The Centre for the Promotion of Private Enterprise (CPPE) has called on the Federal Government to take immediate action by introducing tax incentives for low-income employees and small businesses, as well as reducing import duties on specific products. These measures are seen as crucial in mitigating the impact of recent reforms and alleviating the inflationary pressure caused by the removal of fuel subsidies.
Dr. Muda Yusuf, the Director/CEO of CPPE, emphasized the need for urgent measures to address the rising cost of living and escalating operating and production costs for businesses. He suggested a combination of direct interventions, tax incentives, and import duty concessions for critical sectors such as transportation, health, power, and energy. With the improved fiscal space resulting from the reforms, Yusuf believes that implementing these mitigating measures is both feasible and necessary to ensure the reforms have a positive impact on the population.
Yusuf also highlighted the potential for inflationary pressures in the near term, with the country’s exchange rate facing short-term pressures due to the backlog of forex demand. However, he expressed optimism that this pressure will ease before the end of the year, leading to a more sustainable equilibrium exchange rate.
Furthermore, Yusuf recommended that the Central Bank of Nigeria establish a sustainable intervention framework to address volatility in the forex market. He emphasized the positive outlook for the economy, including lower fiscal deficits, reduced debt service burden, and improved macroeconomic stability, all of which are expected to contribute to economic growth in the second half of the year.
Yusuf acknowledged that the Nigerian economy has faced multiple challenges, including the ongoing Russian-Ukraine war affecting energy costs and global inflation, tightening monetary conditions in advanced economies, and geopolitical tensions triggered by the war in Ukraine. Additionally, domestic factors such as the naira redesign policy, dysfunctional foreign exchange policy, political transitions, weak oil production recovery, and ongoing security challenges have hindered economic growth.
In light of these challenges, Yusuf believes that the recent reforms initiated by the new administration will set the economy on a positive trajectory, leading to recovery and growth.
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