By Elizabeth Adegbesan
THE Managing Director of Afrinvest (West Africa) Limited, Mr. Ike Chioke, has advised the government not to use palliative measures to solve long-term economic problems.
He gave this advice at Afrinvest midyear investment parley, which had as its theme, ”The turning point: Positioning for optimal return,” in Lagos yesterday.
Chioke said the parley was to inform the investment public and clients of Afrinvest on the need to be more vigilant on how they managed their investment, seeing how some factors played in the global and domestic economies in the first half of 2023 (H1’23) and possibly outcomes in H2’23.
He said: “We have seen Nigeria, with the advent of the new government, President, Bola Ahmed Tinubu, unified the foreign exchange rates; that have implications for the economy.
“But obviously, the naira devalued significantly by about 40 per cent. But that is beneficial if you are someone on the domestic economy side. For the state government, they should see a 40 per cent improvement in their bank accounts.
“At the same time by removing the fuel subsidy, we estimate that the government saved about N2 trillion just from the subsidy removal alone this year and by unifying the foreign exchange regime we will see something like about N350 billion reduction just from the debt service environment. So those are positive factors.
“There is still one more subsidy element that the government needs to tackle. That is a liquidity subsidy and we see that that will probably push inflation from 23 per cent to 24 per cent towards the third quarter of the year before we commence seeing inflation being reined under control.
“But most of this will depend on the policy of the new government as they are yet to come out with the list of ministers and once the cabinet is replaced they will then kind of articulate their own policy and how they want to move forward and how they need to use some of these savings to impact on the lot of Nigerians particularly, very poor Nigerians.
“But all of this money should not be spent on palliatives because as we know palliative is not a permanent solution; it is just like applying a mentholator on a wound.
“You need to treat the wound first and some of the root causes lying in the quality of infrastructure we have for business, maximum security across the country and of course continuous focus on human capital development; education, healthcare and empower our youths.”
Source: Vanguard