The Managing Director/ CEO, CRC Credit Bureau Limited, 'Tunde Popoola, has said managing a post-recession economy requires bold and coherent fiscal and monetary policies, and putting the right people in places.
Speaking at a business forum organised by the Nigerian Supreme Council for Islamic Affairs (NSCIA) in Abuja, as part of activities marking Nigeria’s 57th independence anniversary, Popoola said the Federal Government had rolled out some significant policies.
The policies include the Economic Recovery and Growth Plan (ERGP) meant to achieve sustained growth.
The plan’s broad objectives are to restore growth, invest in people and build a globally- competitive economy.
Popoola said: “It is clear that the ERGP identified the challenges we face and articulated clear strategies and milestones to put Nigeria on the path of sustained and inclusive growth. It is a beautiful, well-articulated document. However, the achievement of its vision and objectives will depend on the political will to pursue its execution. I acknowledge that the implementation has started well. I can provide some insight from my own engagement with an aspect that concerns my industry, that is, access to credit.”
Popoola praised the Presidential Enabling Business Environment Council (PEBEC) set up to improve the ease of doing business rating.
“The Council has designed measurable quick wins and is laying the foundation for improving Nigeria’s ease of doing business ranking to under 100 by 2020 from the present 169th position out of the 189 economies surveyed in 2017. And significant results are expected,” he said.
Popoola went on: “The ERGP is the blue-print of the administration to address the fundamental challenges we face and put us on the path of sustainable growth and development. As the government formulates plans and policies to grow the economy on a path of inclusiveness and sustainability after the recession, there is a lot to adopt from Islamic economics and principles. The primary objectives of Islamic principles and economic system are equitable distribution of wealth and social justice.
“Economic literature has identified reflation through government spending and restoring production and consumption capacities to the private sector and households as the way out of recession. Governments have resorted to borrowing from the local and international financial institutions and multilateral agencies and governments. In the last four years, total government borrowings have increased from N8.5 trillion in 2013 to N14.06 trillion and $15.05 billion as at June 2017. This is expected in time of recession as government needs to spend to stimulate and reflate the economy,” Popoola added.
He said servicing the debt becomes a challenge, especially when they are foreign currency denominated.
He said Islamic finance is an alternative option worth exploring to raise funds for public works and to support the private sector’s access to finance.
“Worldwide, Islamic finance is no more peripheral to conventional finance. It is being operated in over 75 countries, including the western nations. The United Kingdom issued its first Sukuk on July 2, 2014 for the sum of Pounds Sterling 200 million to build residential homes. Hong Kong and South Africa are among nations that have issued Sukuk in the past. South Africa’s $500 million Sukuk was four times over-subscribed,” he said.
He said Nigeria should give special attention to innovation-driven Small and Medium Scale Enterprises (SMEs) in agriculture, Information Communication Technology (ICT), tourism and fashion. These sectors can absorb the SMEs, reward innovation, provide employment and promote necessary linkages. And this will also address poverty. When the states formulate policies, and provide infrastructure that stimulate the setting up and growth of small businesses, it will improve employment opportunities.
In the medium and long term, when the productive sectors are virile, internally generated revenue will increase.
He said finance literature has established a positive correlation between access to finance and economic development. Finance exerts a significant and positive influence on growth. Financial sector development can contribute to achieving the goal of poverty reduction in Nigeria.
“When people do not have access to financial services, they are unable to do a lot of transactions or projects that can improve their lives, including access to credit and cultivation of savings habits. In Nigeria, the banking system is far from the people as banks are concentrated where they consider to be commercially viable locations, especially in the cities and places with special projects like industries or educational institutions or government agencies. Let me give some statistics to buttress my position,” he said.
“Total loans to the private sector by the 22 commercial banks as at June 2017 was N22 trillion to less than ten million people out of over 90 million bankable Nigerians. Credit penetration in Nigeria is among the lowest in the world because banking penetration itself is low. Besides, millions of Muslims do not believe and do not apply for loans under the conventional banking system,” he added.