Ghana’s president-elect Nana Akufo-Addo will be sworn in January 7th 2017 after winning hotly contested election that took place on the 7th of December 2016. Just like Buhari he rode on populist discontent for the failing economy to win an election that took out the incumbent president who was running for a second term.
Mr Akufo-Addo in a private business meeting in Accra on Wednesday, made his first comment about what his government plans to do to revive their economy.
“We will reduce the cost of doing business, maintain fiscal discipline, reduce government borrowing and reduce interest rates to spur private sector investment,”
Ironically, Nigeria appears to be doing the direct opposite of what he plans to do when he comes in.
Cost of doing business – Nigeria has failed to move up significantly in the Ease of Doing Business ranking. Ranked 169 Nigeria only moved up one spot from 170. Businesses have complained about the cost of doing business in Nigeria and many believe it has probably worsened since Buhari was elected. Regulatory authorities seem to be in constant competition with businesses charging all sorts of levies, fees and taxes which in most cases are duplicated.
Fiscal Discipline – The budget fiasco of 2016 will remain in the minds of many Nigerians and will rank as one of the most embarrassing moments this year. Despite the president’s anti-corruption stand, impunity is still seen across the political class with billions wasted on maintain a large and growing government. This is even made worse by lower Federally Generated revenues (25% variance to budget) and significant local borrowings at interest rates of over 16% pa.
Reducing Interest rates – Interest rates near all time highs on the back of rising inflation rates and aggressive government borrowing. Government local debt offering was on the increase this year by about N2.2 trillion taking our total domestic debt profile to N10.6 trillion as at June 2016. The implication of this is that the private sector is being crowded out of the borrowing space as they cannot compete with a government that is paying as much as 17% in risk free borrowings. The government actually plans to borrow more next year.