The National Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) has formally approached the Minister of Finance and Coordinating Minister of the Economy, Olawale Edun, with a request for the urgent disclosure of the 2024 government fiscal policy.
This move made in a letter was signed by the National President of NACCIMA, Dele Kelvin Oye underscores the critical need for a stable economic framework to guide investment and business decisions in Nigeria.
Delay in fiscal committee report worries business leaders
NACCIMA commends the government’s initiatives on fiscal and tax policy reforms, including the formation of the Presidential Fiscal Policy and Tax Reforms Committee in August 2023.
Yet, there is growing concern among business leaders about the delayed release of a comprehensive fiscal policy for the upcoming year. NACCIMA emphasizes that reliable fiscal and monetary policies are vital for the private sector to make informed decisions and plan strategically.
Erratic changes in fiscal regimes and monetary policy adjustments
The absence of a clearly defined fiscal policy for 2024 has already led to uncertainties, notably through erratic changes in fiscal regimes and monetary policy adjustments. These include the unpredictable duty rate modifications by the Nigerian Customs Service and recent significant changes to the Monetary Policy Rate and Capital Adequacy Ratio, which have complicated the investment planning process for businesses.
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The letter read:
- “You will agree that most business and investment decisions are anchored upon Fiscal and monetary policy expectations which are guided by regular updates from the appropriate authority. Therefore, on behalf of our members, we hereby advocate for the timely release of a well-defined government fiscal policy for the year 2024.
- “Historically, the presentation of a consolidated fiscal policy alongside the annual budget briefing has provided the private sector with a stable framework to formulate investment strategies and business plans. This practice has not only fostered domestic economic stability but has also been pivotal in attracting foreign direct investments (FDIs), contributing to the overall national economic prosperity.
- “However, the private sector currently faces significant challenges due to the apparent lack of conclusion of the Presidential Committee’s report. This has translated into frequent and unpredictable changes in fiscal policies, such as the sporadic and the nearly weekly duty rates by the Nigerian Customs Service using United States Dollars for the importation of raw materials and goods. Moreover, the recent monetary policy adjustments, including the elevation of the Capital Adequacy Ratio to 45% and the Monetary Policy Rate (MPR) to an unprecedented 24.75%, have compounded the uncertainty within the business environment. In addition, the monthly cash allocations to the public sector by the FAAC without commensurate production of goods and services is a challenge.”
NACCIMA’s letter to the minister stresses that a stable fiscal environment is not only crucial for domestic economic stability but also for enhancing Nigeria’s appeal to foreign direct investments (FDIs).
The current fiscal unpredictability, exacerbated by the delay in concluding the Presidential Committee’s report, undermines the efforts to foster a conducive business climate essential for investment and economic growth.
By advocating for the swift release of the 2024 fiscal policy and the final report of the Presidential Committee, NACCIMA aims to secure a clear, coherent, and consistent fiscal framework.
Such a framework is deemed crucial for the private sector to finalize investment plans and for the government to reinforce its commitment to economic stability, thus boosting investor confidence and setting Nigeria on a path to sustainable growth.
