KPMG calls for innovative approach to Nigeria’s economy

The KPMG, audit and tax advisory services has called for innovative and unconventional approaches to effectively navigate Nigeria’s economic environment in this turbulent times.

The guide, contained in the “KPMG Nigeria’s economic 2017 outlook” released recently in Lagos, pointed that though 2017 provides opportunities, yet the persisting headwinds impacting macroeconomic front could mar such prospects.
Such headwinds, including internal and external rests among other factors, on fiscal and monetary policies, structural policy, governance and political, among others.

The report, signed by Kunle Elebute, National Senior Partner KPMG in Nigeria and made available to Daily Times Nigeria, re-emphasized need for the country’s monetary policy to drive growth with the ability to provide clear signal for investment, hence promotion of FDI inflow remains critical to the economy.

According to the report, monetary policy direction will be critical, must focus on growth through reduction of monetary policy rate (MPR) and Cash Reserve Ratio (CRR), while liberalizing foreign exchange to encourage lending, increase money supply and stimulate aggregate demand.

The report further posited that government’s ability to secure, stabilize and develop the North East & the Niger Delta, as well as ability to quicken the implementation of the Fiscal Sustainability Plan (FSP), would further drive economy in 2017.

The KPMG Nigeria’s economy 2017 outlook ‘ report showed that government’s Implementation of the National Economic Recovery and Growth Plan (NERPG) to stabilize current macroeconomic headwinds, coupled with ensuring inclusive economic growth by 2020, will improve ease of doing business in Nigeria to place the country in the league of top 100.

The report pointed that, hence 2017 FGN spending is estimated at N7.29 trillion, revenue sustenance and financing current spending will further stimulate the economy

All these, coupled with positive indicators, such as rise in oil output and prices, reduction of inflation, decline in maximum lending rate and expected real GDP growth. The report further highlighted key opportunities in technology, manufacturing, among other sprawling prospects likely to further boost economy in 2017, however to be driven by macro-economic trends.

Such positive scenarios described a silver linings expected to lift business environment in 2017, KPMG pointed are, improvement in oil production, improvement in foreign exchange earnings and gradual improvement in business confidence.

Others are, improving fiscal policy coherence, launch of the economy recovery and growth plan and gradual improvement in capital flows into the economy.

Innovative approach to journeying 2017 becomes expedient, hence , irrespective of the opportunities, Nigerian businesses are faced with a unique set of challenges resulting to negative Economic growth,, decline in turnover and return on investment as well as high interest rates.

This is further compounded by higher borrowing costs, declining capital flows, limited investment funds for existing and new projects as well as exchange rate depreciation, rising Inflation forex losses on Naira-denominated assets among other impediments.

The environment, according to the report is further challenged by high cost of operations, competitive pressure, and competitive dynamics in the industry as players seek to survive, and declining Purchasing power challenging consumption patterns leading to overall reduction in demand and revenue.