Rivers State Television Channel 22

MIXED reactions have trailed the upgrading of Nigeria’s economy from stable to positive by Standard and Poor’s (S&P) ratings agency, as analysts stressed the need for government, albeit belatedly, to hit the ground running immediately, to resolve lingering socio-economic problems assailing Nigerians.

The rating agency based its upgrading on positive assessment of President Goodluck Jonathan’s transformation agenda.

“The Nigerian government under President Goodluck Jonathan has been undertaking several important reform initiatives and is tightening its fiscal and monetary stance. The authorities have restructured and strengthened the banking sector, and we expect economic growth to remain strong. We are revising our outlook to positive from stable...” the agency stated in its report yesterday.

It also reaffirmed its B+/B long- and short-term issuer credit ratings for Nigeria, the continent’s most populous nation.

Analysts, however, described the rating as counter-productive as it has no relevance to worsening employment situation in the country and concomitant insecurity and unrests around the nation.

Besides, they assessed the business environment as investment-unfriendly, with parlous infrastructure signposting the economy, even as de-industrialising has been emerging a manifest effect of unattended issues crippling businesses in the country.

Indeed, the Lagos Chamber of Commerce and Industry (LCCI) stressed its earlier position that the 2012 budget is a disincentive to the private sector, adding that the budget’s proposition on tariff review poses risks to the economy and the citizens’ welfare.

The risks, it said, could worsen poverty conditions of Nigerians as the price of   the two major staple foods, rice and bread would increase considerably giving rise to smuggling of the products.

According to a statement signed by the Director General of the Chamber, Mr. Muda Yusuf, the lowering of recurrent expenditure by 2.4 per cent fell short of expectations and is not significant enough.

“The expectation of a major restructuring of the budget turned out to be misplaced because it did not happen. The numbers did not show a significant paradigm shift. What was presented was only a marginal reduction in recurrent budget, which was reduced from 74.4 per cent to the 72 per cent of the total budget compared to 2011 budget, a mere 2.4 per cent reduction. This is not a significant reduction.”

“In an economy that is in dire need of infrastructural investment, committing 72 per cent of the budget to recurrent spending would not promote the cause of economic transformation. And going by the record of budget implementation, performance of recurrent budget will be much more than that of capital. Therefore, the portion of the budget that would go to capital spending may even be less than the proposed 28 per cent.

Also, a long-serving council member of the Manufacturers Association of Nigeria (MAN), Dr. DVC Obi lamented that the S&P’s position could further encourage the Federal Government “to celebrate non-achievement and sustain its lackadaisical attitude to the well-being of Nigerians.”

Obi pointed out that S&P failed to observe the continually dying industrial estates in the country and the rising legion of unemployed youths.

“What I understand by the rating agency’s report is that a fresh regime of hardships should further be unleashed on Nigerians in celebration of poor government’s performance.

“The objectivity of ratings of some western economies was lacking in the assessment of Nigeria’s economy, to warrant the positive outlook painted by S&P. I hope the government would not be persuaded to believe that all is well, while majority of Nigerians continue to wallow in abject poverty,” Obi added.

Nigeria has been pursuing economic reforms including a controversial measure to cut fuel subsidies, which the government says has amounted to more than $8 billion this year.

Economists and government officials view the move as essential to allow for more spending on the country’s woefully inadequate infrastructure and to ease pressure on its foreign reserves.

Nigerians, however, view the subsidy, designed in part to hold petrol prices at N65 per litre ($0.40, 0.30 euros), as their only benefit from the nation’s oil wealth.

Nigeria’s Central Bank Governor Lamido Sanusi has also led sweeping bank reforms seen as having pulled the sector out of crisis. Finance Minister Ngozi Okonjo-Iweala is a highly respected former World Bank managing director.

However, the country has also seen worsening violence blamed on Islamists and warnings from the Christian population that they will defend themselves against further attacks. Standard & Poor’s noted concerns over the situation.

The country relies tremendously on the oil industry for revenue, and the rating agency pointed out that crude exports accounted for 72 per cent of current account receipts in 2010.