Source: Ayo Olesin, Yemi Kolapo and Tunji Abioye, Punching, Monday 4 Jan, 2010

Restoration of confidence in the banking sector, reduction of political tension, reversal of infrastructure deficiencies, and the strengthening of leadership and institutions are some of the key concerns of leading private sector players in the New Year.

According to them, while the worst of the financial sector crisis may be over, government and the private sector must focus on these core issues to keep the economy on the growth path with meaningful impact on businesses and the general population.

Group Managing Director, UAC of Nigeria Plc, Mr. Larry Ettah, said on Sunday that 2010 should be approached with cautious optimism, pointing out that while the worst appears to be over, it would be premature for companies to be off their guard.

He said private sector players should not expect any significant upswing in revenues and profitability and there was need to keep costs in control.

He said, ”This is clearly not a year of recovery, but we will likely see slow growth. This is a time for everyone to keep his or her eyes on the ball. We should prepare for the worst but expect the best because the problems of the money market in terms of lending will not evaporate. The issues in the financial sector will take some time to be addressed.”

He said that while the government seemed to have made “the right noises,” there was a need to differentiate between noise and signal. According to him, ”There has been a lot of noise in terms of energy, about the number of megawatts expected to be generated, and in areas like investments, but outlays and outcomes are different things. A lot of money has gone into the energy sector but the outcomes are different.”

He also stressed the need to reduce the political tension in the country. “I think it will be helpful if there‘s a lot of reduction in political risk. There should be a way to de-escalate political tension by ensuring that issues surrounding the Presidency are resolved.”

A former President of the Nigeria Economic Society, Ambassador Isaac Aluko-Olokun, who noted the nation was starting the new decade in a shaky note also said the Federal Government should take urgent actions to reduce the hardship and drudgery of everyday life in the country.

He said, “The economy is comatose, uncertainty abounds in the polity and there is a pervasive crisis of confidence, trepidation and gloom across the board. Government should, first and foremost, focus on reducing the infrastructural constraints.”

Aluko-Olokun, said government should specifically improve the supply of electricity, ensure that the road networks are rehabilitated and begin to develop an efficient rail system as well improve and stabilise the supply of petroleum products.

On the banking sector crisis, he said the Central Bank of Nigeria should look inwards and introduce more regulatory reforms and change the practice of universal banking, which, hitherto, allowed banks to compete in all areas of the economy. He also said, “Government in 2010 should consolidate the amnesty programme in the Niger Delta and recognise the close linkage between politics and economics. We shall not be able to solve our economic problems if we don‘t resolve the political problems we confront.”

On his part, the Managing Director, Financial Derivatives Company Limited, Mr. Bismarck Rewane, said there should be greater coordination between all arms of government in 2010 to ensure an improved economy. Rewane said in a telephone interview with our correspondent on Sunday that the time between policy formulation and implementation must also be shortened, in addition to the development of stronger leadership and institutional capacity.

“Whenever we make decisions and we run into problems, we should very quickly retrace steps,” he added.
He stressed that the banking sector crisis must be resolved as soon as possible to prevent a greater crisis in the economy.

According to him, “The banking sector problem has to be resolved urgently. The regulator has to sell those banks very quickly. It is sub-optimal to have the regulators manage the banks for an extended period.”

He, however, said the bill for the creation of an Asset Management Company, expected to redistribute banks’ losses from margin lending and other exposures, and also provide the basis for the eventual recovery of the capital market, “must be passed into law immediately”.

For the Chief Executive Officer, Economic Associates, Dr. Ayo Teriba, the nation, at the highest policy level is “adrift”. He said, “The President is sick, his deputy, who is well, is not formally taking over. So, at the highest policy level, the nation is adrift. And if this is happening, you can‘t have strong policy initiatives. We are left with an economy that will be driven by purely cyclical forces, which looking at the international environment, are largely favourable.

Teriba, however, said there was a lot of uncertainty on the domestic front, adding, “It is unclear, for instance, when the banking sector crisis will end. There is no mechanism for putting forward what Nigerians would like to see in the sector.”

Aviation sector stakeholders also said on Sunday that 2010 would likely be another year of gloom due to low passenger volumes and blockage of credit lines.

The General Secretary, Aviation RoundTable, an industry pressure group, Mr. Sam Akerele, said, “I don‘t expect any difference from what we had in 2009. The banks that used to rescue the airlines disappeared in 2009 and they are yet to be seen returning. The passenger volume and the price we pay for one-hour flight cannot sustain the airlines. Also, the policy for growth is not there.”

According to the Chief Operating Officer, IRS Airlines, Mr. Kenneth Wemambu, the decision of banking sector regulators will determine the fate of airlines, noting that the past year was difficult due to the fact that the lines of credit dried up even before the shake-up in the banks.

Nigerian Bank Nigeria