NECA Urges FG: Rethink Fuel Subsidy, Naira Float Policies Now

Private Sector Warns of Unemployment Crisis, Economic Downturn Risks

by Oluwatosin Racheal Alabi

In an urgent call to the Federal Government, the Nigeria Employers’ Consultative Association (NECA) has put forth a compelling argument for the reevaluation of recent economic policies, including the controversial removal of fuel subsidies and the decision to float the naira. As the voice of employers across the nation, NECA’s concerns, articulated in February 2024, highlight the growing apprehensions within the private sector regarding the sustainability of their operations amidst the current economic policies.

NECA’s critique is grounded in the observable impact these policies have had since their implementation in 2023. The Director-General of NECA, Mr. Adewale-Smatt Oyerinde, has been particularly vocal about the distress signals emanating from the private sector. The cumulative effect of the currency redesign, the abrupt cessation of fuel subsidies, the floating of the forex rate, along with increased taxes and adjustments in import clearance rates, are perceived as catalysts pushing businesses towards a precipice.

This analysis is backed by data from the National Bureau of Statistics (NBS), which indicates a worrying trend in unemployment rates. The rise in unemployment is not merely a statistic but a reflection of the real hardships faced by Nigerians, with the potential to plunge the country into a deeper employment crisis. Oyerinde’s emphasis on the need to dissect the root causes of this unemployment spike is a clarion call for a strategic reassessment of the current economic direction.

The departure of multinational corporations such as GlaxoSmithKline and Procter & Gamble from Nigeria’s shores serves as a stark warning, according to NECA. Such exits underscore the fragility of Nigeria’s business environment, highlighting the need for stability and predictability in policy formulation. The association warns that without a conducive business climate, more companies may be forced to either exit the market or drastically downsize, further exacerbating the unemployment challenge.

The downsizing trend, as observed by NECA, is not merely a cost-cutting measure but a survival tactic in an environment increasingly hostile to business growth and sustainability. The resultant job losses have a domino effect on the economy, reducing purchasing power, and by extension, demand for goods and services. This cycle of decline, if unchecked, poses a significant threat to the economic stability and future growth prospects of the nation.

In light of these concerns, NECA’s appeal to the Federal Government is not just a request for policy revision but a plea for a broader strategic rethink. The association suggests that the government should adopt a more consultative approach, engaging with stakeholders in the private sector to understand the on-the-ground impact of these policies. Such a dialogue, NECA argues, is essential for crafting policies that support economic growth, encourage investment, and ultimately, create jobs.

Moreover, NECA’s call for action is underpinned by the broader implications of the current policy trajectory. Beyond the immediate economic repercussions, there’s a palpable risk of eroding investor confidence, both domestic and international. The narrative of multinational companies exiting Nigeria could deter potential investments, further straining the country’s economic recovery efforts.

In conclusion, NECA’s advisory to the Federal Government reflects a deep-seated concern for the Nigerian economy and its workforce. The association’s critique of the removal of fuel subsidies and the flotation of the naira, coupled with other economic policies, is a call to safeguard the interests of the private sector as a critical engine of growth and employment. As Nigeria stands at a crossroads, the decisions made today will have lasting implications on its economic trajectory. NECA’s plea is a reminder of the need for policies that are not only economically sound but also socially responsible, ensuring the welfare and prosperity of the Nigerian populace.

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