Local Savings Can Help Reflate Economy—Finance Minister

By Dipo Olowookere

Nigeria’s Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, has said the country’s economy can be reflated if local savings is encouraged.

The global economy is currently on a life support because of the coronavirus pandemic, which forced many countries to lockdown their economies.

Nigeria was not an exception as it only eased the lockdown early June after almost all economic activities were shut down for nearly three months in order to curb the spread of COVID-19.

Already, the fiscal authorities are looking ahead of post-COVID-19 era. It is believed that the virus will disrupt the ways things have been done in the past.

While speaking at the inauguration of the National Savings Strategy Working Group in Abuja at the weekend, the Minister canvased the need to mobilise local savings, saying it was capable of reflating the economy post COVID-19.

She tasked members of the group to develop easy instruments that are safe to be able to attract ordinary Nigerians to key into the strategy.

The terms of reference of the group include; To study the National Savings Strategy Paper and advise the federal government on the feasibility of the proposals or with recommended changes.

The team is also expected to advise on ways and means of mobilizing and channelling corporate and individual savings to accelerate domestic capital formation to support entrepreneurs and enterprise development in the urgent task of diversifying the economy and the deepening of the capital market;

The group is further expected to draft a National Working Paper that outlines a detailed roadmap on the implementation of the National Savings Scheme to be submitted for approval by the Federal Executive Council.

“Let us not forget the average Nigerian that wants to save and does not have huge sums, we need to develop easy instruments that are safe to be able to attract them. look at creating retail savings scheme to allow these Nigerians to save quickly by being able to enter and exit without unnecessary rigours.

“We need to mobilise local savings to reflate the economy, increase productivity by creating new enterprises and ensure that existing ones also thrive,” she said.

Mrs Ahmed commended the acting Director General of the Securities and Exchange Commission (SEC), Ms Mary Uduk, her team and the members of the Capital Market Master Plan Implementation Council (CAMMIC) for their dedication and commitment to the implementation of the masterplan so far.

She expressed optimism that ongoing efforts to review the masterplan to align the assumptions and projections with current realities, would redefine the road map for stakeholder participation in the Nigerian capital market.

“My expectation when the review is concluded is that we would have a strategic document that provides a clear pathway that would enable the Nigeria’s capital market achieve the goal to be Africa’s deepest, most liquid and largest capital market contributing not only to Nigeria’s socio-economic development but also serve as a global financial hub offering opportunities to other parts of Africa,” she said.

In her remarks, Ms Uduk said the SEC launched a 10-year capital market masterplan in 2015, a market wide strategic blueprint that had the buy-in of all stakeholders, aimed at making the market deeper, vibrant and more effective.

Ms Uduk said the implementation of the initiatives in the 10-year plan will transform the Nigerian market, facilitate the diversification of the economy, encourage savings and create wealth.

“This will no doubt grow investors’ confidence, improve the depth and breadth of the market in terms of product offerings, engender market integrity, and contribute to the country’s economic growth.

“I am glad to report that we have taken up the initiatives outlined in the masterplan document in a systematic manner while engaging with the government, and other critical stakeholders to successfully implement key initiatives while driving the execution of others,” she stated.

Ms Uduk disclosed that the need to establish a National Savings Strategy was outlined in the masterplan as one of the key strategies to enhance capital formation by mobilizing domestic funds for investment to drive rapid economic growth.

She said it envisaged the deliberate provision of risk capital as venture capital and private equity that are naira based and more committed to the long-term prosperity of Nigeria, as well as create a buffer to the instability created by foreign investors.

“On July 16, 2016, CAMMIC set up a 7-man technical committee as a first step towards achieving that goal.

“The technical committee developed a 102-page, 7-chapter position paper which reviewed historical data and information on the Nigerian savings-investment culture, the Nigerian financial system, population and economy and the savings and investment strategies of select countries.

“The purpose of the position paper was to ascertain the need for a national savings strategy in Nigeria and make recommendations on an implementation strategy.

“The position paper forms the basis for the work expected to be carried out by the national working group being inaugurated today,” Ms Uduk added.

She, therefore, assured that SEC will provide the necessary support and every other assistance within its capacity to the national working group to ensure that their job is done in a timely and efficient manner.

Also speaking, Chairman of the team, Mr Fola Adeola, said savings is one of the fundamentals of highly developed economies and pledged the readiness of the group to help drive the Nigeria economy.

“This assignment is coming at a most difficult time as people are worried about the effect of COVID-19 on the economy, but if we get it right now, by the time we ease into good times, we will be better for it,” he added.

Recall that the capital market masterplan proposed the National Savings Strategy (NSS) as one of the key initiatives to drive capital formation and investment necessary to support entrepreneurs and enterprise development in the urgent task of diversifying the economy and deepening of the capital market.

To lift the equity markets, galvanize new start-ups and expand existing projects, there should be deliberate provision of Naira based risk capital.

In essence nurturing, growing and channelling domestic savings to fund the creation of new enterprises will result in rapid economic growth, diversification of the economy, acceleration in the rate of job creation and increasing the productivity and output of the Nigerian economy.