Reducing the cost of governance in Nigeria has become a hotly debated topic in Nigeria. It is seen as a way of achieving Economic Growth in Nigeria.. Professor Ndubisi Nwokoma, an eminent expert in financial economics and Director of the Centre for Economic Policy Analysis and Research at the University of Lagos, has said that Nigeria needs fiscal reforms to improve Nigeria’s business sector. The professor told news correspondents in an interview that there is a pressing need for the government to reduce the cost of governance and address core fiscal issues.
He pointed out the severe challenges that manufacturers face in Nigeria’s current business environment and attributed much of the economic instability to infrastructural deficiencies, energy supply inconsistencies, policy unpredictability, and barriers to foreign investment. Professor Nwokoma pointed out that these pressing issues are some of the causes of Inflation in the country. So, the government must tackle the problems with urgency to create a more business-friendly environment. He stated, “I completely agree with manufacturers about the business climate; it’s not conducive at all. The government should focus on these areas. The business environment is unfavourable; the government needs to critically assess it.”
Strategic measures to reduce governance costs.
One of the main areas of concern is the disparity in interest rates, which Professor Nwokoma argued are disproportionately high compared to other countries. “In Nigeria, interest rates are high. I assume the central bank raised rates to nearly 27% at the last MPC meeting to combat inflation and attract foreign capital,” he explained. He noted that high interest rates, when combined with an unstable economic system, hamper Productivity and contribute to inflation due to reduced production capabilities.
Furthermore, Professor Nwokoma suggests ways for the government to reduce the cost of governance and promote financial responsibility. This includes cutting unnecessary government expenses, like reducing the number of ministries, departments, and agencies (MDAs), limiting excessive allowances for officials, and enforcing strict budget rules. Improving transparency and accountability in public finances can also help minimize waste and corruption. Effective monitoring agencies and digital financial management tools are very important as well to ensure public funds are used properly.
Economic diversification should be considered.
Oil theft and leakages also drain Nigeria’s economy. In fact, the bulk of Nigeria’s Revenue comes from the sale of crude oil. So, implementing stricter monitoring and Security measures, along with leveraging Technology for tracking and reporting, can minimize these losses and increase revenue from the oil sector. As many political promises state, the government can also diversify the Economy and reduce reliance on oil revenues. Initiatives to support smallholder farmers, improve infrastructure, and provide access to markets can stimulate growth in this sector.
Then, Nigerians need to be made less cynical about taxes. Revising Tax Policies to ensure they are business-friendly while broadening the Tax base can increase Government Revenue without imposing heavy burdens on businesses. Simplifying the tax code and ensuring that individuals and businesses comply through better enforcement mechanisms are helpful steps, too. Finally, encouraging public-private partnerships can attract investments in key Infrastructure projects. This approach can relieve the financial burden on the government while ensuring that projects are completed efficiently.
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Professor Nwokoma also stressed the importance of addressing broader fiscal issues, such as managing public debt and ensuring sustainable economic policies. He argued that political leaders need fiscal discipline in order to direct funds towards initiatives that drive economic growth. “We must direct funds towards economic growth. The government should cut governance costs, address fiscal issues like expenditure and oil theft, and improve the agricultural environment. These steps can reduce business costs and subsequently lower interest rates,” he concluded.