Kunle Aderinokun and Olaseni Durojaiye
As concerns about the laggard pAs concerns about the laggard performance of the economy and the current recession continue to worry all and sundry, the federal government’s recent release of recovery and inclusive growth strategies may just be timely.
The fact that some of the strategic thrust contained in the roadmap have been on the cards for a while without appreciable impact on the economy and the living condition of Nigerians have not dampened expectations.
The Minister of Budget and National Planning, Senator Udoma Udo Udoma, last Monday unveiled the strategies at the Presidential Villa in Abuja during the Second Presidential Business Forum presided over by Acting President, Prof. Yemi Osinbajo.
Udoma stated that the medium-term Economic Recovery and Growth Plan (ERGP 2017-2020) was being finalised to address current economic challenges, restore growth and reposition the economy for sustained inclusive growth.
Pointing out that, while 59 strategies had been developed for implementation to achieve the strategic objectives of the ERGP, he stated that 12 of them had been prioritised based on their import to the success of the ERGP.
The strategic thrust, which contained 12 plans includes ramping up oil production to 2.2 million barrels per day (MBPD) attaining 2.5 mbpd by 2020, privatising selected assets, accelerating non-oil revenue generation, drastic cost cutting, aligning both monetary and fiscal policies and expanding infrastructure especially in the power sector, roads and rail as well as revamping the existing four refineries in the country.
Other strategies, the minister disclosed are ease of doing business, expanding social investment programmes and delivering on transforming the agricultural sector, promote export as well as accelerating implementation of the National Industrial Revolution Plan using special economic zones as well as focusing on priority sectors to create jobs among others.
The minister also noted that the ERGP was different from previous plans and developmental visions that had been developed but not implemented, assuring that implementation of the ERGP would be driven by strong political will in close partnership with the private sector especially in the areas of agriculture, manufacturing, solid minerals, services and infrastructure sectors.
He stated that ERGP builds on the existing 2026 SIP, and contains strategic deliverables and enablers to revive the nation’s economy.
While some of the 12 strategies aligned with summations by some industry analysts who contended that it is the bucket of policy measures and not one particular plan that will drive economic recovery, observers opined that judicious implementation remained a key factor if the economy would witness recovery and inclusive growth.
Analysts, however, cautioned that increase in oil production could not be viewed in isolation of appropriate fiscal policies that will effectively manage the supply and demand side of forex administration, if oil receipts must impact the economy and ease the forex challenge that the country currently face.
While analysts welcome the need to promote export and improve business environment in the country, stakeholders also called for a revisit of the suspended Export Expansion Grant (EEG) and argued that huge revenues are lost in export trade as operators in the sector have resorted to unofficial trading due to suspension of EEG.
An analyst with one of the third generation banks who preferred anonymity told THISDAY that, “The strategies are good on paper even though not all of them are new as you will recall that government have been mentioning of it since last year. That does not take away from the fact that they are good routes to go but I believe implementation is key.
“It is cheering to see that government is beginning to see the need to align fiscal and monetary policy. If that is not done, we could lose the benefits of increased earnings from oil sales to inability to manage the supply and demand sides of forex. So, increased oil production and earnings should not be viewed in silos”, he stated.
Also speaking to THISDAY, a Port Harcourt-based analyst, Ezeh Wordu, welcomes the plan to promote export since Nigeria has been losing huge revenue in the area of export trade because operators in the sector have not been going through government since the suspension of Export Expansion Grant.
“Promoting export includes improving ease of doing business, this will include looking at reducing cost of production and improving standard so that made in Nigeria goods can be competitive in the global market. So much needs to be done and much is dependent on the will to implement all the strategies”, he stated.
In the same vein, Executive Director, Corporate Finance, BGL Capital Ltd, Femi Ademola, noted that, “By privatising some state assets and focusing on priority sectors, local production of so many imported products would be increased while exports enhanced.”
Just like others, Ademola, however, added that, the success of these strategies lies in implementation.
“And the fact that the implementation of some of the strategies will depend on the cooperation of other parties and the resolution of some lingering issues indicates that success is not guaranteed.”
Specifically, Ademola stated that, “one very important strategy mentioned that can help the economy out of recession quickly is the alignment of monetary, trade and fiscal policies.”
According to him, “By working together, the fiscal and monetary authority can easily and quickly formulate policies that can solve the structural challenges in the economy and thus make monetary policies effective.”
He contended that, “The strategy of expanding infrastructure especially power, roads and rail as well as revamping the four existing refineries is a no-brainer and I think has been over-flogged. On this strategy, it should be more action and less talk.”
Besides, Ademola noted that, “The acceleration of the implementation of National Industrial Revolution Plan using special economic zones as well as focusing on priority sectors is a welcome idea. Without an improved and very strong productive base, exchange rate volatilities will continue no matter what we do.”
While welcoming the strategies, which they considered a step in the right direction, analysts at Eczellon Capital Ltd, however, emphasised the political will to implement them.
According to them, “The ‘strategies’ are a welcome development and a step in the right direction albeit it is long overdue. Three key important points to infer from the priority areas are: first, the government is interested in addressing the crisis in the Niger-Delta; secondly, there will be a greater role for the private sector via sale of some key economic assets; thirdly, a possible harmonization of monetary, fiscal and trade policies which has been lacking for some years. This will provide some form of succour to economic actors that have hitherto looked up to the government for some form of economic direction in the short to medium terms. However, from history, Nigeria has never really lacked a development economic plan. There have been arrays of such documents prepared by different government.
“The challenge has always lie in having the right institutional framework and political will to implement the contents of the plan. It is in this light, we hope the current government will dimension the 12 priorities areas into SMART – Specific Measurable, Achievable, Relevant and Time bound – goals for the short, medium and long term. This should as well be supported by driving reforms in key public institutions that will drive the implementation of these strategies. Otherwise, the much anticipated ERGP (Economic Recovery & Growth Plan) may end up like the NEEDS (National Economic Empowerment Development Scheme) programme, Vision 2020 and other development plans of previous governments.”
Nevertheless, the Chief Executive Officer, Global Analytics Derivatives Ltd, Tope Fasua, argued that, “It would have been great if we could get a fundamental shift in thinking about the economy.”
“That government is still locked into resource-dependence is cause for worry. Our annual budget is still driven by crude oil prices, meaning that we are not really challenging ourselves by thinking outside the box. Not a lot was said about some sort of progressive taxes that we could institute, like the taxes with which many successful countries drive their economy and ensure order in society.”
Fasua, however, added that. “With 59 strategies, it may begin to look like we are going through the motions and saying everything everyone wants to hear. We hope the government is being strategic. Getting out of recession itself shouldn’t be too difficult because it is a mere statistical issue. If one part of the economy – say the oil and gas sector – grows due to rising global prices, the economy can get out of recession; but the structural issues in the economy will remain.
The vast majority will remain poor and disenfranchised, small businesses will struggle, and the cycle of boom and bust will persist.”
