Preparatory to the launch of the Economic Recovery and Growth Plan sometime this February expectations are high and opinions are diverse on the best way to go in formulating the plan, which is expected to put the economy on the path of recovery and growth, writes Kunle Aderinokun
Since the advent of the recession that has been plaguing the economy, the journey to recovery has been tortuous. While efforts have been made by the federal government to pull the economy out of its challenges, they have been without form and plan. That has necessitated the call by stakeholders, economic analysts and market watchers for a blueprint to set the economy on the path of recovery, achieve growth and stability. Because there is a dearth of fund and no articulated plan, the implementation of the budget has been a struggle and particularly the 2017 budget, which lies before the National Assembly is already witnessing a setback.
The expected financial leverages from multilateral development financial institutions are long in coming because such borrowings demand a recovery and growth plan as prerequisite. Only recently, the President of the African Development Bank (AfDB), Adewunmi Adesina, at World Economic in Davos, Switzerland, hinted that the pan-African financial institution would not release the second tranche of Nigeria’s $1 billion loan, which is $400 million, to the Nigerian government, except it produces an economic recovery plan.
“We are waiting for the economic policy recovery programme and the policy framework for that,” said Adesina.
Ditto the World Bank and other foreign institutions. The Bretton Woods institution and others, where Nigeria seeks to borrow a total of $4 billion are also expecting the federal government to have a clear roadmap to take the economy out of the quagmire.
In realisation of this, the Acting President Yemi Osinbajo, who was also in Davos assured the international community that the Nigeria Economic Recovery and Growth Plan (ERGP) would be unveiled in February. This was after President Muhammadu Buhari’s New Year message, announced the government was working on the ERGP, would be anchored on optimising the use of local content and empowering local businesses.
According to Osinbajo, who spoke on the side-lines of WEF, the newly developed ERGP of the Buhari administration has been specifically designed to take the country out of recession and in the long term continue to grow the economy.
Few days after this, Minister of State for Budget, Senator Udoma Udo Udoma, during the Second Presidential Business Forum presided over by Osinbajo , at the Presidential Villa in Abuja announced 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.
Dropping the hint 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.
Economic analysts have, however, described these 59 strategies as generic and not the articulated plan or the blueprint that all and sundry have been waiting for. As such, they contended that so-called strategies are not capable of lifting the economy out of the murky waters of recession.
While Nigerians and the international community are waiting for the ERGP of the government, there are suggestions as to what should form part of the plan. Although opinions are myriad on the recipes for recovery of the beleaguered economy, notable economic and policy analysts, who spoke to THISDAY, have presented their proposals for the ERGP.
A renowned economist and Director-General, West African Institute for Financial and Economic Management (WAIFEM), Prof. Akpan Ekpo, said the ERGP should identify expenditures on capital projects with a view to reversing the economic challenges.
In fact, Ekpo advised that the plan should articulate policies and strategies that would deal with the structural problems of the economy such as power, roads, railway.
According to him, “From what government is saying, the plan has two components namely the economic recovery and then the growth trajectory. The economy is in a recession hence the plan should identify expenditures on capital projects to reverse the downturn. There is also the need to articulate policies and strategies that would deal with the structural problems of the economy such as power, roads, railway, among others.”
In addition, Ekpo, who is a former CBN director, suggested that, “government should put forward how best to bail out states owing areas of salaries to workers.” This, according to him, is “crucial for stimulating aggregate demand. Nigeria’s recession is of a special type requiring fiscal and structural palliatives.”
Pointing out that, “The recession affects both the demand and supply sides of the economy,” he noted that, “It is important to include in the plan how best to deal with vulnerable groups as well as the unemployed.”
Asking, “If the government is able to spend and get the economy out of the recession technically then what next?,” he said, “I say technically because a marginal but positive growth of say 0.05 per cent can get the economy out of the recession but the problems of rising unemployment, inflation, high lending rates would remain.”
“It is within this context that the growth component of the plan is important. In order to sustain a positive growth trajectory exceeding the population growth, fiscal, monetary and structural policies are required. During the recovery phase, the type of monetary policy becomes pertinent. It is expected that the plan would articulate how monetary policy would stimulate growth in specific terms; same goes for fiscal and structural policies, “ he added.
Besides, Ekpo posited that, the growth component should identify targets for various sectors and how the targets would be realised.
“I expect the plan to explain how the Nigerian economy would remain competitive globally. The plan must articulate the role of government and the private sector. It is expected that the plan should make projections up to the year 2020. The monitoring and evaluation process should be part of the plan. Assuming that the economy grows at 4 per cent at the end of the plan, it is important to note that growth is only a necessary condition for development. Lest we forget growth may not result in development hence it is the role of government to continuously deal with development matters so as to move millions of Nigerians out of poverty. The successful implementation of the NERG plan will re-start the journey to development,” he stated.
In his own suggestion, Director, Union Capital Markets Ltd, Egie Akpata, noted that he expects the economic blueprint to contain “market-tested and proven strategies to solve the immediate short term problems facing the economy.” By short term, he meant things that could have an impact in 2017.
Akpata also said, “On a longer term basis, there needs to be a focus on bringing private funds into building and running major infrastructure projects.”
According to him, “It is not likely that the FGN will ever have the funds to build out the infrastructure of this country. And borrowing to fund these projects might be suboptimal given the historical track record of the government with delivering value for money when it comes to large projects.”
Rather, he added, the Federal government should be focused on social development which seems to be given less priority based on how funds are spent in the current budgets.”
“Funding for education and healthcare should be at the very top of the list as there are really no known private sector solutions which can change the major health and education indices where Nigeria is lagging behind the rest of the world.”
Akpata submitted that, “Without fixing these social problems in health and education , long lasting development needed to lift the masses out of poverty will be difficult to achieve.”
Similarly, Analysts at Eczellon Capital Ltd expect the ERGP to address the key structural economic anomalies that will alter the status-quo of the Nigerian economy and put it on a sustainable growth path in the medium to long term.
Specifically, the analysts expect the plan to address at least four key areas.
One area they want the plan to contain “A detailed framework/modality on how to harmonise trade, monetary and fiscal policies of the government. The second is for it to have “Initiatives geared towards diversifying the nation’s foreign exchange earnings which is tied to crude oil at the moment.”
Thirdly, they proposed “Defined role(s) for the private sector to enhance collaborations between the public and private sectors in productive sphere of the economy especially in financing huge infrastructural projects.
And lastly, the analysts are advocating, “Reforms in the delivery of public institutions cum services and how the government intend to improve the ease of doing business indicators in the country, which should invariably enhance overall productivity of the Nigerian economy.”
The Eczellon Capital analysts noted that, “Irrespective of the content of the plan we reiterate the need for it to be SMART (Specific, Measureable, Achievable, Relevant and Time-bound),” stating that, “Anything short of this may render the ERGP to be another bogus document that may have little or no impact on the economy like previous economic development plans.”