Peter Uzoho examines efforts by the federal government to mobilise private sector investment through the Economic Recovery and Growth Plan
Although the federal government has continued to push through its Economic Recovery Growth Plan (ERGP), there appears to be limited understanding of the huge potential the initiative has for the country.
When the ERGP was launched in 2016, it was aimed at stimulating the economy, activating growth of non-oil sectors and delivering a robustly diversified and sustainable economic growth and development.
Also, it was designed to among others, sustain private sector growth, help businesses grow capacity, and remove bottleneck to business growth.
In less than a year, the implementation of the plan has contributed to the positive momentum recorded by the country.
For instance, in last year’s World Bank Doing Business index, Nigeria jumped 24 places and was listed among the 10 most reforming economies globally, feats that have attracted wide applause and commendation for the federal government’s economic policies.
Also, there are noticeable improvements in key economic indicators including declining inflation, foreign exchange rate stability, rising foreign reserves and Nigeria’s improved ranking in ease of doing business index.
Indeed, the federal government through the ERGP has demonstrated commitment to restoring growth and provide strategic economic direction for the country over the medium term, 2017-2020, with a target of seven per cent growth rate by 2020 and 15 million jobs over the plan period.
The ERGP articulates government’s vision for the country and lays the foundation for long term growth.
The underlying philosophy is to optimise local content and to empower local businesses.
The three strategic objectives of the plan are to: restore and sustain growth; invest in the people; and build a globally competitive economy.
The Focus Lab
In line with the administration’s economic focus and direction, which includes restoring growth and building a competitive economy, the ERGP Focus Labs were inaugurated to drive new investments that would create hundreds of thousands of jobs for Nigerians across the 36 states of the federation and, in the long-term, continue to grow the economy.
The ERGP Focus Labs constitute one of the many initiatives introduced to further facilitate the implementation of the plan and consolidate the economy’s recovery.
“The Labs in Nigeria are designed as closed-door investment platforms to identify and accelerate high-impact projects with significant impact on Gross Domestic Product (GDP) and job creation,” President Muhammadu Buhari had said.
The initial focus areas of the Labs are: agriculture and transportation; manufacturing and processing and power and gas.
The focus on agriculture and transport is to increase private sector investments in selected crops and products (agro-business) and to provide necessary transportation infrastructure that would enable transportation of agricultural products, so as to provide a major boost to the agricultural sector.
On manufacturing and processing, the focus is to increase private sector investments in selected manufacturing sub-sectors and products and the processing of selected solid minerals in Nigeria; while on power and gas, the focus is to increase private sector investments in both sectors.
That is, electricity generation across its value chain and energy mix, and the gas industries including expansion of the domestic market.
Before now, investors in agriculture faced difficulty in accessing lands and occupancy related documentations. Other challenges they faced included non-existent of access roads to project sites (weathered roads, erosion etc), lack of power supply, lack of water supply, difficulty in accessing incentives prescribed for agricultural projects, heavy import duty cost on agricultural equipment(s), difficulty in accessing loans from banks due to protracted processes and stringent requirements, and prize competitiveness of local farm produce like start when compared to the imported products due to low import duty.
The Central Bank of Nigeria (CBN) through the Focus Labs created awareness for accessible financial options for investors.
Also, investors were made aware of the availability of services in the supply of electricity, water and road networks by the ministry of Agriculture to the investors and the processes in enjoying thus.
Also, through the Focus Labs, investors were made aware of incentives applicable to them within the agricultural sector.
The federal government had disclosed that requests for permits on transportation were vetted and approved during the Focus Labs. Also, through consultations, agreements were made to increase the tariff on imported starch to be competitive in pricing with the local starch.
Through networking at the Focus Labs, ideas shared helped in the maximal growth and utilisation of resources for investors within the sector.
On power, findings also revealed that the focus Labs helped create a platform of engagement and direct discussions between the public sector representatives which included the Minister of Power, permanent secretaries, and key representatives alongside private investors.
A major criticism that trailed past efforts at development planning in Nigeria has been the weakness of implementation.
To further consolidate the improvements recorded in the economy, the federal government decided to conduct sector-specific labs as part of the implementation strategies of the ERGP.
For instance, the Focus Lab which is a problem-solving platform that focuses on tackling issues faced by an entity through an iterative trouble-shooting process.
The idea of adopting the Focus Labs to fast-track the attainment of the strategic objectives of the ERGP was the outcome of the Federal Government Cabinet Retreat on ERGP Implementation held in Abuja in August 2017.
After that, in February 2018, the federal government commenced Wave 1 of the ERGP Focus Labs to accelerate the implementation of the ERGP.
For six weeks, the participants of the labs, made up of both public and private sector representatives, rigorously drilled down the issues with the projects presented, and brain-stormed on how to resolve these issues, and the bureaucratic reforms needed to fast-track the development of Nigerian economy.
The ERGP Focus Labs, therefore, was intended to ramp up implementation and delivery of the strategic objectives of the ERGP by unlocking private sector capital in some key areas of the economy.
“Government resources alone are insufficient to finance the projects/programmes in the ERGP. The conduct of the Labs is also consistent with the underlying principles of the ERGP to leverage the power of the private sector in driving economic recovery and sustained growth.
“The progress we have witnessed during the gallery walk in the various labs reflects the enormous amount of work put in the past three weeks,” the Minister of Budget and National Planning, Udoma Udo Udoma said, adding that “data from the three labs show that we are on course to meeting our target of $25 billion investment commitment.”
Significant progress was made at the end of the Labs. Generally, the Labs were able to identify 164 projects spread over the six geopolitical zones of the country with a total potential investment worth $22.5 billion and 513,981 jobs by 2020.
Of this amount, $10.9 billion worth of private investments were categorised as ‘most ready’ to go.
Specifically, disaggregating with respect to each of the work-streams, $4.73 billion worth of investment was identified in the agriculture and Transport Lab, with a potential to create about 129,000 jobs; $9.25 billion investments, with a potential of 378,000 new jobs, were identified in the Manufacturing and Processing Lab, while $8.57 billion worth of investments was expected from Power and Gas, with the potential to create 7,000 jobs.
According to the government, the investment projects unlocked in this initial set of the ERGP Labs extend beyond 2020.
By projection, the cumulative investment value of the identified projects is expected to reach $39.12 billion by 2025 and about 716,079 jobs would be created.
In specific terms, the Labs were intended to: identify projects that would drive catalytic growth and impact and that have the capacity to contribute by increasing private investments and creating new jobs for Nigerians; unlock private investments that are stranded/stalled due to red-tape and bureaucracy, breakdown ‘silos’ to harness private-public partnerships; develop clear, down-to-earth implementation plans for each Entry Point Project (EPP), with identified budgets, key individuals responsible for these activities and accountable lead ministers, along with key performance indicators (KPIs).
On his part, Vice President Yemi Osinbajo, pointed out that the ERGP Focus Labs succeeded in identifying more than $22.5 billion in private investments from about 164 projects, which could be unlocked.
“Of this amount, $10.9 billion of them are what we call ‘Most Ready’ projects, that is, we are almost sure to unlock these projects and accelerate their delivery by the private sector. “These projects are forecast to create more than half a million new permanent jobs for the people of Nigeria up until the year 2020, demonstrating the far-reaching impact of the ERGP Focus Labs in unleashing a brighter future for our country.”
“The ERGP is unlike others introduced by governments in the past. At its core is a focused approach to its implementation, supported in particular, by the highest level of political will, from the President himself through to our civil servants on the ground… It is no longer business as usual for us in government”, Osinbajo said.
He said following the six weeks of lab work, which included the participation of around 300 individuals from the government, working to resolve issues and problems presented by captains of industry, “we as a government are clearer today as to what we can do today to remove the regulatory and bureaucratic bottlenecks within the ambits of the law.”
“The reality is that if we say that we are committed to improving the business environment and serious about making our economy more market-driven, we cannot but take the outcomes of the Labs very seriously.”