Atiku’s Economic Policy: Separating Fact from Fiction

Atiku Abubakar

Tunji Andrews

One phenomenon that seems to always follow the Nigerian election cycle, is the polarisation it throws the country into. With every single candidate putting fort grand proposals and agendas, in the hope of office. Politicians, especially those aiming to be elected to the office of the president or governor of a state tend to infamously for promise more than can be realistically accomplished.
This common development undoubtedly causes voters to feel betrayed and unrepresented. However, more often than not, they continue to fall prey to similar grand gestures the following election year.

While the economy is on a slow recovery road, after falling into a recession, it is almost a given that the economy would be the key focus of every campaign promise.
With the premise that Nigerians will vote for whoever is able to create dramatic change, or at the very least, promise it.
The Atiku campaign manifesto and its focus on the economy is well documented.
The 186-page document designed to get ‘Nigeria working again’ is quite an interesting read and pretty much covers all the core issues of the Nigerian economy. However, one central problem with the document is that, it says a lot without really saying much – heavy on rhetoric, but lacking in quality details to the problems.

Economic Development
The document goes straight into it by saying he (Atiku) will, “create a sound, stable and globally competitive economy that is diversified with a mix of output from a ‘technologically- enabled agriculture’, a ‘vibrant and globally competitive manufacturing sector’ and a modern services sector.”

The challenge with this statement, is that it is seeking a solution to a problem that does not exist. The national bureau of statistics has put broadly the number of sectors contributing to the economy at 6, which are further broken down into 45 sub sectors; so the question of diversifying the economy is mute. What needs diversification however, is the government’s revenue, to which the plan touches upon briefly and vaguely to say “with regards to fiscal resources, we recognise the imperative to broaden Nigeria’s resource horizon, maintain spending efficiency and reform internal revenue generating machinery.”
How it plans to do this, was not mentioned.

Policy Priority: Growth Drivers
The Atiku team says it plans to more than double the size of the Nigerian economy in six years, taking the nation’s GDP from $375.8 billion to $900 billion by 2025. The plan then goes on to make a small arithmetic error of assuming that the nation’s population size would remain at 180m by 2025; by saying it expects to “raise Nigeria’s GDP per capita from the current levels of approximately US$2,000 to US$5,000”. All of this is however predicated on the hope that Nigeria would grow at an average of 10 per cent GDP annually. This all falls apart with one of the three main growth pillars it put up, saying that “We shall accelerate investment to double our infrastructure stock to approximately 50 per cent of GDP by 2025 and 70 per cent by 2030.” This looks like a plan until you read the next line which expresses the ‘how’ of this rise, where it says it “will require a commitment to invest a minimum of US$90 billion annually in the next 5 years to finance all the core public infrastructure projects.” $90bn annually comes to N32.4 trillion annually (It helps to note that Nigeria currently struggles to finance its current N8 trillion budget).

Increasing the Flow of FDI into Non-Oil Sector

A key component of the plan’s economic drive is on how to drive FDI into the country. Where it states that “we shall attract and increase the stock of our investment from 15 per cent to 35 per cent of GDP within five years and FDI shall be a key component.”
This at current GDP and FX rates is from $56 billion to $131.2 billion yearly. The total capital importation into the country, comprising of both Foreign Direct Investments (FDI) and Foreign Portfolio Investments (FPI), in 2017, was at $12.2 billion. Ambitious to say the least, as all of this is hinged on the hope that investment will come flooding in, once they provide incentives to attract foreign investment, strengthen credit guarantee initiatives of Infra-Credit, achieve the lowest corporate income tax rate in Africa and achieve lower transactions costs. With little room for the question, ‘What if it does not’

Promoting the Agricultural Sector
The core of the plan’s agriculture thrust is on increasing agricultural output from the current level of N23.85 trillion to about N40 trillion by 2025. This would imply an annual growth in agricultural sector from 4.11 per cent to 10 per cent between 2019 and 2025. It then goes on to focus on production and land reform with states but does not make mention of how to curb agric produce wastage in the country, talk less of how to fix it. It is estimated that Nigeria Nigeria’s food waste has hit 80 per cent as against the global average of 33 per cent. The nation, for instance imports over 70 metric tons of tomatoes at an estimated cost of N11 billion annually, despite being one of the world’s largest producers of tomatoes after Egypt. No amount of production increase will solve the problem without key investment in storage facilities across the country. This will curb excess wastages and allow the nation experience food availability all through the year.

Promoting the Manufacturing Sector

The plan hopes to have grown the manufacturing sector’s output from nine per cent to 30 per cent of GDP by 2025. While it is laudable that the Atiku team plans to Improve the level of engagement with the private sector and ensure that all major economic and investment policies are formulated after sufficient prior consultation with the organised private sector, it owns up to not having an idea on how to fix the exchange rate and high lending rate issues. As a matter of fact, a large portion of its manufacturing drive is hinged on the ideas ‘to be generated’ after the elections by the Manufacturers Association of Nigeria (MAN), chambers of commerce and other relevant stakeholders.

Promoting the MSME Sector
The plan for MSMEs is quite interesting, as though it starts by stating that it will “strengthen the sector by removing all identified impediments to its growth and ensuring that MSMEs have strong linkage with the productive sectors of the economy-namely agricultural and manufacturing sectors”; it then goes on to say it will continue to do what has always been done (or at least mouthed) in the sector. It plans to via NISRAL (Nigeria Incentive-Based Risk Sharing System for Agricultural Lending), move towards de-risking for MSME lending. It hopes that NISRAL can mobilise financing for MSMEs by using credit guarantees to address the risk of default. A move that has been attempted by various governmental agencies but which often fails at the point of the Actual Guarantee on default. This plan doesn’t explain the model or where the finances will come from.

Promoting the Oil And Gas Sector
With the world looking to move towards cleaner energy in the coming years, this plan holds nothing new for Nigerians, in terms of revenue focus of the government. In fact the key word for oil and gas in this plan is increase.
• Increase the contribution of the downstream sector to GDP from 0.5 per cent to two per cent (a reality that would easily be met once the Dangote refinery comes online).
• Increase crude production to five million per barrels per day
• Increase regulation
• Increase exploration

The only plausible explanation for having such a wordy policy document which lacks in a real value addition, is the hope that Nigerians would not bother to read the 186 page document or realise that this was probably one of the most outstanding works of fiction to ever come out of Nigeria.

Andrews is the Lead economist at TTAC Africa, an European Union consultant, under the EU SUFEGOR project, a financial literacy advocate and a renowned media personality