FG’s road map to economic recovery and the challenges ahead
Two months after the National Bureau of Statistics (NBS) confirmed that the Nigerian economy has contracted by 1.5 percent in 2016, the federal government has released a road map to pull the economy back on the path of growth. Quite detailed, the plan has an idea on how to tackle almost all aspects of Nigeria’s economic challenges. Tagged the Economic Growth and Recovery Plan, the federal government says it is a medium term plan covering 2017 to 2020 aimed at “restoring growth while leveraging on the ingenuity and resilience of the Nigerian people; the nation’s most priceless assets.”
The federal government also says that the plan is “articulated with the understanding that the role of government in the 21st century must evolve from that of being an omnibus provider of citizens needs into a force for eliminating bottle necks that impede innovations and market based solutions. The plan also recognises the need to leverage Science, Technology and Innovation and build a knowledge based economy while also saying that the plan is consistent with the aspirations of the Sustainable Development Goals as set by the United Nations.
As usual, the biggest criticism has been that Nigerian has never lacked plans but the challenge has been implementation of those plans. However, the federal government says that this time it is going to be different. The document states that “focused implementation remains at the core of the implementation of the plan over the next four years.” It states that “More than ever before there is a strong political determination, commitment and will” to have the plan implemented. Unlike previous plans, a delivery unit is being established in the presidency to drive the implementation of key priorities in the plan.” Already, the ease of doing business secretariat has been established at the presidency to drive the removal of bottlenecks in the way business is done in the country. Delivered by that unit is the “Visa on Arrival” initiative aimed at making it easier for foreign investors to come into the country. There are already testimonies that this is already working while reforms are also being targeted in other areas of the economy that is expected to be delivered within a 60-day target.
The federal government also states that this plan differs from previous plans because it has some “bold new initiatives.” These include a plan to ramp up crude oil production to 2.5 million barrels per day by 2020, privatising selected public assets and enterprises and revamp local refineries to cut Nigeria’s dependence on imported petroleum imports by 60 percent in 2018. The federal government also says it plans to engage in environmental restoration projects in the Niger Delta while oil revenues will now be used to diversify the economy and not just to support consumption as was done in the past. Other areas that the current plan is different from previous plans, according to the federal government is the fact the government intends to have a closer collaboration with the private sector in its implementation while the merger of the national planning office and that of budget means that future budgets will be shaped by the plan.
So now basically there is a plan to get the Nigerian economy moving again. This comes as a huge relief to the business community which had always clamoured for some form of economic direction from the government. But as with previous plans, the challenge is in the implementation. Players have rightly asked for clear timelines for several of the initiatives already outlined in the plan. For example, it would be great to see timelines in the privatisation initiatives of the government and especially the assets that the government intends to put on sale. This is critical for the private sector in terms of those that may be interested in the acquisition of the assets and also the potential competition that could be created in the private space when these assets are no longer in government hands. Another elephant in the room is the resolution of current foreign exchange situation based on market based principles as captured in the plan. The private sector will be happy to see some timelines around the potential move to a more market based foreign exchange management framework and also how the government seeks to tackle other non-market based tariffs for power, and fuel prices.
But the biggest challenge actually facing the implementation of the growth and economic recovery plan is the looming 2019 elections. The Independent National Electoral Commission (INEC) release on 10 February of a tentative timeline for future elections will significantly influence the implementation of the plan. INEC with the release of the draft timeline has put politicians in an election mood and politicians in an election mood are unlikely to make tough economic decisions that are politically unpopular. This may mean the critical market based decisions to drive economic recovery are not likely to be made if they are likely to be politically unpopular.
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