Friday, May 20, 2016 8:48AM/FBNQuest Research
Yesterday we attended an official briefing in Lagos focused on Nigeria’s 2016 Change Agenda. It highlighted the key socio-economic development strategies designed by the FGN to drive economic growth.
Given that the 2016 budget has finally been signed into law, we welcomed the briefing as it shed some light on the government’s proposed direction. Economic reforms, infrastructure, social development and security were identified as pillars of the national development plan.
Diversifying the economy is one of its key strategies. In agriculture the FGN intends to implement measures that should assist in achieving self-sufficiency in agricultural products. Specific targets include tomato paste by the end of this year, rice in 2018 and wheat by 2019.
It seems the FGN recognises mass housing development as a multiplier for the economy. According to its strategy implementation plan, the FGN has allocated N35.6bn (US$178m) for the construction of 7,068 housing units across the six geo-political zones.
Providing housing units would help tenants to transition to becoming home-owners and encourage capital formation. This process can be accelerated if financing support is readily available.
As for transport, N288bn (US$1.4bn) has been apportioned for 26 listed projects. They include the reconstruction of sections of the Benin-Shagamu expressway, the second Niger Bridge, the Lagos-Ibadan road, the Lagos-Kano standard gauge rail line and the rehabilitation of Abuja airport
The power sector is also expected to get a facelift as N9.2bn (US$46m) has been set aside for the execution of projects designed to optimize the country’s 7,000MW installed power capacity. The construction of a 215MW gas power plant would gulp 60% of the total amount allotted. Other plans include the Zungeru hydro power project and the ongoing electrification project in Kano State.
The N500bn social intervention projects have been split into five categories: job creation, school feeding, conditional cash transfers, an enterprise programme and education grants for science and technology. The creation of jobs for 500,000 school teachers and 100,000 artisans accounts for 38% of the total cost.
We look forward to seeing these projects executed; the hike in projected capital expenditure to N1.6trn from N600bn in 2015 should make a sizeable impact on output, if properly managed. In the 2016 budget, GDP growth is optimistically projected at 4.2% for this year.