Tuesday, February 14, 2017 7.06 PM / Exclusive
The Economic Recovery and Growth Plan (ERGP), a Medium Term Plan for 2017 – 2020, builds on the SIP and is developed for the purpose of restoring economic growth while leveraging the ingenuity and resilience of the Nigerian people – the nation’s most priceless assets. It is also 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 bottlenecks that impeded innovations and market based solutions.
Nigeria aspires to have a rapidly growing economy with diversified sources of growth, increased opportunities for its people, and a socially inclusive economy that reduces poverty and creates jobs for the millions of young people entering the labour market annually. To achieve these objectives the Federal Government of Nigeria is determined to provide the leadership required to establish a well-governed society with stable macroeconomic conditions, and a dynamic, competitive environment that enables the private sector to thrive.
The ERGP was developed through a consultative process comprising retreats, seminars and round tables with a cross-section of Nigerians. It involved discussions within the Executive, with the National Assembly, the private sector, civil society groups, academia, and international development partners. These public engagements enabled frank and open discussions about the challenges and opportunities for the Nigerian economy in the immediate and medium term.
The ERGP aims to restore sustained economic growth while promoting social inclusion and laying the foundations for long-term structural change. It will focus on providing macroeconomic stability, stimulating priority sectors and tackling critical constraints to long-term growth.
Here are the execution priorities gleaned from presentations made on the ERGP.
To achieve the growth aspirations, the first requirement is a stable macroeconomic environment with low inflation, stable (market reflective)exchange rates and sustainable fiscal and external balances. This requires that monetary, trade and fiscal policies are well aligned to ensure coherence and effective coordination. Non-oil revenue will be accelerated through improved tax and Customs administration, including introduction of tax on socially harmful (e.g. tobacco, alcohol, etc.) and luxury (e.g. private jets, motor vehicles, etc.) commodities. This would ensure a more diversified fiscal revenue base away from the current dependence on crude oil and gas. Fiscal consolidation will also be pursued through cost cutting measures that include rationalization of overheads and recurrent expenditures and sub-national fiscal coordination. Selected national assets will be privatized to reduce fiscal burden of the privatized institutions on the government. To avoid any reversal to the fiscal regime of fuel subsidy, Government will put in place an automatic fuel price adjustment mechanism to safeguard against changing economic realities.
Agriculture and Food Security:
Agriculture has contributed to GDP growth in Nigeria in a consistent manner. The sector grew by 4.88 percent in Q3 2016 and by as much as 13 per cent in previous years, suggesting immense unrealized potential. Investments in Agriculture can guarantee food security, have the potential to be a major contributor to job creation, and will save on the foreign exchange required for food imports. Successful harvests will also help to reduce inflation and promote economic diversification. ERGP focuses on the needs of the people by prioritizing food security as a critical national objective, and plans are already in place for national self-sufficiency in rice by 2018 and wheat by 2019/2020.
Energy (Power and Petroleum Product Sufficiency):
The Energy sector is fundamental to development across all other sectors of the economy. The ERGP will address issues of energy from the perspective of electric power and the petroleum sector. With regard to the power value chain, efforts will be concentrated on overcoming challenges related to governance, funding, legal, regulatory, and pricing across the three main power segments of generation, transmission and distribution, and ensuring stricter contract and regulatory compliance. The ERGP aims to achieve 10 GW of operational capacity by 2020 and to improve the energy mix including through greater use of renewable energy. The Plan also aims to increase power generation by optimizing non-operational capacity, encouraging small-scale projects, and building more capacity over the long term. Government will also invest in transmission infrastructure.
With regard to the oil and gas sector, the intention is to increase the production of crude oil and gas while adding value in the downstream petroleum sector. Success in both power and petroleum will entail major outcomes:
Industrialization Focusing on Small and Medium Scale Enterprises:
The strengthening of small-scale businesses & the promotion of industrialization are priorities for economic recovery. Nigeria’s manufacturing sector has been particularly vulnerable to the stagnant economic conditions. It contracted by 4.38 per cent in Q3 2016 (down from 13 per cent in previous years) largely due to the difficulty of accessing foreign exchange to import intermediate goods and raw materials, and falling consumer demand. This contraction is as a result of infrastructural bottlenecks and an uncompetitive business environment. The sector is expected to contribute to growth in the short term through policies to improve the usage of existing capacity, through increased availability of foreign exchange and greater domestic value addition. One major strategy is to accelerate implementation of the National Industrial Revolution Plan (NIRP) through Special Economic Zones (SEZs). The focus will be on priority sectors to generate jobs, promote exports, boost growth and upgrade skills to create 1.5 million jobs by 2020.
A revitalized manufacturing sector will create jobs, stimulate foreign exchange earnings and grow the important micro, small and medium enterprises (MSMEs) which have greater importance given their contribution to economic activity. Further, the involvement of small businesses in the service sector is a major lever for economic recovery. The service industry accounts for 53 per cent of GDP and contains key sectors that can contribute to short-term economic growth and longer-term structural change.
While the telecommunications and information and communications technology services (ICT) sector grew in absolute terms by 9.26 per cent in Q3 of 2016, it offers huge scope for further growth, especially from opportunities in the digital economy. Creative industries, especially music and film, also have great growth potential, as do both financial services and tourism.
These four priorities are to be underpinned by a focus on governance and delivery, which have been identified as crucial to the successful implementation of the Plan. Transparent, effective and fair governance is being deepened through the continued fight against corruption, strengthening the security system, public service reform, and reinforcing sub-national coordination.
Across all of these areas, the ERGP lays out a total of 60 strategies that will collectively bring about the overall objective of inclusive growth through structural economic transformation. Each strategy has a clear set of activities associated with it and a budget allocation for which the responsibility lies with a Ministry, Department or Agency of the Federal Government.
The delivery mechanism will be a major determining factor in the successful implementation of the Plan. To this end, the implementation strategy focuses on prioritising the identified strategies, establishing clear system of accountability for well-defined assignment of responsibilities, setting targets and developing detailed action plans, allocating resources to prioritised interventions, creating an enabling policy and regulatory environment, developing an effective monitoring and evaluation system to track progress, and using effective communication strategy.