Monday, August 26, 2019 / 03:09PM / By FSDH Research / Header Image Credit: The Guardian Nigeria
Congratulations to all the Ministers of the Federal Government of Nigeria (FGN) who were inaugurated on 21 August 2019. Now that the screening process and inauguration ceremony are over, and portfolios assigned, it is time to get the Nigerian economy moving fast to achieve the next level development agenda of the FGN. There are critical pressure points in the Nigerian economy which need to be addressed by urgent fiscal policy actions. The economy is not growing at a rate that can create enough jobs for the high number of unemployed people in Nigeria and for the graduates that enter the labour market each year. Consumer income is very weak and does not support consumption that can stimulate investment. The lives and property in the country need to be protected. There is no adequate infrastructure in the country that can support the quest for a diversified economy. The ratio of interest expenses to revenue of the government is high because of weak government revenue generation. All these and many others need to be addressed.
Government needs to make a rm decision on the best way to allocate the scarce resources of the country. In taking this critical decision, FSDH Research recommends that government should only spend money on those essential services that no other economic agents can provide for the country. Some of these services include security of lives and property, law and order, primary healthcare, compulsory quality and relevant education for all Nigerian children, at least up to secondary level.
Another crucial service is the provision of a supportive transport system in partnership with private sector operators, through various viable project finance models. The Public Private Partnership (PPP) arrangements will encourage injection of private capital in this critical sector of the Nigerian economy. Tolls should be reintroduced across major highways in the country in order to generate income for road maintenance. Government must honour any PPP agreement it enters into with private investors. We advocate the establishment of a special court where commercial disputes are resolved promptly.
There should be an adequate plan for Nigerians to pay for private goods like electricity with well documented modalities from the government to prevent abuse from private sector operators operating within these businesses. FSDH Research recommends that the funds allocated for the payment of subsidy on the Premium Motor Spirit (PMS) and all the intervention funds in the electricity sector be devoted to the provision of quality healthcare and education in Nigeria. These essential services directly affect the welfare of the Nigerian masses. Therefore, there is an urgent need for removal of the subsidy on the PMS pump price and adjustment to the electricity tariff to reflect the true cost of refined petrol and production of electricity.
Immediately after implementing these quick wins, Nigeria must have a documented long-term economic development policy plan that is SMART (Specific, Measurable, Attainable, Realistic and Timely). Many countries, including China, India, Malaysia and Singapore, have used this strategy and the results include provision of shared prosperity for the people. It is time for the Giant of Africa to have a similar long-term economic development blueprint that works. The policy should not be a short-term strategy paper that will address only certain imbalances in the economy. Indonesia, for example, has a 20-year development plan that has been broken into four separate medium-term plans. Nigeria's economic development plan should be a product of wide consultation that any subsequent government will continue its implementation irrespective of the political party in power.
Our estimate shows that the housing deficit in Nigeria is estimated at between N170trillion and N200trillion. This creates huge investment opportunities in Nigeria if there is appropriate support and funding model both from the government and private sector. Citizens of the country should be able to live in decent homes in order to improve the standard of living. Government can have an arrangement with real estate developers to develop low-cost housing schemes for its employees. Government can contribute land in order to reduce the cost of each housing unit. There can be an arrangement where people would be made to pay for the cost of the land in future. There must be an urgent downward review in the cost of perfection of titles and to reduce administrative delays in obtaining title documents. The development of this sector is very important to employment generation in Nigeria as the sector provides job opportunities to skilled, unskilled and semi-skilled workers.
Ongoing support for the agricultural sector should continue. However, there is a need to fund agricultural research institutes that will help to produce seedlings that will increase farm yields. This will encourage more investment in the sector. Port reforms are also urgently needed so that Nigeria can encourage importation and exportation of goods to and from Nigeria. This will increase government revenue. Port reforms that are supportive of exportation will also help the country to diversify the economy from crude oil exports.
FSDH Research notes that providing transport infrastructure is not enough to stimulate the economy. Complementary policies and actions should be put in place. The government should embark on port reforms to boost both local and international trade. Issues surrounding delay in cargo clearance, numerous documentation, and high port charges should be tackled to improve efficiency of the Nigerian ports system.
Our dear ministers, the tasks ahead are enormous, but we know you will not disappoint the Nigerian people. Congratulations again and good luck as you make Nigeria great again.