Sunday, June 20, 2021

    Economic turnaround: What can Buhari’s ERGP do for Nigerians?

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    Naija247news Media, New York
    Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

    An Open Day, being organised by the Ministry of Budget & National Planning will tomorrow drop the curtain on the first phase of the Economic Recovery and Growth Plan (ERGP) Focus Labs. The ERGP is designed to restore the economy after the exit from a painful recession. But, like several other policy documents before it, the implementation of the ERGP blueprint will decide its fate, writes COLLINS NWEZE.

    MORE than one year after the Federal Government unfolded its Economic Recovery and Growth Plan (ERGP), the Ministry of Budget & National Planning will tomorrow mark the end of the first phase of the ERGP Focus Labs with an Open Day.

    The ERGP was unfolded as economic blueprint in January last year to get the country out of recession and attain stability and growth.

    It itemised the potentials in the economy and how they can be harnessed for economic growth and development.

    Tomorrow’s open day, billed for the International Conference Centre (ICC) in Abuja, will be flagged off by the Vice President, Prof. Yemi Osinbajo. It will be attended by the lead sector ministers involved in the first phase of the labs.

    The Focus Labs are designed as workshop-style closed-door investment fora between private sector and senior government officials. The labs serve as forum for detailed discussions and interactions to address some of the bottlenecks and inhibitors of additional business investments in the economy.

    The Open Day is expected to present the outcomes of these initial Labs and elicit feedback from the public. Besides presenting lab outcomes for their sectors, the lead ministers are to discuss the way out of the identified bottlenecks and to pave the way for investments that can create jobs.

    The Labs produced 67,200 man-hours of effort within a six-week period, involving 180 organisations, including the relevant ministries, government agencies, authorities and private sector companies.

    Commenting during the last week of the Labs, Budget & National Planning Minister Udoma Udo Udoma said: “Over the last few weeks, participants in the Labs have had an opportunity to engage the government directly on the complex inter-agency issues that hinder investment.

    “The frank and open discussions between investors and nine cabinet ministers and their teams, as well as several agencies and departments, are a critical first step to building trust and credibility between the public and private sectors and harnessing important partnerships that will unlock key investments to diversify the economy and create wealth and employment.”

    The ERGP recognised that Nigeria has the potential to become a major player in the global economy by virtue of its human and natural resource endowments. However, this potential, it said, has remained relatively untapped over the years.

    Analysts said the ERGP content shows that government is approaching the nation’s economic challenges with the same zeal with and commitment it had demonstrated in the fight against corruption and economic crimes.

    They believe the ERGP had brought together all the sectoral plans for agriculture and food security, energy and transport infrastructure, industrialisation and among others means to revive the economy.

    After a shift from agriculture to crude oil and gas in the late 1960s, Nigeria’s growth has continued to be driven by consumption and high oil prices.

    “Previous economic policies left the country ill-prepared for the recent collapse of crude oil prices and production. The structure of the economy remains highly import-dependent, consumption-driven and undiversified,” they argue.

    The ERGP, a Medium-Term Plan for 2017 – 2020, builds on the Strategic Implementation Plan (SIP) and has been developed for the purpose of restoring economic growth while leveraging the ingenuity and resilience of Nigerians people – the most priceless assets.

    It has an understanding that the government’s role in the 21st Century must evolve from that of being an omnibus provider of citizens’ needs into a force for eliminating the bottlenecks that impede innovation and market-based solutions.

    The plan recognises the need to leverage Science, Technology and Innovation (STI) and build a knowledge-based economy. It is consistent with the aspirations of the Sustainable Development Goals (SDGs), given that the initiatives address its three dimensions of economic, social and environmental sustainability issues.

    However, stakeholders believe that cost reduction strategies for achieving greater macroeconomic strategy and realising the goals of ERGP.

    Financial analysts believe that every Nigerian will benefit from efficiency in management of available resources, adding that efficiency management of resources will achieve the ERGP goals, and save more funds for implementation of more projects.

    They said: “Government should be seen as business of service and not means of acquiring wealth. The ERGP is key in helping government realize its objectives.”

    Speaking on the sidelines of the just concluded 2018 Spring Meetings of the International Monetary Fund (IMF)/World Bank in Washington D.C., Udoma said the ERGP has attracted positive responses from the public which shows there are many opportunities for investment in Nigeria beyond the oil sector

    The minister told reporters at the meeting: “At the moment, the focused labs are being conducted in agriculture, transportation, power and gas, manufacturing and processing. The response has been very good.

    “We are looking forward to organising an open day in which we will share the results with the Nigerian public, that should be in the next one or two weeks. So, that is going well and I am very encouraged by it.”

    He said the focus of the ERGP is to generate more revenue and revive key segments of the economy.

    Udoma said: “As you are aware, we have the tax amnesty to try and increase the tax revenues being generated. We are looking at some of our excise duties and so the focus is to generate more revenues. Our problem is not a debt problem, our problem is a revenue problem and so we are focused on generating much more revenues.”

    On economic growth, the senator said the country targets seven per cent growth by 2020, a figure he said would make him comfortable. “Our target is seven per cent growth by 2020; that will make me comfortable; above seven per cent will make me even much more comfortable.

    “And that is why we are working so hard. Even though we are working so hard, the rate of growth is still too slow. So, we will like it to pick up and that is why there is a need to work hard. They say the result for good result is more hard work and so we are poised to continue to focus on the various measures on the ERGP. We believe that we are already seeing some positive results and we believe that we will get it.

    “I think the key is revenues, we just have to make sure that we have a broad-based growth that we are growing in agriculture and other areas within our control. I think that is what we are trying to do, that is the best measures we can take.

    “In terms of inclusiveness of growth, as you know, this is a government that is committed to making sure that we carry everybody along. And that is why we have the social investment programme in which we have committed N500 billion every year in the budget, the school feeding programme, the Government Enterprise and Empowerment Programme (GEEP). So, we have a number of programmes to make sure nobody is left behind.”

    Udoma said that judging from the series of meetings he has been having with private investors, it was evident that investors are interested in Nigeria.

    He said: “Many of the investors I have met have shown interest in the investment opportunities we are creating through the initiatives and reforms in the ERGP and are desirous of coming to explore them.

    “They have seen that this is the right time to come to Nigeria. They have seen how committed the government is towards improving the business environment, in removing constraints to investments, in diversifying the economy, and in partnering with the private sector on infrastructure development.

    “I am very encouraged by the fact that the positives development in Nigeria are being recognised. The positive developments about economic recovery and growth plan, the things that we are doing to encourage investment, make Nigeria more investment friendly. I’m happy that all those are being recognised. And the fact that the economy is out of recession and is growing again is also being recognised and the fact that growth is not dependent solely on oil. That there is growth in agriculture and other areas, so it has been a positive meeting for me.”

    A Lagos-based economist, Michael Obi, said the government can be efficient in a productive process. He said that having a progressive economic plan provides opportunity for the government to be efficient in the management of resources.

    According to him, the economy must be diversified and real sector promoted for the real benefits of ERGP to be realised.

    His words: “For the economy to grow, the real sector has to be promoted. There is need to manage inflation, reduce cost of borrowing and have efficient exchange rate for the economy to thrive. Government has to implement budget efficiently, for it to realise set objectives.”

    The Efficiency Unit, domiciled at Federal Ministry of Finance, is expected to review all government overhead expenditure. Its aim is to reduce wastages, promote efficiency and ensure quantifiable savings for the country.

    The unit works across all Ministries, Departments and Agencies (MDAs) to identify and eliminate wasteful spending, duplication and other inefficiencies. It also identifies best practices in procurement and financial management and share such knowledge with the MDAs to ensure its adoption.

    “Findings of the Efficiency Unit will be formally communicated accordingly and will be enforced through establishment of expenditure guidelines, undertaking follow-up reviews and spot checks”, a Finance ministry report said.

    It went further: “Other measures that will ultimately checkmate wastage across all areas of Federal Government expenditure will also be adopted.”

    According to the statement, the development is based on the fact that presently, the nation’s recurrent expenditure completely dwarfs capital expenditure by a ratio of 84/16.

    “This includes non-wage related overhead expenditure such as travel costs, entertainment, events, printing, IT consumables, stationery,” it said.

    The ERGP also indicated that oil accounts for more than 95 per cent of exports and foreign exchange earnings while the manufacturing sector accounts for less than one percent of total exports.

    According to the report, “the high growth, recorded during the 2011-2015, which averaged 4.8 per cent per annum and mainly driven by higher oil prices, was largely non-inclusive.

    “Majority of Nigerians remain under the burden of poverty, inequality and unemployment. The General economic performance was also seriously undermined by deplorable infrastructure, corruption and mismanagement of public finances.

    “Decades of consumption and high oil price-driven growth led to an economy with a positive but jobless growth trajectory.”

    According to the report, after more than a decade of economic growth, the sharp and continuous decline in crude oil prices since mid-2014, along with a failure to diversify the sources of revenue and foreign exchange in the economy, led to a recession in the second quarter of 2016.

    It said: “The challenges in the oil sector, including sabotage of oil export terminals in the Niger Delta, negatively impacted government revenue and export earnings, as well as the fiscal capacity to prevent the economy from contracting.

    “The capacity of government spending was equally constrained by lack of fiscal buffers to absorb the shock, as well as leakages of public resources due to corruption and inefficient spending in the recent past.”

    It said the current administration recognises that the economy is likely to remain on a path of steady and steep decline if nothing is done to change the trajectory.

    The report said: “It is in this context that since inception in May 2015, the government has made several efforts aimed at tackling these challenges and changing the national economic trajectory in a fundamental way.

    “The earliest action was the prioritization of three policy goals: tackling corruption, improving security and re-building the economy. Consequently, the SIP for the 2016 Budget of Change was developed as a short-term intervention for this purpose. Visible successes and achievements have been recorded.

    “However, it is recognised that more needs to be done to propel the country towards sustainable accelerated development.”

    It said the ERGP differs from previous plans in several ways. First, focused implementation is at the core of the delivery strategy of the plan over the next four years.

    More than ever before, there is a strong political determination, commitment and will at the highest level.

    The report said: “Whilst all the MDAs will have their different roles in implementing the plan, a Delivery Unit is being established in the Presidency to drive the implementation of key ERGP priorities.

    “The Ministry of Budget & National Planning will coordinate plan-implementation and for this purpose will, amongst other things, build up its capability for robust monitoring and evaluation.”

    The plan outlines bold new initiatives such as ramping up oil production to 2.5 mbpd by 2020, privatising selected public enterprises/assets, and revamping local refineries to reduce petroleum product imports by 60 per cent this year.

    Other initiatives include: environmental restoration projects in the Niger Delta, which demonstrate the Federal Government’s determination to bring environment sustainability to the forefront of its policies.

    It said: “As part of this plan, oil revenues will be used to develop and diversify the economy, not just sustain consumption as was done in the past. The economy will run on multiple engines of growth, not just the single engine of oil.

    “The Plan focuses on growth, not just for its own sake, but for the benefits it will bring to the Nigerian people. This plan also places importance on emerging sectors such as the entertainment and creative industries

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