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The Good And The Bad Of Nigeria’s Economic Recovery, Growth Plan - Politics - Nairaland

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The Good And The Bad Of Nigeria’s Economic Recovery, Growth Plan by slivertongue: 5:57pm On May 24, 2017
Nigeria’s Gross Domestic Product contracted twice in 2016 which resulted to economic recession that affected and still affecting macro and micro economic indicators of the country. Since its development, Federal Government has been working out modalities to take the economy out of it through various policies, being implemented casually before launching Economic Recovery and Growth Plan (ERGP) in April, 2017. The plan has been analysed from different perspectives by the economists and analysts on its potentials or otherwise. Some believed that the plan is capable of rescuing Nigeria’s economy from recession while others identified numerous factors capable of impeding its full implementation.

Apart from the GDP use in figuring out country’s readiness to leave recession and whether a recovery is in progress, inflation, financial markets and unemployment rate have also been favoured by the economists. Diagnosis, guiding policy and coherent actions are the kernels of a good plan. By guiding policy, a recovery plan is expected to have approaches that would deal with the obstacles identified during situational analysis, marking the direction forward but not defining the details of the trip. Coherent actions are feasible coordinated policies, resource commitments, and actions designed to carry out the guiding policy. In other words, recovery and growth plan should be embedded with the goals and slogans with commensurate mechanisms towards its realization. Approaches to Recovery and Growth To revamp and ensure sustainable growth of the economy, government proposes four core areas – macroeconomic stability, economic diversification and growth, competitiveness and business environment, governance and security. Our analysis shows that more preference was given to economic diversification and growth, and competitiveness and business environment than other areas. EGD had 125 guiding policies while CBE had 32 guiding policies.
Coherent Actions With 164 and 160 coherent actions for economic growth and diversification, and competitive and business environment respectively, the two areas are more important to the government compare to other problems being experienced. Further analysis shows that government has 46 Ministries, Departments and Agencies (MDAs) as resources that would be committed to the plan’s implementation. The share of the resources analysis establishes that 40% of the resources would be expended on attainment of EDG’s activities while CBE would have 30% followed by macroeconomic stability with the 20% of the resources. Suffice to note that government and security is left with the remaining 10%. This however calls for concern on having robust mechanism for the proper coordination of the activities towards the realization of the strategies highlighted in the plan because good governance is a pre-requisite in building an enabling environment for economic diversification.
Within EDG component, government intends to achieve various activities in seven sectors of the economy. On the provision of feasible coordinated activities, agriculture and manufacturing sector tied on 24 activities, while services had 28 activities followed by oil and gas which had 18 proven activities.

Solid minerals which has been favoured by government and concerned stakeholders on different fora as one of the main areas for the right economic diversification and growth had 10 activities compared to oil and gas which had 18. Surprisingly, the resource commitments to the actualization of the activities differed across the sectors and the enabler. Our analysis reveals that 8 resources would be dedicated to manufacturing with 24 activities while services despite its highest number of activities had 4 resources. In line with this analysis, there are indications that Nigeria will continue to be a monolithic economy for years. On the approach developed to realise the activities, we found that services sector had the highest number of approaches. The sector was favoured with 28 approaches followed by agriculture (26) and manufacturing (24) . Again, solid minerals had the least approaches. This has the likelihood of working against Nigeria of being one of the most diversified and competitive countries in the world by 2020. Beyond this, diversification would be conducive to faster economic growth. Government’s readiness to invest in the exploration of oil at the Lake Chad Basin is another pointer that the country still prefers revenue from oil and gas sector than agriculture, solid minerals and does not suggest is thinking less of oil as core export revenue earner. Nigeria has a lot to learn from United Arab Emirate formed in 1971. To be competitive, UAE has constantly implemented its diversification from petroleum policy. The country is now a global financial, export and re- export and a significant trading centre in the world. Recent analysis placed the country on a ‘buffer zone’ against oil price decline and global economic stagnation due to intensive investments in non- energy sectors such as infrastructure and technology. Investing in people, infrastructure and business environment are considered worth pursing under the competitiveness and business environment component. Investment in human capital had the highest approaches (20), feasible coordinated activities (66) and resource commitments (13). Despite the government’s strong emphasis on increasing competitiveness through the Presidential Enabling Business Environment Council initiative established in early 2016, the plan has one approach towards executing 24 activities using 7 resources. Infrastructure which has every tendency to ensure better business environment had 11 approaches and 11 resources. These point to the fact that having the right and competitive environment for local and international businesses before and by 2020 remains infeasible, especially meeting the initial target of moving up 20 places in the World Bank’s Doing Business Ranking.

It would be recalled that Nigeria ranks very low on the 2017 World Bank index on the Ease of Doing Business, maintaining the 169th position out of 190. As espoused by seasoned economists and analysts, Nigeria needs to pay special attention to domestic investment, exports, imports, domestic innovation, inbound foreign direct investment, outbound foreign direct investment because they are the key indicators and enablers of country’s competitiveness and productivity growth. The right Implementing Strategic Options Strategic options available to the government and MDAs responsible for the implementation of stated activities within the identified 60 strategies constitute main focus of this section. Straddle strategy option, which involves buying a call and put, was considered appropriate. This is further divided into long and short straddle and conceptualized as matching the current gains in each component and remain focused on the actualization of the new sets of distinctive activities. With the both, we were able to determine time all resources need to spend in attaining the feasible coordinated activities. Our analysis establishes that activities within agriculture, manufacturing, services, oil and gas, growth enablers, infrastructure, business environment, and investing in people are better achieved within 2 years than 4 years. Same result was discovered for activities in infrastructure, business environment and investing in people. However, solid minerals’ activities are better achieved within 4 years than 2 years.

When the strategies were mapped with the coherent actions, we discovered create a more business friendly environment, integrated transformation of agriculture sector, accelerate non-oil revenue generation, drastically cut costs operating and capital expenditure, and increase power generation to have more coherent actions than the others. Out of these strategies, create a more business friendly environment had 24 coherent actions which fall within competitive business environment followed by integrated transformation of agriculture sector (24) entrenched within economic growth and diversification. The degree of fitness analysis conducted on the activities stated for all the strategies to determine both attainability and sustainability shows that with over 39% of the activities within economic diversification and growth were reinforced while 43% of activities in competitiveness and business environment had simple consistency of fitness, signifying alignment of all activities with the overall strategy.

Activities within economic diversification and growth would serve few needs of many, those in competitiveness and business environment would serve broad needs of few. We also found that activities within macroeconomic stability would serve broad needs of many in a narrow way while those in governance and security would serve broad needs of few. These are the patterns of value Nigerians and entities would derive from the various activities stated in the plan. These three patterns of value would emerge when the resources use distinctive sets of activities, a tailored set of activities and different set of activities to reach beneficiaries in the best way. Beyond Implementation’s Rhetoric Absence of timelines, legal backing, enormous activities and lack of performance monitoring indicators are the core inadequacies experts found in the plan while prioritization of key activities and overhauling of implementation process are suggested as specific factors towards the effective implementation of the plan. Choosing manageable activities Selection of two items in the plan rather than focusing on all the projections is being considered as the best approach to execution of all the strategies. Attainment of energy sufficiency and efficiency in transportation is being preferred as key item that would propel other items in the plan towards the right direction. Development and deployment of necessary tools would help in unlocking the chosen primary activities. ‘Killer apps’ such as artificial intelligence could be used. Apart from attaining specific targets for the energy and transportation, revenue generation should also be increased. Before the increase could be achieved, government needs to stimulate economy by pumping money into it that is fiscal stimulus. Political risks The electoral activities that would commence by 2018 have been seen as one of the political threats to the plan’s realization. Experts were of the view that political officeholders who are at the core of implementing the plan would be busy on working out modalities for their electoral victory in all ramifications. It was also observed that government spending is at high level during electoral process which usually increases inflation rather than productivity growth. Thus, 2019 general election poses a threat to the ERGP’s goal of subduing inflation to single digit level by 2020. According to them, this will definitely shift their attention from carrying out activities that might be slated for the year. In addition, change in government in 2019 will undeniably affect the implementation because Nigerian politicians have been known for changing policies and programmes of their predecessors, especially those that are not aligned with their ideologies and philosophies. Putting the economy on the path of full recovery would also be hampered by the challenge of political will by the government. Formulate enabling laws Specific laws need to be enacted to back up the ERGP’s implementation. Having a Delivery Unit in the Presidency to assist the Ministry of Budget and National Planning is not sufficient. The Unit lacks capacity to discharge its duties because it is not emanated from any law. Therefore, there is a need to have ‘Economic Recovery and Growth Bill’ to the National Assembly, to take care of all issues specific to the ERGP distinct from the current Fiscal Responsibility Act of 2007 which focuses on annual budgets and the three year Medium Term Expenditure Framework. Leading roles Office of the Vice President is expected to take the leading roles in the implementation of the plan. Idea of having private sector as part of the main stakeholders towards the implementation is good but it ought to have been stated clearly and how it would be achieved. Absence of right directions and performance metrics There is consensus among the experts on the non- availability of the specific directions, lack of sufficient crisis response mechanism and key performance indicators in the plan, pointing to implementation process and evaluation. Expectation was that criteria for taking items and executing them, and how the criteria would be met should have been stated in the plan. Beyond defining the criteria, performance management should be reflected and become targets by which every minister and public office holder would be measured. It was suggested that performance should be measured every quarter using 80 to 100 per cent for excellent (green mark), 60 to 79.99 per cent as good (amber mark), and below 60 per cent unacceptable (red mark).

Overhaul of institutional framework and stronger coordination between fiscal and monetary authorities There is need for an overhaul of institutional framework and stronger coordination between fiscal and monetary authorities. Ministries, Departments and Agencies (MDAs) that would drive the policy need to work at cross purposes, the purpose would be achieved. In specific terms, all the institutional structures that would be deployed need reformation.

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