Nigerian economy is prostrate. Revenue is low, debt is high, cost of debt servicing is soaring, unemployment rate is mindboggling, poverty rate is alarming, inflation is high, foreign exchange rate management is problematic, power supply is epileptic, infrastructure deficit is phenomenal and fuel subsidy bill is skyrocketing. Against this background, SULAIMON OLANREWAJU looks at the programme of the Peoples Democratic Party presidential candidate, Alhaji Atiku Abubakar, to revitalize the economy as contained in his 5-Point Development Agenda and his presentation to the Lagos Chamber of Commerce and Industry (LCCI) recently.
The Peoples Democratic Party’s presidential candidate, Alhaji Atiku Abubakar, is not a novice in economic matters. He served as Nigeria’s Vice President from 1999 to 2007, during which he presided over the nation’s Economic Management Team, he is also a notable businessman with his fingers in many pies. His 5-Point Development Agenda, which he christened, My Covenant With Nigerians, speaks to his understanding of both the challenges impeding the growth of the nation’s economy and the strategies that could spring the economy out of the miry clay.
The PDP presidential candidate hinges his economic plan on three prongs. The first is re-affirming the criticality of private-sector leadership and greater sector participation in development; the second is repositioning the public sector to focus on its core responsibility of facilitation; and finally enabling the appropriate legal and regulatory framework for rapid economic and social development.
To unleash the country’s huge potentialities, Atiku promises to break government monopoly in all infrastructure sectors, including refineries, rail transportation and power transmission to reenact the benefits gained by the country in the oil and gas as well as the telecommunications sectors. He also says he will allow market forces to determine prices. This, according to him, would eliminate the persistent price distortions occasioned by interventionist exchange rate management policy.
According to the candidate, the essence of his economic agenda is to create economic opportunities for Nigerians. Pushing further the need to engender economic opportunities for Nigerians when he was hosted by the Lagos Chamber of Commerce and Industry (LCCI) recently, Atiku said, “Creating economic opportunities for Nigerians will represent significant implication for social cohesion and national security. Increased jobs and income opportunities will reduce the likelihood of our youth being involved in crime, violence and conflict motivated by manipulating religious or ethnic differences.”
He added, “Economic prosperity is an integral part of my 5-point agenda, that seeks to restore Nigeria’s UNITY, strengthen NATIONAL SECURITY, foster ECONOMIC PROSPERITY, improve EDUCATION DELIVERY AND RE-STRUCTURE the polity. Indeed, economic prosperity is the thread that runs through the other critical elements of the agenda.”
Going into specifics on how he plans to redirect the economy to the path of growth and prosperity, Atiku in his agenda, gives the seven strategic steps he would take to implement the economic development agenda. These are; reforms to reposition private sector, investing to increase stock and improve the quality of infrastructure, putting in place policies and measures to optimize the growth potentials of real sectors and MSMEs, harnessing the potentials of the new economy, policies and measures to expand the export base of the economy, increasing flows of FDI into non-oil sector and optimizing the fiscal space to generate more revenues for development.
At the LCCI event, Atiku expatiated on these strategies.
On reforms to reposition the private sector, he said his administration would work closely with the private sector should he win the 2023 presidential election.
His words: “We cannot overcome our economic challenges without significant reforms to re-structure the economy and to support the private sector to unleash its growth potential and play a key role in the economy. A strong, productive, and pro-growth private sector is needed to create wealth, generate employment opportunities, and help fight poverty.”
While noting that the nation’s business environment constrained businesses and hindered them from fully realizing their potentials, he said, “Our administration will be different. We will support the private sector to drive growth. We will establish strong partnership in investing in infrastructure, in creating jobs and income and in the fight against poverty.
“We will listen to the private sector more. Understanding the private sector and securing their buy-in when policies are designed will determine the success of our economic growth and development agenda. Through regular dialogue with the private sector, we will build consensus, improve trust between us and make new reform initiatives easier to implement and sustainable.”
Alhaji Atiku Abubakar, while speaking on how the monetary and fiscal regimes of the country could be improved, said “We will restore investor confidence in the Nigerian economy to take risks and invest capital by taking the following steps:
“There will be more clarity, coherence, and consistency in policy. Nothing could be more threatening to investment flows than an environment that is full of policy flip-flops.
“Our monetary and fiscal authorities will be better coordinated and shall ensure a stable macro-economic environment with low inflation, stable exchange rate and interest rates that will be supportive of businesses’ quest for credit.
“We will allow CBN the independence to pursue its mandate BUT ensure that such policies are not detrimental to Nigeria’s quest for FDI and to Nigeria’s long-term growth. For example, we will push for a foreign exchange policy that encourages capital inflows and makes capital outflows less attractive to the investors.”
On how he would improve electricity supply in the country, Atiku said, “Our administration will consider declaring a state of emergency in the Power Sector to underscore our concerns about the state of affairs in the sector.
“As a short-term measure to ensure enhanced supply within the first year of the new administration, I shall initiate and implement an Emergency Power Programme (EPPs) that can deliver additional capacity in certain key areas.
“Over the medium term, I will then go on to propose a legislation for the removal of the entire electricity value chain from the exclusive list and give states the power to generate, transmit and distribute electricity for themselves.
“Secondly, my policy shall aim at achieving greater coordination of investments in the entire electricity value chain. Investments in additional generation capacity are futile without consideration for the complementary transmission and distribution infrastructure to wheel the additional energy.
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“Thirdly, ahead of procuring additional generation, both transmission and distribution capacities would be enhanced with private sector support for investments. In this regard, we shall incentivize private investors to invest in the development of multiple green-field mini-grid transmission systems to be looped into the super-grid in the medium to long term while allowing the FG focus on policy, regulation, and standardization.”
On investing to increase stock and improve the quality of infrastructure, Atiku said, “The government is currently driving key infrastructural programmes with very limited private sector participation. In the face of dwindling public revenues and given the quantum of resources required to bridge the financing deficit, this is neither feasible nor sustainable.
“We shall incentivize, with regulation and tax incentives, a consortium of private sector institutions to establish an Infrastructure Debt Fund [IDF] with an initial carrying capacity of US$20 billion. This will be for the financing and delivery of large infrastructure projects across all sectors of the economy.
“We will establish an “Infrastructure Development Unit” [IDU] in the Presidency, with a coordinating function and a specific mandate of working with the MDAs to fast track and drive the process of infrastructure development in the country.”
The PDP candidate, while speaking on putting in place policies and measures to optimize the growth potentials of real sectors and MSMEs, said “Within the first 100 days in office, I will create an Economic Stimulus Fund with an initial investment capacity of approximately US$10 billion to prioritize support to MSMEs across all the economic sectors, as they offer the greatest opportunities for achieving inclusive growth.”
He added, “Today, millions of Nigerians go to bed hungry every day. Nigeria must feed Nigerians! We will pursue an aggressive and innovative food production policy that will strongly boost farmers’ access to farm inputs. We will put farmers first!
“My government will ensure transparency in the access of farmers to seeds, fertilizers and farm machinery, as well as processing equipments to boost food production and bring down food price inflation.
“My government will strongly promote private sector investments in agriculture, from seeds to fertilizers, farm chemicals, farm machinery to expand our competitiveness in national, regional and global markets, for commodities in which Nigeria has comparative advantage.
“We will support agro-industrial development for major food crops, livestock, fisheries, and invest heavily in irrigation and climate resilient agricultural systems. We will add value to all of what we produce!”
Atiku, elucidating his plans to optimize the fiscal space to generate more revenues for development, said, “I will undertake far reaching fiscal restructuring to improve liquidity and the management of our fiscal resources. There are five bold steps to be taken:
“First, undertake an immediate review of government spending with a view to eliminating all leakages arising from subsidy payments. With its current precarious fiscal position and daunting development challenges, can Nigeria really afford to forego critical investments in education, health, security etc. and channel scarce resources to subsidizing the lifestyle of its elites?
“Second, stop all fiscal support to ailing State-Owned enterprises. As with subsidy payments, by holding unto these underperforming enterprises, Nigeria is sacrificing investments in critical areas, including education, health, water, sanitation, and rural infrastructure. For example, the first phase in the rehabilitation of Nigeria’s refineries is expected to gulp US$1.55 billion!
“Third, take steps to improve spending efficiency by gradual reduction of government recurrent expenditures. Over the medium term, recurrent expenditures should not exceed 45 per cent of the budget.
“Fourth, undertake a review of government procurement processes to ensure value-for-money and eliminate all leakages
“Finally, focus on non-debt financing by promoting a private sector-led infrastructure development fund for the financing and delivery of key infrastructure projects.”
Speaking on debt accumulation, Atiku said he would be more strategic and more circumspect. To address the debt issue, he said, “I will take immediate steps to slow down the rate of debt accumulation by promoting more Public Private Partnerships in critical infrastructure funding and identifying more innovative funding options.
“I will review the current utilization of all borrowed funds and ensure that they are deployed more judiciously. Specifically, our government will ensure that all borrowed funds are for priority infrastructure projects that would generate income, boost output, and put the economy on the path of sustainable growth.
“I will review the country’s debt strategy by focusing on concessional and semi-concessional sources with lower interest rates and relatively long-term maturity. The government must reduce the issuance of short-dated debt instruments.”
On institutional reforms to engender efficiency and reduce administrative costs, he said “I will introduce reforms that will make the institutions you interface with more efficient. I will streamline their functions and ensure that they focus on their core responsibilities of policy coordination, facilitation and standardization and enabling the appropriate legal and regulatory framework for rapid economic and social development.”
He added, “The private sector is made to deal with too many federal agencies and actors who often make conflicting policy pronouncements as they interact with investors and businesses. The Federal Ministry of Trade and Investment alone has 17 agencies under its supervision: NIPC, FTZA, NEPC, SMEDAN, BOI, NERFUND etc. Many of the agencies lack the technical capacity to deliver on their mandates efficiently. Many of the agencies operate in a typical civil-service style, with cumbersome processes and delayed decision making or implementation.”
There is no doubt that Alhaji Atiku Abubakar invested quality time in the development of his economic agenda, which, if painstakingly implemented, has the capacity to turn around the economy 180 degrees. But there are some gaps as well as areas which are not well articulated.
The candidate spoke about having a stable exchange rate. While this is desirable, the fact is that the exchange rate is a function of many factors, including the productivity level in the country. Stable exchange rate cannot be achieved by a fiat, especially when the candidate said he would allow market forces to determine prices. This area needs to be further worked upon.
While it is great to know that Atiku is considering the establishment of a private sector-led Infrastructure Debt Fund (IDF) with an initial carrying capacity of US$20 billion for the financing and delivery of large infrastructure projects across all sectors of the economy, it is important to know how soon after May 29, 2023 this should be expected in case the candidate wins the presidential election.
Then, the candidate is silent on fuel subsidy issue. Although he said he would undertake an immediate review of government spending with a view to eliminating all leakages arising from subsidy payments, that statement is not categorical enough. The citizens need to know what to expect from an Atiku Abubakar presidency with respect to subsidy payment.
Despite these gaps, not only has the candidate put together a very sound economic blueprint, he appears ready to hit the ground running right from the first day because he comes across as someone who knows the way out of the nation’s economic doldrums and possesses the political will to take the hard decisions required to take the nation out of its economic woes.