THIS year’s United Nations General Assembly (UNGA77) and the International Monetary Fund/World Bank Meetings held in the United States’ cities of New York and Washington DC respectively, make the ideal platforms for Nigeria’s Minister of Finance, Budget and National Planning, Mrs Zainab Shamsuna Ahmed, to regale the international world with a log of her country’s economic journey in the past 7-years-plus of her stewardship at the strategic government ministry.
The econologue’s unmistakable refrain, delivered in her deft, but comfortingly reassuring manner is: “Nigeria’s economy is resilient”.
That pronouncement is not without solid backing. The Minister simply enjoined her various interlocutors to cast their minds back to a well-known PricewaterhouseCoopers’ unbiased forecast. She recalls that the firm believes “Nigeria could be Africa’s fastest growing economy, which could move up the global GDP ladder to the 14th position by 2050, if it succeeds in diversifying its economy away from oil and strengthen its institutions and infrastructure”.
Not surprisingly, much of her discussions at the conferences and side-events were dedicated to spelling out what the President Muhammadu Buhari-led government has been doing to diversify Nigeria’s oil-dependent economy, strengthen weak institutions and build support infrastructure since taking responsibility at Aso Rock, Abuja official residence.“We are on course,” she says, “to taking a rightful place in the global economy as we continue to sustain policy reforms, improve governance, and encourage public-private investments in social, human and physical infrastructure”.
Moving away from oil
Figures from the National Bureau of Statistics bear her out. The economy grew 3.54 percent in the second quarter of this year, with contribution from the oil sector dropping to 6.33 from last year’s corresponding 7.42 percent. The growth, the agency said, was driven mainly by the non-oil sector featuring the ICT, trade and finance, agriculture, manufacturing (food, beverage) etc., proof that the economy is slowly but steadily moving away from its debilitating reliance on the oil sector.
This, however, does not mean that the still strategic oil-and-gas sector is being neglected. Nigeria’s significant endowment in these resources, Mrs Ahmed says, must be well harnessed to deliver the capital the broader economy needs.In the past seven years, there have been significant investments by such local players as Dangote, Bua and Waltersmith Refining and Petroleum Company. These huge investments, when completed, are bound to reverse the country’s embarrassing reliance on importation of refined products.
Making agriculture pay again
Perhaps the most notable efforts of the government at diversifying the economy are found in the agriculture space. The minister’s tone brightens when she speaks of the achievements in this sector: “In 2014, most of our food and agricultural inputs were imported,” she says. “We had fewer than 10 operating rice mills and fertiliser blending plants. Today, we have close to 70 rice mills and some 50 fertiliser blending plants producing the NPK variety.”
Many companies are doubling capacities as they expand business and investment. WACOT Rice in Kebbi State went from 120, 000 to 240, 000 metric tonnes in a short space of time. Umza Rice in Kano has achieved much the same feat. Such successes have made Nigeria a global player in fertilizer production. The Dangote Group opened its urea plant recently, while Olam and Indorama are expanding their facilities. At the national level, the Nigeria Sovereign Investment Authority is collaborating with OCP Morocco to develop an Ammonia production plant. More inspiring is the country’s success at securing assistance of the African Development Bank for the programmes in the agriculture sector, with an overt interest in the development of Special Agro-Industrial Processing Zones.
Getting infrastructure in place
The growth in financial services must rank as one of Nigeria’s obvious successes, and Mrs Ahmed can’t hide her excitement. “Our fintech revolution is second to none in Africa,” she enthuses. “We have the highest number of unicorns on the continent. The seed capital and brain power that enable these businesses to flourish come mainly from the country.” For instance, the winning bid for first licensing round for the 5G network in Nigeria came from a Nigerian wholly-owned company. Many such private firms are cashing in on government’s commitment to liberalise the economy to make the private sector the real driver of economic growth.
Still, in the financial services industry, the two biggest transactions so far seen on the continent were carried out by Nigerian companies. In April, Flour Mills of Nigeria acquired another giant, Honeywell Flour Mills to become the biggest flour miller in the region. A couple of months later, in June, Union Bank of Nigeria was swallowed up by the TGI Group, through its subsidiary, Titan Trust Bank. Union Bank was originally owned by Atlas Mara and a consortium of global and domestic private equity funds. These deals are proof that the Nigerian economy’s potential as an investors’ paradise and global world beater remains intact, regardless of current domestic challenges caused largely by the uncertainties in the global economy.
The administration’s recent policy of involving the private sector in infrastructure development is another pointer to the direction it is leading the economy. Under the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme, several well-heeled companies are taking up the challenge of building physical infrastructure as roads and power stations. They are encouraged to add to the country’s stock by generous tax relief offers. Dangote Group has been exceptional, taking on major roads in the commercial city of Lagos, including those leading to the city’s badly congested ports. The programme is giving the government the fiscal space to deal with other pressing infrastructure needs around the country, including the much-awaited Second Niger Bridge that links the South West region of the country to the commercially ‘hyperactive’ South East region.
The lingering power, which has been the main pain of manufacturers and domestic power consumers alike, seems to be getting the right attention with the Presidential Power Initiative. For reasons yet to be fully fathomed, Nigeria has only achieved a total power generating capacity of 13MW for a population of over 200 million. Curiously, on average, only a miniscule 3.4 MW reaches the entire network of consumers due to rampant corruption and crass ineptitude of those vested with the responsibility of powering the country. The damage this has done to industry and quality of life is written large on the economy’s fortune.
After a long, tortuous negotiation with Siemens, the Nigerian government reached an agreement with the German power company to help raise generation and distribution capacity to 25,000 MW in the short-to-medium-term. The first shipment of equipment connected to the deal worth 63 million euros, were billed to arrive the country last September. The populace watches expectantly, as the government struggles to make success, this time round, of the power policy that has disappointed in the past but now shows signs of genuine commitment.
The importance of reliable energy supply as a basis for sustainable economic growth cannot be over-flogged. Siemens’ official statement after the deal was ratified clearly shows the company knows the weight of expectations Nigerians of all social classes place on the deal. “The successful implementation of the Presidential Power Initiative (PPI) will increase access to reliable, stable and affordable electricity. The project will energize the economy, industry and society”. That’s what Minister Ahmed and indeed the entire functionaries in the Buhari administration hope will be the Nigerian narrative and experience going forward.
Dealing with underlying policy issues
Now that Nigeria is making a head-way in implementing various government programmes and projects, attention has been turned to the more fluffy area of policy origination and monitoring.
In August, the Federal Executive Council approved the National Monitoring and Evaluation (NM&E) Policy. It is the administration’s answer to the need to focus on accountability in all realms of public investment spending.
The Finance Minister herself had taken up the duty of defining what the policy is intended to achieve. “The policy,” she said, “defines a framework for the institutionalization of the practice of monitoring and evaluation to promote good governance, learning and accountability for results that will contribute to improve the socio-economic development of the country and enhance the well-being of citizens.”
President Buhari is even more fired up by the adoption of the M&E policy. Speaking without prejudice to a slew of his administration’ earlier policy prescriptions, he says his government is “strongly committed and will track, monitor the progress and evaluate all national commitments to ensure that strategies , policies, programmes and projects meet citizens’ expectations and more importantly, benefit them”.
Waxing as emotional as he has ever been, he said: “The (NM&E) policy will also engender greater transformation in the community, society and the nation, leading to the agendas of not leaving anyone behind in the march towards prosperity. Furthermore, Nigerian citizens will enjoy better quality service delivery that will increase their trust in their future. Where there are challenges in implementation of programmes and projects, government will be expeditiously informed so that remedial actions can be taken to avoid delay and any shortfalls.” A few public affairs analyst see in this the mind of a leader all too aware of the shortness of his time in stewardship, wanting to do as much as he can to leave a legacy of service.
This view resonates with Prince Clem Agba, Honourable Minister of State, Finance, Budget and National Planning, who believes that the NM&E policy could not have come at a better time than now the government is genuinely committed to purposeful economic interventions.
He said the Ministry of Finance had the collaboration of the United Nations Children’s Fund (UNICEF) in driving the process of design, development and roll-out of the policy. He also told newsmen that the policy was subjected to a wide consultative process to allow the inclusive participation of all identified stakeholders in the country’s economy.
To make the policy as compatible with international best practice, the committee that put it all together referenced the Organisation for Economic Cooperation and Development’s Development Assistance Committee’s evaluation criteria. This means that the policy will measure a range of things, including but not limited to the policy’s relevance, efficiency, effectiveness, coherence, impact and sustainability of economic interventions.
Economic Priority Areas
Back in August, 2019 at a Ministerial Retreat, President Buhari’s cabinet members pared down their work area for the economy to 11 Priority Areas under three themes: Accelerating economic and governance reforms; Enhancing investments in physical infrastructure, human capital development to spur job creation and economic growth; Optimizing investments in physical security and food security to drive inclusive socio-economic development. They knew that the achievement of the goals under the priority areas required significant revenues as well as the active management of emerging fiscal risks.
In line with the overarching Federal Government of Nigeria (FGN) Strategic Priorities, the Federal Ministry of Finance, Budget and National Planning focused in turn, on five Priority Areas: Enhancing Revenue Generation, Collection and Monitoring; Accelerating Fiscal Consolidation by Optimizing Priority Capital and Recurrent Expenditure; Optimizing Management of both Domestic and Global Fiscal Risks; Increased Coordination of Fiscal, Macroeconomic, Monetary and Trade Policies; and Integrating Annual Budgets and Medium-Term Fiscal Strategies into rolling Medium and Long-term National Plans.
To ensure enhanced revenue generation, collection and monitoring, strategic revenue growth initiative was launched under the oversight of the Minister of Finance, Budget and National Planning Steering Committee, with the responsibility for achieving sustainable revenue generation. It was also to identify new sources and enhance existing revenue streams, improve coordination and cohesion among the agencies in the revenue ecosystem.
On the strategic revenue growth agenda, meant to achieve sustainability in revenue generation, the thrust has been to build a sustainable revenue generation ecosystem by ensuring resilient and optimal performing revenue streams while applying the right incentives, safeguards, and accountability and performance management systems. This has crystallised into the recently inaugurated Nigerian Monitoring and Evaluation Policy.
The strategy also sought to identify new and enhance the enforcement of existing revenue streams, achieve cohesion in the revenue ecosystem (people and tools), grow revenues by implementing new taxes, broadening the tax base and enabling strategic investments that spur economic growth, implement a revenue generation operating model that enhances collaboration, synergies, capacity building, use of data, eulogizes meritocracy in every facet of governance and eliminates leakages.
The Ministry set off by putting in place the Presidential Revenue Monitoring and Reconciliation Committee chaired by the Director-General (DG) Budget, comprising 16 FGN revenue collecting and reporting agencies, to diligently reconcile and closely monitor revenues on a monthly basis to produce critical information for decision making and produce quarterly and annual reports. The Committee worked with dredged up data to establish baselines, track trends and monitor performance while the Budget Office and the Office of the Attorney General of the Federation also enforce circulars and guidelines on remittances of Operating Surpluses from Government-owned Enterprises and has since been maintaining the momentum.
Agenda 2050
As the Muhammadu Buhari administration clears its desk in preparation for taking a bow from its stewardship mandate of Nigeria’s economy, the President has inaugurated a Steering Committee for the new development plan, Agenda 2050. The Committee will oversee the development of the Nigeria Agenda 2050 and Medium-Term National Development Plan (MTNDP) to succeed Vision 20:2020 and the Economic Recovery and Growth Plan (ERGP) 2017 – 2020.
Speaking at the inauguration, President Buhari said the main objectives of these Successor Plans are to lift 100 million Nigerians out of poverty within the next 10 years, particularly given the “World Bank’s projection that Nigeria will become the world’s third most populous country by 2050 with over 400 million people.”
His main concern is to lay down a framework that will help functionaries and appointees to oversee the execution of key deliverables, including recommending measures to ensure the continuous implementation of the Plans even after the expiration of the tenure of successive administrations – including legislation, if required.
“Such legislation may introduce the much-needed rigour and discipline to the nation’s development planning as well as institutionalise planned outcomes for the future. I trust that our partners in the National Assembly will support us in exploring these reforms,” he said, evidently aware of the important role Nigeria plays on the continent as well as in the global community.
He said the Successor Plans must, therefore, be designed to sustain national development, as well as support regional and global strategic interests, as outlined in the African Union Agenda 2063, the ECOWAS Integration Agenda 2050 and the Sustainable Development Goals 2030.Underscoring the importance of national development planning, he wants to leave a carefully conceived and diligently implemented plans, capable of transforming the economic fortunes of Nigeria. He reminds his cabinet and compatriots at every opportunity that good successive planning and visioning exercises are indispensable tools for guided investment in human social capital.
Minister Ahmed concurs. She urges implementers of the new plans to bear in mind the comparative advantages available in Nigeria’s diverse regions, to build a virile, integrated economy.
Overcoming global uncertainty headwinds
Mrs Ahmed is convinced that Nigeria’s economy is on the upward trajectory in spite of the ravages of the exogenous headwinds, shocks and risks —especially, Covid-19 and Russia’s invasion of Ukraine — it has had to contend with in the lifetime of the current administration. “The effects of these shocks on growth and poverty have been severe,” she laments, but not catastrophic.
Even so, she by no means downplays the damage, which triggered two recessions on the economy as well as a host of other unpleasant outcomes. Certainly, Nigeria is not insulated from global crises. “We experienced high commodity prices, depressed external demand, declining remittances, all of which are still wreaking havoc on our projected growth. Capital inflows and remittances are all declining and trade finance is drying up,” she says, matter-of-factly.
She lists more woes, including private capital flows, mainly consisting of foreign direct investments (FDI), which have slowed to a trickle, hindering the financing of much-needed infrastructure and natural resource access projects. At the nadir, the Nigerian Stock Exchange All Share Index fell 37 percent, the steepest in more than a decade and the sharpest drop in the world.
Ready for increased investment
Fortunately, Mrs Ahmed says, all these ‘negatives’ did not finish off Nigeria’s renowned resilience and can-do spirit. The administration’s fidelity to pursuing sound but sometimes unpopular fiscal policies kept the economy ticking. The 2021 Finance Act, which introduced 40 amendments to existing tax and regulatory legislation, is one way the administration kept the economy on the level, to bring in more revenues and plug loopholes in the system.
At the political end, the government has been beefing up its arsenal and strategy to end the long-running insecurity problem, which has dampened investors’ enthusiasm in the economy. The Nigerian military seems to have finally gotten their act together, and have recorded impressive assaults against insurgents, and kidnappers making life unbearable in a huge swathe of the vast Northern Nigeria.
As the country and its over-200 million denizens prepare for a change of government, and economy managers via the general elections billed for February next year, Nigeria’s Finance Minister, who has seen the country weather the storm of uncertainty, remains upbeat. “Overall,” she says, “Nigeria’s economy is ripe for increased investment.”