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57 Unhearty Cheers For The Economy
« on: October 01, 2017, 09:26:59 AM »
In the early years of its independence in 1960, Nigeria held the promise of becoming a global economic powerhouse. It was doing well in agriculture, manufacturing and solid minerals exploitation, among others. However, 57 years after, it remains Africa?s sleeping giant, a euphemism for a society without bearing. But experts believe that things are changing for the better under the present administration CHIKODI OKEREOCHA, MUYIWA LUCAS and DANIEL ESSIET report.

The best independence anniversary gift to Nigerians would have been their country?s exit from recession. Coming weeks before the 57th independence anniversary, it was a major public relations boost for the economic management team, but for Nigerians, it was hoped deferred. Reason: The gains of the recession exit would not be immediate. Improvement in Gross Domestic Product (GDP) growth rate, which grew by 0.5 per cent in the second quarter, has yet to translate to improvement in Nigerians? living standards.

More importantly, experts and operators, who spoke with The Nation, argued that Africa?s largest economy and oil producer had no reason slipping into recession in the first instance.

To them, the recession could have been averted if successive administrations had been circumspect in the management of the nation?s oil & gas resources.

A lawyer and Public Affairs Analyst, Mr. Obiora Akabogu, said Nigeria walked into economic cul-de sac because of corrupt and clueless leadership that could not manage revenues from period of high oil price well to make up for the current period of low price.

?The fact that Nigeria was rattled by the slide in oil prices, which came in the wake of the recession shows that successive administrations have not been saving for the rainy day. It also underscored the leadership deficit that has continued to hold down the nation?s economic growth and development, 57 years after independence,? Akabogu said.

Nigeria, he noted, is still paying the price of its age-long neglect of other viable sectors, such as agriculture, manufacturing and mining, following the discovery of oil in 1956.

Akabogu recalled, that at independence in 1960, agriculture the mainstay of the economy, providing the largest chunk of foreign exchange. According to him, agriculture contributed as much as 64 per cent of the GDP.

But with the dramatic shift of focus to oil and the attendant oil boom of the 1970s, agriculture was displaced as the main foreign exchange earner. He lamented that today the sector?s contribution to the GDP is as low as 24.4 per cent.

Prof. Abiodun Adeloye of the Faculty of Agriculture, University of Ilorin (UNILORIN), brought the reality of the neglect of agriculture following the discovery of oil nearer home when he said the early years of Nigeria?s independence were supported by agriculture especially in export.

He recalled, that the west was a global powerhouse in cocoa production and export, including cassava, rubber, and kola nuts; the north held sway in groundnut, cashew, Sesame seed, wheat, cotton, and millet, the east had competitive and comparative advantage in palm oil, yam and rice.

The don, regretted that the aggressive demand for fast and easy money from oil resulted in the drift of able-bodied young men from the farms to the cities.

?The remaining labour or hands in the farms are old men whose input is limited by age. So, the population of farmers that are left on the farms can only produce food crops for family needs and less for export,? he told The Nation.

The expert noted that at the moment, export earnings from agriculture is as low as less than five per cent of GPD, despite the present administration?s agricultural revolution agenda. While emphasising that the farming population is low and aged, he said the challenge is how to meet the food needs of the huge population talk less export.

Indeed, it?s been a tale of woes for agriculture in the last 57 years. As a result of the low and aging farming population and other factors, Nigeria, which once led the world in palm oil production, is today a major importer of vegetable oil. The groundnut pyramids, which once dotted the landscape in the north, have also disappeared.

Similarly, the rubber plantations in the midwest and the cocoa and kola nuts in the west have become things of the past. Today, despite being Nigeria?s single largest economic sector, the agriculture sector?s impacts on government and export revenues have remained relatively small.

Last year, the sector accounted for a meagre 4.8 per cent of Nigeria?s total foreign earnings and 24.4 per cent of GDP. And for a sector on which Nigeria anchors its hope of diversifying the economy, following the crisis in the international oil market where prices have been tumbling, this was unacceptable.

According to experts, Nigeria shot itself in the foot when it shifted its focus to crude oil and neglected agriculture. This is despite boasting about 82 million hectares of arable land that can support commercial agriculture.

With the fall in crude oil prices, which forced a strategic rethink in favour of transforming agriculture to diversify the economy and exit recession sustainably, Prof Adeloye said there is no better time than now for government and stakeholders to focus on how to boost agriculture?s contribution to the national economy.

He said that as Nigeria marks its 57th independence anniversary today, government must walk the talk on its Agriculture Transformation Agenda (ATA). This, he said, was necessary because the sector is credited with having the greatest potential to create jobs, boost domestic demand, and generate significant foreign exchange.

?There is need for aggressive campaign to enable Nigerians go back to the farms. This will guarantee jobs for the youths,? Adeloye said, adding that people should be made to understand the benefits of agricultural entrepreneurship to create jobs and make life better.

Mr.Barnabas Dickson the Chief Executive Officer (CEO), Dickson Leadership Training Institute International, in Gombe State, said there is need for the country to go back to the drawing board and reclaim its lost as the ?store house of the world.?

?The necessary thing to do at this point is to go back to the drawing board and come out with strategies to reclaim our lost position as the global store house. Going forward we must stop feeding from other nations? store houses. Except we bring back agriculture, nothing good will happen, and the purported exit from recession will not be sustainable,? Dickson warned.

The game changers

However, agriculture is not the only sector that has suffered decline in the last 57 years. Manufacturers and operators in the  mining and related extractive industry are also ruing the neglect of the industrial sector generally.

Mining, before the discovery of oil in the 1950s, was a major contributor to the economy, swelling the GDP by as much as 12 per cent. But currently, the solid minerals sector, on the average, contributes a paltry 0.46 per cent to the GDP. This is despite the fact that Nigeria  has over 44 mineral deposits.

The sector, according to the Nigeria Extractive Industries Transparency Initiative (NEITI), contributed only N113 billion to the public coffers in five years. Specifically, the sector?s overall contribution to GDP in 2010 stood at N52 billion. Five years after, precisely 2015, it contributed N103 billion.

Although, the previous administration was said to have targeted a five per cent GDP contribution from the sector by 2015, it never achieved the target. But the President Muhammadu Buhari-led administration has set a new target to increase the sector?s GDP contribution to 10 per cent by 2020.

To realise the target, the government has begun the implementation of the ?Roadmap for the Development of the Solid Minerals Sector? launched in 2016. The roadmap articulated clearly what particular strategies must be deployed in achieving set targets. It looked at the entire value chain, from institution building to stakeholder management and to management of players in the sector, including the issue of funding etc.

Already encouraged by the roadmap, Partner/Mining Industry Leader, PwC Nigeria, Mr. Cyril Azobu, said if the implementation of the 2016 roadmap is managed in a professional, actionable manner that can track achievements of its set objectives, the sector looks good to replace oil in the next five years.

?I think mining is the next oil. In five years from now, we can begin to think of mining as the next oil, if we do the right thing. Let?s see the implementation working to the letter, not in bits and pieces. It?s a very good roadmap, but work it to the letter,? Azobu told The Nation, adding however, that the private sector must drive the sector?s reforms if the targets must be achieved.

Although, the National Bureau of Statistics (NBS) report of Nigeria?s 0.5 per cent economic growth in the second quarter was music in the ears of members of the Organised Private Sector (OPS), they are also pushing for the strategic repositioning of the manufacturing sector, going forward.

The real sector, which includes manufacturing and agriculture, has had its fair share of neglect due to issues around lack of infrastructure particularly power, policy inconsistency, multiple taxation, among others.

Manufacturers have also, been groaning over difficulties in sourcing foreign exchange for importation of raw materials for industrial production. This was because of low revenue inflow caused by dwindling oil prices and activities of militants in the Niger Delta.

Apart from foreign exchange challenge, manufacturers also faced banks? high lending rate, high cost of power generation and declining household consumption from depleting real income due to surge in aggregate price index.

Consequently, it has been extremely difficult for manufacturers to sustain production particularly in the last two years as inventory of raw materials dried up without sustainable means of sourcing foreign exchange for replenishment.

Efforts made at developing local raw materials through backward integration also appeared troubled following the unavailability of the driving factors such as steady and reliable electricity supply and affordable credit, among others. Many of that who could not weather the storm shut down; others relocated to neighbouring countries.

But the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), reacting to the exit from recession, said improved monetary policies were responsible.

It?s National President, Chief Alaba Lawson, said improved monetary and fiscal policies, relative stability of the foreign exchange market, renewed investor confidence, earnest efforts by the private sector as well as relative stability of the global prices of crude oil were responsible for the recovery.

She noted that the monetary and fiscal policy syntheses, evidenced by strategic adjustments in foreign exchange management policy and complementary fiscal policies that were implemented in the period accounted for the positive swing in vital industrial performance indicators in the second quarter of 2017.

The NACCIMA chief was, however, quick to warn that the economy was still exposed to external shocks, as it remained largely import-dependent. ?We call on government to intensify implementation of programmes and strategies geared towards economic recovery, ensuring ease of doing business, infrastructural development and diversification of the nation?s economy,? she said, in a statement in Lagos.

According to Lawson, there is need for increased support for Micro, Small and Medium Enterprises (MSMEs), agribusiness, tighter control on imports as a way of stimulating local production. She also said the real sector should be empowered by encouraging the banking sector to lower interest rates for operators.

For the Manufacturers Association of Nigeria (MAN), president Dr. Frank Jacobs, various credible policy adjustments and implementations between mid-first quarter 2017 and early second half of 2016 were largely responsible for the pace of economic recovery.

While pointing out that the growth rate of 0.5 per cent was good, he said the question remained whether it was real and sustainable and whether it could engender inclusiveness such that the impact of the positive improvement could be felt by all Nigerians.

The industrialist advised the government to continue with an appropriate mix of policies such as backward integration agenda, especially in agriculture, solid mineral and petro-chemical sectors as well as creation of incentives and concessions for investors in the sectors.

The MAN president also sought the enforcement and monitoring of the implementation of the recent Executive Order by the Federal Government on patronage of made-in-Nigeria goods by Ministries, Departments and Agencies (MDAs),.

He also said smuggling, adulteration and counterfeiting should be checked and offenders penalised.

Brighter future beckons

Economic and financial experts are optimistic that with the effective implementation of the Economic Recovery and Growth Plan (ERGP), the future is bright and promising.

The ERGP, a medium-term economic plan, launched by President Buhari in April, charts a course for the economy over the next four years, from 2017?2020. Its vision is to restore economic growth, invest in Nigerians, and build a globally competitive economy.

Its aims to achieve these by focusing on five execution priorities: stabilising the macroeconomic environment; achieving agriculture and food security; ensuring energy efficiency (especially in power and petroleum products); improving transportation infrastructure and driving industrialisation primarily through SMEs.

The ERGP will return the economy to sustainable, inclusive and diversified growth, and transform Nigeria from an import-dependent to a producing economy; a country that grows what it eats and consumes what it produces.

Massive investment in infrastructure

The Buhari administration has also demonstrated a single-minded commitment to upgrading and developing Nigeria?s transport infrastructure. Roads are being constructed in many state?s; many of the projects were abandoned in the past because of money owed contractors.

The administration is also pushing ahead with the revitalisation of the 3,500km network narrow-gauge railway. In March a consortium led by General Electric, and comprising Transnet of South Africa, APM Terminals of the Netherlands and Sinohydro Consortium of China submitted the sole bid for the concession of the Lagos-Kano Railway narrow-gauge Line. (Transaction Advisers were approved for the project in 2016).

In May, the Federal Executive Council (FEC) approved the start of negotiations with GE to conclude the concessioning. In addition, Abuja?s Light Rail system will also go into operation (test-run) this year.

The first line to be launched will connect the city centre with the airport, with a link to the Abuja-Kaduna Railway Line. The test-run will start next month, ahead of resumption of operations between January and March next year.

The power sector reform is also on course, with the launch of the N701 billion Payment Assurance Programme (PAP) designed to resolve liquidity challenges by guaranteeing payments to generating companies and gas suppliers, while the Federal Government undertakes the much-needed reform and strengthening of distribution companies.

In addition to the PAP, there is also a much more comprehensive Power Sector Recovery Programme, launched in March, which has received the endorsement of the World Bank.

The signing of three executive orders by Vice President Yemi Osinbajo may have also raised hopes of a rebound of the economy. The initiative was aimed at eliminating the hurdles that stand in the way of a bigger and more productive private sector.

The executive orders, seek to facilitate the ease of doing business in the country to save time and cost, promote transparency and efficiency as well as promote Made-in-Nigeria products and services by supporting local contents in public procurement.

The objective of the initiative, The Nation learnt, is to stimulate a rebound of the economy and also fast-track the country?s transition to a non-oil economy.

The stipulation of sanctions for violations of the executive orders was seen by some private sector operators as indication that a new dawn is in the offing.


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57 Unhearty Cheers For The Economy
« on: October 01, 2017, 09:26:59 AM »


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