Economy: Modest achievements, bright future outlook

By all assessment parameters, the Nigerian economy may not have impacted on the ordinary Nigerians in terms of their socio-economic well being as many would have expected in the current year, but what cannot be denied in governments’ efforts to strengthen the economy alleviate poverty is that most of the policy measures have the potentials for inclusive growth of the economy in the years ahead.

For instance, even when joblessness and poverty still remained big challenges in the nation’s economy in the outgoing year, there are remarkable micro and macroeconomic indices in the year under review that indicated that ongoing economic policy reforms will engender broad-based transformation of the economy, particularly in terms of infrastructure capacity, real sector growth, job creation and poverty alleviation in the medium and long terms.

In setting its priorities for the economy as enunciated in the 2013 budget, the Federal Government had promised to reduce cost of governance, adopt a stronger strategy for managing domestic debt; bridge the yawning infrastructure financing deficit; create job, support of real sector growth; and gender empowerment and sports development.

At the budget presentation and ministerial briefings, it also promised to continue with the previous year’s agenda of fiscal consolidation with inclusive growth in the current year, and underpinned this with a projected oil production of 2.53 million barrels per day (mpbd) benchmark oil price of $79 per barrel, real GDP growth rate of 6.5 per cent and average Exchange Rate of N160/$.

A critical assessment of the economy in 2013 showed that the Federal Government had performed fairly well in terms of sundry policy steps being undertaken to grow the economy.

According to the Report on the GDP growth rate by the National Bureau of Statistics (NBS) for the third quarter, the growth rate when measured on aggregate basis grew by 6.81 per cent, representing 0.63 per cent higher than the growth rate in the preceding quarter. Inflation rate has also been kept at bay through various monetary and fiscal measures, sustaining a single digit trend through the whole year.

In November, the inflation rate rose by 7.9 percent year-on-year, representing a marginal increase of 0.1 percentage points from7.8 per cent recorded in the preceding month.

The economy also recorded some measure of success in job creation as the Federal Government continued the implementation of the palliative SURE-P.

For instance, the implementation of the Graduate Internship Scheme (GIS) of the programme which is one of the Social Safety Net (SSN) projects of the SURE-P is being sustained with the creation of the Public Works, Youth and Women Employment (PW/WYE) component, amongst other initiatives.

Latest official statistics on the Programme indicated that it had created 130,000 new jobs since its inauguration in February 2012 this is even as the government unveiled plans to empower 50,000 graduates by the year 2015, with quality work experience under the GIS.

On the efforts by the government to improve infrastructure capacity base of the economy, substantial progress was also recorded in the power sector reform initiative with the privatisation of the PHCN successor companies and far-reaching upgrade of some critical road networks, including those road rehabilitation projects executed under the SURE-P.

Another sector that witnessed transformational changes is the agricultural sector which, during the year under review, attracted substantial investments and enjoyed enabling policy framework for its sustainable development.

For instance, the launching of the NFIS early this year by the CBN was followed by the launching of the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF), which had 60 per cent committed to providing long-term credit at single digit interest rate to women in micro and agro-based businesses in the country.

Blumberg Grain, one of the world’s largest food security company, has unveiled plans to invest $250 million (about N40 billion) in a food processing company in the country in demonstration of its confidence in and support for the ongoing Agricultural Transformation Agenda (ATA). With the planned establishment of the company’s facility in Nigeria, the Minister of Agriculture and Rural Development, Dr Akinwumi Adesina, said by manufacturing storage warehouses in the country, farmers, agroprocessors and financial services industry would be able to reduce post-harvest losses, improve market access and incomes across agricultural, value chains.

Only last month, the Federal Government sealed a N6.6 billion investment pact in form of an Memorandum of Understanding (MoU) with the Bank of Agriculture (BOA) and the Bank of Industry (BOI) in furtherance of its efforts to boost cassava HQCF productivity and meet the country’s needs for Cassava bread and export potentials at the international markets. Under the arrangement, BOA is to manage N2.4 billion of the fund while BOI will manage the balance.

These and many other initiatives have impacted on the sector with improved productivity across the value chains during the year.

Under the ATA, the goal is to add 20 million MT of food to the domestic food supply by 2015 and reducing the estimated 50 per cent loss in produce from post-harvest losses, amongst others. Similarly, a glimpse into the performance of the real sector could be seen in the views of the immediate past President of the Lagos Chamber of Commerce and Industry (LCCI), Mr. Goodie Ibru, during the Chamber’s Annual General Meeting in Lagos recently.

The industrialist said: “Ours is the second largest economy in Africa with over $300 billion GDP, what we lack is the capacity to harness these opportunities for our common good. However, some progress has been made in charting the right course. “Economic and business performance in the year was mixed.

According to the National Bureau of Statistics, Gross Domestic Product growth rate for the second quarter of 2013 was 6.18 per cent as against 6.56 per cent in the first quarter and 6.39 per cent recorded in the second quarter of 2012.

“However, when compared with global output growth, the Nigeria growth performance could be considered satisfactory. But from our perspective as private sector player, the economic conditions were difficult and the challenges of doing business remained formidable”, the LCCI chief added. Reflecting on the overall performance of the economy during an interview with Sunday Mirror, a frontline investment analyst and management Consultant, Dr. Boniface Chizea, who noted that the economy had fared fairly well during the year argued that there were some steps to be taken by government to improve the impact of the ongoing policy measures on the economy.

While describing the efforts by government to reduce cost of governance which is widely acclaimed as too huge as desirable for public sector financial efficiency, however posited that restructuring the budget to allow for improved capital allocation required a focused and consistent drive towards that agenda, particularly tackling headlong corruption and other causes of leakages, over a long time.

In the area of infrastructure capacity building, the seasoned public finance analyst, noted that government had given a focused attention in view of the fact that all the money it borrowed recently are all targeted at improving the provision of infrastructure, pointing out however that there is need to ensure effective utilisation of the fund in order to achieve the goals.

He also commended the achievements of government on the SURE-P so far which, in his assessment, has massively impacted on available infrastructure with the activation of the Kano – Lagos railway line which has been moribund for more than twenty years and proposed plan to use it to resuscitate other important railway routes such as Port Harcourt to Maiduguri and for the construction of major arterial roads such as the East-west Road, amongst others.

According to him, despite the positive side, the inability of the government to enlist private sector involvement in the programme and other road rehabilitation projects through the Public-Private-Partnership (PPP) arrangement appeared to have slowed down the progress on the infrastructure re-engineering agenda.

On job creation scorecard, Chizea, who lamented that one of the worrisome aspects of developments in the Nigerian economy was the challenge of jobless growth, said the SURE-P and its job creation components like the You- Win and the GIS remained laudable, there was “the need to facilitate growth in the real sector of the economy such as is now happening with agriculture for sustainable job opportunities to be realised”.

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