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Dr. Ayo Teriba, CEO, Economic Associates:
• Nigeria’s growth has been remarkably fast, with the global rank of its nominal GDP rising from 52nd in 2000 to 30th in 2012, and now widely expected to be among top 20 by 2020, other things being equal. Foreign investment and Nigeria’s management of the global linkages of the economy has been (and will continue to be) important to growth in Nigeria.
• Nigeria’s growth is too dependent on favorable global commodity price cycles, easily reversible, as was the case in the 1980s, too concentrated, as just three of its 33 sectors oil, crops and trading combine to deliver 90 percent of economic activity and growth, and not sustainable, as crops are known to rot away in the absence of forward linkages with other sectors.
• Rail links between Nigerian cities, sectors and regions are urgently required to make Nigeria’s economic activity and growth more inclusive, more resilient to global cyclical downturns, more sustainable, and make the 20:2020 dreams more attainable. Urgent legislative and policy reforms are required that will open up the rail sector to private sector investment, local as well as foreign.
• With a population of 170 million, world’s seventh largest, thirty-six states, a Federal Capital Territory, 774 local government areas, half a billion tonnes in annual output of crops, livestock, fishery, forestry, petroleum products, and solid minerals, plus large volume of imports through airports, seaports and land borders, the case for accelerating development of rail transport in Nigeria is evident. The economic pay-off to Nigeria and reward for private investors in rail and other infrastructure is clear; what is required is clear and consistent policy commitment to private sector participation in infrastructure provision and management.
• Instituting an annual President’s Economic Report to the National Assembly in Nigeria will provide clearer central vision and direction, and also make economic policy more forward-looking and better coordinated. Economic policy conception and design should be undertaken in the Presidency, as is the practice in the United States all ministries, departments and agencies should only implement. The resulting policy coordination and clarity will boost investor confidence, especially in areas like infrastructure Public-Private-Partnerships where billions of dollars depend on policy continuity.
• Nigeria’s fiscal policy has disconnected from economic growth realities as total government revenue and spending has been falling steadily relative to the economy; urgent steps are required to reconnect the fiscal processes to the realities of current economic growth. Importantly, the Federal Ministry of Finance needs to be allowed to focus on the daily pressures of revenue collection, disbursement of payments, and debt management. This too is important for foreign investment, whether it is portfolio inflows or foreign direct investment.
• The bulk of the GDP growth is happening in the non-oil sectors such as crops, trading and other commercial activities. Unlike the oil sector where sales proceeds accrue into government coffers, sales proceeds in the non-oil sectors accrue into private hands, and are manifestly under-taxed. Governments at different tiers should generate revenue from the current boom in private income and spending to fund recurrent spending, and re-invest oil revenue. A lot of this has to go into building and maintaining physical infrastructure, a key requirement for attracting investment in manufacturing, real estate etc. and thus boosting growth and jobs creation.
• Nigeria needs to resolve the deadlock that holds the nation from investing excess funds in times of boom. The benchmark price of oil should be set high enough to ensure balanced budgets at the different tiers of government, while the savings accruing to the excess crude account (ECA) should be committed to capital projects as they accrue. This could be handled in a way that boosts rather than undermine investor confidence.
• The savings amassed by Nigeria in nearly five years of unexpected 2004-2008 global cyclical upturn were depleted within two years of an unexpected 2008-2009 global cyclical downturn. Needless to say, they were spent on recurrent items such as salaries, overheads and debt service, not capital projects. Of course, it is difficult to invest during a recession. But if the oil savings had been committed to capital projects as the boom occurred, government would have had the motivation to overhaul the non-oil tax system. In a country where VAT has remained at 5 per cent across all categories since introduction in 1995, the presence of idle funds cannot but continue to kill incentives for needful tax reforms.
• The vital policy lesson for Nigeria from the 2008-2009 crises is that if not committed to investment, the proceeds of boom will be eventually consumed! Saving the excess funds is inferior to investing them. Savings are nothing more than deferred consumption. Investment is deferred income.
Zainab Usman, Doctoral Candidate in International Development, University of Oxford:
•The Nigerian economy has grown at an impressive average of 7 per cent over the past decade and projections for growth in 2014, put at 7% by the IMF for instance, are strong. While this is a laudable performance, and its consistency will help Nigeria in the long run, domestic and international investors as well as ordinary Nigerians want to see serious commitment to strategies to sustain and accelerate this growth momentum.
• While Nigeria’s economic growth rates are impressive, human development indices in health, sanitation, mortality and education are less so. While Nigeria is set to overtake South Africa as the continent’s economic powerhouse, 63 per cent of Nigerians live below the poverty line. Improving human development indices is essential to enhancing Nigeria’s competitiveness and the promotion of inclusive growth.
•The growth drivers in Nigeria are oil, telecommunications, trade and construction, which are capital-intensive sectors but don’t employ a lot of labour, especially outside of a few centers. Inclusive growth must be driven by labour-intensive job creating sectors such as agriculture, manufacturing, industry and solid minerals. Looking forward to a discussion on the strategies for unlocking these sectors.
• Foreign investment flows to Nigeria are in excess of $7 billion p.a. For the second year running, Nigeria is ranked as the number one destination for FDI in Africa. These inflows are a critical source of investment required in the infrastructure which will attract investment into sectors that create jobs en masse, agriculture and manufacturing especially. The delay in passing the Petroleum Industry Bill (PIB) is thus not only blocking new investment into the oil sector but Nigeria’s capacity to achieve jobs creation and inclusive growth. The summit is an opportunity for all stakeholders to broker an irrevocable timetable for passing a PIB.
• Through the Agricultural Transformation Agenda, Nigeria has embarked on sensible reforms promoting transparency in the agriculture sector. The e-wallet system of delivering subsidized imputs to farmers has the potential to boost production and incomes, thus promoting inclusive growth. These reforms must be insulated against the 2015 elections cycle.
• With a 38 per cent youth unemployment rate, there must be greater emphasis on provision of quality education and employment to young people. The government’s entrepreneurial initiativeYouWin! has created 18,000 jobs and the government has provided a N200 billion ($907 million) intervention fund for tertiary institutions. Will these initiatives lead to enhancing the quality and relevance of the education system to the economy?.
• Nigeria’s current economic boom is regionally concentrated, with growth and its benefits concentrated in Lagos especially. A key precondition for achieving economic diversification and addressing inequality is spreading the economic growth to other regions where 90 per cent of Nigerians live.
Federal MDAs and State Governments must devise and faithfully execute sector reforms-in agriculture, transport infrastructure, primary education, microfinance etc. that are required to create growth and jobs across the country.
• The Boko Haram insurgency in the North-east has cut off most of Nigeria’s North from the current economic boom. The government has earmarked a N2 billion economic transformation fund for the North-east. What other plans do all stakeholders (i.e. government, donor partners, local private sector) have for addressing other structural challenges to economic expansion in Northern Nigeria.
Dr. Olumide Abimbola, an Economic Anthropologist is a Research Fellow Max Planck Institute in Berlin Germany and a Consultant at the African Development Bank:
•Because of agreements under ECOWAS, the West African region should indeed be seen as an extension of the Nigerian market. This means more than 300 million consumers and counting – that is close to the population size of the United States. With Nigerian banks and companies with investing across the sub-region, Nigeria is in effect a gateway to West Africa.
•The current state of infrastructure is one of the biggest constraints to economic growth, but this should also be seen as an opportunity: infrastructure development is itself a job creator, in addition to enabling economic growth. It has the biggest multiplier effect in any economy.
• Safe and effective transport services are essential to any country that is serious about economic growth. Getting the policy and regulatory environment right, and staffing agencies with competent hands, should be a priority.
• Such a simple thing as creating a direct link for passengers between Muritala Muhammed International Airport and the Muritala Muhammed Airport 2 would greatly improve connectivity and encourage greater transit. It would also go some distance in positioning Lagos as an aviation hub for West Africa.
• Reforms should not be limited to the obviously economic sectors. Our health care system too needs a serious revamping and rethink. Revamping the health care system also presents investment opportunities. Are we thinking of these?
• Creating job with programmes like You-Win is important and even laudable. But they cannot replace longer-term and more sustainable job-creation schemes. The government should be thinking of how to encourage light manufacturing on a large scale, and how to create, extend, tap into and upgrade along value chains.
• Agriculture is currently the single largest contributor to the GDP. Imagine what would happen if commercial farming were intensified and value chains created – with a view to increasing export.
• WEFA certainly holds positive implications for the oil and gas sector, but those may not be realised because of the uncertainty in the legislative environment of the sector. Is 2014 the year the Petroleum Industry Bill will be passed?
Tolu Ogunlesi, Writer and CEO, Wowe Media:
Governments have to treat ‘Continuity’ like it’s a Constitutional requirement – revisiting old policy documents to see what needs attention. Governance is not always about trying to craft brand new plans and policies. Documents like the Vision 2010 and 2020 contain great but sadly forgotten insights into Nigeria’s most critical challenges, and intelligent solutions to them. Politicians and bureaucrats should be consistently digging into the past to see what can be salvaged from it, instead of always trying to reinvent the wheel.
2014 will have to be the year that the Nigerian governmentconvinces the people that it’s got the potential to create jobs. In fifteen years of democracy we haven’t seen much evidence of a capacity for ambitious government-driven job creation; the sort that sets up hundreds of thousands of families for transition, within a generation or two, into a firmly-grounded middle-class.
It’s time to extend the Lagos economic ‘boom’ beyond Lagos. Other states need to position themselves to significantly tap into Foreign Direct Investment and to significantly raise Internally Generated Revenues. (A more efficient taxation process usually translates into increased accountability, because unlike with natural resource wealth citizens feel a direct connection to tax).
All things being equal 2014 will come to an end with at least a doubling of current electricity generation. Will that potential be fulfilled? Will we have the transmission capacity to sustain that? How much electricity does Nigeria need to jolt GDP into double digits? How close are we going to be to that target by the end of 2014?.
It took Nigeria only a few years to move from being the world’s biggest cement importer to being a surplus producer. When will we replicate this sort of production feat in agriculture – palm oil, rice, fish? What should we be doing to make these ambitions realizable? Are there any lessons to take from the cement ‘miracle’?
•NIGERIA IS MANY COUNTRIES
Looking forward to increased focus on Nigeria not just as a single ‘Market’ or ‘Opportunity’ but as 37 different ones. We need to break down the conversation from a national one to a sub national one. Nigeria has 37 sub national regions, each of which, by virtue of population and economic potential, can be a country by itself. Most of these are not currently viable, but definitely have the potential to be. We need to start focusing on state and regional GDPs, for example. And why can’t we have sub-National Wealth Funds in Nigeria?
•VISION2050: In 2050 there will be an estimated 400mn Nigerians, making Nigeria the 3rd most populous country in the world, after India and China. What sort of Nigeria will that be? A country just as dysfunctional as the current one, or one that has learnt to harness its human potential for development, and has learnt to not be obsessed with natural resource wealth.
• SMALL BUSINESS
99% of SMEs in Nigeria are actually ‘Micro-enterprises’ – employing less than 10 persons. How do we create and implement policies specifically targeted at this class. How do we fast-track the creation of a Movable Asset Registry to help unlock economic value for artisans and creative industry people? How do we reform the Land Use Act to support the smallest and most vulnerable businesses?
One thing to create jobs, another to create people qualified to competently fill those jobs. Beyond creating new jobs we need to create the skills required to carry out those jobs. And, very importantly we also need to create new attitudes among Nigerian youth, regarding work ethics, self-development, and the value of expertise.
• REGIONAL COOPERATION
“DAWN’ (South West), ‘BRACED’ (South South), ‘SENEC (South East)’ – what are the roles of regional development blocs in an emerging economy? We need to pay greater sattention to them. What are they getting right? What are they not getting right? How can we empower these blocs to move from just being a fad, to actually translating into development.