I thank the Lagos Chamber of Commerce and Industry for giving me this platform to speak to such a distinguished audience and on such a germane issue. As you are aware I have been in the private sector running my businesses and feel, therefore, very comfortable amid captains of industry, entrepreneurs and businessmen and women. So, this is like home coming to me. It is Business2Buisness. A meeting of like minds.
Why is this gathering important not just for us but for our great country as well?
First, in times of uncertainty such as we are experiencing today, it is the hallmark of leadership for business and political actors to pause, anticipate, before taking the next steps. Our actions today will have consequences on our tomorrow and the day after.
Second, Nigeria is in transition as the APC government leaves the stage and the PDP takes over -with your support and goodwill- come May 2023. It is your duty, therefore, to take stock of the assets (if there are any) and liabilities (which will be huge!!!) of the APC administration. It is also your responsibility to interrogate those who aspire to govern the country. You must assess their understanding of the environment, their policy priorities, and their strategies for dealing with a plethora of local and national issues from the mundane to the most complex.
You should never allow political slogans to take the place of development plans. Political propaganda on Facebook, Tweeter and Instagram is never a substitute for proper socio-economic and political agenda.
Thirdly and finally, the private sector is key to any government’s development agenda and must be always listened to. For those who do not realise the criticality of the private sector in Nigeria’s development, the following will whet your appetite:
● According to National Bureau of Statistics (NBS) data, the public sector accounts for only 7.5 percent and the private sector, 78.9 percent of national consumption expenditure.
● Similarly with investment expenditure, a major source of economic growth. Government investment is only around a quarter of that of the private sector. Indeed, 85% of the investments in the Medium-Term National Development Plan 2021-2025 are envisaged to be private sector funded.
● According to the Nigeria Infrastructure Master Plan, Nigeria has an infrastructure financing deficit of approximately US$3 trillion over the next 30 years. This means a financing requirement of approximately US$100 billion per annum which cannot be met by the public sector. Nigeria’s annual budget is only USD30 billion.
For these and many other reasons, a warm handshake with the private sector is inevitable for any economic policy or programme to succeed. Indeed, private sector leadership in driving growth is the first of the three key principles of my economic growth and development agenda, as encapsulated in My Covenant with Nigerians.
So, you ask me: What is your economic policy that can lift Nigeria up from the abyss?
A little background
In all my life endeavors, whether as a businessman or as a public officer, I have always nurtured a desire to create abundant opportunities for people and enhance their capability to explore those opportunities so that they live a happy, healthy, and productive life. I feel fulfilled when I create prosperity for others.
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.
Economic prosperity is an integral part of my 5-point agenda, soon to be officially unveiled, 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.
Today, I will speak on the strategic steps I will take to rebuild the economy of our dreams and foster boundless prosperity for all Nigerians.
Let me crave your indulgence to ask: So where is the Nigerian economy today?
It is important to first understand where we are because policy prescriptions must always be preceded by diagnosis. So, before I outline the contours of my economic growth and development agenda, permit me to remind ourselves of the key challenges facing the economy. I will focus on five key deficiencies of the economy which all turn out to be self-inflicted.
1. The Nigerian economy is crawling rather than growing
Nigeria’s GDP grew at an average rate of less than 1% since the APC assumed power in 2015. Compare this with an average growth of 6.5% in the seven years earlier.
Per capita income, a measure of citizens’ well-being, has progressively fallen since 2015 because of declining output and a fast-growing population. Nigerians are worse-off today than they were in 2015.
The current rate of growth of about 3.5% masks the real challenges facing the economy. The economy remains very fragile as the key sectors are either growing slowly (as with agriculture) or contracting (as with oil and gas). The oil and gas sector, which is the economy’s lifeline has suffered decline in 19 out of 30 quarters since 2014.
For many economic sectors and for the ordinary citizens it still feels as if we are in a recession.
2. Under the present administration our people are not working.
More than 23 million people are out of jobs. In just 5 years between 2015 and 2020, the number of fully employed people dropped by 54%, from 68 million to 31 million people.
The number of unemployed people is more than the population of Lagos state or the inhabitants of the Federal Capital Territory (FCT), Abia, Bayelsa, Cross River, Ebonyi, Kwara and Nasarawa states combined!
What is even more worrisome is that the majority of the unemployed are young men and women, who lack not only the means to survive but any hope for the future. The number of unemployed youths increased by 9 million from 4 million in 2015 to 13 million in 2020.
High youth unemployment and limited employment opportunities pose serious economic and security challenges. Ensuring there are enough jobs for Nigeria’s youth is therefore already an urgent concern.
3. More Nigerians are poorer and more miserable today than in 2015
Job losses, declining purchasing power of per capita income and lack of citizens’ access to basic amenities have pushed more than 90 million people below the poverty line and created more misery for the poor in towns and villages.
This year, around 12 percent of the world population in extreme poverty, with the poverty threshold at 1.90 U.S. dollars a day, live in Nigeria.
Basic commodities are now beyond the reach of the average Nigerian. A loaf of bread costs 100% more today than it did in 2020. Farmers now pay more than 200% more for a bag of fertilizer -if they see it-than they did in 2020.
4. Nigeria is being dressed in borrowed robes!
Nigeria under the APC-led government has consistently run-on budget deficits since it came to power in 2015. These budget deficits are often above the 3% threshold permissible under the Fiscal Responsibility Law. Ironically, this has increased the government’s appetite for more debts- now more than N50 trillion (if you add AMCON debts and Ways and Means)
For the first time in Nigeria’s history, the FGN paid more in debt service than it earned! By spending more than 100% of its revenue for debt service, Nigeria is breaching one of the applicable debt-sustainability thresholds. The APC-led government is dressing Nigeria in borrowed robes!
This action puts a big question mark on the capacity of the government to manage its rising debt profile without endangering macroeconomic stability. Indeed, we are concerned that this action is already exposing Nigeria to financial stability issues as we slip from a medium risk of debt distress to high risk of debt distress.
5. Capital has taken a flight
Policy incoherence and flip-flops combined with internal insecurity continue to pose a significant risk to investment and thus output growth. They leave potential investors confused and weary of the Nigerian economy. Foreign Direct Investment (FDI) has progressively declined since 2019. It fell sharply from US$8.5 billion in Q1 2019 to US$5.8 billion in Q1 2020 and US$1.9 billion in Q1 2021.
We have lost our esteemed position as Africa’s preferred investment destination to less endowed nations!
Ask me why these economic challenges have persisted and progressively worsened?
It has become fashionable for the APC-led government to blame the opposition and external factors for Nigeria’s economic woes.
The evidence, however, is overwhelming that the country’s under-performance is largely attributable to leadership failures in the management of the state. The failure of leadership by the APC-led government is staring every Nigerian in the face as the country’s economic, social, political and security challenges persist and assume frightening dimensions.
An unprepared leadership fails to anticipate impending crises and is always slow to react. The first policy document designed by this government – the Economic Recovery and Growth Plan (ERGP) in 2017- was a reaction to the economic crises of 2016. Similarly, the Economic Sustainability Plan (ESP) was a reaction to the COVID19-induced economic crises. Even these reactions were slow to come and economic recovery has perhaps been premised more on luck, rather than planned economic reforms.
So, having outlined the challenges we face, you may quite rightly ask me: what is my vision to get the economy on its feet and create prosperity?
The economic growth and development agenda:
Our economic growth and development agenda seeks primarily to stimulate the growth of the economy. It envisions an economy that is modern, dynamic, and competitive, capable of taking its rightful place among the top 20 economies of the world. Nigeria has the potential to double its GDP by 2030 and achieve a per capita income of approximately US$5,000.
We anticipate growth from our policies that seek to revitalize the real sectors including agriculture, manufacturing and MSMEs. Re-building infrastructure and reducing infrastructure deficit will enhance the carrying capacity of the economy and unleash growth and wealth creation. We will elevate production for export to a top policy priority and long-term investment priority and promote export of manufactured goods
How do we deliver on these lofty goals?
Here are just a few examples of the sort of strategic steps we plan to take should I be so fortunate so to be chosen by the Nigerian people to lead them:
1. A warm handshake with the private sector.
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.
Nigerian businesses are significantly impacted by business environment constraints and cannot therefore realise their full potentials. This government has failed to demonstrate a strong commitment to private sector development: for example, the several pledges it made to reduce its pervasive influence on the economy and promote private sector-led development remain unfulfilled.
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.
2. 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 (the 3Cs) 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. (Read my lips: a stable exchange rate, not one Naira to one US$ exchange rate!!!)
● 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
● We will take tough and difficult decisions on security matters without fear or favour. Investment is a coward animal and is fearful of conflicts and insecurity.
3. I will break the jinx in infrastructure financing
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 toestablish 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.
4. I will lead Nigeria out of darkness
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. One lesson we have learnt recently is that an industrial dispute with the FG in Abuja should not affect an industry in Lagos or a factory in Aba or in Kano or even an average Nigerian who just wants to get home, watch the news and sleep under a ceiling fan.
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.
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.
5. I will stimulate growth to create jobs and wage war against hunger.
The economy must grow for economic opportunities to abound.
However, economic growth will be meaningless unless our citizens enjoy the benefits of growth including access to jobs, higher incomes, and enhanced access to social amenities. Poverty reduction shall be the centrepiece of our economic development agenda and economic performance shall henceforth be measured by the number of jobs created and the number of people lifted out of poverty.
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.
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!
6. 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% 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.
7. On debt accumulation, I will be more strategic and more circumspect.
The revelation by Nigeria’s Finance Minister in July this year that the cost of servicing Nigeria’s debt has surpassed the federal Government’s retained revenue by N310 billion in the first quarter of the year is very worrisome.
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.
● 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
● 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.
8. I will undertake far reaching Institutional reforms to engender efficiency and reduce administrative costs
• 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
• 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.
Many of you may wish to ask whether Atiku Abubakar has what it takes to implement these radical initiatives?
Our economy is bleak and our challenges daunting, there is no doubt about that. No one should downplay the enormity of the tasks ahead. Indeed, I cannot think of a more daunting challenge than restoring confidence in the future of Nigeria as a dynamic economy and stable democracy.
However, I have three things going for me:
First, I have a good grasp of the challenges bedeviling Nigeria. I know the root causes of our problems. I know that many of these problems are self-inflicted and can be reversed if we are determined. AND WE ARE DETERMINED!
Second, I will not come unprepared. It is not in my character as a businessman or as a public officer to be caught off guard. My policy document contains the right policies that will be timely delivered. Yes, timely delivered! Without any GO SLOW, I can assure you. I will assemble the critical skills and competencies to implement innovative solutions to our problems with the desired impact. I will provide the critical leadership that is needed to deliver.
Finally, in economic reforms and economic management matters, I am not a novice. I have a history of economic reform and economic transformation. Remember the good old days of economic growth with macroeconomic stability, low rates of unemployment and low poverty headcount. As head of the economic management team, (1999-2007) I was instrumental in the design of a private sector revival strategy and advocated for the opening of the economy for private sector investments in the IT sector. Today it is undeniably the fastest growing services sector in the Nigerian economy. Experience counts and to avoid the mistakes of the past, never again should Nigerians hand over their future to a green horn.
AS ONE WE CAN DELIVER!
Thank you and God Bless!
Being an Address Delivered by His Excellency, Atiku Abubakar, Vice President of Nigeria (1999-2007) and Presidential flag bearer of the People’s Democratic Party -PDP on September 13, 2022.
