NESG: Roadmap to Inclusive Growth, Sustainability Lies in Tough Choices
Olaseni Durojaiye who was at the 21st edition of the Nigerian Economic Summit and witnessed the robust sessions which identified various impediments to sustainable growth in the economy writes on the recommendations of the NESG
Upon the agreement that there was an urgent need to arrest the nation’s economy from further slide to recession, and the need to foster competitiveness especially in sectors where the country holds comparative advantages, engender inclusive growth and sustainability, participants at the 21st Nigerian Economic Summit which ended in Abuja last week have presented key strategies to help navigate the country’s economy out of its current precarious state.
In the recommendations, the summit particularly charged the federal government with the task of improving the investment climate in the country and easing the process of business as a way to grow the nation’s economy. The gathering agreed that there was need to diversify the economy away from the oil sector, explaining however that doing so requires that government makes tough choices.
While noting that the most critical part of the exercise was implementation, summit chairman, Bukar Abba Kyari, in a chat with journalists had stressed that if adopted, the roadmap contained in the recommendations to the federal government would foster competitiveness, inclusive growth and sustainability in different sectors of the nation’s economy and return the economy to growth mode. He also disclosed that the private sector had resolved to follow-up with the government in terms of further engagement as regards to implementation and monitoring of execution of the recommendations from the summit.
The strategic recommendations which was an aggregation of thoughts of economists, experts and analysts who are largely operators in the private sector was preceded with a “Country Scenario Presentation” by Kunle Elebute, Partner and Head Advisory Services, KPMG Professional Services. Before Elebute’s presentation, Chief Executive Officer of NEXTNOMICS and Chairman, NESG Faculty of Economics, Dr. Oshikoya, had presented a paper titled ‘State of the Nigerian Economy.’ Indeed, the presentation by Dr. Oshikoya, a former Chief Economist of the African Finance Corporation and Director of the African Development Bank (AfD), witnessed by the Vice President, Professor Yemi Osinbajo, ended on an optimistic note. He concluded that the Nigerian economy would rebound just as Elebute noted that the ruling All Progressive Congress (APC) manifesto aligns with ‘Optimistic Approach model, one of the case scenarios contained in the options he presented as a way of the economic state the country has found itself in the light of the decline in global oil price.
Background
In his presentation titled “Country Scenario Presentation,” Elebute, painted the current state of the nation’s economy and noted the four phases of economic cycles as boom, recession, recovery and a return to boom. He then identified fiscal multipliers as education, health, infrastructure, security and other capital expenditure adding that fiscal multiplier was the ratio in which change in a nation’s income is affected by government spending.
He also presented three model assumption cases: Base Model, Moderate Model and Optimistic Model. In the optimistic model which aligns with the tough choices suggested to government in the summit recommendation, Elebute canvassed that “budgetary allocation to education be increased to 20 percent from a raise in the quality and standards of universities to redress the outflow of students to foreign countries and, increased investment in vocational education through establishment of technical colleges and vocational centers in each state of the federation.
On health, he argued that government should “provide tax incentives and government funded research grants to local manufacturers of phar- maceutical products as well as to convert 1,000 hospital beds in five teaching hospitals into world class private wings with funding, expertise and management by world class healthcare companies.”
Further in his presentation on infrastructure, he called on government to privatise or concession the railways with focus on freight, major highways, major airports, refineries, pipelines, depots. He also added that it was imperative that government “adopt alternative financing options in the areas of infrastructure investment both directly and in partnership with the private sector “and urged privatisation of the power transmission networks as a way to increase power generation to achieve 20,000 mega watts.
According to him, adopting the Optimistic Model approach will check the slowdown mode, arrest a further slide into recession and see to a 7.5 percent growth in the economy by Q2 of 2018.
Recommendation Proper
In the recommendations to President Buhari, a substantial part of which was adopted from contributions from Elebute, Oshikoya and a former Prime Minister of Georgia, the summit identified pervasive corruption, poor infrastructure, weak institutions, inadequate regulations and policy deficiencies as some of the challenges bedeviling business operations in the country. The communique added that to drive the economy towards competitiveness in line with the theme of the summit, the government needs to tackle problems of corruption, infrastructure deficit; power, roads, healthcare, poorly funded schools, ineffective institutions, obsolete and multiplicity of legislation as well as the entire educational and associated infrastructure.
Chairman of the summit, Kyari Abba Bukar presented the summary of the recommendations to the Head of Service of the Federation, Danladi Kifasi, who represented President Muhamadu Buhari for onward delivery to the president. The summit also recommended adoption of the economic reengineering model adopted by Georgia as presented by a former Prime Minister Gilauri.
In the document which was obtained by THISDAY, the summit submitted that for the country to engender inclusive growth there was need for the federal government to eliminate insecurity and pull more people into the productive sector of the economy.
On reforms, the recommendations reads “Conduct impact assessment of current institutional reforms to enable deepening, consolidation and or redesign of institutions; institute performance management system with new appraisal metrics that track, measure and reward performance; put in place a competency-based Human Resources (HR) function founded on a robust performance management system, flexible employment policy and compensation structure to restore governments as employers of choice and reengineer Ministries, Department and Agencies’ (MDAs) business processes to remodel the bureaucratic system and its red tape and bottlenecks.”
Continuing, the summit called on the federal government to among others “Identify all obsolete laws that are impediments to GCI and ease of doing business. Expedite speedy legislation; simplify regulation to eliminate bottlenecks and outdated laws as well as strengthen legal framework for repatriation of stolen funds and institutionalise disincentives for graft,” it stated.
The call on government to simplify regulations, do away with outdated laws and eliminate bottlenecks rang through the second plenary during which ‘Creating and sustaining Nigeria’s comparative advantage’ was discussed. Chief Executive Officer of C& I Leasing, Emeka Ndu, noted a couple of ineffective and counterproductive laws that unnecessarily prolong turnaround time and stifle the nation’s investment climate. The session identified ineffective policies to include the policy that regulates application for share capital increase and the port tax policy. Chief Executive officer of Phillips Consulting, Mr. Folusho Phillips, also alluded to the policy of closing the seaports by 6pm as outdated and traced the policy to the Nigerian civil war adding that the law came by in order not to make the ports targets for Biafran aerial forces during the war.
The recommendation concerning ease of doing business was in tandem with the approach that Georgia adopted to recover its economy from the brink. Stating this in his presentation at the summit, Gilauri called out the need for structural reforms and highlighted the elements of it as including: Redesigned process, streamlined regulation, changed mindsets and creating motivational formula.
While arguing that his propositions were what worked for his country, he posited that Great reformers outperform others with respect to growth and stability; Every situation is different but there is a common DNA in many of the reforms and best reforms are radical, deep and fast with respect to growth and stability,” he stated.
Speaking to THISDAY on the sidelines of the summit, Director General of the Lagos Chamber of Commerce and Industry, Muda Yusuf, explained that what the business community wants from the summit that can be regarded as value is for the government to improve the quality of the investment climate.
“Fine, the summit talked about diversifying the economy which simply means relying less on oil for revenue generation and foreign exchange earnings and when you want to rely less on oil we should be looking at other sectors for job creation and income generation the manufacturing sector is key, mining sector is key, real sector is key and the agriculture sector too is key.
“What can enable these sectors grow is an enabling environment. From the policy perspective government should remove the many bureaucratic bottlenecks that frustrate businesses. From the Georgian example, the focus should be reducing the cost of doing business, reducing the number of permits and licenses and increase the speed of doing business and create more infrastructures and making institutions more supportive to business. Once the environment is right, the sky is the limit,” he concluded.
The summit submitted that for the country to engender inclusive growth there was need for the federal government to eliminate insecurity and pull more people into the productive sector of the economy