• Thursday, April 25, 2024
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NESG: Galvanising engagements to reform the Nigerian economy

How Nigeria can achieve sustainable development- NESG

In 1993, an army of private sector leaders and patriots floated the Nigerian Economic Summit Group (NESG) to champion the reform of the Nigerian economy into an open, private sector-led, globally competitive economy. As of the time of founding this noble group, many private and public sector leaders were sceptical about it, mainly because the country was still mired in the throes of a military interregnum.

However, 27 years down the line, the group has become the most important platform for public and private sector engagements, advocating for efficient and effective government policies that galvanise growth and jobs.

Since its establishment, NESG has been guided by fundamental principles such as free market, encouragement of private sector investment, creation of an enabling environment, establishment of an economic foundation for democracy, commitment to the rule of law and governance in the national interest. So far, the group has succeeded in fuelling discussions and policies that reflect these visions, missions and strategic targets.

It may not be totally correct to ascribe economic successes achieved in the last 27 years to any one organisation. However, the success of every organisation would be better measured by its visions, strategic targets and efforts put in place to achieve them. It is, therefore, on record that the NESG has championed some of the biggest market-led reforms in Nigeria’s history through its consistent advocacy and participation in government committees.

The group’s advocacy is responsible for the Pension Reform Act of 2014, which has, for 16 years, instilled confidence in pensions management in Africa’s biggest economy. The Act replaced the unfunded and unsustainable Defined Benefits Scheme with the Contributory Pension Scheme, which is now fully funded and ensures that money contributed into individual employees’ Retirement Savings Account (RSA) gets to them as they retire. The benefits of the Contributory Pension Scheme enjoyed by most Nigerians today could be attributed to the many years of advocacy done by NESG. The group had, before the pension reforms, advocated for an independent and sustainable scheme that would ensure that employees were not starved of funds at their retirement.

Today, the Pension Fund Administrators (PFAs) manage and invest employees’ funds in the RSA, from where the contributors draw benefits on retirement, in line with the provisions of the Act.

This is not the only major contribution of NESG. The reform of the telecoms industry today was due to advocacies and participation by the NESG and its key members. Before the reforms, Nigerians had been stuck with the anachronistic and regressive Nigerian Telecommunications Limited (NITEL), a monopoly that made access to communications difficult and expensive. It was then an exclusive preserve of the rich who could afford to intimidate the poor with telephones. Though the government had enacted the Nigerian Communications Commission Act in 1992 which allowed new entrants into the telecommunications sector, it did not happen until NESG and other private sector groups mounted pressure on government. NESG, in its characteristic manner, campaigned for free market and fair play that would allow competition and prices to allocate telecoms services.

Today, the results are here for everybody to see. The country has had MTN, Glo and other telecoms companies who have used communications services to improve lives, businesses and economy. When MTN berthed in Nigeria, a SIM pack cost over N25,000, but competition has brought it down to almost nothing today. It is now possible to get free SIM cards. The poor, the middle-class and the rich can afford recharge cards because they are now denominated in lower and higher currencies.

Moreover, the reforms Nigerians see in the petroleum and electricity industries today are products of NESG engagement with Nigerian leaders over the years.

In one interview with BusinessDay in 2016, Laoye Jaiyeola, CEO, Nigerian Economic Summit Group (NESG), had argued that petroleum subsidy was a total waste of the country’s resources and that the country was only subsiding fuel for the rich with many cars and drivers. After many years of ignoring the calls for the removal of corruption-infested subsidies which supposedly cost Nigeria N1 trillion annually, the present administration of President Muhammadu Buhari has granted it. The removal of the subsidies is among the best things to happen to Nigeria since its return to democracy in 1999.

The Lagos Chamber of Commerce and Industry (LCCI) in its recent statement confirmed NESG’s age-long position that Nigeria’s fiscal space can no longer sustain humongous, corruption-prone and opaque subsidies which are not in the best interest of the citizens, the economy and future generations.

In a statement by Muda Yusuf, director-general of the chamber, the LCCI also argued that attracting private capital in the electricity sector requires that pricing must be right to ensure that the economics of investment makes sense to the investors.

These have been the position of NESG over the years.

In 2003, NESG had a first-ever public debate on Public-Private Partnership for Infrastructural development with the support of UK Trade and Investment. The discussions and resolutions resulted in the Infrastructure Master Plan of 2015-2043, which on paper is among the best infrastructure policies in Africa.

Furthermore, NESG contributed to the repeal and replacement of the Nigerian Enterprises Promotion Act of 1989 and Exchange Control Act of 1962 with the Nigerian Investment Promotion Commission Act 1995 (later 2007) and Foreign Exchange Act 1995 (later 2007), respectively. The FX market is not yet in its best form, but it is still a much better market than it was many years ago, thanks to NESG’s advocacies.

It is also on record that NESG championed a policy shift from state ownership and management of business to privatisation and competition across the economy to confine government to governance and leave business for the private sector. This led to the privatisation of previously government-owned enterprises such as paper mills, NITEL, steel plants, textile mills and many others. Some of the privatized firms are not performing as expected, but that is down to management, politics, policies and corruption, not basically privatisation. Only about 37 percent of 142 privatised enterprises were moribund as of 2018, according to Alex Okoh, director, Bureau for Public Enterprises.

The group has also called for the privatization or full concessioning of Ajaokuta Steel Complex and Aluminium Smelter Company to make them return to life. Moreover, the group is partly responsible for the establishment of Vision 2010 Committee which produced a comprehensive and well thought-out framework for economic development of the country.

It is also critical to note that NESG was part of Nigeria’s banking reforms which recapitalised deposit money banks, making them stronger and more responsible to their customers. Through the reforms, many backward-looking financial institutions in the country began a step towards becoming 21st century institutions. It is now possible to carry out remote financial transactions, use the automated teller machines (ATMs) and even do agency banking.

The contributions of the NESG, no doubt, are enormous. Some of its remarks and researches are yet to be implemented, but the ones that have been actioned have contributed in no small to the transformation of the Nigerian economy. In the second quarter of 2020, for instance, the telecoms and information services contributed 14.30 percent to the Gross Domestic Product (GDP), amounting to about $57.2 billion, thanks to reforms in the telecoms industry. As of May 2020, pension assets in Nigeria stood at N10.8 trillion, up from N10.6 trillion in April this year, according to the National Pension Commission (PenCom). Nigerians can now discuss investing pension funds in other industries, an impossible phenomenon in the old pension scheme. Total assets of banks were N42.2trn as of the end of February 2020, thanks to reforms. Technology is now driving businesses and is a focal point today due to COVID-19. But this is possible only due to the reforms implemented in the sector.

As the group plans its 26th Economic Summit in October entitled ‘Building Partnership for Resilience’, it is important to note that discussions and resolutions from the summit will be part of Nigeria’s growth journey.