Nigeria’s President Muhammadu Buhari kicked off a two-day economic summit yesterday in Abuja, with a pledge to boost electricity output to 10,000 megawatts (mw) and boost gas supplies to power stations.
Speaking at the opening session of the two-day National Economic Council (NEC) retreat, the President said: “Nigerian’s favourite talking point and butt of jokes is the power situation in our country. But, ladies and gentlemen, it is no longer a laughing matter. We must and by the grace of God, we will put things right. In the three years left for this administration. We have given ourselves the target of ten thousand megawatts distributable power. In 2016 alone, we intend to add two thousand megawatts to the national grid.”
Analysts, who however listened to the President’s speech or read it afterwards, mostly panned the address, likening it to familiar slogans echoed by former leaders.
“The President’s intention to add 10,000mw of electricity to the national grid by the end of his tenure is not strange, as we have had similar promises by our leaders in the past. If we can add 2000mw this year despite our challenges, then we can hope that the promise will be fulfilled come 2019,” Bolade Agbola, executive director, Cashcraft Asset Management Limited, said.
“There is need to ensure that our exchange rate reflects the fundamentals of our economy. The present regime of FX is suboptimal and would continue to create arbitrage opportunities to the detriment of the society. The administration could be lucky if the crude oil market rebounds soon, otherwise, the wait for things to improve will be long and lots of damage created for the economy,” Agbola said.
Nigeria currently generates about 4,000mw of electricity, even as consumers continue to complain about constant power cuts and high electricity bills.
Other problems include low supply of gas to power plants due to vandalism, obsolete power distribution equipment such as transformers, power fluctuations, which damage manufacturing equipment and household appliances, and low voltage that cannot run industrial machinery.
The two-day retreat is being organised to generate immediate, medium and long-term viable policy solutions to the economic challenges facing the country at both the Federal and State levels.
“This sounds like another talk shop retreat, exposing that they did not have an economic blueprint and the President’s tone is the same generic statements and phrases,” said the CEO of a major financial firm, speaking on condition of anonymity.
“President Buhari spoke as if he was still canvassing votes. He listed several things he knew should be done or will be done. One year after he was sworn in, the President did not mention even one key economic step his government has taken to bring life to the economy and the reason is simple, there is not one key step he has taken,” he said.
Among attendees are members of NEC led by Vice President Yemi Osinbajo, state governors, ministers and a former cabinet minister and economic adviser to the Prime Minister of India, Montek Singh Ahluwalia, who would present a paper at the retreat.
Declaring open the retreat, Buhari urged the governors to consider what he called some random policy options filtered from across the spectrum of four selected sectors of the economy.
He listed Power, Agriculture, Manufacturing and Housing.
The President said though the power sector had been privatised, there was no evidence of any improvement in the quality of service. “We are facing the classic dilemma of privatisation: Public interest Vs Profit Motive. Having started, we must complete the process,” he said.
The President said the electricity regulator, National Electricity Regulatory Commission (NERC), must ensure consumers get value for money and overall public interest was safeguarded.
While the government will fast track the completion of pipelines from gas points to power stations and provide more security to protect gas and oil pipelines, power companies should be encouraged to replace obsolete equipment and improve the quality of service and technicians, Buhari said.
The President told the 22 states governed by the All Progressives Congress (APC) to build 250,000 housing units per annum to enable the party meet up with its election promise of providing one million houses per year for Nigerians.
He invited foreign investors and local construction companies to assist Nigeria to cover the country’s housing deficit, which stands at 17 million.
On the manufacturing sector, he said he was grieved that so many manufacturing industries in the country were groaning and frustrated because of lack of foreign exchange to import raw materials and spare parts.
According to the President, he believes it is a temporary phase as there are deeper, more structural problems bedevilling local industries, which the retreat should identify short and long-term answers to.
Some of the problems he said include inadequate infrastructure, high cost of borrowing money, lack of long-term funding, under-developed science and technology research, union issues and smuggling.
He therefore recommended among others, that there should be more fiscal incentives for Small and Medium Enterprises (SMEs), which prove themselves capable of manufacturing quality products good enough for export and for the Central Bank of Nigeria (CBN) to create more incentives and ease credit terms for lending to manufacturers.
He also called for the launch of a fresh campaign for the patronage of Made-in-Nigeria goods, “for example, all uniforms in government-sponsored institutions should be sourced from local factories.”
The President also spoke of the situations in agriculture and health sectors, noting that now both the peasant and the mechanised farmers agree with the general public that food production and self-sufficiency require urgent government action.
For too long “government policies on agriculture have been half-hearted, suffering from inconsistencies and discontinuities,” he said.
On his part, the Vice President Yemi Osinbajo said the retreat was convened to find a solution to the country’s economic problems, which he said was caused by over dependence on oil.
A political economist, speaking with BusinessDay after listening to the president’s speech, said: “There are a number of changes that are fundamental to moving Nigeria from the present consumption centric orientation to a production focused polity. The government needs to re-size the bloated central government; put in place proper fiscal federalism; scrap these banana entities known as states, which except for Lagos, cannot pay their way as the units of the federation and put in their place regional units, probably along the lines of the six geo-political zones.”
PATRICK ATUANYA & ELIZABETH ARCHIBONG
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