…N2trn bond issuance to clear contractor debts
…Transmission capacity now 7000mw
…FG working on 50 reforms to improve business climate
Three senior government ministers on Friday made a compelling case for the revival of growth in the Nigerian economy, as the various policies being pursued by the President Muhammadu Buhari administration begin to gain traction.
Speaking at the BusinessDay Nigeria Economic Outlook Conference, Udoma Udo Udoma, Minister of Budget and Planning said the 2017 Federal Budget which will be passed sometime in March, encapsulates key ingredients of the Economic Recovery and Growth Plan (ERGP).
“This reflects government’s commitment to get the economy out of recession and into diversified and inclusive growth. We are determined to change in a fundamental way, the trajectory of the Nigerian economy.”
The N7.3 trillion federal budget assumes a benchmark price of $44.5 per barrel, oil production targets of 2.2 million barrel per day (bpd), Foreign Exchange (FX), rate of N306 per dollar, inflation rate of 15.74 percent, and GDP forecast of 2.5 percent.
The ERGP is based on three strategic objectives and enablers, according to Udoma.
These are restoring growth, investing in the people and building a competitive economy.
Principles of the plan include upholding core values, leveraging the private sector, allowing markets to function, tackling constraints to growth, and building a cohesive nation.
Agriculture is the number one priority of the ERGP, followed by expanding Nigeria’s energy infrastructure in power and petroleum refining, improving the transportation infrastructure and driving industrialisation.
Udoma also predicted that the level of investments in Nigeria’s oil sector is set to rise in 2017 due to new Joint Venture (JV) cash call mechanisms, marginal field licensing and early license renewal.
There will also be a renewed push to solve the issue of contractors being owed huge sums of money by the Federal Government.
“The Federal Government is planning to issue up to N2 trillion in bonds to deal with contractor liabilities and amortisation will start in 2018,” Udoma said.
Capital spending is expected to make up 31 percent of total FG expenditure in 2017, while the projected deficit as percentage of GDP will be 2.06 percent.
For the Ministry of Power, Works and Housing, headed by Babatunde Raji Fashola, N18.7 billion has been released as counterpart funding for the 3,050 Mambilla Hydro Project, while the Lagos- Ibadan Expressway has been earmarked N31.5 billion.
“This job can be done and it will be done. Government plans to improve the liquidity situation of the power sector, as it is working on policies to pay the generation companies over the next two years for every unit of energy generated, so that they can pay their distributors. This is expected to strengthen the distribution end,” Fashola said.
Nigeria now has about 7,000 mw of transmission capacity, while current generation was close to 3,400 mw according to Fashola.
On housing, the minister said government has delivered on its promise to evolve a national housing implementation plan to achieve the policy of delivering affordable housing to Nigerians.
The Federal Government has voted N100 billion in the 2017 budget for a new social housing programme which is expected to rise to N1 trillion.
Fashola said the private sector has a huge role to play in ensuring the success of government’s plans for the power sector.
He called on the private sector to invest in the (green) bonds when they are issued, and to play by the rules.
He decried the activities of private sector businesses that set up their businesses in a manner that obstructs government’s right of way, calling on petrol tanker operators to adhere to the volume limit of 33,000 litres for their tankers.
Fashola said that a situation in which the tankers take on product volume of as much as 60,000 litres is not good. He also urged petrol tankers to set up proper parking spaces rather than use the roads and bridges as parks.
He said government will set up weighbridges at specific points on our roads as a means to arrest continuous flouting of these rules.
The minister said the private sector can help the power sector by emphasising efficiency in the use of power infrastructure under their management, paying their bills promptly, and using existing mechanisms for dispute resolution, rather than resorting to the law courts for all power-related disagreements.
Okey Enelamah, Minister of Industry Trade and Investment, said the government intends to tackle the ease of doing business problem head on.
Enelamah emphasised the importance of improving the ease of doing business in Nigeria, noting that when nations perform well in the ease of doing business, their economies grow; and that the ease of doing business is a leading indicator.
Nigeria’s tough business environment has been deterring Foreign Direct Investment (FDI) in recent years.
FDI which peaked at $8.8 billion in 2011, fell to $7.1 billion in 2012, $5.6 billion in 2013, $4.7 billion in 2014, $3.1 billion in 2015 and $1.6 billion for the first two quarters of 2016.
Enelamah said that based on his interactions with foreign investors, people perceive Nigeria as a difficult place to do business, but that the government is doing a lot of work to ensure that this perception is changed.
“People have their expectations for what it will take them to write their cheque,” he said. “We need to restore domestic confidence and the confidence of foreign investors.”
Enelamah said Nigerians must accept collective responsibility for the outcomes they want to see in the economy and not put all the responsibility on the government. He observed that economic improvement requires partnership with the government.
Enelamah highlighted key areas where the government has acted decisively as it plans to improve on its ease of doing business ranking, to attract more investments and grow the economy.
He noted that government has simplified the visa application process and introduced ten initiatives to improve the process of starting a business. Government has also introduced 12 initiatives to improve access to credit, seven initiatives to improve dealing with construction permits, and 3 initiatives for improved access to electricity. In addition, Enelamah said government was working with the World Bank to enact 50 reform efforts which should significantly improve the country’s ease of business scores.
The minister said that the government plans to concession the airports, adopting the Singapore model. He said that with all the policies in place, the business climate in Nigeria will improve significantly as the government targets to get 20 points positive movement in the ease of doing business ranking within the next 1 year, and be ranked among the 100 best countries in the ease of doing business by 2019.
