Can the Economic Sustainability Plan forestall looming recession?
Anxiety has gripped Nigerians over fear of another round of economic downturn following the devastating twin impacts of the Coronavirus (Covid-19) pandemic and low oil prices.
The International Monetary Fund (IMF) exacerbated the fear on Wednesday when it warned of a more intense looming economic recession, lowering its earlier projected 5.4 percent economic contraction in 2020. This was a reversal of its earlier forecast of -3.4 percent.
Nigeria has hardly recovered from the last recession in 2016, which ruined many businesses and led a chain of crisis the current government is grappling with.
The IMF made this projection in its World Economic Outlook update titled ‘A Crisis Like No Other, An Uncertain Recovery’ and urged Nigeria and others hit hard by the pandemic to brace up for the challenge and implement good policies to ameliorate the grim consequences of the pandemic.
The IMF projection may have coincidentally triggered swift response from the Nigerian government, which on Wednesday, June 24 apparently took the gauntlets. The Federal Executive Council (FEC), approved N2.3 trillion stimulus recommended by the Nigerian Economic Sustainability Plan (NESP) chaired by the Vice President, Yemi Osinbajo which recently submitted its reports to President Muhammadu Buhari.
The plan is to support the Nigerian economy in the face of the disruptions caused by the Covid-19 and some of its goals is to “create jobs, put money into the economy and hopefully stop it from slipping into recession.”
It was also aimed to “support small businesses and prioritise local content”.
According to media aide to Osinbajo, Tolu Ogunlesi, the NESP is a 12- month ‘transit’ plan between the Economic Recovery Growth Plan (ERGP) and the ERGP successor plan currently being worked out.
The NESP appears ambitious in its contents but experts have advised on the discipline, tact and strategy required to make the plan successful otherwise, the consequences of a failed could better be imagined.
Speaking with BDSUNDAY, Johnson Chukwu, CEO, Cowry Asset Management commended the government for the newly developed plan as it is critical to spurring the needed growth in the nation’s economy especially at a time like this.
He said: “Considering the current state of the nation, this plan fits in to ensure the desired growth and revamp the economy again, we must commend the government for the effort”.
Chukwu however, stressed on implementation, adding that there is need for strict monitoring and frequent measure up of action plans to ensure it is successfully implemented.
“We are never short of good plans as a nation but the problem is always on poor implementation. What I will say is that the plan should have specific deliverable items, there should be smaller action plans to aid implementation”.
Other recommendations of the plan include- A mass Agricultural programme, which is expected to bring between 20,000 and 100,000 hectares of new farmland under cultivation in every state of the federation and create millions of direct and indirect jobs; Extensive Public Works and Road Construction programme focusing on both major and rural roads and using locally available materials like limestone, cement and granite; Mass Housing programme to deliver up to 300,000 homes annually, engaging young professionals and artisans who form themselves into small and medium scale businesses within the construction industry, using indigenous labour and materials, and installation of Solar Home System, targeting 5 million households, serving about 25 million individual Nigerians who are currently not connected to the National Grid.
Aliu Hassan, an Abuja-based economist, in his response said that the plan is a welcome development as it seeks to address the major issues of poverty, unemployment and local production, especially for the SMEs.
Speaking further, Hassan charged the government on implementation strategy, saying that most economic plans have failed over the years due to lack of competence and technical knowhow and corruption among delegated personnel.
“I am personally glad about this project; it goes a long way to show that the government feels what the public is going through at this time.
“We see businesses collapsing; we see increase in job losses, even the average Nigerian can barely go on three square meals daily as everyone is struggling to pull through this period, but these and more have been highlighted in this Sustainability plan”.
However, another public affairs analyst, Katch Ononuju (PhD Economics) dismissed the plan, stressing that the government of President Buhari does not have any plan for Nigeria because the government is allegedly full of corruption and cannot sustain any serious plan.
He said: “The government does not have any plans. Look at the kind of corruption going on in the government. The government went on a borrowing spree to spend and not to improve the economy, so, there is no hope in the plan as the country is already in recession.”
Another expert, Majeed Dahiru, advised that the nation tread with ‘cautious optimism’ in the coming days. He said that judging by antecedents, the issue of implementation has always been the challenge of Nigeria and not good ideas.
“NESP contains a lot of good measures that will help protect the Nigerian economy from recession and help boost prosperity. The challenge however is implementation,” he said.
He expressed doubts over the discipline needed to carry out the plan even as he advised that Nigeria must reform it’s governance system if the nation would work.