*Economic speech details trajectory of the Buhari presidency, offering policy insights
“We must pay attention to what we are seeing today, and some of the shameless noises of those who brought our nation to its knees, many of whom still have looted funds in their possession, trying to rewrite history and hoodwink the populace again. We say never again.
“But with 60% less revenue, we started a series of bailouts for the States, to enable them pay salaries and pensions. With 60% less revenue, we were able to provide about N1.3trillion for capital expenditure, the largest amount for capital in our nation’s history.
“For the first time in five years we saved $500million, and invested another $500million in the Sovereign Wealth Fund. Today our external reserves stands at $35billion the highest in the past four years.”
SPEECH BY VICE PRESIDENT YEMI OSINBAJO (SAN) AT THE 2017 GRADUATION CEREMONY OF THE NIGERIAN INSTITUTE OF POLICY AND STRATEGIC STUDIES ON SATURDAY
It is a special pleasure to be here at this graduation ceremony, of the Senior Executive Course 39 of 2017 of the National Institute of Policy and Strategic Studies, and I bring you the very warm felicitations of President Muhammadu Buhari, President, Commander-in-Chief of the Armed Forces of the Federal Republic of Nigeria. I congratulate the participants of Senior Executive Course 39, for your excellent performance and your elevation to the privilege of Member of the National Institute, MNI.
Your presentation to Mr. President last week, Friday 17th November, on the theme “Science, Technology and Innovation for the Development of Agriculture & Agro-Allied Industries in Nigeria,” was both scholarly and practical, and will be an important reference in refining and implementing policy in this important area.
I also congratulate family and friends, and especially spouses of participants on this joyful occasion.
NIPSS occupies an important place in our national policy discourse, especially through its policy-relevant training and research outputs. Notably, the NIPSS alumni provide a patriotic repository of knowledge that is very often deployed in support of national development objectives.
Today’s event is significant. It is at once a celebration of success, and in many ways, also symbolic of the opportunities that will arise from completion of a year of rigorous learning and reflection, for you, and the Federal Government. And it also provides me an opportunity to share some thoughts on the trajectory of our national economic development with the Nigerian policy elite, to which distinguished group, you now rightly belong.
I am going to focus on the economy, where we are, and where we are heading in the next 12 months. What are the policy choices we have made? Why have we made those choices? Are those policy choices working?
From the very beginning of our administration when Mr. President asked me to head the economic management team, he made it clear that in his view, the major reason for the slow development of our nation and the poverty of millions of our people, was corruption and mismanagement of public funds & resources. And that fighting corruption and mismanagement of public resources was as much an economic imperative, as it was a law and order issue. I agreed.
We, from that point, put in place structures that would ensure prudent and transparent management of resources. In July 2015, the President ordered that all MDAs funds should be paid into the Treasury Single Account. This ended years of MDAs keeping secret bank accounts, in some cases putting public funds in fixed deposit for interest far below market rates. Banks would then lend money back to government by buying treasury bills at substantially higher interest. Today, government knows exactly how much we have, and we are saving significantly.
Early in 2016, an Efficiency Unit was set up under the Federal Ministry of Finance to reduce wastage, plug leakages and foster greater fiscal transparency. The Efficiency Unit has enforced several deliberate cost-cutting measures including the removal or reduction of sitting allowances for civil servants in many cases, and saved over 1 billion a year, stopping the procurement of souvenirs, and printing for government programmes, we saved another N1billion.
By reviewing travel expenditures, and negotiating procurement discounts, we saved N15billion. We have also removed or reduced meals and refreshments for meetings, and saved another N1billion annually.
We stopped the siphoning of funds through ghost workers by insisting that all MDAs must be on the Integrated Payroll and Personnel Information System (IPPIS) across government, and also mandated the use of BVN. Over 461 Federal MDAs have been captured on the system thus far, with the objective being able to enroll all of them. We are now saving N25billion a month, from cleaning up the payroll in this way. The President has also ordered all Armed Forces personnel to be captured on IPPIS.
It is important to understand, what these measures to block leakages and stealing of public resources mean for economic performance. I will demonstrate that impact.
But with 60% less revenue, we started a series of bailouts for the States, to enable them pay salaries and pensions. With 60% less revenue, we were able to provide about N1.3trillion for capital expenditure, the largest amount for capital in our nation’s history.
For the first time in five years we saved $500million, and invested another $500million in the Sovereign Wealth Fund. Today our external reserves stands at $35billion the highest in the past four years.
We have made the point, that Nigeria is not poor because it has no resources, it is poor because a lot its resources are stolen or mismanaged. We can do a lot more with far less, if we don’t allow stealing.
Now let us for a moment, reflect on where the Nigerian economy is today. The economic focus and direction of the Buhari administration is set out in the Economic Recovery and Growth Plan – the ERGP. The plan is based on a set of principles, broad principles, and certain key action points including eliminating corruption in government procurement and processes, prudent management of resources, social inclusion, overcoming constraints such as power, petrol and skills shortages, promotion of the private sector, and use of the market mechanism where possible.
We have worked hard to keep faith with these crucial principles. In particular we are committed to ensuring that Nigeria does not return to the years of corruption and waste, where people at the highest levels of government simply converted to private use, funds and public resources meant for the building of public infrastructure and the provision of services.
We must pay attention to what we are seeing today, and some of the shameless noises of those who brought our nation to its knees, many of whom still have looted funds in their possession, trying to rewrite history and hoodwink the populace again. We say never again!
Distinguished guests ladies and gentlemen, today, regarding our economy, we can see the light at the end of the tunnel. The darkness is giving way to the light. Let’s begin with the macroeconomic story.
The decline in growth which started in 2014, has been reversed with the third quarter figures released earlier this week, showing that the economy has truly exited recession with the growth of 1.4%.
A further analysis of the Q2 2017 GDP results indicates that the recovery was driven largely by the performance in agriculture, industry, solid minerals and crude oil and gas production. Agriculture, which is a main focus of this administration, as stated in the Economic Recovery and Growth Plan (ERGP), grew strongly throughout 2016 despite the contraction in the overall economy, continued to grow in 2017 recording a 3.06% growth in Q3 2017.
Industry which had contracted for nine consecutive quarters, but recorded its first positive growth of 1.45% in Q2 2017, and it has grown stronger in Q3 2017, growing by 8.83% compared to a contraction of -12.66% a year earlier. This represents the strongest growth in industry since Q2 2014, when industry grew at a similar rate of 8.97%.
The oil sector also grew strongly, partly due to actions of government which has led to stable oil production and an improved situation in the Niger Delta, as well as oil prices remaining steady. Oil production GDP grew very strongly by 25.89% in Q3 2017 compared to 3.53% in Q2 2017, and a contraction of -23.04% in Q3 2016.
Inflation continues to fall from a peak of 18.72% in January, to 15.91% today. Similarly, as noted earlier, our reserves are now at about $35 billion while the exchange rate regime has been stabilized. We are confident that the Naira will continue to appreciate.
One of our biggest priorities as a government was making the lives of the poorest and most vulnerable amongst us better. Right from the presidential campaigns that preceded our coming to serve, we had made it very clear that we would be a government for the poor and vulnerable. We designed an ambitious Social Investment Programme to accomplish this, comprising four initiatives; a jobs’ scheme for unemployed graduates, a micro-credit scheme targeting SMEs, a Home-grown School Feeding Scheme, providing one free meal a day to primary school pupils, and a Conditional Cash Transfer Scheme for the poorest Nigerians across the country.
The Social Investment Programme kicked off a year ago, with the recruitment of 200,000 young Nigerian graduates for the first phase of N- Power. These young people have been deployed across the 774 Local Government Areas of the country, as Teaching Assistants in public primary schools, Public Health Assistants in primary health centres, and as Agricultural Extension Service Assistants in various agricultural programmes.
Today, a year later, we have just pre-selected an additional 300,000 young unemployed graduates, and they will be further engaged in the N-Power programme.
The Home Grown School Feeding Programme now provides a free, nutritious meal, one a day to over 5 million children across 19 States, and our target is 5.5million children before the end of 2017.
In addition to providing nutrition for children in the first three years of primary education, the school feeding programme buys food from local farmers, and employs almost 55,000 cooks in 28,249 schools. Other participants in the food value chain such as processors and transporters also benefit indirectly from this programme.
While we were laying the groundwork of the rollout of the Social Investment Programmes, we began to aggressively invest in plugging Nigeria’s huge infrastructure gap. One of the reasons why we are where we are today, is that over the last three decades, we failed to invest substantially in infrastructure to any appreciable degree, even as our population grew.
Much of the funds that should have been invested in infrastructure simply cannot be explained. We wasted no time addressing this. Even at a time when our resources had dropped dramatically, and with little by way of savings, we invested in roads, railway and power projects.
Work resumed on several projects that had been abandoned or suspended before we took office. We completed and commissioned the railway line connecting Kaduna to Abuja, the first Standard Gauge line in Nigeria. The Abuja Light Rail project, which was only half-completed when we inherited it, is now almost ready to go into operation. When completed it will be the first functioning urban light rail in Nigeria.
Our successful engagement with the Chinese Government has yielded fruit; construction has started on the Lagos -Ibadan segment of a new Standard Gauge railway line between Lagos and Kano, and will soon commence on the coastal railway from Lagos to Calabar, which will open up the Southeast and Niger delta in unprecedented ways. We are now providing in the 2018 budget, the commencement of work on the Mambilla hydro-electric project.
However, even if we invested our entire annual budget on infrastructure, it would not be enough to fill the gap. So as a government it was clear, that the greatest impact would come from the efforts of private capital, while we act as enabler and catalyst, creating an environment conducive for investors and businesses.
This is why we have revised and prioritized the Road Trust Fund, to enable private firms to partner with the Federal Government to build, repair, and maintain roads in return for tax credits. Meanwhile, work continues on the long overdue Second Niger Bridge, the Lagos-Ibadan Expressway, and other major arterial roads like the Ilorin-Jebba-Mokwa-Birnin-Gwari-Kaduna Road, and the Enugu-Port-Harcourt Road to mention a few.
The power sector has always been one of historic concern. This dismal situation was due to factors including inadequate generation, limitations in transmission capacity and financing constraints. The problems associated with the privatization exercise itself has manifested serious constraints in the ability of the DisCos to reinvest in electrical assets.
Despite major investments of time, effort and resources, power supply remained in the region of about 3000MW. We tackled these issues, and although still vastly inadequate, power supply and transmission capacity has moved up to 7000MW. There is good cause to believe, that we will achieve the 10,000MW envisaged in the ERGP, through policies enabling off-grid solutions and eligible customer arrangements.
So the problem today is not with generation, it is with distribution. Many of the DisCos are rejecting power transmitted to them. They claim that they are unable to sell because of the losses from collection, and the poor state of distribution assets such as transformers, last mile transmission lines and metering.
These investments should ideally be made by the DisCos, but many are so highly leveraged that they can’t borrow anymore. We are exploring several options including selling down equity in the DiscCs to attract more capital. We are also completing some transmission and distribution projects that may be game changers in power supply story. But easily the clearest demonstration of our belief that the private sector, including MSMEs, must be enabled as they are the engines of economic growth, will be seen in the Ease of Doing Business Reforms which we embarked upon in 2016.
Our goal has set by Mr. President, was to move Nigeria by 20 spaces upwards in the World Bank’s Ease of Doing Business Rankings. After a year of intensive reforms, including a National Action Plan, an Executive Order, two Acts of Parliament, and other initiatives, we surpassed our 20-place target.
The improvements we brought to Nigeria’s business climate include the simplifying of business registration processes, implementing a Visa on Arrival procedure, enabling better access to credit by the creation of National Collateral Registry, and the Credit Risk Bureau both set up by Law. This earned us a 24-place improvement as well as a designation as one of the ten most improved countries in the world.
The lesson from this is that, consistent and dedicated effort will produce results. This is the underlying theme of all the work we have put into the economy in the last two and half years.
In Agriculture, we were enthused by the remarkable progress so far. Throughout the recession, agriculture maintained a solid growth area, due to policy interventions by the Government. The Anchor Borrowers’ Programme has provided financing to tens of thousands of smallholder farmers, enabling them to maximise harvests, as well as connecting them to off-takers and markets. Up to N5 billion, has been disbursed in support of almost 250,000 smallholder farmers, across 31 states, with coverage of 286,000 hectares.
Although it is still early days, there are appreciable results in nine commodities namely; rice, wheat, maize, cotton, fish, soybean, cassava, groundnut and poultry. The focal point however remains rice, because of our aim for food security and to reduce the huge amount of foreign exchange used in importing food, especially rice. Rice imports have now dropped by 70%, and we are producing over 7million MT of paddy rice today. The question of course is milling, we are not measuring up, and we are still recording very low figures in terms of actual production of rice.
The Presidential Fertilizer Initiative (PFI) which President Buhari launched in December 2016, has directly led to the resuscitation of 15 Moribund Fertilizer Blending Plants, and to the production, this year, of more than 7 million bags of NPK Fertilizer, which is now available to our farmers at prices well below what they paid before the PFI.
Taking the lead from government’s commitment to agriculture, the private sector has also undertaken major investments in agriculture and agro-processing. Up to 300,000 metric tonnes per annum of rice milling capacity has been added in the past 12 months, including the WACOT factory in Kebbi State, and Umza Rice Mill in Kano. Upcoming ones include the investments by the Labana and Dangote Groups amongst others. Dangote alone is investing in milling capacity of 1million MT. The President also recently commissioned OLAM’s N20billion integrated feed mill and hatchery in Kaduna.
In Solid Minerals, we succeeded in tapping into the Natural Resources Development Fund, to create a dedicated fund for supporting investment in solid minerals in Nigeria. This is the first time that this is happening in Nigeria. Moreover, work is ongoing to fully exploit the bitumen resources in Ondo State, to meet national asphalt requirements for roads and other construction projects.
To consolidate on these efforts, we have also established a N30billion Solid Minerals Development Fund to support other minerals exploration activities across the country.
I have spoken about what we set out to do and what has been done so far. Let me now speak to some of the forthcoming actions in the year ahead.
To start with, the Federal Government sees 2018 as a year of consolidation of the economic recovery, and the gains from improved macroeconomic management, and the extensive investments made in agriculture, infrastructure and the business environment. We are diversifying our options in power supply.
Also we have provided in both the 2017 and 2018 budgets, funds for what we have described as the energizing education project. This involves providing independent power in the following universities in the first batch; the Abubakar Tafawa Balewa University in Bauchi, Bayero University in Kano, Usumanu Danfodiyo University in Sokoto, Federal University of Agriculture in Makurdi, Federal University, Ndufu Alike, and Nnamdi Azikwe University in Anambra, University of Lagos, Obafemi Awolowo University and Teaching Hospital, Federal University of Petroleum in Delta State.
Our emphasis going forward, will be on job creation, through scaling up of the social intervention programmes, to include artisans, but also through a massive construction effort with regard to homes and revitalization of the manufacturing sector.
Jobs are central to our purpose for revitalizing the manufacturing sector. The focused attention we have given to promote agriculture will be replicated in the manufacturing sector. We recognise of course that electricity is critical for this sector and this is being continually addressed.
We already have policies for the automobile and tomato processing sectors, and we will continue to fine-tune other sectoral policies. In addition, we are focused on ensuring the take-off of a Special Economic Zones in six geo-political zones, dedicated to textiles and footwear for exports, and on ensuring adequate, and affordable financing to enhance the operations of manufacturing concerns. We have already provided N80billion in the 2018 budget for this Special Economic Zones.
Jobs are also the reason why we will be fast-tracking the implementation of the Family Homes Fund. It is an important programme for providing housing in the coming year. Our intention is to use this programme to create a large number of jobs in construction, and as well to promote widespread home ownership by providing affordable housing to be paid for through a sustainable mortgage financing system.
The coming year, will see even greater movement to fully utilise the oil and gas value chain. The private investments in refineries, petrochemical plants, fertiliser factories will be complemented by more gas projects, especially critical pipeline infrastructure and greater penetration of LPG in the domestic market. The start-off of modular refineries in the Niger Delta is part and parcel of this work programme. Up to 35 communities and their investor groups, have reached the right to invest stage and three of them are already preparing to ship their facilities for installation.
Our emphasis on supporting micro, small and medium scale enterprises, is largely because the sector is also critical for job creation. We will continue with the MSME clinics which are being followed up with the creation of one-stop shops for Federal Regulatory Agencies across all the States of the Federation. We will by this means reduce some of the costs and the regulatory obstacles that MSMEs face in trying to do their business. The MSME programme now goes hand in hand with the Government Enterprise and Empowerment Programme which provides micro loans to cooperative societies and artisans.
Our recent experience has shown that Government revenues are quite low for the size of our economy and inadequate to fully meet related societal demands. Our total tax collection is just 6% of Gross Domestic Product, as compared to an African average of 17%. We are accordingly taking all necessary steps, to increase Government revenues through the Voluntary Assets and Income Declaration Scheme (VAIDS), excise taxes and improved collection of taxes.
Government will also ensure better management of its resources, through cost efficiencies, automated payroll systems and leveraging of its assets to ensure better returns. The decision to reduce Federal Government holdings in Joint Venture operations, in a case in point. By this means, we will not only be raising revenues to help fund Federal and State budgets, we will in addition also be improving governance in the oil and gas sector.
In a similar context, as the case of JAMB has shown there is substantial under-remittance to the Federal Government by its parastatals and agencies and we will be putting a stop to this using the results of a forensic audit being undertaken as well as greater scrutiny and oversight by the Economic Management Team.
The infrastructure projects that I have mentioned will of course continue to be the focus of attention, until they are completed across power, roads, rail, airports and broadband infrastructure. The 25 road projects in all six geopolitical zones to be financed by the recently issued N100 billion Sukuk Bonds, will be closely monitored to ensure that they are delivered in good quality by the specified date.
Our efforts to improve business conditions will continue apace. We must always bear in mind that the purpose of our efforts on the ease of doing business, is to promote the private sector and provide the right atmosphere for firms to operate profitably in order to grow the economy and provide jobs for the unemployed and those joining the labour market.
Thus while we continue to bask in the improvements in our ranking, and the citation of Nigeria as one of the 10 best reforming economies in the world, we realize that our task is far from being done and will remain focused on the ERGP objective of being in the top 100 countries in terms of ease of doing business by 2020. Until the average Nigerian has food on his table, has a job and is satisfied with the life that he is living, we are far from preparing any kind of celebration.
One of the principles underpinning our economic planning that is often overlooked is the commitment to upholding core values. Our desire for change must translate into strengthening ethics especially patriotism, integrity, ethnic and religious tolerance.
We must strive to build a fair, just and equitable society, that prefers investment to consumption, thrift over waste and which celebrates integrity over corruption. These values are not only morally right, but they are also essential underpinnings for restoring growth, investing in our people and building a globally competitive economy.
May I conclude by extending warm congratulations, to the participants graduating from NIPSS today. I have no doubt that you will all be returning to your respective duty stations full of insight and understanding of our national policy space. I urge you to deploy the knowledge gained here in support of the national development efforts in whatever positions you find yourselves. The proof that you have a role to play in evidenced by the very vibrant, committed and forward looking Alumni Association that you have joined.
In similar vein, we must commend the Acting Director-General and Faculty of NIPSS to whom has been given the critical task of developing the Nigerian policy infrastructure, and for their commitment to maintaining the dynamic spirit of Kuru. The Federal Government is aware of some of the challenges that the Institute continues to face, we are committed to resolving them.
Thank you for your kind attention.
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