The Economic Recovery and Growth Plan (ERGP) is a medium term all-round developmental initiative focused on restoring growth, investing in people and building a globally competitive economy. The ERGP was launched in April 2017. Precisely one year after its implementation, we examine the performance of the Plan in line with set execution principles in the table below.
|Execution Principles||Achievements of the ERGP|
|Stabilise the macro environment||· Introduction of the Voluntary Asset & Income Declaration Scheme (VAIDS) : Effective implementation of the VAIDS is gradually restoring the efficiency of the country’s tax system. According IFRS chairman, a total of N20bn (out of a target N305bn) has so far been realised from 262 corporate taxpayers who have declared their assets under the scheme within 8 months of implementation.
· Introduction of Importers & Exporters (I&E) FX window: Premia in the FX Market has narrowed in the post I&E window era and remains relatively flat, albeit susceptible to intermittent FX demand. The Naira has gradually settled to N360-N365 in the parallel Market as at April 2018.
· Sustained recovery from recession and growth in GDP to 1.92% as at Q4 2017. The Nigerian economy advanced 1.9 percent year-on-year in the fourth quarter of 2017, accelerating from a 1.4 percent growth in the prior period. It is the third consecutive quarter of expansion and the strongest since the fourth quarter of 2015.
· Headline inflation moderates with a downward trend for 14 consecutive months to 13.34% as at Q1 2018 compared to 18.33%1 in October 2016.
· Foreign reserves hit a 5 year high of $46B in Q1 2018 as stability is restored in oil producing states through sustained dialogue with Niger Delta militants and rising crude oil prices
|Achieve agriculture and food security||· The ERGP has continued to ride on the success of the CBN Anchors Borrowers’ Programme. Over N55bn has been disbursed by the Central Bank of Nigeria to over 250,000 farmers under the scheme. About 80 per cent of this has gone into rice production, further driving the nation’s target of attaining self-sufficiency by 2018 with respect to rice production.
· Increase in non-oil revenue generated from agricultural sector. Agriculture contributed 21.97% to nominal GDP. This figure is higher than the rates recorded for the fourth quarter of 2016 and lower than third quarter of 2017 at 21.35% and 24.44% respectively. Annual growth rate recorded was 11.29% in 2017 as against 9.61% in 2016.
· N118.98 billion as budgetary allocation to the Agricultural sector for the year 2018, N15b higher than N103b of previous year.
· Other pipeline projects recently launched include the Accelerated Agricultural Development Scheme (AADS), commissioning of the West African Cotton Company Limited (WACOT) Rice Mill in Argungu, Kebbi State with production capacity of 120,000 metric tonnes, African Soil Information Service (AFSIS) pilot project all geared towards enhancing productivity within in the agricultural sector.
|Ensure energy sufficiency in power and petroleum products||· Nigeria still tops the chart as the largest producer of crude oil in Africa. With its current exemption from the oil cut by OPEC which commenced in January 2017, there has been improved crude oil production. With a maximum production capacity of 2.5m barrels per day, production went up from 1.4m b.pd in April 2017 to 1.7m b.pd. According to the Monthly Oil Market Report by OPEC in 2018,production had reached 1.8m b.pd. This represents a 29% increase compared to production in April, 2017.
· Nigerian National Petroleum Corporation on the 23rd of April announced that it had been able to reduce the cost of producing a barrel of crude oil to $20 down by 13% from $23 per barrel last year.
· Increased power generation from 3,500 MW to about 5,000MW with improved transmission and generation capacity of about 7,000. The highest peak generated between April 2017 till date is 5,222.3MW generated in December 2017.
· Other milestones include the Commissioning of Azikel Refinery in Bayelsa State, the first private modular refinery with production capacity of 12,000 bpd; resumed operations of the 250,000bpd Forcados terminal by Shell and launch of the power sector recovery program (culminating in the signing of various power plant construction contracts).
|Improve transportation infrastructure
|· The ERGP Labs geared at empowering youths was launched in March 2018.
· Enactment and signing into law of the following Acts to further consolidate on the improvement in Ease of Doing Business;
o The Secured Transactions in Movable Assets Act 2017 (the “Collateral Registry Act”) – guarantees access to affordable credit secured by movable properties of Medium, Small, & Micro Small Enterprises (MSMEs).
o The Credit Reporting Act 2017 (the “CRA”) – provides a platform for “credit information providers” to provide credit bureau with information relating to a person’s credit worthiness, credit standing or capacity, and to the history and profile of such person with regard to credit, assets and any financial obligations.
· Movement by 24 places to a new ranking of 145 among 190 economies on the World Bank’s Ease of Doing Business Index. Improvement from the 170th & 169th position in 2016 and 2017 respectively
· Inaugural Lagos-Kano Economic and Investment Summit in March 2018 which culminated in the signing of a Memorandum of Understanding (MoU) for economic partnership aimed at creating jobs and facilitating growth and development.
· Consolidated gains from the Ogun Investors’ Forum with over 300 new industries in the state and 75 percent of Foreign Direct Investment in Nigeria attracted into the state.
|Drive industrialisation focusing on SMEs|
There is evident work in progress to ensure that the ERGP succeeds. Positive results are already manifesting in key economic indices such as real GDP growth year on year, growth in foreign reserves, downward trend in inflation, increased capital importation and narrowing foreign exchange gap. However, at year ended 2017, GDP was at 1.92% growth rate, Nigeria ranked 145 in world bank’s ease of doing business and power generation is hovering somewhere between 4,000 and 5,000 MW as against targeted metrics of 7% GDP growth rate, ranking at 100 for ease of doing business and a 10,000 MW electricity generation by 2020.
Consequently, the ERGP implementation team still has challenges to deal with. These include funding, budget implementation, security challenges (specifically in the North-East and North-Central), fluctuation in global oil prices and increasing use of alternative sources of energy (e.g., shale oil). The key drivers of any economic plan especially the ERGP are oil prices & production volumes, political stability and macro-economic policies. The implementation team must continually guard these key drivers within the next two years as these will impact the achievement of the plan’s objective. In addition, other State government should take a cue from states like Lagos, Kano and Ogun states by coming with similar all-round developmental plans to underpin the ERGP. Government at the State and Local Government levels through the National Economic Committee should be involved to drive an all-inclusive implementation of the Plan.
While some of the target metrics appear overly ambitious, overall the ERGP appears to be on course and remains quite robust and achievable. This is however subject to constant evaluation and assessment at fora where questions such as how a 7% growth can be achieved when capital expenditure is projected at 30% per the plan. As these questions are asked, attention also needs to be paid to ensuring that these recovery plan translates into not just growth but development so that these gains are felt by the citizenry. That notwithstanding, we will continue to track developments and achievements in the coming quarters with respect to the ERGP.