In November 2016, I did a thread on twitter on the National Economic Recovery Plan which at that time was expected to be released in Dec 2016. You can refresh your memory here. (https://storify.com/yinkanubi/the-national-economic-recovery-growth-plan).
It is important to know this so you can understand how we got to where we are today.
Finally, on the 7th of March after close to 8 months of planning, the FG finally released the #ERGP – a 140 Page document of the Economic Recovery Growth Plan (ERGP). The purpose of this post is not to break down in detail the content of the #ERGP but to summarize it in a form that allows people to understand it.
The Summary of the ERGP is as follows:
- 3 Broad Objectives
- 24 Programmes
- 60 Strategies
- 351 Activities
- 50 MDA’s (excluding Presidency & State Govt) to take the lead
*MDA (Ministries, Departments, Agencies)
To understand it better, please check the chart attached which breaks down the document in an easy to digest manner.
The document starts with an INTRODUCTION where it describes the “problem” and the rationale for economic recovery and growth. It gives a feedback on the implementation of the SIP (Systematic Investment Plan) 2016. It then talks about the governing principles behind the ERGP which are the following:
- Focus on barriers to trade
- Leverage the power of the private sector
- Promote national cohesion and social inclusion
- Allow markets to function
- Uphold core values
From there, it talks about the Vision and Strategic Objectives of the ERGP
The Vision: The ERGP will contribute to achieving the national aspirations and vision set out in the 1999 Constitution by seeking to promote national prosperity and an efficient, dynamic and self-reliant economy to secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity.
The ERGP has three broad strategic objectives:
(1) Restoring growth,
(2) Investing in our people, and
(3) Building a globally competitive economy
Key Execution Priorities
To achieve the objectives of the ERGP, the key execution priorities, as illustrated in Figure A, are:
– Stabilizing the macroeconomic environment
– Achieving agriculture and food security
– Ensuring energy sufficiency (power and petroleum products)
– Improving transportation infrastructure
– Driving industrialization focusing on Small and Medium Scale Enterprises
A few details on the broad objectives
Restoring Growth: To restore growth, the Plan focuses on achieving macroeconomic stability and economic diversification. Macroeconomic stability will be achieved by undertaking fiscal stimulus, ensuring monetary stability and improving the external balance of trade.
Investing in our People: The ERGP will invest in the Nigerian people by increasing social inclusion, creating jobs and improving the human capital base of the economy. Emphasis on “inclusion”. Inclusive growth basically means making sure everyone is included in growth, regardless of their economic class, gender, sex, disability and religion.
Building a Globally Competitive Economy: The ERGP aims to tackle the obstacles hindering the competitiveness of Nigerian businesses, notably poor or non-existent infrastructural facilities and the difficult business environment. It will increase competitiveness by investing in infrastructure and improving the business environment.
Across all of these areas, the ERGP lays out a total of 60 strategies that will collectively bring about the overall objective of inclusive growth through structural economic transformation. Each strategy has a clear set of activities associated with it and a budget allocation for which the responsibility lies with a Ministry, Department or Agency of the Federal Government.
OUTLOOK FOR THE PLAN
By 2020, Nigeria will have made significant progress towards achieving structural economic change and having a more diversified and inclusive economy. Overall, the Plan is expected to deliver on the following key outcomes:
- Stable Macroeconomic Environment: The inflation rate is projected to trend downwards from the current level of almost 19 per cent to single digits by 2020. It is also projected that the exchange rate will stabilize as the monetary, fiscal and trade policies are fully aligned. This outcome will be achieved through policies that seek to remove uncertainty in the exchange rate and restore investors’ confidence in the market.
- Restoration of Growth: Real GDP is projected to grow by 4.6 percent on average over the Plan period, from an estimated contraction of 1.54 percent recorded in 2016. Real GDP growth is projected to improve significantly to 2.19 per cent in 2017, reaching 7 per cent at the end of the Plan period in 2020. The strong recovery and expansion of crude oil and natural gas production will result as challenges in the oil-producing areas are overcome and investment in the sector increases. Crude oil output is forecast to rise from about 1.8 mbpd in 2016 to 2.2 mbpd in 2017 and 2.5 mbpd by 2020. Relentless focus on electricity and gas will also drive growth and expansion in all other sectors.
- Agricultural transformation and food security: Agriculture will continue to be a stable driver of GDP growth, with an average growth rate of 6.9 per cent over the Plan period. The Agricultural sector will boost growth by expanding crop production and the fisheries, livestock and forestry sub-sectors as well as developing the value chain. Investment in agriculture will drive food security by achieving self-sufficiency in tomato paste (in 2017), rice (in 2018) and wheat (in 2020). Thus, by 2020, Nigeria is projected to become a net exporter of key agricultural products, such as rice, cashew nuts, groundnuts, cassava and vegetable oil.
- Power and petroleum products sufficiency: The ERGP aims to achieve 10 GW of operational capacity by 2020 and to improve the energy mix, including through greater use of renewable energy. The country is projected to become a net exporter of refined petroleum products by 2020.
- Improved Stock of Transportation Infrastructure: By placing transportation infrastructure as one of its key execution priorities, effective implementation of this Plan is projected to significantly improve the transportation network (road, rail and port) in Nigeria by 2020. Given the scale of investment required to deliver this outcome, strong partnership with the private sector is expected to result in completion of strategic rail networks connecting major economic centres across the country, as well as improved federal road networks, inland waterways and airports.
- Industrialized Economy: Strong recovery and growth in the manufacturing, SMEs and services sectors are also anticipated, particularly in agro-processing, and food and beverage manufacturing. Ongoing strategies to improve the ease of doing business will boost all manufacturing sector activities. Overall, the ERGP estimates an average annual growth of 8.5 per cent in manufacturing, rising from -5.8 per cent in 2016 to 10.6 per cent by 2020.
- Job Creation and Youth empowerment: The implementation of the Plan is projected to reduce unemployment from 13.9 per cent as of Q3 2016 to 11.23 per cent by 2020. This translates to the creation of over 15 million jobs during the Plan horizon or an average of 3.7 million jobs per annum. The focus of the job creation efforts will be youth employment, and ensuring that youth are the priority beneficiaries.
- Improved Foreign Exchange Inflows: The reduction in the importation of petroleum products resulting from improvement in local refining capacity following the implementation of the ERGP is projected to reduce demand for foreign exchange. The economic diversification focus of the Plan is also projected to translate into enhanced inflows of foreign exchange from the non-oil sector.
On the whole, Nigeria is expected to witness stability in exchange rate and the entire macroeconomic environment. The country should also witness a major improvement in economic performance which should result in the following, amongst others:
- a) Reduction in importation of food items and refined petroleum products,
- b) Improved power supply,
- c) Higher quality transport infrastructure,
- d) Expansion in the level of industrial production,
- e) Improved competitiveness,
- f) Greater availability of foreign exchange,
- g) Job creation,
- h) Reduction in poverty and
- i) Greater inclusiveness in the spread of the benefits of economic growth.
Why is it important to study this document?
- The ERGP gives precise broad and policy objectives with timelines for execution and who is responsible. These are not campaign promises. Monitoring and Evaluation is therefore key.
- The ERGP is predicated on some underlying assumptions. For instance it assumes that Oil prices will remain within the $42 – $54 range. It assumes that there will be peace in the Niger Delta to allow for oil production to rise to 2.5mpb in 2020 and it also assumes it would be around in governance to be able to implement this in 2020. Bear in mind that this administration tenure ends in May 2019. Officially, the last budget it will have impact on his the 2019 budget.
- We can debate the issues factually and be better informed on government policy going forward.
I know that many will say “What took them so long?”
They will say that thinking that the execution of this plan starts from the release. If you are inclined to think like that, then I am inclined to tell you that this plan is actually a continuum of what has already started. Many of the programmes incorporated in this document have already started or are in the process of being implemented.
Overall, my assessment is that it is a good policy document with emphasis on structural change of the economy with emphasis on inclusive growth.