5 PRIORITY AREAS THAT WILL CHANGE THE FUTURE OF THE NIGERIAN ECONOMY – VICE PRESIDENT’S SPEECH AT THE PLATFORM NIGERIA 2017

The Acting President (Ag. President) of the Federal Republic of Nigeria, His Excellency, Professor Yemi Osibajo (SAN), was the Keynote Speaker at The Platform Nigeria organized by Covenant Christian Centre, which held on May 1 2017.

In his speech, the Vice President discussed the Nigerian Economic Recovery and Growth Plan (NERGP), the progress made so far and future reforms by the Federal Government (FG). The discussion centered on the five critical priority areas needed to achieve economic recovery and growth in Nigeria. These priority areas are:

Stabilizing the macroeconomic environment

Delivering agricultural and food security

Energy sufficiency which is adequacy of power and petroleum products, improving transportation infrastructure

Driving industrialization through small and medium scale enterprises

Delivering an effective social investment programme

These five priorities and their key reforms, as expounded by Professor Yemi Osibajo in his speech, are summarized below:

Stabilizing the macroeconomic environment

In stabilizing the macro-economic environment, the FG has focused on aligning fiscal policy with monetary policy and nudging the Central Bank of Nigeria (CBN) towards the objective of more market determined exchange rates. The FG is also working on replacing the 41 items not valid for foreign exchange with a more trade policy-driven restrictions taking into account those items that are required and locally unavailable raw materials.

It is important to note that the CBN had recently released a circular on thirty-six (36) items that are now valid for foreign exchange (Forex). These 36 items are items that hitherto were not valid for Forex, but are now valid. This new circular is one of the windows established by the CBN for Small and Medium Enterprises (SMEs) to provide access to Forex and ease pressure on the market.

In addition, the FG is in the process of obtaining intervention fund for agriculture through the Bank of Agriculture, and for SMEs through the Bank of Industry, as a means to reduce the high interest in the economy which is also reflective of the high inflation rate in the country. There is also the Development Bank of Nigeria which is the main vehicle for intervention banks. Furthermore, Professor Yemi Osibanjo explained that reducing the interest rates will involve borrowing less from the domestic market, however at the moment, the FG is borrowing substantially from the domestic market which is expected to change in the future.

Delivering agricultural and food security

As part of the Federal Government (FG) plan to diversify the Nigerian economy from over dependency on oil revenue, the FG proposed to achieve three objectives in diversifying into agriculture.

First is the provision of the right inputs, equipment and finance which is expected to increase the yield of farmers. The CBN Anchor Borrowers Programme has provided finance for thousands of farmers, which has resulted in increased local production and in fact, local production of rice has tripled as a result. In addition, a major problem before now was the milling of rice paddy. However, FG supplied 200 mills of various sizes to farmers with a combined effort of the public and private sector to address this issue.

Secondly, FG has sought to provide improved seedlings to farmers including rice seedlings. Thereafter, farmers would be taught simple farming practices that improves crop yield. Both Kebbi State government, IITA and Jigawa State have run excellent rice seed improvement programmes that have been of tremendous benefit. Some of the other initiative under the seedling programme are improved wheat and maize production as well as maintaining our position as Number 2 in sorghum production in the world.

The third objective is the provision of fertilizer. In 2017, there will be a major revolution in the fertilizer sector because the Presidential Fertilizer Initiative came up with a design to solve the problem of obtaining fertilizer once and for all. The Ministry of Agriculture produced a soil map for the country that determined the pattern of fertilizer distribution and this helped a great deal. Using the disaggregated soil maps, the FG was able to provide fertilizer for each soil type in different states in Nigeria. Prior to this, there was no map and fertilizers were given indiscriminately. However, after this initiative, the yield increased from 2 tonnes per hectare to between 4.5 and 9 tonnes per hectare. Also, the FG provided a concessionary working capital loan for Nigerian-based blending plants to enable them produce fertilizer locally.

The next phase of the FG agricultural diversification is the plantations of tree crops such as, cocoa, cashew, shea-butter, coconut, sesame seed, soya bean, pineapple, banana, cassava and sugar cane. These are expected to improve the revenue generated from agriculture.

Energy sufficiency

One of the important sector the FG is determined to reform is the Power Sector. The major problem has been that the private sector players have not been able to invest in the critical areas of metering, and others that guarantee improvement in the sector. Other issues include complaint about the inability to generate enough revenue to break-even due to lack of a cost-effective tariff and illiquidity in the energy generation, transmission and distribution value chain.

The Federal Executive Council (FEC) had on the 1st of March 2017 approved ₦701 billion CBN facility as a payment guarantee for Nigeria Bulk Electricity Trading Company (NBET) to guarantee payments to the power sector and in turn improve power supply. This fund will be provided to NBET at a 10% interest per annum; the Federal Ministry of Finance would in turn guarantee the repayment of the principal and interest. Indicative data presented by NBET indicates that NBET intends to pay a flat-rate of 80% of the January-2017 generation invoice. This is a good signal, representing the FG keeping to its word.

The FEC also approved that FG continue discussions with the World Bank Group (WBG) with the objective of securing financial support of US$2.5 billion for the power sector. After discussions with the WBG, the Power Sector Recovery Implementation Program (PSRIP) was created. The PSRIP will address issues such as liquidity, transparency, energy sufficiency and governance in the power sector

Driving industrialization through medium and small scale enterprises

In driving industrialization and focusing on MSMEs, the focus has largely being on creating an enabling environment for doing business in Nigeria. Many Medium, Small and Micro Enterprises (MSMEs) complain about the difficulties of obtaining financial and other assistance from government agencies responsible for one approval or the other relevant for their businesses.

As a result, the FG launched the MSME clinics across Nigeria to inform government agencies about their role as facilitators of business not obstacles. At this clinics, small business owners meet with the relevant government agencies to ask questions and deal with issues on the spot if possible.

In terms of industrial infrastructure, the FG is focusing on improving existing Special Economic Zones, and establishing new ones. ₦50 billion has been set aside in the 2017 budget for the existing free trade zones. The plan is to accelerate the implementation of the National Industrial Revolution Plan (NIRP) through the special economic zones. The zones will focus on priority sectors to generate jobs, promote exports, boost growth and upgrade skills with an objective of creating 1.5 million jobs by 2020.

Growing the digital industry and innovation has also been a priority for the government. After the Aso Villa Demo Day, 30 out of over 4000 innovators emerge and the presidency in collaboration with the World Bank through the GEM programme, further selected 81 innovators through a competitive process. These innovators were provided funds for their businesses through the ₦756.3 million fund set aside for the project.

The FG is also promoting innovation hubs in 6 geo-political zones in Nigeria. The hubs are essentially to provide training for a wide range of technology related skills, empowering youths for entrepreneurship and employment.

Delivering an effective social investment programme

The National Social Investment Programme (SIP) was introduced by the FG in 2016. The programme covers the following:

Homegrown School Feeding Initiative which is targeting 5.5 million primary school people in all the states of the federation from primary 1-3. Eleven states are set to fully start the scheme which would involve feeding 3.5 million school children.

Job Creation Initiative aimed at training 500,000 university graduates, who would be deployed to work in their local communities as teachers, agriculture workers and health support workers. The graduates would be receiving a monthly stipend of ₦30,000 monthly for a period of two years.

Conditional Cash Transfer Initiative, where one million caregivers would be given ₦5,000 monthly for a period of two years. The focus would be on the extremely poor and vulnerable in our society and special emphasis is on the North Eastern part of the country where there are a lot of Internally Displaced Persons.

Enterprise Promotion Programme, which is a loan scheme handled by the Bank of Industry. The loan would be available to 1.66 million people, made up of market women, traders, artisans, small businesses and youths and would be from ₦10,000 to ₦100,000.

The next phase of FG reform is anchored on three pillars which are deepening existing reforms, initiating sub-national reforms, which will culminate in the sub-national ranking of all 36 states and the FCT in 2018 and introduction of a new reform area “Trading within Nigeria”, which will push initiatives aimed at improving business processes and regulations within Nigeria, and ease the movement of goods within the country.

Based on the above, the Vice President concluded that the opportunities are limitless for Nigeria, our population is young, vibrant, bolder, more creative and more entrepreneurial than the youths of any other country in our region. Therefore, we must not allow the failures of the past to hold us down or become an excuse for our failure. We must lead and shape the future as the future is already here.

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