Improving sentiments and implementation of ERGP
The recently launched Economic Recovery and Growth Plan (ERGP) may be belated, ambitious and beset with revenue challenges, but there has never been a denial that it has the capacity to turn the country around. Of course, the next challenge is implementation, which is a matter of time.
In fact, the record of poor implementation of plans in the country has made many to look at the current economic blueprint with suspicion, as in the proverbial saying “the taste of the pudding is in the eating.” For the less conservative, the mindset is “let’s watch, wait and see”
But the Director of Fiscal Affairs at International Monetary Fund (IMF), Vitor Gaspar, told the global investment community and finance experts at the just concluded IMF/World Bank Spring meetings in Washington DC, that Nigeria’s economic plan is laudable.
“I had the privilege of visiting Nigeria some months ago and was very happy to understand that for Nigeria, fiscal policies in general and tax policy in particular are part of the strategies for development,” he said.
Corroborating the stance, the Assistant Director of Fiscal Affairs Department, IMF, Catherine Patillo, added: “This is necessary for diversification and in building revenues. So, we very much welcome the ERGP. As you are aware, Nigeria went into recession last year, but now there have been forecasts on recovery, although still very fragile.
“The need to address the fiscal situation is urgent. Our recommendation is for the continued fiscal consolidation. One striking statistics, I think, is the fact that over the past years, the ratio of interest payment to tax revenue has doubled to 66 per cent in Nigeria. This, the ERGP is targeting.
“So, two-thirds of all tax revenue is going into interest payment, illustrating the need to raise tax revenue. That would allow the government to implement the social and growth-friendly policies that are part of the objectives of the ERGP,” she said.
The ERGP aims to increase export earnings and government income by N800 billion more yearly for a period of three years. The same plan has a revenue earning plan from sale of national assets, including oil joint ventures and reducing stakes in oil and non-oil assets. There is also plan to review and if possible, remove currency control on 41 goods and services that has been on since 2015.
It would also improve tax collection to raise N350b yearly, partly by implementing and increasing tax on luxury goods to 15 per cent from its current five per cent, starting from 2018. Agriculture would get an upscale to realise self-sufficiency in rice by 2018; wheat by 2019; and Nigeria becoming a net exporter of rice, cashew, groundnuts, cassava and vegetable oil by 2020.
Just last week, IMF, while officially unveiling the sub-region’s growth forecast for 2017, reaffirmed its earlier assertion at the just concluded IMF/World Bank Spring meetings in Washington DC, that Nigeria would be top in driving the economy of the Sub-Saharan Africa back to stability.
Pointing to the mechanism for the growth, Director of the IMF’s African Department, Abebe Aemro Selassie, said the positive outlook is hinged on implementation of development policies contained in the economic blueprint, which comes as a reassurance to the country and investment-community.
While global markets have acknowledged that the largest economy in Africa is in the process of a key fundamental transformation that may exceed all expectations, with the recovery plan for 2017-2020, which displayed an encouraging outlook for the nation, a currency analyst however, raised the implementation challenge.
“The four-year plan was built around achieving a healthy economic growth and sustainable development, while the nation embarked on its quest to breaking away from oil reliance. With a very strong focus on the nation to enhance both public and private sectors’ efficiency, while also boosting overall productivity, the growth forecast of seven per cent by 2020 could become a reality if the protocol is followed.
“Nigeria must do all it can to achieve a stable macroeconomic environment such as investing heavily in agriculture and bolster infrastructure investments to generate sustainable economic growth in the longer term. Implementation is the key,” Lukman Otunuga of Cyprus-based FXTM, said.
Also, the Managing Director and Chief Executive Officer of Cowry Asset Management Limited, Johnson Chukwu, who lauded government for the bold step to launch a roadmap in the first place, although long expected, argued that the plan was too ambitious, given our capability at present, alleging that the figures are too good to be realised.
“One of which is the Gross Domestic Product’s growth numbers. These projections need to be broken down further,” he said.Chukwu explained that what the government needs to do now is to embark on sensitisation of the plan so that it would be fully grasped by private sector operators. This will also help them to begin their own strategies in response to opportunities therein, while government finishes its regulatory framework towards the plans.
But from a political space, a respondent who pleaded anonymity affirmed that government is determined to open up its plans to actualise the economic growth plan. He also confided in The Guardian that every move is weighed to avoid getting this economic policy enmeshed in ambiguity and scandal.
“Again, people are already worn out with sufferings and gloomy outlook as to the end of the hardship. They need hope, not ‘grammar’. They want to see action, not just paper work and promises. But the media should also step up,” he said.
He however said, Nigeria needs to achieve a stable macroeconomic environment, reinvest in agriculture and reinforce infrastructure to promote sustainable economic growth.
While affirming that the recovery plan has already been received positively by the international investment community and could translate to an increased foreign investment in the medium to long term, he admitted the importance of implementation, continuity of policies and clear policy framework as the critical consideration.
Also, the Executive Director of OJA Development Consult and public affairs analyst, Jide Ojo, commended the Federal Government for launching the much-awaited economic blueprint, which is to pull the country out of recession now.
For him, the roadmap looks good, with all the niceties, sound-bites and desirable action plans, but experience from the past has shown that we are long on rhetoric, but always short on delivery of all our noble plans.
“I am particular about the promised diversification of the economy, ease of doing business, increase oil production, reduction of inflation, effective collaboration between the public and private sector, as well as between the federal and the state governments, the leverage on science, technology and innovation and building a knowledge-based economy. These are exceedingly laudable.
“The ERGP is also consistent with the aspirations of the Sustainable Development Goals (SDGs) given that the initiatives address its three dimensions of economic, social and environmental sustainability issues. It is also laudable that the document is a product of wide consultations,” he said.
He noted that the global ascendancy of protectionism may impact negatively on many of the projections as several countries of the world and political groups like European Union embark on economic protectionism, which will necessitate review of trade agreements and economic partnerships.
“Widespread restiveness, terrorism and pervasive insecurity will pose a major threat to the realisation of the many beautiful recommendations in the ERGP. But highly desirable is a diligent and patriotic implementation of this elaborate plan,” he added.
For an economist and financial analyst who would not want his name in print, “Nigeria is not short of bright minds and ideas. It is not also short of selfish and political jobbers, who are only interested in circumventing the rules for their personal gains.
“The crux of the matter is faithful implementation and that is why everyone will be waiting to see how it would pan out.”I know we have the right ones who would put their names on the line,” he said.