Guest Writer
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| By Roberts Orya |
Pull quote: With arrow-sharp focus on execution of policy strategies, we can achieve so much more than we have experienced in our history as a nation and as market-focused institutions.
2nd pull quote – “the Administration of President Goodluck Jonathan very well deserves all the plaudits it continues to get for the progress that Mr. President has made with the implementation of the power sector reform”
The link between good policies and realization of their targeted outcomes is disciplined execution. This essential policy success factor has not always been very evident on the Nigerian policy landscape. As such, disciplined execution was something we appreciated because of what difference we thought it would have made, as opposed to the power of its presence, and as the strong link between good policies and the realization of their targeted outcomes.
In recent years however, we have begun to see a momentous change that is influencing a new learning paradigm. Our understanding of what works is no longer predominantly influenced by what didn’t work or what might have been. Nigerian policymakers and policy observers now see the influence of persistent execution of policy strategies in the realization of the outputs of public policies.
The turning point would be when, 15 years ago, Nigeria opted for a democratic system of government. Public expectations on good governance and the accountability requirement of democracy put more demand on a representative government and, more generally, on policymakers. It was for this reason that the successive administrations we have had since 1999 embraced the need to deliver the ‘dividend of democracy’ to Nigerians. In other words, a governance framework that is result-driven and that is validated by positive policy outcomes is what is now afoot in Nigeria, notwithstanding the challenges we face. Indeed, the commitment of government to addressing the challenges is evident; whether we look at the investment commitments that are being made in infrastructural development, efforts to continue to brighten the investment outlook of Nigeria and programmes that target improvement in citizen’s welfare.
These efforts are long-term commitments. However, some of them have begun to produce results that have stayed with us as a country and as a market. For instance, continuous reform of the fiscal space has ensured macroeconomic stability; Nigeria is no longer a jurisdiction that is marked by volatility arising from unsound fiscal management. Industry-specific reforms have, in the past 10 years, designated a new banking industry that has become significantly bigger, stronger and that is supported by an independent central bank to ensure macro-prudential supervision and soundness of the banks. Moreover, assiduous pursuit of price stability has more recently become more appreciable as the Central Bank of Nigeria, CBN, maintains a resolute stance on maintaining stable exchange rate in spite of speculative attack on the local currency and the fact that other emerging economies have yielded to the pressure of currency devaluation.
This ‘new’ Nigeria has not faltered; it is the environment of low, single-digit inflation rate we continue to have due to consistent monetary stance. Happily, we have had no dire need of even orderly wind down of the extant policy. The new CBN Governor, Mr. Godwin Emefiele, has just renewed the commitment to price stability by the Central bank. This stable Nigeria is the market which local and foreign investors are increasingly committed to because of inviolable private ownership of business assets and the avowal of the government on private sector development.
These changes have remained with us because of sustained execution of the requisite policies. In a lot of the situations, implementation of the policies has met strong structural obstacles and systemic resistance, especially in the power sector. Therefore, the administration of President Goodluck Jonathan very well deserves all the plaudits it continues to get for the progress that Mr. President has made with the implementation of the power sector reform. For a very long time, powerful interests within the power sector — where importers of generators were fingered as the bad guys – allegedly stood in the way of implementation of the power sector reform and improvement in grid-electricity supply in the country. Today, however, some of the generator importers have invested in the growing number of Independent Power Projects in the country. Asset owner transition to private companies who had purchased the unbundled power generation and distribution companies has happened despite the fear that the labour union of the old state power monopoly would scuttle it.
Still with President Goodluck Jonathan’s administration, the recent rebasing of the economy has two significances in commitment to execution of government policy. The first is that the rebasing actually took place. The rebasing was supposed to be done every five years. But a combination of factors had ensured the last rebasing was in 1990. This being the case, it is remarkable that President Goodluck Jonathan has provided the political leadership to make the new rebasing a reality.
The other significance of the rebasing was its ‘revelation’ of the extent to which the Nigerian economy has diversified; with strong performances across a wide range of industries which were previously quite weak and had not been captured in the previous rebasing. The much diversified Nigerian economy that we now know is a product of assiduous pursuit of the economic diversification agenda. It is true that this has been a policy commitment of previous administrations. Thus, we have in evidence, policy continuity in Nigeria. However, President Goodluck Jonathan has provided unparalleled leadership and commitment to the execution of the economic diversification policy under his transformation agenda. Execution of the strategies encapsulated in the agenda has been steady across his cabinet. This provided the yields in the strong performances of the sectors Mr. President has given particular support to the critical sectors including entertainment, transportation, manufacturing and housing as revealed in the GDP statistics that emanated with the rebasing to 2010.
I like to exemplify the importance of disciplined execution with my experience at Nigerian Export-Import Bank. NEXIM Bank is an institution that was set up by the Federal Government to execute its trade policy. In recent years, this policy has taken the direction of promoting export growth in the non-oil sectors of the economy and formalization of trade as its core objectives. Without a doubt, these objectives are capable of turning around the economy, given the country’s huge potentials. However, at institutional level, the lack of disciplined pursuit of its mandate and sustained execution of the trade policy goals of the government had ensured that when I assumed office five years ago, NEXIM Bank was a shadow of the important institution it was meant to be. Lax risk management which had resulted in significant impairment of its risk assets, poor corporate governance and poorly motivated staff profiled the bank to be ineffective in supporting the trade policy of the government and the aspirations of Nigerian exporters.
In response, I had to reunite NEXIM Bank with its institutional mandate and operational focus. These entailed a thorough audit of the Bank’s processes, people and risk management architecture. What ensued was a corporate transformation agenda that entailed institutionalization of corporate governance best practices, smart deployment of human capital and design of a risk management framework to support creation of risk assets. With this in place under the guidance of KPMG professional services, we had to refocus NEXIM Bank to what the trade policy objectives of the government have been. This was how we came up with the MASS Agenda acronym which readers of my essays are by now very well acquainted with.
NEXIM Bank has, in the last five years, focused on the manufacturing, agro-processing, solid minerals and services sectors. A lot of our commitment and lending in these sectors have aimed to de-risk the sectors, provide information support and funding for businesses to enhance export growth and prosperity of Nigerian exporters. So doing, we have lent support to the brightening of our sectors of focus. In concrete terms, we have assisted a number of SME manufacturers who have recovered from the margins of their operations and are now tapping the export market. Across the “MASS” sectors, we have created and helped sustain over 27,000 jobs. Over $230 million has been earned in foreign exchange by the businesses, and NEXIM Bank has managed the entertainment industry fund. Against the pressure to operate the fund as a grant, which it is not by the policy that instituted it, the fund has made disbursements to deliver world-class infrastructure and production of creative and entertainment products.
The discipline of execution of our strategies has ensured that we follow our customers to the market to learn their real challenges. What we found, specifically with non-tariff barriers to trade especially in the West African sub-region, inspired us to help facilitate a regional shipping line that will provide direct maritime links within the sub-region, and this has generated interest in Central Africa as well. Later this year, the Sealink Project, a private sector business which has continued its fund-raising efforts, will be launched. Its operation will significantly cut the cost of freight and transportation time for sea cargoes in West and Central Africa. This will be catalytic in lifting and deepening intra-Africa trade from its current low level.
Thanks to the discipline of execution of the trade policy of the Federal Government of Nigeria, NEXIM Bank has been thought in some mischievous quarters to be larger than it actually is in terms of paid-up share capital and fund under its management. But this has a positive meaning. With arrow-sharp focus on execution of policy strategies, we can achieve so much more than we have experienced in our history as a nation and as market-focused institutions.
Roberts Orya is managing director/chief executive officer, Nigerian Export-Import Bank
— Jun. 30, 2014 @ 01:00 GMT
Tags: CBN Central Bank of Nigeria Federal Government of Nigeria NEXIM Bank Nigerian Export-Import Bank President Goodluck Jonathan Roberts Orya
