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Olu Ajakaiye, executive chairman, African Centre for Shared Capacity Development Building, ACSDCB, Ibadan, points out the problem with Nigeria’s economy while praising the new federal government’s economic plan
| By Anayo Ezugwu | Apr 24, 2017 @ 01:00 GMT |
DESPITE the claims by the federal government that the economy is gradually recovering from recession, Olu Ajakaiye, executive chairman, African Centre for Shared Capacity Development Building, ACSDCB, Ibadan, said the economy is presently in stagflation. He noted that all economic indices show that the economy will not recover from recession anytime soon.
Ajakaiye, stated this while delivering the ‘Bullion Lecture’ organised by the Centre for Financial Journalism in Lagos, On April 11, with the theme: “Nigeria’s Economic Recovery and Growth Plan: Options for Low Cost Financing of the Programmes”.
He said the problem with Nigeria is that since 1999, the federal government has been running the economy without a definite plan. He cited section 16 (2a) of the 1999 Constitution as amended, which stipulated that “The state shall direct its policy towards ensuring that promotion of a planned and balanced economic development.
“In keeping with this section of the constitution, a number of attempts have been made to prepare a development plan for the country between 1999 and now. Perhaps the first effort in this regard is the launching of National Economic Empowerment and Development Strategy, NEEDS, 2004-2007 under the leadership of Prof. Chukwuma Soludo, then chief economic adviser to the president.
“Some state governments also prepared SEEDS and few local governments prepared LEEDS. Inconclusive attempts were made by subsequent leaders of the National Planning Commission, NPC, to prepare a follow-up to the NEEDS. A second successful attempt at development planning was the launching of Nigeria Vision 20:2020 spearheaded by Shamsudeen Usman, former minister of national planning and deputy chairman of the NPC.
“Usman also spearheaded the preparation and launching of a 30-year National Integrated Infrastructure Master Plan. Subsequent efforts to comply with this section of the constitution included the 7-Point Agenda of late President Umaru Yar’Adua, the Transformation Agenda of former President Goodluck Jonathan and the numerous ministerial/sectoral inititatives of which the National Industrial Revolution Plan is a prominent one.”
According to Ajakaiye, a common feature of these efforts to have a development master plan is that well articulated aspirations were not implemented primarily because they lacked well considered government investment programmes necessary for strong plan-budget link. As a result, he said the capital budgets of the federal government could not be linked with a non-existent government investment programme of the plans. Also, he said the state governments and, indeed, the private sector agents could only react to the annual budgets once they were passed thus compromising the much desired proactive initiative by these stakeholders.
However, he said that there are indications that the recently launched Economic Recovery and Growth Plan, ERGP, 2017-2020, will be accompanied by the federal government investment programmes raising the prospects of a strong plan-budget link, a pre-requisite for an orderly, effective and efficient plan implementation. Ajakaiye hopes that the state governments as well as private sector operators will be guided by the Federal Government Investment Programme, FGIP, of the plan in their investment plans.
He applauded the excellent macroeconomic framework of the ERGP which provided a reasonable basis for considering issues of financing the plan. “This is particularly so because the ERGP document admirably decomposed the size of the investment programme of the plan into those to be undertaken by federal and state governments as well as by the private sector. In addition, the plan contains information on arrangements for financing federal government budget deficit.”
Ajakaiye, therefore, advocated that the federal government should consider issuing project-tied bonds as a way of financing most projects in the ERGP. He said it is possible that concessional external loans may be insufficient to meet the external components of budget deficit. In such case, he said government should consider issuing project tied bonds and market them among Nigerians in Diaspora because of drop in Foreign Direct Investment, FDI, into the country.
“Nigeria is by far the largest recipient of all FDI coming to West Africa. Reports have shown that Nigeria remains a top destination for FDI coming to West Africa, receiving about 50 percent in 1999, while receipts reached a peak of about 72 percent in 2006. From the 2006 peak, however, the proportion of West Africa-bound FDI that ended in Nigeria has declined continuously, dropping to below 50 percent in 2012 on account of the inclement conditions in the oil producing region. Clearly, the major attraction for Nigeria is the oil industry making it imperative to ensure peace and stability in the Niger Delta region if the projected annual FDI flow of around N970 billion is to be realised,” he said.
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