Being text of address delivered by Vice President Yemi Osinbajo at the Nigerian Economic summit
It is a pleasure to be here at this year’s National Economic Summit. I bring you the warm greetings of President Muhammadu Buhari who sends his best wishes for successful deliberations at this meeting. The annual Economic Summit occupies a special place in our national economic dialogue. It is at once a statement of the priority that we attach as a government to close collaboration between the government and the private sector and at the same time an opportunity for us all to engage in meaningful discussions on the economy.
Our policy of partnering with the private sector is also borne out of reality. While the Federal Government on its part is determined to build a modern economy, its ability to do so is limited by the fact that its annual budgeted expenditure of seven trillion naira is only a small part of a multi trillion naira economy. The private sector is clearly the bigger contributor to the economy. It thus follows that the private sector must be enabled and encouraged to play its decisive role if our development efforts are to succeed.
In the period since the last summit, the Economic Recovery and Growth Plan was articulated and adopted. This dynamic document which was developed through extensive consultations with stakeholders lays out national economic priorities over the next three years with a short term focus on getting the economy out of recession and placing it on a trajectory of sustained inclusive growth in the long term.
Several issues were raised at last year’s economic summit and in keeping with our commitment to keep faith with the work of the summit, several significant actions have been taken by the Federal Government in response to the issues raised.
Let me now speak to some of them.
1. OUT OF RECESSION
First, the economy has now returned to the path of growth after a continuous slide from 2014. As is now well known, we exited recession in the second quarter of 2017 with a GDP growth rate of 0.55% while inflation has similarly declined continuously from its peak of about 18% in January 2017 to about 16% today.
2. FOREX AVAILABILITY
Second, last year there were concerns about the availability of foreign exchange and a rapidly deteriorating exchange rate. The situation has been turned around and stabilised. Foreign exchange reserves have risen to about $33 billion and end users have increased access to foreign exchange partly due to increased export earnings and remittances as well as the introduction of a dedicated transparent window for Investors and Exporters (NIFEX). The results have been encouraging as the inflows of capital in the second quarter of 2017 of about $1.8 billion were almost double the amount of $908 million imported in the first quarter of the year.
3. OIL PRODUCTION RAMPED UP
Third, another issue of great concern last year that has been resolved was the loss of a significant amount of oil production. At some stage last year, we were losing up to one million barrels a day of crude oil production but thanks to the series of engagements we had with stakeholders in the Niger Delta on the New Vision for that region, production has been restored to nearly 2 million barrels per day. At the same time, the debt overhang preventing required additional investments in the oil sector has been addressed through the plan to pay off Joint Venture cash call arrears. There is renewed confidence in the sector and we are already seeing significant investments.
4. NEW POWER SECTOR INITIATIVES
Fourth, for a variety of reasons including shortage of gas, limitations in transmission capacity and financing constraints, power supply was in the region of about 3000MW. We tackled these issues and although still vastly inadequate, power supply has moved up to 7000MW. We are at the moment dealing with the constraints in distribution, with two notable policy interventions.
The National Electricity Regulatory Commission in August issued the eligible customer directives and will this month issue directives on independent metering. The eligible customer regime allows a willing-seller/willing-buyer arrangement in the sale of power. While the independent metering directive allows independent entities aside from registered power distribution companies to sell and install meters to customers and be paid directly as collections are made from metered customers.
This will break the distribution gridlock and there is good cause to believe that we will achieve the 10,000MW envisaged in the ERGP.
5. TAKE-OFF OF THE AGRICULTURAL DIVERSIFACTION OF THE ECONOMY & IT’S MANY BENEFITS
Fifth, we undertook to begin the process of diversifying the economy leading with the agricultural sector. Agriculture has created a large number of jobs and is an important source of raw materials and means of generating foreign exchange. The Anchor Borrowers Programme launched by the President in 2015 has benefitted up to 200,000 small scale farmers and attracted investments of up to N43.92 billion from participating institutions. What is particularly encouraging is that we are moving steadily towards self-sufficiency in rice and also scaling up in eight other commodities and produce that are vital for food security but which can also be exported. The Presidential Fertilizer Initiative has resuscitated 11 blending plants with a capacity of 2.1 million metric tons with the product being sold to farmers at N5,500 without subsidy and far less than prevailing market prices.
But the best news is the enthusiastic response of the private sector. Wacot opened its 120,000 metric tons parboiled rice plant in Kebbi in August. Indorama opened its 1.5 million metric tons fertilizer plant, while Dangote announced its investments in 1 million metric tons of rice mills.
6. REVITALIZATION OF THE RAILWAY SECTOR
Sixth, this time last year we had promised to take steps to revitalize the railway sector. The now concessioned narrow gauge railway will soon come into full operation and help to redress the high cost of freight especially of food items. I also had the distinct pleasure of kicking-off the construction of the Lagos-Ibadan segment of the Lagos-Kano standard gauge railway line earlier this year.
7. CLOSER GOVERNMENT AND BUSINESS CONSULTATIONS
The seventh issue is the complaint made at last year’s National Economic Summit about lack of consultations with the private sector. We refuted this then but of course it can certainly no longer be said to be the case. The Industrial Policy and Competitiveness Advisory Council which I chair and consisting, as it does, of leaders of the public and private sector is an excellent example of government-business cooperation and is contributing through various recommendations to addressing the challenges facing the manufacturing sector. Moreover, we have now had several sessions of the Presidential Quarterly Business Forum which enable an exchange of views between the Federal Government and the organised private sector. The last meeting had a very useful interaction between the private sector and heads of regulatory agencies on how to improve the business environment.
8. EASE OF DOING BUSINESS REFORMS
This leads me to the eight area which is our efforts to improve the business environment. The Presidential Enabling Business Environment Council, PEBEC introduced reforms under a 60-day national action plan focused on eight areas that make it easier to register businesses, obtain construction permits, get credit, pay taxes, get electricity, trade across borders, facilitate entry and exit of people and register property. The evidence coming from the business community itself is that these changes are becoming manifest such as the electronic visa on arrival process and faster business registration. The second national action plan which will bring about similar results was launched at the beginning of this month.
9. IMPLEMENTATION PROGRESS IN SOCIAL INVESTMENT PROGRAMMES
Ninth, this time last year most of our social investment programmes were framed around promises. This has of course since changed. The N-Power programme for unemployed graduates has employed 200,000 young people with another 300,000 set to be recruited. With regard to the Home Grown School Feeding Programme about 3 million children across 14 States are participating in the programme with the numbers expected to ramp up as it begins to cover 21 States in this new academic session. The GEEP programme which gives credit to MSME’s is also growing quite rapidly.
10. MSMES CLINICS IN 10 STATES
The challenges and obstacles facing MSMEs is the tenth area in which progress has been made since the last National Economic Summit. We have addressed the regulatory and financial challenges facing this crucial set of actors through a number of actions. The National MSME Clinics taking place across some states in a systematic manner has helped several thousand MSMEs to engage with regulators regarding processes such as business and product registration, access to finance and export requirements amongst others. In addition, an Executive Order promoting local content in government procurement has been issued intended to give preference to Nigerian small businesses in specific sectors. One of the critical things that the Manufacturers Association of Nigeria has proposed to us in support of the local content initiative is what they described as ‘margins of preference’ for local content goods. In order words, what they are saying is that if you prefer locally made goods then you must take care of the problems that local content goods have, in order words, they are usually more expensive than the imported goods, so you have to take care of that by what they call ‘margins of preference.’
So, we are looking at that proposal and we are looking at the percentage for procurement purposes. But we do agree with the principle that if we are going to promote local content goods then we must find ways of preferring them to imported ones and we think that the margins of preference is a sensible way to do so. These ten issues are not the complete picture of what has been done but rather an indication of responses to issues raised here last year. The Buhari Administration remains focused on implementing the ERGP and our actions thus far are just the beginning of changes required to turn the economy around. The key thing is that issues of concern raised in this forum have been systematically addressed and we are committed in doing so and we want to continue to work on some of the other lingering concerns.
We are concerned as most of you are, with the very high interest rates and of course most of that have to do with government borrowing. Since the evidence points to a crowding out of the private sector, the Federal Government is reducing its demand for domestic paper and will seek to refinance maturing domestic debt with longer tenor and cheaper external borrowing. Meanwhile, intervention funds will continue to be made available through the Bank of Industry, and repositioned NEXIM & Bank of Agriculture and the newly established Development Bank of Nigeria. Going forward, the Federal Government will continue to sustain the dialogue with the private sector most notably through this National Economic Summit but also through the Presidential Quarterly Business Forum, and various sectoral bodies. We count on the continued engagement of the private sector to support the economic policies of this administration and I look forward with anticipation to receiving the outcomes of this 23rd National Economic Summit.
It is now my pleasure to formally declare open the 23rd Session of the National Economic Summit.
Thank you.
