Nigerian 2017 Budget of Economic Recovery and Growth

“The underlying philosophy of our Economic Recovery and Growth Plan is optimizing the use of local content and empowering local businesses”
“The role of government must be to facilitate, enable and support the economic activities of the Nigerian businesses ….”
President Muhammadu Buhari, December 14, 2016

On December 14, 2016, like millions of Nigerians (I hope), I watched the Nigerian president deliver his budget – speech and all – to the joint session of the Nigerian national assembly, and long before the saliva could dry from his mouth economic experts went to town analyzing the budget. I have always wondered how anyone could do that simply from a budget speech; especially, given that the details of the budget were not even known to members of the national assembly, at least, as at that time. Anyways, I believe in different yolks for different folks.

The two statements in paragraph 14 of the president’s speech caught my attention, and it was based on those that I decided to look for the details of the budget to see if appropriate allocations were made to the right agencies responsible for seeing this promise to fruition. – Ministries of Labor, Agriculture, Mining/Natural Resources, Finance/CBN, Economic Development, Works/Power, Transportation, Industry/Trade, Health and Justice. Analysis of the breakdown of allocations to these ministries and departments will present a better picture of where this administration is going economically and socially; especially, with regards to pulling the nation out of recession and placing it on a steady and stable growth footing. Until those details become available, we must review what role each of these ministries/departments playing in realizing the president’s goals above.

Optimizing use of Local Content
Here, local content is not only limited to mineral resources and raw materials; it includes localized information gathering and distribution, development and sharing of technological expertise, local labor recruitment, training and retraining, which requires establishment and refurbishing of training facilities. Now, which are the ministries and departments key to this role? They will be the ministries/departments of Agriculture, Mining and Natural Resources, Labor, Education, Economic Development, and Justice. A database of resources – natural and manufactured – that are obtainable in Nigeria for production and manufacturing purposes should exist in the ministries/departments of Agriculture, Mining, Natural Resources, and Economic Development, and be easily accessible to Nigerians who may wish to use such resources in their entrepreneurial ventures.

The ministry of Labor, on its part, should have or collect data on all Nigerians of labor age – 18-55 years; their academic and skills experience, and in collaboration with the Ministries/departments of Education and Economic Planning, formulate a training program not only geared towards enhancing the existing skills of this labor-age group, but providing training opportunities for a change of skills training, based on the prevailing economic situation. That way, the nation will always have an abundance of skilled labor force for every economic sector, and will not have to depend on supplies from foreign labor force like India and China. Where does the Ministry of Justice come in? Without laws, there will be societal chaos. Since the proposed data collected by the Ministries of Labor, Natural resources, Agriculture, Education, etc. towards creation and preservation of local content will include sensitive private information of Nigerians and their resources, a law guiding its sharing, with whom, and for what purpose is very important. So also is the safeguarding of any technology developed or enhanced by Nigerians, and the application of such technologies to avoid harm or injury to users that might result in legal disputes; and where such disputes occur, there should be a legal framework to resolve them.

Empowering Local Businesses
This involves a little bit of export promotion and import substitution policies, to enable local businesses survive and grow. It also means tax breaks and other financial incentives like extension of generous credit and loan facilities, business-friendly laws – including easement of doing business in Nigeria; improving power, infrastructure, transportation and security services will go a long way towards realizing this goal; granting of import licenses for heavy machinery and raw materials not available in Nigeria, and education/seminars focused on spreading of information on the available forms of business, risks and benefits, resources and their accessibility, and market opportunities within and beyond the Nigerian shores. The ministries of Finance, Trade and Industry, Power/Works, Justice, Transport, and the Central Bank all have roles to play in towards meeting this goal. The Ministry of Finance and the Central bank should work with the commercial banks and other special interest banks, like the Banks of Industry and Agriculture, Import-Export bank, and the Islamic bank, to make loan facilities available at low interest rates – even if it means creating a soft loan or interest rate regime just for small and medium-scale Nigerian business owners.

On their parts, the Ministry of Trade and Industry and the Nigerian Export Promotion Board would handle the sourcing of international and regional markets, and promotion of Nigerian-made products, respectively. Also, the Standards Organization of Nigeria (SON) has the role of ensuring that made in Nigeria goods and services meet internationally-acceptable standards; this will help allay the concerns of international importers about the quality of these products. The Nigerian Customs Service should draw up a set of procedures to ensure smooth and quick clearing of big ticket production/manufacturing equipment at the wharfs, and reduce clearing costs for these and other business-related machinery, so as to reduce unnecessary demurrage and holding cost that might negatively impact on businesses’ capital budgets.

Critical Infrastructure Needs
Without steady power supply and a reliable access to markets, no business will be successful, and this where the Ministries of Power/Works, and Transportation have roles to play in ensuring the success of the president’s 2017 goals. Without a doubt, power supply in Nigeria is epileptic at best, and the cost of alternative power supply has driven many local companies out of business. The major reasons why the national power agencies in Nigeria have not been able to make much of an impact are sabotage by the staff and the fierce resistance of generator importers. To improve power supply in Nigeria, government must first ban generator importation; with that out of the way, it could then focus on improving/modernizing available equipment, ridding the agencies of corrupt management and staff, and proposing a billing system that includes lower rates for business facilities like manufacturing and production warehouses.

Like power, the Nigerian road network is terrible and deserves a lot of attention. The same applies to the transportation system. Without necessary infrastructure, it is very costly to do business in Nigeria, even for Nigerian businesses. The responsible ministries must redouble efforts to improve Nigeria’s road network, provide for an efficient rail and water transportation system so as to efficiently move heavy cargo to their destinations. Frequent delays in air transportation add to the woes of any business entity, by increasing their cost due to unnecessary waste of time at airports. An efficient business environment requires ease of movement and communication by air, land, and sea; and, between these two ministries, and some other government agencies, a lot is expected of them if the 2017 budget goals of empowering local businesses will ever be achieved.

Enabling Business Laws
After the finance and infrastructure comes the enabling environment, and this is where the national assembly and the justice ministry find themselves working hand in hand. In collaboration with the justice ministry and the Presidency, the national assembly should look at laws currently on the books that need tweaking, and new ones that may be needed, to ensure ease of doing business in Nigeria both for indigenes and interested foreign investors. Currently in Nigeria, it takes about two years to get all the necessary documentation and approvals to set up a corporation; about half that length of time for a partnership, and about six months if you want to set up a legalized Sole Proprietorship. A personal experience: to renew/update my company information at the Corporate Affairs Commission took four days in Abuja, and a whole lot of palm greasing. With that experience, not many would want to set up a business in Nigeria. If the business establishment laws are modernized, and bureaucratic bottlenecks eliminated at both federal and state levels, doing business in Nigeria will be easier and prospective investors will flood the nation.

While ease of doing business laws are important, it is equally important – if not more so – to enact laws that protects young indigenous businesses for at least 5 years, to give them enough time to find their footing and compete at par, or near so, in the international markets. Such laws would mandate government agencies at every level to source their needs locally, and only look outside for those needs that are not available locally. I believe there are laws or discussions in the national assembly to this effect. Since one of the problems that kill businesses in Nigeria is difficulty in debt collection – and payment of loans, laws that make it mandatory for buyers to pay their debts within 30 day of purchase, or face prosecution and confiscation of properties to the creditor, should not only be enacted but be enforced. All of these will encourage many Nigerians to establish businesses, with the assurance of the full backing of the laws of the nation.

There are so many things needed in Nigeria to successfully empower local businesses, and the above are just a few of them. One thing must be acceptable by Nigerians: economic recessions take about three years of focused investment in the right segments of the economy to end; so, any hope that the current recession will end by the end of 2017 is wishful at best. All of the above propositions, if implemented, cannot come to fruition in the 2017 fiscal year, but a continuous implementation over a period of three fiscal years will ensure a stable and growing small and medium business sector in Nigeria that will be the major employers of labor by 2023.

“The role of government must be to facilitate, enable and support the economic activities of the Nigerian businesses ….”

The Buhari administration, and subsequent administrations, must not allow the above statement to be just a budget presentation talk, as has been the case in many years past; government must make sure that it means what it says by working with relevant government agencies and ministries to enact and implement policies that achieves what the president promised. To this effect, the N50b set aside to expand Export Processing and Special Economic Zones; the N15b for recapitalization of Banks of Industry and Agriculture; the seed amount of $1.3b for the Development Bank of Nigeria, and the provision for establishment of model technical and vocational schools are all steps in the right direction, if the government can actually move from talking to doing.

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