By theG&BJournal
TUE, OCT 23 2018-theG&BJournal-The already visible and significant impact of The Economic and Recovery Growth plan (ERGP) which was developed by the President Muhammadu Buhari’s administration is reassuring investors and stakeholders that Nigeria is turning the page on the sloppy policy implementation process of the past.
In recent days, many have spotted clutches of heartening messages of the obvious impact made after the launch of the Labs on March 13, 2018 by President Muhammadu Buhari who indicated then that the labs would be targeting an initial $25 billion in investments from the private sector. Even the sceptics who doubted the Federal Government’s capacity to implement the programme and deliver the intended results are the unseen cheer leaders today.
The ERGP Focus Labs from start identified more than US$22.5 billion in private investments from about 164 projects that can be unlocked. Of this amount, USD $10.9 billion of them were classified as ‘Most Ready’ projects, that could certainly unlock the projects and accelerate their delivery by the private sector. These projects are forecast to create more than half a million new permanent jobs for Nigerians up until the year 2020, demonstrating the far-reaching impact of the ERGP Focus Labs in unleashing a brighter future for our country.
The implementation of the projects so far represents something very different: the economy recovery that the country is currently experiencing. It has also resulted in the level of activity not seen since in this country before and the establishment of a platform for private sector investors to have direct access to regulators, senior government officials, and relevant cabinet ministers in a single location to resolve problems with regulatory or bureaucratic delays inhibiting their businesses.
This new optimism is evident in the number of companies hiring again. It has also been reflected in the continued deceleration of inflation which is 11.23% following 18 months of continuous deceleration, resurgence of foreign direct investment and a stable currency and increased commitment to long-term plans by investors.
Many economists spoken to say Nigeria is easily a much more pleasant place to be doing business in now than in the past. There is a solidified belief now that the country is actually driving back to sustainable path and this change in sentiment is very widely shared. Economic growth witnessed today is a sure sign that the economy is slowly but surely ridding out of recession. Together with a firming up of crude oil prices, the economy has bounced back into positive levels from -0.9% in the first quarter of 2017 to 1.4% and 1.9% in the third and fourth quarters, respectively. There are also noticeable improvements in key economic indicators including rising foreign reserves which reached a 5 year high of $45.83 billion as at August 31, 2018, and improved ranking in ease of doing business index.
“We have made remarkable progress and working together we can achieve so much,” says the Vice President Professor YemiOsinbajo when he jointly reviewed the progress of the Lab earlier. “We are encouraged by the fact that Nigeria really has what it takes to realize our investment and growth targets.’’
A few months ago, the recovery was not clearly visible, at least not before the conduct of the Focus Labs, an innovative method of plan implementation in Nigeria, by some specific Sector Ministries including Ministry of Agriculture, Ministry of Transportation, Ministry of Industry, Trade and Investment, Ministry of Mines and Steel and Ministry of Petroleum Resources.
The Federal Government’s Forex policy has played a major role-helping the manufacturers to boost productivity as well as exports. The National Bureau of Statistics (NBS) in is Q2 2018 calculation puts the country’s foreign trade at N6.57 billion in the second quarter. The figure is 8.9 per cent less than N7.21 billion recorded in the first quarter but represents a significant 14.56% growth from the N5.73billion recorded in the second quarter of 2017.
The success of the Lab’s effort has surpassed even many of its supporters expectations but that success flows from the ability of the central steering committee’s effort which initially identified a whopping US$ 4.73 billion worth of investment in the Agriculture and Transport Lab, with a potential to create about 129,000 jobs, a US$9.25 billion investments in the Manufacturing and Processing Lab, with a potential of 378,000 new jobs, and another US$8.57 billion worth of investments in the from Power and Gas, with the potential to create 7,000 jobs.
On the back of this, Nigerian and foreign companies doing business in the country are now confidently making more optimistic forecast for future investment and consumers are equally responding to the uptick in economic growth.
The investment projects unlocked in this initial set of the ERGP Labs is expected to extend beyond 2020 and the projection is that the cumulative investment value of the identified projects will reach US$39.12 billion by 2025 with about 716,079 jobs created within the period.
And the quick-wins are manifesting already particularly in the Agric and Transport sectors. For instance, through the networking of the Lab participants, investors in the large mechanised farm were able to engage with a local company called Autodex Ltd to gain access to the supply of local tractors while in the process eliminated the need to import and to request for duty exemption and more importantly resolved the need for import of tractors by Songa Farms. Equally, the Aviation Company required a LOI of transport to access foreign funding for US$500 million. It had only three months window to apply and obtain the LOI but with the company engaging in the Lab with the Ministry of Transportation (MoT), the MoT were able to access and action on the opportunity quickly and issue the LCI. It obtained it in 5 weeks rather than 3 months. Again, The Nigeria Shippers Council was saved the agony of a I year wait for land allocation for the establishment of a truck transit park by the Sokoto State government after engaging the Large Holding Company during the Lab.
Indeed several other Nigerian companies have benefitted immensely from engaging the Lab for issue resolutions including the Barite and Zinc Ore Mining Company in Benue State which received expedited access to the Solid Mineral Development Fund, the Bitumen Mining Company in the South West which licence was renewed to continue its exploration activities unhindered, the Iron Ore Mining and Casting Company based in Kano which was connected to Ajaokuta by the Lab to purchase coke for its production activities as well as the Metal Manufacturing and Aluminium Company which worked with an agency of the World Bank for facilitation of access to funding.
All of these initiatives are expected to bolster the mining sector growth further. According to the latest figures from the NBS the mining sector already accounts for 0.3% of national employment, 0.02% of exports and about $1.40 billion of Nigeria’s Gross Domestic Product.
The ERGP focus lab has proven to be unlike others introduced by governments in the past. At the core of the Lab is a focused approach to its implementation, supported in particular by the highest level of political will, from the President himself through to our civil servants on the ground and most of these investments would, of course, be from the private sector.
The ERGP followed unexpected disruption caused by sudden plunge in oil prices, second the blurred inter-agency lines that created barriers to private sector investments and third the realisation of the immense potential of a focused investment in key sectors of the economy such as the Agriculture, Manufacturing, Processing, Power, Gas and Transport sectors. Many investors had almost given up hope of a normalised operating environment before the ERGP kicked in 2017.
In February 2018, the federal government commenced the Wave 1 of the ERGP Focus Labs to accelerate the implementation of the ERGP. For six weeks, the participants of the labs, made up of both public and private sector representatives, rigorously drilled down the issues with the projects presented, and brain-stormed on how to resolve these issues, and the bureaucratic reforms needed to fast-track the development of our country.
The three Labs were conducted over all by the Sector Ministries within the selected areas (Ministry of Agriculture, Ministry of Transportation, Ministry of Industry, Trade and Investment, Ministry of Mines and Steel and Ministry of Petroleum Resources).
The whole process was facilitated by the ERGP Implementation Unit (ERGP-IU) which was created under the Ministry of Budget and National Planning. In addition, technical assistance is being provided by the Performance Management and Delivery Unit (PEMANDU) Associates of Malaysia. The technical services of PEMANDU Associates was engaged to leverage best practices and build capacity of the ERGP Implementation Unit (ERGP-IU) to independently facilitate the conduct of future labs in other sectors of the economy.
It will be recalled that, upon inception, the Buhari administration had merged the planning and budgeting functions in one ministry, the Ministry of Budget and National Planning. This was done to ensure more effective budget-plan linkage. And upon the launching of the ERGP, a special ERGP Implementation Unit (ERGP-IU) was established at the Ministry of Budget and National Planning (MBNP), to work closely with the Ministries, Departments and Agencies (MDAs), in ensuring delivery of the Plan’s key execution priorities.
Since its development and launching in 2017, the FG has been implementing the various initiatives and reforms outlined in the ERGP which has resulted in the economy recovery we are currently experiencing. The ERGP Focus Labs constitute one of the many initiatives introduced to further facilitate the implementation of the Plan and consolidate the economy’s recovery.
ERGP is Nigeria’s medium term Plan for 2017-2020. The Plan articulates government’s vision for the country, and lays the foundation for long term growth. The underlying philosophy is to optimize local content and empower local businesses.
The three strategic objectives of the ERGP are to:
- Restore and sustain growth;
- Invest in the people; and
- Build a globally competitive economy.
The thinking and the development of the Plan were driven by five fundamental principles:
- Tackling constraints to economic growth;
- Leveraging the power of the private sector to drive economic recovery and sustained growth;
- Promoting national cohesion and social inclusion;
- Allowing markets to function optimally while strengthening Government regulatory oversight to minimize abuse; and
- Upholding core values that define the Nigerian society as enshrined in the 1999 Constitution, notably discipline, integrity, dignity of labour, social justice, religious tolerance, self-reliance and patriotism.
To achieve the objectives of the ERGP over the medium term, the ERGP outlines five key execution priorities, which are:
- stabilizing the macroeconomic environment;
- achieving agricultural transformation and food security;
- ensuring energy sufficiency (power and petroleum products);
- improving transportation infrastructure; and
- driving industrialization, focusing on Small and Medium Scale Enterprises (SMEs).
