Nearly eight months after Nigeria entered a recession, the country has just released economic recovery growth plan (ERGP).
The 140 pages is packed with various plans that the markets are doubting the government seriousness and readiness to implement. Other plans in the document are day to day policies that Nigeria might not find difficult to carry out..
On the topline, the ERGP has the following pillars:
Focus on tackling constraints to growth. Economic growth in Nigeria faces various supply constraints including fuel, power, foreign exchange, and business unfriendly regulations. In addition, there is a shortage of requisite skills and appropriate technology necessary to drive growth.
Leverage the power of the private sector. Economic recovery and transformative growth cannot be achieved by the government alone. It is essential to harness the dynamism of business and the entrepreneurial nature of Nigerians, from the MSMEs to the large domestic and multinational corporations to achieve the objectives of this Plan. The Plan prioritizes the provision of a more business friendly economic environment.
Promote national cohesion and social inclusion. Nigerians are the ultimate beneficiaries of more inclusive growth and therefore, the initiatives set out in this Plan are aimed at ensuring social inclusion and the strengthening of national cohesion.
Allow markets to function. The ERGP recognizes the power of markets to drive optimal behaviour among market participants The Plan prioritises the use of the market as a means of resource allocation, where appropriate. However, the Plan also recognises the need to strengthen regulatory oversight to minimise market abuse.
Uphold core values. The ERGP is rooted in the 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. It requires all citizens and stakeholders to adhere to these principles.
There are concerns that the ERGP will not address structural problems that mitigate foreign direct investors. The plan still relies on an improvement in Nigeria’s oil production capacity while charting a way ahead for diversification.
Razia Khan, Chief Economist at Standard Chartered Bank told Financial Times that “A lot of attention was focused specifically on whether the plan would endorse foreign exchange liberalisation or not, The fact that this has not been made front and centre of the economic recovery plan will disappoint many. While the wording on FX liberalisation suggests that this is sdll work in progress, and broadly adopts the need for flexibility, that will not. in itself, provide enough direction to markets”