Nigeria’s Economic Sustainability Plan is a bold step, not feasible- ACUF

Nigeria’s Economic Sustainability Plan is a bold step, not feasible- ACUF

By Paul Okah

[Nigeria] – A non-governmental organisation, the Amaka Chiwuike-Uba Foundation (ACUF) has said that the Nigeria’s Economic Sustainability Plan formulated by the Vice President Prof Yemi Osinbajo-led committee is a bold step in the right direction but not feasible as it stands.

In a statement to media Tuesday, ACUF Board Chairman, Dr Chiwuike Uba, said that many recommendations in the white paper may be difficult be implemented as “more emphasis was placed on increasing government revenue through borrowing and taxation and less emphasis on reducing costs, wastages and pilferage that have become part of governance in Nigeria”.

Dr Uba recommended that, for the plan to be effective, government must, inter alia, as part of the post-COVID-19 measures, encourage the establishment of privately-owned refineries with minority shares by the government, even as he harped on job creation to reduce unemployment.

He said: “The Nigeria’s Economic Sustainability Plan recently presented to President Muhammed Buhari by the Vice President is a bold step and we commend the Federal Government for conceptualising a policy response needed to jumpstart Nigeria’s economy after COVID-19 pandemic.

“The government recognised the precarious situation of Nigeria’s economy as evidenced in the high unemployment rate of 23.1% (expected to increase to 33.6% at the end of the year 2020, decreasing revenue occasioned by the decline in the demand and price of crude oil, death/closure of businesses, increasing recurrent expenditure, high poverty rate, despondency, and high misery rate and its attendant implications on the security of lives and property.

“While we commend the government for putting together a beautiful document/plan to achieve the stated objectives contained in the plan, we observe that more emphasis was placed on increasing government revenue through borrowing and taxation and less emphasis on reducing costs, wastages and pilferage that have become part of governance in Nigeria.”

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Continuing, he said: “It is expedient to reduce cost of governance occasioned by wastages, frivolities, pilferages and all forms of corruption in the system. As the government continues with the review of the Oronsaye Report, it would be necessary to close down some government agencies as cost-saving measures. For instance, following the removal of price capping on fuel, the continuing existence of PPRA would be a huge drain on the economy of Nigeria. The functions of PPRA should be transferred to DPR. In addition, Nigeria’s refineries have posted no profit in the last 18 years.

“The refineries posted a combined loss of N154b and N149.23bn in the year 2018 and 2019 respectively. The loss has continued in 2020. An asset is expected to generate wealth but our refineries are currently national liabilities. The truth is that the cost of fixing the refineries may be enough to install new refineries. Therefore, it is recommended that, as part of the post-COVID-19 measures, privately-owned refineries with minority shares by the government should be encouraged.

“What is the need of keeping loss-making NNPC? Nigeria would experience an improved economic performance through the provision of more jobs, reduction in capital flight, and building of a new set of industries if we build more and have working refineries in Nigeria. What is the government’s plan to reduce recurrent expenditure currently hovering around N5trn and revenue to debt service ratio of over 66%?” It is more worrisome when the revenue to debt service ratio in the first quarter of year 2020 is above 80%. This is not sustainable!

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He added: “While we agree that agriculture is needed not just to create jobs but to improve the general economy, we are concerned with government’s plans for agriculture. Whereas the government clearly indicated its intention to ‘create five (5) million jobs by focusing on increasing land under cultivation with State Governments contributing between 20,000 to 100,000 hectares from a combination of aggregated smallholder farms and utilisation of abandoned states farm settlements and agricultural projects’, it failed to state the current yields per hectare and the expected yield from the cultivating additional lands as proposed in the plan. The plan gave the impression that more lands guarantee more yields.

“Finally, we recommend that the government should, in addition to agriculture, medical, and pharmaceutical manufacturing, focus on how to invigorate other manufacturing (textiles and others) in Nigeria. Manufacturing is a high labour-intensive sector- it employs a larger number of persons, boosts faster productivity growth, services other companies, improves import substitution, and drives technological change. There is a need for everyone to make sacrifices. We cannot continue to increase the public debt to fund consumption and corruption.”

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