Osinbajo speaks on progress in Buhari’s economic plan

• Says “there is light at the end of the tunnel”
Speech delivered by Vice President Yemi Osinbajo, SAN, GCON at The Platform, a programme organised by the Covenant Christian Centre, Lagos on May 1, 2017.
First, let me say how very honored I am to be here again at “The Platform,” this yearly event that I make a point of attending so long as I am invited!
And I thank the pastor because he has been inviting me since 2009. It is indeed a very useful way of communicating our ideas and also getting very useful feedbacks.
We live in one of the most important nations in the world by many standards.
A nation of 170 million of some of the smartest people on the face of the earth: Acres of arable land, natural resources of every kind from precious metals to natural harbours and breath-taking coastlines, a strong and growing army of digital natives doing incredibly innovative things. For example, we are developing perhaps the most sophisticated animation technology expertise in Africa, a group of young persons are doing that.
Our music and entertainment industry is the fastest growing in the world today. Nigerian Writers have won every prize in literature from the Nobel to, just last month, a Pulitzer- it was Premium Times that won that.
Only last year, a Nigerian girl, Morolake Akinosun won a gold medal at the Olympics, last Saturday Nigerian boxer, Anthony Oluwafemi Joshua won the World WBA title becoming the boxing champion of the world and last year a Nigerian medical doctor Oluyinka Olutoye successfully took out a baby-FOETUS- from her mother’s womb operated on the womb and put the baby back again and the pregnancy was carried full term and was born completely naturally, a feat unheard of in medicine.
Nobody is as funny as Nigerian comedians: professionals or amateurs, we even have a member of the National Assembly who recently launched a CD – Aje kun iya ni o je! (….prolonged laughter….)Who have not heard of Aje kun iya ni o je?
And we are the most innovative entrepreneurs. The other day a young man said he wanted me to attend his book launch and the title of the book is, “seven steps to becoming a professional whistle blower.” (Prolonged laughter)
And by the way, we all know that the Nigerian jollof Rice is the best anywhere in the world. We beat the Ghanaians and the Senegalese! (Prolonged laughter)
My theme this afternoon is “WE CAN SEE THE LIGHT AT THE END OF THE TUNNEL’’.
I am going to focus this afternoon on some of the good news in various sectors of the Nigerian economy and point to the direction that the economy is going.
Only recently the President launched the Economic Recovery and Growth Plan. He had referred to it in his budget speech in December 2016 as being the basis for the 2017 budget and mentioned then that the plan is built on the Strategic Implementation Plan for the implementation of the 2016 budget.
The plan has 4 key execution priorities. That is four things that we think if we get right can completely turn things around for Nigeria and set us on a path of real growth with jobs.
What are those four things?
1. Stabilizing the Macroeconomic Environment.
2. Delivering Agricultural and Food Security.
3. Energy Sufficiency i.e. Adequacy of Power and Petroleum products, improving Transportation Infrastructure.
4. Driving industrialization through small and medium scale enterprises, and-PLUS- delivering an effective social investment programme.
So we think that these 4 items and of course including the Social Investment Programme can do the trick.
Let me tell you the good news in some of these areas.
AGRICULTURE
Take agriculture. As part of our plan to fully implement the diversification of our economy, we expected at least three major results, the first is that we would not have to depend on one source of revenue. In the past few years we depended solely on oil for revenues. But most of the revenues from oil was used to import items we either could make or grow. Food and refined petroleum products consumed most of our foreign exchange revenues.
So when in 2016 oil price crashed and in our case we lost almost 60% of production because of militancy in the Niger Delta, we were hit by triple crisis: no foreign exchange, so exchange rate went up, also prices of imported items including food increased because of the exchange rate. Many factories could not access foreign exchange so that meant in some cases higher prices of their products and shut downs.
So for us focusing on agriculture was key, two reasons. Agriculture and the whole agro-allied value chain is clearly the fastest way of creating jobs and lifting millions out of poverty. The majority of Nigerians are actually poor subsistence farmers. We decided that to move them out of poverty we will provide the right inputs, improved seedlings, and fertilizer and equipment so they could multiply their yield and make more money .
Through the CBN’s Anchor Borrowers programme, we were able to provide financing for many hundreds of thousands of farmers. Taking rice as an example, local production has almost tripled. We are now producing about 5 million tons. We were importing over 580,000 tons in 2015 and by 2016 we were importing only 58,000 tons. A major problem before now was being able to mill rice paddy. Government has now supplied 200 mills of various sizes for cooperatives ( in addition to private sector efforts)
If all goes well we could be producing all our rice by the end of 2018 and if we are able to do so, it means that the substantial amount that we spend on importing rice will be saved.
How did this happen? We provided improved rice seedlings to the farmers and then just teaching very simple farming practices that improves yield. Both Kebbi State government and IITA and Jigawa state also ( among others) have run excellent rice seed improvement programmes that have been of tremendous benefit.
Also using our disaggregated soil maps we were able to provide the NPK formulation or simply fertilizer for each soil type in the different States. Before now there was no map and fertilizers were just given indiscriminately. So, using that and applying the right fertilizers to the right area our yields went up from 2 tons per hectare to 4.5 to 5 tons per hectare and we have achieved 9 tons per hectare in some states.
So for the same acreage because of better inputs and farming practices the farmer can make more money, get out of poverty and is able to make a decent living and the country is more prosperous.
What we are trying to do for Wheat production is that we are trying to be self-sufficient in wheat production but that hasn’t been as successful as rice, the target is 300,000 tons now & 2.5 m consumption in another 2-3 years with improved seedlings. (For Sorghum, we are no 2 in the world.)
Maize is one area we would have done much better but we have not done enough because of army worm which destroyed a lot of maize across the country. The point is that we have simply not done enough in terms of maize production. A lot of maize that would have been grown here in the South West is not produced. Here in Lagos and in many parts of the South West where you can grow maize, enough has not been, especially when you consider the fact that the growth of the poultry sector is hinged on maize production.
Grain production generally has gone up and has become extremely lucrative. We have huge grain exports going on from Nigeria to the countries on our Northern borders and even threatening the availability of grain for local consumption. The most active markets for grains are Dawano market in Kano, Maigatari in Jigawa, Leila market in Sokoto.
All of these markets are where people come in from northern borders of Nigeria to buy grains. Now why has that become the case? It was because when our currency became weak, it meant that it was cheaper to export, now we are exporting more, that is one of the advantages of having a currency that is devalued. But when you are exporting more you must produce more.
The next phase of our agricultural push is in plantations of tree crops, Cocoa, Cashew, Shea-butter, Coconut oil… (coconut oil expensive, l litre is N7000), the list also includes Sesame seed, Soya bean, Pineapples and Banana. For Cassava – we are now looking at Ethanol and Starch which are in high demand, including Sugar-cane.
This year there was a major revolution in the fertilizer sector. Things improved dramatically because the Presidential Fertilizer Initiative came up with a design to solve the problem once and for all. The Ministry of Agriculture produced a soil map for the country that determined the pattern of fertilizer distribution and this helped a great deal.
Also, the Federal government provided a concessionary working capital loan for Nigerian-based blending plants to enable them produce fertilizer locally. The thing with fertilizer is that a substantial quantity of what you need to blend is available locally which is why we struck the deal with the Moroccan government. We now have a government-to-government arrangement facilitated and driven by private sector players. Nigeria signed an agreement with Morocco for the importation of phosphate at a concessionary price and getting potash from Europe.
We are now able to use our own blending plants to produce fertilizer at a very cheap rate, as a matter of fact we are able to deliver fertilizer around N4,500, almost half of what it used to be.
But more importantly, there is a whole industry around fertilizer production. We are now using warehouses in the sea ports, we are transporting fertilizer via the railway and we hope that we are able to produce 500,000 metric tons of blended NPK for raining season farming and another 500,000 for the dry season farming. The initiative has so far created 50,000 direct jobs and over 120,000 indirect jobs.
CBN
In stabilizing, the macro-economic environment we have focused on aligning fiscal with monetary policy and nudging the CBN towards the objective of more market determined exchange rates. We are also working on replacing the 41 items not valid for foreign exchange with a more trade policy-driven restrictions taking into account those items that are required and locally unavailable raw materials.
SUPPORT FOR STATES
As of 2015 when we assumed office 2/3 of States had been owing salaries for months. We began a systematic scheme of support for States in three phases and only recently paid 25% of Paris Club refunds a debt owed to States since 2005.
All of these interventions were able to ensure that the States survive the recession and workers can continue to earn their pay and support their families.
Now there are all manner of arguments about what the Federal Government has done for the states, there are those who say ‘don’t give them anything,’ there are those who say that the support should come with some preconditions. What we did was to stipulate some pre-conditions for providing the support. We believe that states constitute the nation and once the states are disadvantaged as they were, the whole economy suffers and that reflects on the performance of the economy. So we tried very hard to see that the states meet some preconditions before the bailouts and some of the other supports were given.
INFLATION
Inflation has slowed down, thankfully, here we are down by 1 per cent, there are of course several issues, several conditions why we experienced the kind of inflation that we experienced. Economists say it was cost-push while others said it was cost push inflation on account of rising exchange rate. But we hope that we will be able to slow down as we implement some of the policies.
INTEREST RATES & INTERVETION FUNDS
Interest rates remain high and there has been some criticisms around it, but the truth of the matter is that we may not be able to do much about it. But we think that what we are trying to do now which is using some of our interventions in the critical sectors might be what will mitigate the situation now.
So, we are trying to get intervention fund for agriculture through the BOA, for SMEs through the BOI. We also started the Development Bank of Nigeria which is the main vehicle for intervention banks. But bringing down the interest rates of course will involve borrowing less from the domestic market, at the moment we are borrowing substantially from the domestic market.
FISCAL DISCIPLINE
We have rationalized public expenditure by ensuring fiscal discipline. By rigorously ensuring that all workers, 60% so far are registered on the IPPIs electronic payroll and personnel information system we have removed 58,350 ghost workers from the payroll and saved N92.47 billion between January 2016 and April 2017. By rationalizing overhead expenditure we have saved N15b on travels, N1 billion on sitting allowances and honorariums and 1 billion on meals and refreshments.
ANTI-CORRUPTION
The focus on good governance and anti-corruption is a fundamental doctrine of the government. From the campaigns till now the President has repeatedly said that corruption is an existential problem for Nigeria. We die as a nation or corruption dies. Because corruption in our nation is systemic, cutting across society’s pillars and arms of government, it would have been naive to expect that it would be easy.
Indeed corruption has been boldly fighting back through well established and well-funded entities and even sometimes through government institutions. But let me just say that we are determined and resolved to defend the nation systematically and deliberately against all forms of corruption and the reason is that if there is any one issue that has continuously ensured that our country does not make the kind of progress that it should make, it is corruption.
INDUSTRIALIZATION, MSMES, EASE OF DOING BUSINESS
In driving industrialization and focusing on MSMEs, our focus has largely being on creating an enabling environment for doing business in Nigeria. That is crucial. We need private capital to give our economy the push it needs. This is the abiding philosophy of our economic recovery and growth plan. There is no way that government can ever provide all the resources that is needed to build infrastructure for our economy, so we need a lot of domestic investment.
For instance we have an investment in Refinery that is the largest single line refinery in the world with 650,000 barrel per day capacity, and fertilizer plant. All of these and a subsea pipeline cost almost 12 billion dollars. We are trying to attract the huge investments in the oil sector and in petrochemicals; we are seeing more investment activity in the oil sector with the resolution of the joint venture cash calls issues with the IOC’s that we were able to achieve. It is clear that we are gradually attracting some foreign investments into the economy.
Another plank of that policy is what the president described in his budget speech – growing what we eat and using what we make, in other words, made in Nigeria. It is and like I said, that is the major plank of our economic recovery and growth plan. For instance, the president has directed that the Army and other of our forces patronize local boot makers.
Not too long ago we were in Aba for an MSME clinic and the sheer number of Nigerians producing good boots for our military was amazing but there are three or four major makers of such items, so when the implementation of our Made-in-Nigeria policy gets down, they will benefit immensely from it.
In terms of industrial infrastructure we are focusing on improving existing Special Economic Zones, and establishing new ones. We have set aside N50billon for this purpose in the 2017 budget for the existing free trade zones. The existing zones are:
– Lekki Free Trade Zone, Lekki
– Ogun Guangdong Free Trade Zone, Igbesa
– Calabar Free Trade Zone
– Kano Free Trade Zone
And Model Zone Sites are
– Ibom City and Deep Sea Port, Akwa Ibom State
– Enyimba City, Aba, Abia State
China Eximbank and Afreximbank have announced an initial financing commitment of $1bn that is available for our pilots and other Special Economic Zones in Nigeria.
The plan is to accelerate the implementation of the National Industrial Revolution Plan NIRP through the special economic zones. The zones will focus on priority sectors to generate jobs, promote exports, boost growth and upgrade skills with an objective of creating 1.5 million jobs by 2020.
PEBEC & THE 60-DAY ACTION PLAN THAT ENDED RECENTLY
On February 21, 2017, the Presidential Enabling Business Environment Council (PEBEC) launched a 60-Day National Action Plan on Ease of Doing Business. The president had earlier constituted the council and asked me to chair it. The whole idea was for us to concentrate our efforts on making it easier for business to be done in Nigeria and you might know that we became a poor 169 out of 190 in the ranking for ease of doing business in the world.
So, on a weekly basis we track progress on what we set out to do. The implementation period of the Plan ended on Friday, April 21, 2017. The Plan which was implemented by the Ministries, Departments and Agencies (MDAs), Lagos and Kano Governments, the National Assembly and affected private sector stakeholders, committed to a set of quick wins across eight priority areas – Starting a Business, Dealing with Construction Permits, Getting Electricity, Registering Property, Paying Taxes, Trading Across Borders, Getting Credit, and Entry & Exit of People.
On April 24th, the PEBEC released a Report Card with an overall completion rate of 70%, with 15 of the original 22 initiatives completed and a further 10+ reforms completed outside of the formally announced Plan.
PROGRESS IN BUSINESS REGISTRATION
I will just point out some areas where progress have been made. In starting a business, the Corporate Affairs Commission (CAC) has implemented reforms that have made the process of business registration easier and faster through automation, including – free online search of company names, consolidated application forms from 7 to 1, document upload for e-submission, and integrated CAC and FIRS portal for stamp duties payment. The CAC portal and servers are being migrated to a private company Main One to give 99% uptime within the next 30 days.
PROGRESS IN ENTRY AND EXIT OF PERSONS & OTHERS
On the Entry & Exit of People indicator, i.e. The ease of coming into Nigeria and leaving through our airports, completed reforms include the Simplified Visa-on-Arrival process, and the consolidation of immigration, custom forms to one single form of 15 questions when leaving the country. We have also tried to do some infrastructural improvements at the Abuja airport and FAAN is now commencing work on the Lagos Airport.
On trading across borders, some of the completed reforms include reduction in import documentation requirements from 14 to 8, and export documents have reduced from 10 to 7.
Also we have the Palletisation of imports so that they are easier to be inspected, advanced cargo manifests, and scheduling of Joint Physical Examination anchored by the Nigerian Customs Service (NCS).
The next phase of our reforms is anchored on three pillars:
Deepening existing reforms;
Initiating sub-national reforms, which will culminate in the sub-national ranking of all 36 states and the FCT I 2018;
Introduction of a new reform area “Trading within Nigeria”, which will push initiatives aimed at improving business processes and regulations within Nigeria, and ease the movement of goods within the country.
The PEBEC secretariat, EBES, is holding a “Hackathon” bringing together computer programmers and other technology developers to develop an M&E solution for tracking reforms and getting public feedback. So we want to develop an app that can enable the public to complain directly about government agencies that are making doing business difficult. The app should also be capable of administering a public survey to ascertain those reforms that small and medium scale business consider to be priorities.
MSME CLINICS TURNING AGENCIES INTO BUSINESS FACILITATORS NOT OBSTACLES
In addition we have been conducting MSMES clinics across the country. Many MSMEs complain about the difficulties of getting help from government agencies responsible for one approval or the other relevant for their businesses.
So we decided to launch the clinics letting government agencies know that they are to be facilitators of business not obstacles. So we have been taking the government agencies, NAFDAC, SON, CAC, BOI, NEPC, to various states for these clinics. There, small business owners meet with government agencies, ask questions and deal with problems on the spot where possible. I have been to Aba, Sokoto on the clinics and will be in Jos this week and we are taking all of the agencies involved to meet the MSMES.
DIGITAL INDUSTRY & INNOVATION TECHNOLOGY PROGRESS
Growing the digital industry and innovation has been a priority for the government. After the very successful Aso Villa Demo Day which saw 30 of the best of over 4000 innovators emerge, the presidency in collaboration with the World Bank through the GEM programme has through a competitive process selected 81 innovators who have been given funds for their businesses. The World Bank set aside N756.3 million for the project. We are also promoting innovation hubs in 6 geo-political Zones. The hubs are essentially to provide training for a wide range of technology related skills, empowering youths for entrepreneurship and employment.
POWER
Power is key, if there is a single reform that can fundamentally change the narrative on the Nigerian economy it would be power. One thing that is clear is that we are very focused on trying to deal with the issue of power.
By and large, the major problem has been that the private sector players have not been able to invest in the critical areas of metering, and others that guarantee improvement in the sector but the problem is much complicated than that. They complain that the reason why they cannot make enough money is that they do not have a cost-effective tariff. We have a situation where there is illiquidity in the chain, meaning that there isn’t enough money to service the chain.
The Federal Executive Council had on the 1st of March 2017 approved a N701Bn CBN Facility as a payment guarantee for Nigeria Bulk Electricity Trading company to guarantee payments to the Power sector and in turn improve Power supply. This fund will be provided to NBET at a 10% interest per annum; the Federal Ministry of Finance would in turn guarantee the repayment of the principal and interests.
At the meeting, the FEC also approved that FGN continue discussions with the World Bank Group (WBG) with the objective of securing financial support of $2.5 billion for the power sector. After discussions with the WBG, the Power Sector Recovery Implementation Program was created.
The January 2017 invoice is now due. Indicative data presented by NBET indicates that NBET intends to pay a flat-rate of 80% of the January-2017 generation invoice. This is a good signal, representing the FGN keeping to its word.
REFINED PETROLEUM
Refined petroleum products is crucial, at the moment we spend 30% of our foreign exchange to import refined products but we are working around that and we hope that by the end of 2018 we should have attained self sufficiency in refined products.
CONCLUSION
Finally let me say again that we live in a great country and you and I are at a perfect moment in the history of our country. The opportunities are limitless. Added to that we have easily some of the best talented people anywhere in the world.
Our population is young and vibrant, they are bolder, more creative, more entrepreneurial than the youths of any other country in our region, and have competed and beaten the best in the world.
So what do we have to fear? This generation must not allow the failures of the past to hold it down or become an excuse for your own failure. Every generation has a responsibility to take life, opportunities and challenges as they find them and go ahead and do great things. You here are not leaders of the future, the future is already here.
THANK YOU!