My first thoughts on encountering the National Economic Recovery and Growth Plan (NERGP) was that, at 142 pages, it was always going to be a difficult read. Upon reflection, however, I could understand why the document was that long.
Ignore the Panglossian narratives around the outlook for the domestic economy preferred by supporters of the Buhari administration. And the truth is that today’s Nigeria is in an uncomfortable place — and conditions have worsened over the last 18 months. If, indeed, we would need a document of this nature to loosen the purse strings of those whose funds could help us improve the economy, then it cannot but be a comprehensive description of the nature of our problem(s). This way, our would-be creditors get a sense of how well we understand the difficulty we are in; and what it is we intend doing to get out of it.
What do we intend doing?
The NERGP presents us with a long shopping list. But basically, this government expects over the next four years to push the annual domestic output growth rate to an average of 4.6%, eventually peaking at 7% by 2020. With population growing at a tad below 3% annually, this target does make a lot of sense. Still, most experts turn out a figure of 10% annual gross domestic product (GDP) growth rate over a generation if we are to pull more than half of our poor into relative affluence. All the same, from where we are (-1.5% as at end-December 2016) to 4.6% is a long way to travel in a very short time. In favour of this goal are the fundamentals of the economy. Almost 200 million people. Nearly half of whom are economically active. In a N95 trillion space. Why should this target be hard to achieve?
The problem is that we have had a litany of such targets since independence, and we have had difficulty meeting any of them. So, we do have a track record in these matters; and alas, it is of general non-performance. Is there a likelihood that anything may have changed since to permit more belief to be invested in this scheme than is justified by past experience? The answer, if the brief history of the current administration serves any purpose, is a resounding “NO”. In its management of the foreign exchange market we have seen the administration set itself up against market solutions, leading to chaos in the market, and the downward pressure on the naira’s exchange rate. Moreover, in its choice of funding for the investment needed to push the economy out of the rut that it is in, we have seen the Buhari administration opt for public provision, when a fixing of the economy in a way that invites private investment would have sufficed.
Nonetheless, we are not going to get the economy into high single-digit growth territory without key sectors of it moving really fast. So, the NERGP’s targets for both manufacturing and agriculture (average annual growth rates of 8.5% and 6.9% respectively over the plan period) are worthy pursuits. Both should help keep unemployment down. But how realistic, given where both unemployment and underemployment currently are, is an 11.23% unemployment rate by 2020?
The snag that this vision is likeliest to hit is that we cannot achieve the desired improvements in productivity across the economy without investing in new capital. We cannot achieve the levels of efficiency required to be competitive globally relying on just infusions of new levels of labour. It is a safe bet therefore, that were we to get both manufacturing and agriculture running at the desired levels, it will not be because the new outfits employ more people. If then the government hopes to bring down unemployment by creating over 15 million new jobs before 2020, it would need to do more.
Improving power generation is arguably one of our lowest hanging fruits. At the artisanal level, if not for small and medium scale outfits, it should significantly bring costs down, allowing more efficient and profitable operations. So, is the 10GW target for operational electricity capacity by 2020 a welcome one? Yes. Except that it has taken us the better part of 3 decades to generate 4GW of electricity.
Whether, then, our goal is attaining a single digit inflation rate by 2020, or crude oil output of 2.5 million barrels per day by the same year, the NERGP is credible only if we assume that somehow, managers of this economy will husband our resources differently (better, that is) over the next four years than they have done since 1960.