For an economy in which oil alone contributes 95 per cent of export earnings and about 80 per cent of budgetary revenues, the urgency to grow new income sources has become stronger, especially with crude oil output falling to a multi-decade low recently.
This is coming at a fitting moment when Nigeria is holding its seventh presidential vote of the Fourth Republic during which economic reforms that promise enduring prosperity will be a key consideration in deciding who wins among the top four contenders.
But other major metrics of development are perhaps even gloomier.
Debt servicing gulped about 80 per cent of government revenue from January to November 2022 although the World Bank expects it will climb to 123.4 per cent this year.
At 21.8 per cent, Nigeria’s headline inflation surged to its 17-year peak last month, wrecking the government’s long-standing plan of keeping it within a 6-9 per cent target band.
The figure could be way higher, with the International Monetary Fund noting this month that Nigeria’s parameters for measuring inflation rate are outdated and unreliable and calling for the inflation basket to be reconstituted.
Much of the pressure on price levels is fuelled by the outrageous premium most importers and manufacturers pay on dollars sourced from the parallel market, compared to that of the official market, where the currency is cheaper but in inadequate supply.
As of Wednesday, the US dollar closed at N752 at the black market in contrast to N461.6 at the I&E Forex Window, leaving a spread of 62.9 per cent.
The four leading candidates in the 2023 presidential election hope to approach these and other constraints somewhat differently, going by their manifestos.
Former Vice President Atiku Abubakar, the presidential candidate of the Peoples Democratic Party (PDP), favours a free market economy more than the other three and has laid out plans to radically liberalise trade, end government’s monopoly in certain sectors, and de-risk lending to MSMEs.
Labour Party’s Peter Obi aspires to diversify the economy through a departure from consumption to production. He will pivot the shift around building manufacturing capacity and setting up his “Fourth Industrial Revolution,” anticipated to be driven by agricultural development and vast exportation of finished goods.
Bola Tinubu, the All Progressive Congress (APC)’s presidential hopeful, seeks to sustain the public-private partnership (PPP) model of President Muhammadu Buhari, who is a fellow party man.
Rabiu Kwankwaso of the New Nigeria Peoples Party (NNPP) has a three-pronged economic agendum centering on long-term sustainable investment, job creation and emergency economic revamp:
Atiku Abubakar (PDP)
Atiku led the privatisation programme of the Olusegun Obasanjo administration from 1999 to 2007 during which several state assets were sold to individuals and privately owned companies in a push to curb the government’s ownership of corporations.
He wants to deregulate the economy by freeing trade of restrictions, a move Bloomberg says is endearing him to international investors.
“Our economic agenda will seek to alter the current trajectory of the Nigerian economy and build a competitive, and resilient economy and remain the largest in Africa and 15 largest globally with a GDP per capita raised from the current levels of approximately US$2,000 to US$5,000 by 2030,” his manifesto says.
That is a considerably ambitious target, which assumes that Nigeria’s GDP will expand by 150 per cent from $440.8 billion $1.1 trillion in the next seven years.
He said he would ramp up power generation to 25,000 megawatts, create 3 million jobs every year, lift 10 million people out of poverty every year and increase Nigeria’s oil refining capacity to 2 million barrels.
The PDP candidate also nurses the hope of raising manufactured goods to between 25 to 40 per cent of exports and 30 per cent of the GDP from the current 9 per cent. His strategy for developing a knowledge-based economy involves allowing ICT to power operations in health, education, commerce and other industries.
A group of private institutions is to be assembled by his government to set up a fund pool to be called Infrastructure Debt Fund and built with cash mobilised from foreign and local private resources. For a start, an investment worth $20 billion is targeted, while the fund will finance key projects across the economy with contributors expected to get tax holidays in return.
Analysts argue that Atiku’s expansive liberalisation plan, if radically pursued, could thrust the fragile economy into full-blown capitalism and widen the inequality gap further. He also has among his strategies increasing MSME funding from N200 billion to N500 billion and proposes to provide incentives that will help formalise the informal sector.
Peter Obi (Labour Party)
Mr Obi is anchoring his push for a production-based economy on adding layers of value to locally produced goods to scale up their earning potential when exported abroad as finished goods.
Entrepreneurs desiring to develop expertise in manufacturing such goods including technology exports will be incentivised with funding, according to Mr Obi’s manifesto.
He is setting sights on overhauling trade processes, the logistics industry, the maritime sector, and the customs with a view to cutting costs of doing business, improving ease of doing business and making made-in-Nigeria products competitive.
Ensuring high standards and quality in domestically produced goods is central to his bid to position Nigeria as a top manufacturing hub within the Africa Continental Free Trade Area and the rest of the world.
Among his proposals to diversify the economy is “Incentivising and investing in agro-cluster and industrial cluster development across our geo-resource zones to take advantage of agglomeration and scale effects.”
One of Mr Obi’s ideas is to venture into a new revenue source he calls “The Blue Economy.” The scheme has at its heart harnessing marine resources for economic development, especially its potential for marine biotechnology, bio-processing, renewable energy and the extractive industry.
He has a grand ambition to up Nigeria’s electricity production and distribution capacity to 20,000 MW within four years.
“We shall embrace political entrepreneurialism to directly lead missions to top Original Equipment Manufacturers (OEMs) and leading Global Value Chain headquarters, lobbying and granting them all the necessary incentives to expand their production and manufacturing value chains to our country,” his manifesto says.
His “4th Industrial Revolution” seeks to promote a digital economy through youth capacity development, expand technology-focused universities and establish a fund to grow the start-up ecosystem.
“We shall establish a Green Army tasked with identifying all opportunities to tap into the 3 trillion dollars international climate finance to engineer economic growth and employment for millions of our youths and transition our country to the green epoch,” the document says.
Of the four, he is the only one who specifically proposed to restructure the economy into fiscal federalism, a subject that has proved a sore point among past governments and many politicians yet seen by analysts as the key to rapid economic growth.
He is hoping to devolve more power to states, enabling them to directly generate revenue and allocate a portion of collected taxes to the federal government in a shift away from the current arrangement where the central government takes the lion’s share of revenue mobilised by states.
Bola Tinubu (APC)
Many of Mr Tinubu’s strategies for running the economy take the PPP mould, which he wants to drive by using government agencies like the central bank and the ministry of finance “to expand the availability and scope of credit guarantees to attract more private sector investment in needed infrastructure projects.”
He intends to plug leakages and expand private sector interventions initiated by his predecessor.
His fiscal ambitions encompass offering tax and youth employment incentives to local manufacturers, boosting value-addition initiatives and cutting import fees on semi-finished products in the IT and automotive industries.
Mr Tinubu’s administration plans to create industrial hubs in all the geo-political zones.
Tax incentives and lower lending rates are also to be offered to businesses employing an agreed percentage of youths.
His government aspires to revitalise the North-west and the North-east economically by developing new industrial hubs for textile production. His plan for the North-central entails solid mineral exploration and mining, while he hopes to build a new hub and a dry port in the South-east and the South-south.
For the South-west, he is hoping to promote the manufacturing of high-quality glass items as well as dishes and pottery.
There is a move to expand business incubation centres to aid ingenious and creative youths “to acquire and protect, through patent and trademark registration, intellectual property and other proprietary rights over inventions and innovations.”
Parts of his proposals for the digital economy include providing one million jobs in the ICT sector within two years and technical skills development.
Mr Tinubu said, if elected, he will push for policies that will increasingly fund start-ups and attract foreign capital. He is willing to broaden the energy mix by backing renewable power generation and off-grid electricity production among private organisations and state governments. He also intends to support the local production of electricity meters and drive rural electrification by increasing private sector participation and that of subnational government.
He expects to cut youth unemployment by half and enhance young people’s access to credit.
Rabiu Kwankwaso (NNPP)
The NNPP flagbearer hopes to transform the economy through three key strategies: emergency rescue plan, job creation, and long-term/sustainable investment.
He is of the view that the principal catalyst of economic growth is a sustainable energy and power sector, which he hopes to develop by guaranteeing affordability, adequacy, availability and safety.
“We shall lift Nigerians from the poverty ditch through targeted poverty alleviation and poverty elimination strategies that ensure families at the bottom of the social ladder have access to food, clothing, quality education, basic healthcare and basic housing needs,” his manifesto promises.
He has vowed to provide key infrastructures in all the regions and states of the federation.
Equally, the NNPP is hoping to collaborate with the Federal Mortgage Bank of Nigeria to simplify access to mortgages that guarantee ownership of affordable homes.
He is proposing to scale up the capacity of the entertainment industry via training and mentoring programmes as well as the provision of funding.
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