Experts at the 17th Nigerian Economic Summit acknowledge that the federal government has begun to implement the recommendations of the summit, but set new implementation benchmarks towards ending the nation’s economic woes
President Goodluck Jonathan made a profound statement that earned him a standing ovation shortly after the presidential round-table with global chief executive officers, CEOs, at the 17th Nigerian Economic Summit. To many expectant stakeholders of the economy, the President’s appeal to organisers of the summit to come up with far-reaching recommendations was reassuring, more so when he assured that recommendations of this summit would be discussed at the council meeting. That would be the second in two consecutive years. The first came up in December 2010, when he was Acting President.
In the last couple of years, questions about how much of the recommendations of the summit government has adopted has tended to devalue the process of the summit. Frank Nweke, director-general, Nigerian Economic Summit Group, NESG, who seems to have been under pressure by the media to outline what government has done with resolutions of previous summits, took time out prior to the 17th summit, in collaboration with the National Planning Commission, NPC, to articulate some of the recommendations of previous summits that have been adopted by the government. His standpoint when he assumed office at the NESG was that government was not obliged to adopt any recommendation made by any group outside government circles. That was understandable to many observers as he was just making a transition to the private sector from the public sector where he served as information minister in the administration of former president, Olusegun Obasanjo.
Now, following persistent criticisms, the paradigm seems to be shifting. There is, among stakeholders, some level of satisfaction in government’s adoption of the resolutions. But that satisfaction is not deeply rooted and widespread due to lapses and loopholes in the implementation of the summit resolutions. Government is said to have adopted the resolutions of the summits across four broad areas – agriculture, governance, infrastructure as well as the real and service sectors of the economy. However, a critical look at the sectors where most of these recommendations have been adopted shows huge gaps. For instance, at the end of the 10th economic summit, it was recommended that Nigeria’s electoral institutions be reformed. Based on that, government in 2007 inaugurated the Presidential Electoral Committee. It was also one of the recommendations of that year’s summit that government should fast-track the enactment of Pension Reform Law. Thereafter, the Pension Reform Act of 2004 was enacted. Whereas the pension reform seems to be working, not a few Nigerians believe that the electoral process still leaves much to be desired.
At the 11th summit, delegates resolved that the National Electric Power Authority, NEPA, had become a national embarrassment that needed to be restructured. Epileptic power supply crippled the industrial sector. Small and medium-scale enterprises had become comatose due to poor electricity supply arising from long years of decay of electricity infrastructure. Based on the recommendation of the summit, government created the generation, transmission and distribution companies. But till date, full privatisation of electricity supply has not taken place. A worse dimension to the crisis is the fact that the National Integrated Power Project, NIPP, which was initiated by the Obasanjo administration as an intervention in the power sector, suffered major setbacks in the hands of the political class.
The same year, the summit also recommended a recapitalisation and consolidation of the insurance industry. The recommendation was based on the low level of investment that flows into the insurance sector and the near apathy towards insurance in the country compared to its key role in other economies. The Nigerian insurance sector was not benefiting from big-ticket transactions in the oil and gas sector. Government responded by increasing the capital requirement for the establishment of insurance companies by 1,000 per cent in order to give the operators strong financial muscles. The intervention notwithstanding, the sector has remained a fringe player in the financial services sector. In the same year, the summit, having considered the need to expand the capital market to attract more investments, recommended that the cost of transaction be reduced. The regulators of the capital market complied by cutting costs by 50 per cent. But there hasn’t been commensurate growth in the capital market. Many companies are still not encouraged to list on the Nigerian Stock Exchange, NSE, due to the harsh operating environment.
For many years, the state of infrastructural facilities in the country has remained a shame to the nation. The infrastructural deficit is also known to be one major disincentive to investors in the country and an impediment to business and economic growth. At the 11th summit, therefore, the establishment of an infrastructure development agency was recommended and adopted in 2008 by the government through the creation of the Infrastructure Concession Regulatory Commission, ICRC, headed by Mansur Ahmed, a former director general of the NESG. However, despite the establishment of that agency, infrastructure deficiency has remained a burden on the economy.
In 2007, the summit recommended the adoption of Public Private Partnership, PPP, for the development of infrastructure in the country. The federal and Lagos State governments adopted the model. But the development model has suffered more setbacks in the hands of government than anything else. Aside from financial constraints, successive governments engaged in violation of PPP agreements. The Bi-Courtney Group, which pioneered the PPP projects in the aviation sector, as well as in the building of highways in the country, has been facing a series of challenges owing to the inconsistency of the federal government in adhering to agreements with the private sector partner. For instance, Bi-Courtney Aviation Services Limited, BASL, recently had a disagreement with the aviation authorities over the collection of passenger service charge, PSC, with which the concessionaire is expected to maintain the airport.
Stella Oduah-Ogiemwonyi, aviation minister, had instructed BASL to desist from collecting the N2,500-passenger service charge which all domestic travellers using the Murtala Muhammed Airport, MMA2, in Ikeja, Lagos, pay. Based on the agreement with the federal government, BASL rebuilt the old domestic airport terminal that was gutted by fire in 2000 under the PPP initiative. BASL, which invested over $250 million, about N37.5 billion, in building the MMA2, is now in a fix as the project has so far failed to reach break-even point, thereby making it difficult for the company to keep its obligations to financiers.
The execution of the Lagos-Ibadan Expressway project, the pioneer inter-city build-operate-and-transfer, BOT, project in the country is also currently being threatened by a number of factors, one of which is the misunderstanding between the company and the Ogun State government. About 24 hours after the minister of works gave Bi-Courtney Highway Services Limited, BHSL, a 60-day ultimatum, top state government officials stormed the Reynold Construction Company, RCC, yard where the BHSL’s plant was being installed and ordered stoppage of work, insisting that the site had been earmarked for a trailer park.
Also at the 12th summit, government was advised to improve on safety in the aviation sector through procurement of safety and navigational equipment and to enforce statutory minimum operating capital requirement for local airlines. Government did that by increasing the capital requirement of the airlines from N20 million to N500 million and commenced work on the Total Rada Coverage of Nigeria, TRACON, project, which is aimed at having radar surveillance across the country’s air space. But despite the step so far taken by government, the aviation sector remains weak due to harsh operating environment. Similarly, the N200 billion commercial agriculture credit scheme instituted by the federal government in 2009 and the Land Reform Bill presented to the National Assembly by then president, the late Umaru Yar’Adua, which sought the removal of the Land Use Act of 1978 from the constitution, were also some of the fallouts of the 13th and 14th economic summits. Even though the funds were said to have been disbursed to commercial farmers, the impact of government’s efforts is yet to be seen as the agricultural sector remains largely undeveloped.
Shamsudeen Usman, minister of National Planning, is pleased with what government has done with summit recommendations. He affirmed that following the successful conduct of last year’s summit, the key recommendations of the summit were formally discussed and approved by the Federal Executive Council, FEC, as stated by the president. The government was also said to have taken steps to ensure that ministries, departments and agencies, MDAs, implemented certain aspects of the recommendations that relate to their mandates. “Over the past 17 years, the summit has contributed immensely to strengthening the relationship between the public and the private sectors on issues critical to the socioeconomic development of the country,” said the minister who also pointed out that one key outcome of the previous summits was the setting up of Policy Commissions’ meant to facilitate the formulation and implementation of the summits’ recommendations.
But Sam Ohuabunwa, immediate past chairman, NESG does not believe that government has done enough in terms of implementation of the recommendations. He told the magazine that implementation has been haphazard. Government has not fully implemented the recommendations. “What government is seen to be doing is half measure. There is no proper implementation process. But the setting up of the monitoring and implementation department by the government is, however, a step in the right direction,” he said, hoping that the government would use that process to monitor its progress.
But Ohuabunwa’s view differs from that of Anya O. Anya, a professor, who believes that the NESG has made a deep impact on the development of the country. Said he: “without the role of the NESG in the last 17 years perhaps, our economy would have been different. In the last ten years, you can hardly come across a government policy that does not have an NESG touch, whether it is changes in procurement, in the financial services sector, even in governance.” Anya, who is also a former chairman of the NESG believes that what appears to be government’s inadequate response could be ascribed to bureaucracy.
“The process of decision making,” he further explained, “passes through different levels. In the process, sometimes what was originally planned to be done is forgotten. Another set of a new administration comes in, maybe they didn’t even know when you started and you start the journey all over again. But the important thing is, if it means re-educating the people, you re-educate them. Anya takes further consolation in the fact that as the president said, “We have got to a point where each year, the report of the summit is presented to the federal executive council. There is no private sector or even public sector forum that has that kind of privilege. It tells you how far we have gone.”
These views were perhaps, more vividly captured by the president when he told delegates to the 17th summit that implementation processes were deliberately delayed by political considerations even when people were convinced beyond doubts that certain policies were meant for development and for the benefit of all. Although previous governments did not take bold steps towards implementing recommendations of the summits due to various factors, with the level of commitment shown by President Jonathan, there seems to be a turning point in the history of economic summits in Nigeria but his political will again will count.
Additional reports by Muyiwa Lucas and Raymond Mordi