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The economy before Yar’Adua’s exit

…the tasks before Jonathan

Jonathan2

BY UDEME CLEMENT
As Dr. Goodluck Jonathan  sits atop the Presidency as the number one citizen of Nigeria following the death of President Umaru Yar’Adua, one thing in the minds of numerous Nigerians is the state of the economy and the  infrastructure  to propel rapid economic growth and development to move the country forward.

State of the economy
Yar’Adua  came into office with a vision articulated in his seven-point agenda on economic growth and sustainable development. Before his exit, the deceased  president embarked on economic reforms which centered mostly on the energy sector.

The major step was a declaration of emergency in the power sector, with a view to improving the generation capacity, which at that time went  below 3,200megawatts (MW), bringing negative impact on every sector of the economy.

Based largely on increased oil exports and high global crude prices, the gross domestic product (GDP) rose substantially  in 2007 and 2008, but  less strongly in 2009. He continued the economic reforms of his predecessor with emphasis on infrastructure.

He did not achieve much on  infrastructural  development, which was the main impediment to growth, notwithstanding his initiative toward developing stronger public-private partnerships for electricity and roads. Also, he could not realise the 6,000mw target of electricity last December.

Banking sector
The appointment of Mr. Lamido Sanusi  as  governor, Central of Bank of Nigeria (CBN) brought a major shake-up in the banking sector with the  CBN sacking the  managing directors of some banks and giving financial bailout to support them. Another directive was the introduction of a uniform tenure of 10years for chief executive officers of commercial banks to check fraud in the system.

The new codes of corporate governance stated a stipulated tenure of first five years, subject to renewal for yet another five years by the boards  of respective banks. Recently, the CBN also came up with another initiative to discard universal banking.

Agriculture
However, nothing much was done in the agricultural sector to create more jobs, especially for youths.
Agenda for Jonathan

Infrastructural  development/power: The first thing Nigerians would want the government to do is revamp the power sector and provide necessary infrastructure  to ensure sustainable economic development. The president has already come up with an initiative to write a blue print on how to develop the power sector for greater productivity, setting another target of 6,000mw.

Speaking on the 6,000mw target, the executive director operations, Power Holding Company of Nigeria (PHCN) Abuja , Mr. John Ayodele, said, “The 6,000mw target was a well thought out plan by a committee outside PHCN and some top officials of PHCN. It was an agenda set up in 2007 and the funding requirement properly outlined.

But,  again, three things suffered when rehabilitation began. There was no alignment between funding and timing. For instance, many plants that ought to go into the  6,000mw are not ready till now because the manufacturers had not come to check them. Also, money is not often released in bulk, as the allocation comes within the four quarters of the year.

Sometimes, when equipment manufacturers are ready, money is not released, and when eventually money is available, the  equipment manufacturers may not come because they may have organised their work force for another country.

“Another constraint was shortage of gas. Between 2005 and 2011, all gas requirements have  been given to Nigerian National Petroleum Corporation (NNPC) and the agency has problems as well. Infact, when some plants were ready for commissioning, there was no gas to check the state of the plants.

Throughout 2008 and 2009, there was no gas to power the plants, aside from just knowing that they were Chinese  products. And when we finally checked them, we discovered that the plants were not reliable and not what we expected. The problem of kidnapping  was also another factor because the expatriates were not willing to come to Nigeria to look at the plants because of the insecurity in the country. We are optimistic that the present government will  achieve the 6,000mw within the given period.”

The refineries: Also, Nigeria ‘s four state oil refineries, with a combined capacity of 445,000 barrels per day, have,  in recent years, produced less than half that amount due to constant breakdowns. This calls on the need for government to ensure that the plants function optimally to increase productive capacity.

Macro-economim stability: Despite the difficulties and hesitancy in implementation, there has been movement on the policy front. Although the growth rate has been mediocre in recent years, other macroeconomic indicators have demonstrated a degree of stability in economic activities. There is still need to control the rate of inflation in the economy to maximise output.

However, some analysts  argue that macroeconomic stability comes with a price, which could bring about low growth in the non-oil economy, from which demand and liquidity had been squeezed by fiscal contraption imposed by the Federal Government. Others believe that economic policy changes in Nigeria have not translated into higher economic growth because the country has not shifted to a market-based economy. The new president must work towards trade, investment liberalisation and macroeconomic stabilisation to ensure that policy priorities are not divided between dependence on the public sector and import substitution strategies.

Stimulating small and medium enterprises: With hundreds of small companies forced to close in recent years by the deterioration in economic conditions, especially inadequate credit, rising production costs and diminishing consumer demand, the capacity of the economy to provide full-time employment has diminished. One vital challenge facing the new government, therefore, would be to stimulate new businesses and support the development of the many small enterprises that exists  in the informal sector, which accounts for most employment but lacks capital investment.

Reviving the industrial job market: Most industries are struggling to survive, with capacity utilisation in manufacturing declining by the day. Industries using local inputs  need a conducive environment to grow. Also, the government should turn attention to the agricultural sector to create more jobs and revenue for the economy.


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