Frequently Asked Questions And Answers On The Economic Recovery And Growth Plan
Q: What is the ERGP?
A: The Economic Recovery and Growth Plan (ERGP) is a Medium Term Plan for 2017 – 2020, developed by the Administration of President Muhammadu Buhari for the purpose of restoring economic growth while leveraging the ingenuity and resilience of the Nigerian people – the nation’s most priceless assets.
Q: Why is ERGP necessary at this point in time?
A: The country entered an economic recession that was caused by many factors in the second quarter of 2016. The current administration recognizes that the economy is likely to remain on a path of steady and steep decline if nothing is done to change the negative trajectory. It is in this context that the Government developed the ERGP to tackle the causes of the recession and ultimately change the national economic trajectory in a fundamental way.
Q: What of previous economic strategies, plans and measures? Has the Government jettisoned them for good in favour of ERGP?
A: No. The ERGP builds on existing sectoral strategies and plans such as the National Industrial Revolution Plan, and the Nigeria Integrated Infrastructure Master Plan. The ERGP will strengthen the successful components of these previous strategies and plans while addressing challenges observed in their implementation. The ERGP is also consistent with the United Nation’s Sustainable Development Goals (SDGs) as it addresses SDGs three dimensions of economic, social and environmental sustainability issues.
Q: In which values or ideology is the ERGP rooted?
A: The ERGP is rooted in the core values that define the Nigerian society as enshrined in the 1999 Constitution namely discipline, integrity, dignity of labour, social justice, religious tolerance, self-reliance and patriotism. It requires all citizens and stakeholders to adhere to these principles.
Q: What are the implementation strategies for ERGP?
A: Focused implementation is at the core of the delivery strategy of the Plan over the next four years. There is a strong political determination, commitment and will at the highest level. Whilst all the MDAs will have their different roles in implementing the Plan, a Delivery Unit is being established in the Presidency to drive the implementation of key ERGP priorities. The Ministry of Budget and National Planning will coordinate plan-implementation and will build up its capability for robust monitoring and evaluation.
Q: What are the main elements of ERGP?
A: The main elements or objectives of the ERGP include sustained inclusive growth to consolidate national cohesion; a structural economic transformation; improving efficiency in both public and private sector; increasing national productivity; achieving sustainable diversification of production; to significantly grow the economy and achieving maximum welfare for the citizens by ensuring food and energy security.
Q: What are the main priorities for economic recovery and growth?
A: To achieve the objectives of the ERGP, the key execution priorities are:
a. Stabilizing the macroeconomic environment with low inflation, stable exchange rates and sustainable fiscal and external balances. This will be achieved by aligning monetary, trade and fiscal policies in a coherent manner and effective coordination. Non-oil revenue will be accelerated through improved tax and Customs administration and the introduction of tax on luxury items. Cost-cutting measures will be pursued through rationalization of overheads and recurrent expenditures and sub-national fiscal coordination.
b. Using agriculture to achieve food security, create jobs and save foreign exchange for food imports. Plans are already in place for national self-sufficiency in rice by 2018 and wheat by 2019/2020. Successful harvests will contribute in reducing inflation and promoting economic diversification.
c. Ensuring energy sufficiency (power and petroleum products) by delivering at least 10 GW of operational capacity by 2020 and to improve the energy mix through greater use of renewable energy.
d. Improving Nigeria’s inadequate transportation infrastructure to support the economy and reduce the major cost and constraint for businesses. Investments in strengthening Nigeria’s infrastructure will require partnering with the private sector. Significant effort will go towards attracting private sector investment, and ensuring agreed execution priorities and timelines are effectively delivered.
e. Driving industrialization focusing on Small and Medium Scale Enterprises. One major strategy is to accelerate implementation of the National Industrial Revolution Plan (NIRP) through Special Economic Zones (SEZs), focusing on priority sectors to generate jobs, promote exports, boost growth and upgrade skills to create 1.5 million jobs by 2020. A revitalized manufacturing sector will create jobs, stimulate foreign exchange earnings and grow micro, small and medium enterprises (MSMEs). The involvement of small businesses in the service sector is a major lever for economic recovery. The service industry accounts for 53 per cent of GDP. As the telecommunications and information and communication technology services (ICT) sector grew in absolute terms by 9.26 per cent in Q3 of 2016, it offers huge scope for further growth, especially from opportunities in the digital economy. Creative industries, especially music and film, also have great growth potential, as do both financial services and tourism.
Q: What are the tools that will drive the achievement of those objectives?
A: This Plan will use science, technology and innovation to drive growth. It also provides a blueprint for laying the foundation for future generations by focusing on building the capabilities of the youths of Nigeria to be able to take the country into the future.
Q: Is the Plan designed to resolve the major impediments to economic growth such as fuel and power shortages?
A: Yes. The Plan has provisions for tackling impediments to economic growth in Nigeria, especially fuel scarcity, unstable power supply, high cost of transportation, scarcity of foreign exchange, unfriendly business regulations and shortage of requisite skills and appropriate technology.
Q: After removing the impediments to economic growth, what is the envisaged growth of the GDP in the Plan period?
A: The ERGP has set a GDP growth target of 4.62 per cent average annual growth between 2017 and 2020. From the estimated negative growth of -1.54 per cent recorded in 2016, real GDP is projected to grow to 2.19 per cent in 2017 and 4.8 per cent in 2018 before peaking at 7.0 per cent in 2020.
Q: Is the Government the sole driver of the ERGP or is there a role for the private sector in achieving the objectives of the Plan?
A: Government cannot do it alone. The Plan will leverage the power of the private sector to effectively achieve the desired economic recovery and transformative growth. It is essential to harness the dynamism of business and the entrepreneurial acumen of Nigerians, ranging from the MSMEs to the large domestic and multinational corporations to achieve the objectives of this Plan. The Plan prioritizes the provision of a more business friendly economic environment. Additionally, the Plan prioritises the use of the market as a means of resource allocation, where appropriate. However, the Plan also recognises the need to strengthen regulatory oversight to minimise market abuse.
Q: Are there any roles for the 36 States in implementing the Plan?
A: Certainly. The ERGP provides for effective collaboration and coordination with the States to ensure that the Federal and State Governments work towards the same goals. The States have a significant role to play in the success of the ERGP and some have already adopted a number of the initiatives being promoted in this Plan.
Q: As market forces interplay to allocate resources within a framework of regulatory oversight, are there specific measures to cater for and protect the most vulnerable segment of the society?
A: Yes. There are specific measures to cater for and protect the vulnerable in the society. The ERGP will increase social inclusion by creating jobs and providing support for the poorest and most vulnerable members of society by investing in social programmes and providing social amenities. Targeted programmes will reduce regional inequalities, especially in the North East and Niger Delta. Furthermore, the ERGP will improve the accessibility, affordability and quality of healthcare and will roll out the National Health Insurance Scheme across the entire country
Q: The youth constitute a large proportion of the population. What is there for them in the ERGP?
A: Youth empowerment is a major component of the ERGP. Interventions to create jobs, especially among youth, are part of the ERGP. The ERGP prioritizes job creation through the adoption of jobs and skills programme, including deepening existing N-Power programmes and encouraging procuring made-in-Nigeria goods that were produced using local content and labour intensive production processes. All initiatives under job creation would prioritize youths as beneficiaries. Therefore, all capacity building and skills acquisition interventions will be targeted at youth-dominated sectors such as ICT, creative industries and services. Moreover, concerted efforts would be made to encourage youths to venture into other labour intensive sectors such as agriculture and construction.
Q: How many jobs are going to be created by 2020 through the implementation of the Plan?
A: The implementation of the Plan is projected to reduce unemployment from 13.9 per cent as of Q3 2016 to 11.23 per cent by 2020. This translates to the creation of over 15 million jobs during the Plan horizon or an average of 3.7 million jobs per annum. As stated earlier, the focus of the job creation efforts will be youth employment, and ensuring that youth are the priority beneficiaries.
Q: There is an outcry that infrastructure to support the economy is inadequate. Is the ERGP designed to address that observation?
A: Certainly, the ERGP will address it. Investing in infrastructure is a vital component of ERGP: It emphasizes investment in infrastructure, especially in power, roads, rail, ports and broadband networks. It builds on ongoing projects and identifies new ones to be implemented by 2020 to improve the national infrastructure backbone. And the private sector is expected to play a key role in providing critical infrastructure, either directly or in collaboration with the Government under public private partnership (PPP) arrangements.
Q: What are the revenue sources for funding the programmes and projects contained in the Plan?
A: The Plan outlines bold new initiatives for ramping up oil production to 2.5 million barrels per day by 2020; privatizing selected public enterprises/assets and revamping refineries to reduce petroleum product imports by 60 percent by 2018. Other initiatives include environmental restoration projects in the Niger Delta and bringing environment sustainability to the forefront of its policies. Under this Plan, oil revenues will be used to develop and diversify the economy, not just sustain consumption as was done in the past. The economy will run on multiple engines of growth, not just the single engine of oil. The Plan focuses on growth for the benefits it will bring to the Nigerian people. This Plan also places importance on emerging sectors such as the entertainment and creative industries.
Additionally, the tax base will be improved by raising the VAT rate for luxury items from 5 to 15 per cent from 2018, while improving CIT and VAT compliance to raise 350 billion annually. This will contribute in achieving higher tax to GDP ratio from the current 6 per cent to 15 per cent during the period.