The new economic reform agenda
By
Sep 6, 2003, 14:32

One of the abiding worries of President Olusegun Obasanjo has been the uninspiring performance of the economy during his first four-year term that began in 1999. Since economic concerns had to be addressed alongside other equally critical areas, improvements in the economy failed to measure up with what he had envisioned when he was elected.

By May 1999, the depth of socio-political rot in the country was alarming. Aside from the fragile polity, corruption was endemic and infrastructural decay was on a slippery slope. But even worse, the nation was gripped by mutual suspicion and distrust occasioned by the consequences of the annulment of the 12 June 1993 Presidential Election. Sadly, Nigeria was steadily teetering towards disintegration.

President Obasanjo thus devoted his first term to studying enormous problems across the country with a view to stabilising its polity.

Since his re-election, the President has unequivocally stated that his primary goal is to revitalise the economy in order to retain a sound and sustainable economic base as an enduring legacy.

To demonstrate his resolve to kick-start the economy, the first step the President took after his re-election was to constitute the Economic Management Team comprising some of the best economists in the country. The Team meets with the President every Wednesday before Federal Executive Council (FEC) meetings, and advises him on policy directions geared towards revamping the economy.

But by far the most significant step the President has taken is his conceptualisation of a comprehensive and coherent economic reform agenda called the National Economic Empowerment Development Strategy (NEEDS). The agenda seeks to reduce poverty, generate employment, create wealth, reform the public sector, improve budgetary discipline and lay the foundation for a vibrant private sector-led economy. The President’s Chief Economic Adviser, Professor Charles Soludu, is the coordinator of the new economic reform agenda.

NEEDS, which is the cornerstone of the present Administration’s new economic reform policy, revolves around a number of fundamental pillars which are expected to complement continuing policy reforms in the judiciary, due process, transparency, good governance, and the war against financial crimes. At the level of public sector reform, the civil service and several loss-making parastatals with huge employment outlets will be pruned.

Tax reforms are also being examined under the public expenditure and budget process reform. Currently, Government loses over N200million as a result of diminished tax returns from the ports, Value Added Tax and so on. This Administration is thus working towards the formulation of rules that will impose limits on public spending and make the preparation of the budget more transaction-oriented. When this is achieved, it is expected that the budget for the New Year would be ready by every June of the preceding year.

A new contributory pension scheme is also embedded in the new economic reform agenda and will materialise by 1 October 2003. It will require employees to contribute 12.5 percent of their salaries and employers to contribute 7.5 percent of their salaries on a regular basis. The proceeds from this scheme will be invested as pension funds in the stock market.

Upon retirement, workers will have two options. They will be able to collect between 40 and 50 percent of their contributions to invest in business and then distribute the rest to meet lifetime needs. They will also have the choice of receiving portions of the money as pension on a monthly basis. Apart from serving as a major source of long-term capital investment, the fund also has the capacity to drive down interest rates. Closely related to this is the housing fund that requires a 2.5 percent contribution of workers’ salaries.

NEEDS also incorporates what is referred to as sectoral response. In this regard, four sectors of the economy have been identified as indispensable in moving the reform agenda forward. They are: agriculture, Small and Medium Scale Enterprises (SMEs), industries and services. Of these four sectors, agriculture is the first priority. Already, the FEC has agreed that about 10 percent of capital spending should be devoted to agriculture. Services such as trade, finance, tourism, culture, arts and entertainment, which are the fastest growing sectors of the economy and the highest employers of labour, will be subsequently developed.

There will also be a renewed emphasis on Information and Communications Technology (ICT), science and technology, the fight against HIV/AIDS, road maintenance and the Universal Basic Education (UBE) programme.

It is tempting to say that this new economic reform agenda might just be another lofty academic dream like others before it. What is it about this new agenda that should inspire confidence?

First, the reform agenda is the initiative of the President who is impatient with the slow progress the economy has recorded in the past four years, and who has a consuming passion to witness a legacy of sustained economic growth and development for the country. The President is therefore the driving force behind the new reform programme, unlike in the past where such programmes were often the efforts of starry-eyed idealists that operated outside the orbit of mainstream governance.

More than ever before, the reform agenda also enjoys the endorsement of a broad spectrum of the Nigerian people, which include the caucus of the People’s Democratic Party (PDP), the economic committees of the National Assembly, the Federal Executive Council, the National Economic Council which is chaired by the Vice President, and so forth.

All state governors have also passed a resolution pledging to latch on to the agenda, with few modifications to meet their local needs. This is unprecedented in Nigeria. On 16 September 2003, there will be a meeting of the Joint Planning Board and the National Council on Development Planning, which are made up of Commissioners of Finance and Planning and their Permanent Secretaries from the 36 states in Nigeria.

The Nigerian Economic Summit, the Lagos Business School, civil society groups and all stakeholders are expected to scrutinize the agenda and make inputs where necessary. What is more, a mechanism has already been put in place to monitor and evaluate the progress of the reform agenda.



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