Sliding On Transformation Agenda
Transformation Agenda. A look at the direction of the Jonathan administration indicates that the government has good intentions of transforming the nation’s economy.
The key policy framework is aimed at a baseline GDP growth rate of 11.7 per cent per annum for the period 2011-2015, as it hopes that it will translate to real and nominal GDP of about N428.6billion and N73.2trillion respectively at the end of the programme period.
It assumes that the projected GDP growth of the period will be driven largely by the oil and gas, solid minerals, agriculture, ICT equipment and software, telecommunication, wholesale and retail trade, tourism and entertainment, manufacturing and building and construction sectors.
One year down the line it is difficult to assess the administration’s impact on the economy.
Provisional data from the National Bureau of Statistics (NBS) suggest that appreciable progress has not been made in the last one year. The data indicate that real gross domestic product (GDP) in Q1 grew by 6.17 per cent, down from 7.68 per cent in the fourth quarter of 2011 and 7.13 per cent in the corresponding period of 2011. This continues a disturbing and unbroken trend of decline in growth going back to Q1 2010.
Overall, real GDP growth for fiscal 2012 is projected at 6.50 per cent, down from 7.45 per cent in 2011. Crude oil production was estimated to have declined by 2.32 per cent in Quarter 1, 2012 compared with a marginal increase of 0.05 per cent in the corresponding period of 2011. Non-oil real GDP growth estimated at 7.93 per cent in Q1 of 2012 was much lower than the 8.73 per cent recorded in Q1 of 2011.
Growth in agriculture decelerated in Q1 to 4.15 per cent compared with the 5.54 per cent in Q1 of 2011 and 5.74 per cent in Q4 of 2011. Agricultural growth rate has not been this slow in the last seven years at least. In general, the paradox of rising poverty incidence in the face of impressive economic growth further underpinned demands for the implementation of the appropriate structural reforms in the key sectors notably agriculture, power and petroleum sectors, to stimulate productivity.
Inflationary threats re-emerged in Q1 2012, having moderated in Q4 2011. The year-on-year headline inflation which was 12.6 per cent in January 2012 moderated to 11.9 per cent in February but rose to 12.1 and 12.9 per cent in March and April 2012, respectively.
Similarly, food inflation which was 13.1 per cent in January 2012 fell to 9.7 per cent in February but increased to 11.8 per cent in March before declining slightly to 11.2 per cent in April 2012. Core inflation, which declined to 11.9 per cent in February from 12.7 per cent in January, rose sharply to 15.0 per cent in March before moderating to 14.7 per cent in April 2012. On a month-on-month basis, inflationary pressure was rather benign between March and April, and the rise in year-on-year figures largely reflects the base effects in January from fuel subsidy removal. Overall inflation numbers remain within our forecast range”.
Besides, the proposed upward review of electricity and import tariffs on wheat and rice as well as the rising global food and energy prices could further put upward pressure on prices in the near-term. Notwithstanding this, the lingering impact of the aggressive monetary tightening measures undertaken since 2011 and the general slow growth in monetary aggregates and the impact of rising fuel prices in consumer spending, may moderate the pressure on domestic prices in the near term. CBN staff projections indicate that headline inflation is projected to peak around 14.5 per cent in July 2012 before moderating steadily till the end of the year.
These are not positive signs of any impact the policy of government has made on the economy. This government by its Agenda hoped that by 2015 a total investment of N40.75trillion in nominal terms. The public sector will account for N24.45trillion or 60 per cent, while the remaining N16.30trillion or 40 per cent is expected to be invested by the private sector.
Overall, public sector investment plan is made up of N11.59 trillion for states and local governments respectively. So far there seems to be no sign that the required resources are available to meet this target. In 2011, the capital budget of government was N1.09 trillion a far cry from the projected investment.
The government had planned to review the budget process to provide greater clarity of roles between the executive and legislature and to ensure that the appropriation bill is enacted into law within the first month of any year. This was not achieved in the first year of the administration as the budget was assented in April as a result of disharmony between the executive and the legislature.
In its bid to transform the economy, the administration said it will institutionalise the culture of development planning at all levels of government and ensuring that the annual capital budget allocation takes a cue from medium and long term development plans. This measure has been introduced at the federal level. The medium term strategy was forwarded to the National Assembly for consideration along the 2012 budget. States and local government however are yet to take follow suit.
The Jonathan administration said that the government would pursue certain policy measures to reinvigorate various sectors of the economy and enhance their employment generating potentials, including implementing a youth employment safety net support programme that includes conditional cash transfer and vocational training; development of industrial clusters; reviewing of university curricular to align with industry job requirements and promotion of apprenticeship/work experience programmes and joint ventures; enforcement of mandatory sub-contracting and partnering with locals by foreign construction companies and implementation of mandatory skills transfer to Nigerians by foreign construction companies. Within the one year period the government has embarked on agricultural reforms, attempt at resuscitating ailing textile industries, small and medium scale enterprises, youth empowerment programme among others. So far the outcomes are yet to be determined.
Power undoubtedly remains the most mitigating factor against the growth of the Nigerian economy. The administration’s efforts at solving the problem of irregular power supply with the injection of trillions of naira into the power sector have, however, remain largely unfruitful.
Power supply in the last one year has dropped lower and the National Electricity Regulatory Commission is about implementing the multi year tariff which it hoped will spike investment in the sector to provide 24 hours power supply. It is targeting that in the next 18 months all consumers will have been metered. However the much talked about privatization of PHCN is taking longer than necessary due to bureaucratic bottle neck.
Sliding On Transformation Agenda
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