By Prof. Yemi Osinbajo-- It is a pleasure to be here at this year’s National Economic Summit. I bring you the warm greetings of President Muhammadu Buhari who sends his best wishes for successful deliberations at this meeting.
The annual Economic Summit occupies a special place in our national economic dialogue. It is at once a statement of the priority that we attach as a government to close collaboration between the government and the private sector and at the same time an opportunity for us all to engage in meaningful discussions on the economy.
Our policy of partnering with the private sector is also borne out of reality. While the Federal Government on its part is determined to build a modern economy, its ability to do so is limited by the fact that its annual budgeted expenditure of seven trillion naira is only a small part of a multi trillion naira economy.
The private sector is clearly the bigger contributor to the economy. It thus follows that the private sector must be enabled and encouraged to play its decisive role if our development efforts are to succeed.
In the period since the last summit, the Economic Recovery and Growth Plan was articulated and adopted. This dynamic document which was developed through extensive consultations with stakeholders lays out national economic priorities over the next three years with a short term focus on getting the economy out of recession and placing it on a trajectory of sustained inclusive growth in the long term.
Several issues were raised at last year’s economic summit and in keeping with our commitment to keep faith with the work of the summit, several significant actions have been taken by the Federal Government in response to the issues raised.
First, the economy has now returned to the path of growth after a continuous slide from 2014. As is now well known, we exited recession in the second quarter of 2017 with a GDP growth rate of 0.55% while inflation has similarly declined continuously from its peak of about 18% in January 2017 to about 16% today.
Second, last year there were concerns about the availability of foreign exchange and a rapidly deteriorating exchange rate. The situation has been turned around and stabilised.
Foreign exchange reserves have risen to about $33 billion and end users have increased access to foreign exchange partly due to increased export earnings and remittances as well as the introduction of a dedicated transparent window for Investors and Exporters (NIFEX).
The results have been encouraging as the inflows of capital in the second quarter of 2017 of about $1.8 billion were almost double the amount of $908 million imported in the first quarter of the year.
Third, another issue of great concern last year that has been resolved was the loss of a significant amount of oil production. At some stage last year, we were losing up to one million barrels a day of crude oil production but thanks to the series of engagements we had with stakeholders in the Niger Delta on the New Vision for that region, production has been restored to nearly 2 million barrels per day.
At the same time, the debt overhang preventing required additional investments in the oil sector has been addressed through the plan to pay off Joint Venture cash call arrears. There is renewed confidence in the sector and we are already seeing significant investments.
Fourth, for a variety of reasons including shortage of gas, limitations in transmission capacity and financing constraints, power supply was in the region of about 3000MW. We tackled these issues and although still vastly inadequate, power supply has moved up to 7000MW. We are at the moment dealing with the constraints in distribution, with two notable policy interventions.
The National Electricity Regulatory Commission in August issued the eligible customer directives and will this month issue directives on independent metering.
The eligible customer regime allows a willing-seller/willing-buyer arrangement in the sale of power. While the independent metering directive allows independent entities aside from registered power distribution companies to sell and install meters to customers and be paid directly as collections are made from metered customers.
This will break the distribution gridlock and there is good cause to believe that we will achieve the 10,000MW envisaged in the ERGP.
Fifth, we undertook to begin the process of diversifying the economy leading with the agricultural sector. Agriculture has created a large number of jobs and is an important source of raw materials and means of generating foreign exchange.
The Anchor Borrowers Programme launched by the President in 2015 has benefitted up to 200,000 small scale farmers and attracted investments of up to N43.92 billion from participating institutions.
What is particularly encouraging is that we are moving steadily towards self-sufficiency in rice and also scaling up in eight other commodities and produce that are vital for food security but which can also be exported.
The Presidential Fertilizer Initiative has resuscitated 11 blending plants with a capacity of 2.1 million metric tons with the product being sold to farmers at N5,500 without subsidy and far less than prevailing market prices.
But the best news is the enthusiastic response of the private sector. Wacot opened its 120,000 metric tons parboiled rice plant in Kebbi in August. Indorama opened its 1.5 million metric tons fertilizer plant, while Dangote announced its investments in 1 million metric tons of rice mills.
Sixth, this time last year we had promised to take steps to revitalize the railway sector. The now concessioned narrow gauge railway will soon come into full operation and help to redress the high cost of freight especially of food items.
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