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NIGERIAN
ECONOMIC POLICY
1999
– 2003 When this Administration
took office in May 1999, it inherited an economy with the following
characteristics: declining capacity utilization in the real sector,
poor performance of major infrastructural facilities, large budget
deficit, rising level of unemployment and inflation. In addition,
the economy had grave problems of import dependence, reliance on
a single commodity (oil), weak industrial base, low level of agricultural
production, a weak private sector, high external debt overhang,
inefficient public utilities, low quality of social services and
in unacceptable rate of employment. Guiding
Principles
Since its inauguration, the Administration of President
Olusegun Obasanjo has been pursuing an economic policy inspired
by the following guiding principles: - The economy exist for and belongs to the people, and at all times the general well-being of all the
people
shall be the overriding objectives of the government and the proper
measure of performance. - Given the state of the economy, which is equivalent to national emergency, economic management shall involve total commitment of the leadership at all tiers of government, and the mobilization of the
populace
without creating a bloated government. - Government shall be lean, efficient, honest, transparent, cooperative and friendly, operate on the basis
of
extensive devolution of power; and shall function mainly as a facilitator. - Government’s
primary role shall be to ensure, in cooperation with the private
sector, the urgent creation
of adequate and efficient infrastructure, particularly of energy,
telecommunication, water and financial
services,
to bring about a positive and internationally competitive environment
for economic activities. - Private enterprise, private effort, and non-governmental action shall play the major role in achieving the
goals
of the society and the derived targets of the government. -
Everything shall be done to foster a strong work ethic to
drive productivity. Type
of Economy
Based on these guiding principles, the Administration
shall operate an economy, which is -
Market-oriented -
Private sector-led -
Highly competitive, internally and globally, particularly
in areas of comparative advantage. -
Technology-driven -
Broad-based -
Humane -
Open and -
Internationally significant Objectives
Given the poor of the economy, which it inherited,
the Administration shall:
a.
Revive and grow Nigeria’s comatose economy. b.
Significantly raise the standard of living of the people. c.
Put Nigerians back to gainful work and create new employment
opportunities. d.
Reposition the economy to participate beneficially in the
global economy. e.
Make Nigeria the hub of the West African economy. Instruments
The instruments, which the Administration shall use,
will include the following: -
Stabilised market-responsive exchange rate (within narrow
bands and with sufficient predictability) -
Reduced interest rate (to reach single-digit as soon as possible). - Reduced total tax burden to a maximum of 30 percent of corporate and personal incomes as soon as
possible. - Low Customs Tariff, especially for production inputs (at less than 10 percent, with built-in incentives
for
local producers). -
Shift in government expenditure structure in favour of productive,
economic and social sectors. -
Ensuring steady and adequate fuel supply. - Rehabilitation and reconstruction of infrastructure, such as electricity, roads, water supply, railways
and
so forth. -
Enhanced incomes for workers, particularly in the public
sector. -
Significant poverty reduction -
Special focus on Education and Human Capital Development. -
High priority to Agriculture, manufacturing, Small/Medium
Enterprises and the informal sector. -
Institutional rationalisation of government. -
Privatisation. -
Cooperation with the National Assembly. -
Generous incentives for local and foreign direct investment. -
Reduction of Nigeria’s external debt burden through negotiation. -
Promotion of the deepening and increased efficiency of the
financial system. -
Operation of cooperative federalism to ensure inter-tier
policy consistency and effectiveness. Summary
of Targets
With vigorous implementation of the policies and programmes,
which have been described, it is expected that by the year 2003,
the following targets would have been achieved, compared with the
year 1999 position.
Performance
Measurement 7. The Administration shall ensure that henceforth
the assessment of the performance of the economy will derive from
guiding principles stated in paragraph 2 above. Macro-economic
Policies 8. Arising from all the foregoing general principles
and targets, government shall pursue a regime of macro-economic
and sectional policies as follows: n
Monetary
policy will focus on price and exchange rate stability, and healthy
balance of payments n
Government
will pursue a low interest rate regime in order to support the real
sector of the economy. More effort shall be made to narrow the gap
between savings and lending rates. n
Government
shall pursue policies, which will ensure the achievement of a moderate
inflation rate in the medium term (even after allowing for a possible
modest rise during the revelation of the economy). n
The
exchange rate of the Nauru will be stabilised and made market-responsive.
Government will sustain the Inter-Bank foreign Exchange (IFEM). n
Fiscal
policy will be designed to increase the level of government revenues
and to promote overall economic development. In this regard, priority
sectors like Oil and Gas, Export Processing Zones, Solid Minerals
and Agriculture will continue to receive increased fiscal incentives.
However, government will curtail borrowing through CBN’s ways and
Means Advances to a maximum of 12.5% of estimated current revenue,
while additional loans will be sourced through the financial market
without crowding out the private sector. n
Government
will rely basically on good faith collective bargaining for the
determination of incomes in both the public and private sectors. Poverty Reduction
Programme 9. The strategy to be employed shall be to empower
Nigerians in both rural and urban areas to become more economically
productive, with a view to improving their quality of life. To avoid
the mistakes of the past, projects and measures to be implemented
will be people-oriented. The people concerned, as stakeholders,
will be fully involved in determining the projects and will take
ownership. The poverty reduction programme will involve the immediate
improvement of infrastructure in the urban and rural areas, with
government taking the leadership in mobilising the necessary resources.
Significant improvements in the supply of water, energy, basic educational
facilities (both under the Universal Basic Education (UBE) scheme
and Mass Adult Literacy Programmes). Basic health facilities, roads
and transportation projects will be embarked upon immediately on
a nation-wide basis. There will be established a Poverty Reduction
Fund. 10. In view of the foregoing a number of Federal
Ministries/Institutions have been entrusted with the mandate for
the primary effort to eradicate poverty in Nigeria. These are: (i)
Federal Ministry of Education to take change
of Universal Basic Education (UBE). (ii)
Federal Ministry of Health to take charge of
Primary Health care programmes. (iii)
Other
Ministries and relevant agencies will take charge of employment
generation, development of rural infrastructure and economic empowerment. 4-year
targets have been set as follows: - Population Literacy rate in the country to increase from its current level of 57% to 80% by the
Year
2003. -
Access to Primary Health Care to increase from its current
level of 40% to 70% by the Year 2003. -
Immunisation of children to increase from its current level
of 40% to 100% by the Year 2003. - Access to safe potable water supply to increase from its current level of 40% to 60% by the Year
2003. - Access to electricity in rural areas to increase from its current level of 34% to 60% by the Year
2003. - Training and settlement of at least 50% of tertiary graduates estimated at about 230,000 per
annum. - Improved rural transportation through construction of more rural feeder roads, stock routes and
jetties. - Development and nation-wide distribution of simple processes and machines for agriculture and
small
scale industries; and - Development and provision of soft funds and management services for small and medium scale
industries
to enhance employment and value added to the economy. Sectoral policies 11.
Government will continue to implement sectoral
and structural policy measures geared towards attaining short, medium
and long-term goals of improved economic growth, complementarity,
external sector competitiveness and poverty reduction. However,
special emphasis will be given to the following areas: Agriculture
12.
Agriculture
will be given the highest priority both for poverty reduction in
the rural areas, and for the improvement of the economy generally.
New technology, improved seedlings, better storage facilities, fertilisers,
pesticides, etc. will be made readily available. Government will
rely on private sector enterprises to provide these inputs. Furthermore,
government will embark on massive expansion of agricultural extension
services and will ensure better and easier delivery of credits to
farmers. The government will embark on a massive campaign, with
appropriate policies designed to achieve self-sufficiency and expanded
export volumes in crops such as rice, maize, millet, sorghum, ginger,
groundnuts, cocoa, coffee etc. as well as self-sufficiency in industrial
crops such as Soya beans, palm produce, rubber and cotton. Government
will encourage the involvement of Non-Governmental Organisations
in all these measures. Effective protection, consistent with new
international agreements, will be given to operators in the sector
to ensure success. Guaranteed producers prices will be established
in line with the national priorities for self-sufficiency and increased
exports. Government will concentrate on sectors where the country
has comparative advantage and will change the nature of Nigeria’s
exports from primary to processed and manufactured goods.
Health 13. The
policy thrust in the health sector will be the reduction by more
than half of infant mortality and maternal mortality rates, and
increase in general life expectancy of Nigerians by the provision
of high quality health care services which are accessible and afford-able
to all. Priority will be given to rehabilitation of facilities in
the existing hospitals and primary health care delivery programmes;
Completion of on-going University Teaching Hospital Projects; provision
of counterpart funding for donor-funded projects/programs which
were at one time or the other funded through external loans; establishment
of Federal Medical /Centres in the new states; and the continued
phased prosecution of the development of the permanent sites of
the five hospitals on stream. Science and
Technology 14. Emphasis will be placed on achieving break-through
with regard to some key projects such as on-going Research and Development
Supports for Health Care, and for Honey husbandry, upgrading traditional
technology to small scale level and patenting such patenting such
technologies for adaptation in the informal sectors and subsistence
agriculture sector for higher performance and wealth generation.
The formulation of a national policy on the acquisition of computer
technology shall be completed. Other areas of emphasis will include
acquisition and commercialisation of Research and Development results;
research into enhanced agricultural productivity. The Federal Ministries
of Science and Technology (FMST) and Defence will collaborate in
War Gaming to enhance the status of the
National War College. Employment 15. To promote the goal of full employment and address
the critical concern of youth employment, Government will continue
to support the activities of the National Directorate of Employment
(NDE) and Micro Credit Institutions, while concerted efforts will
be made to encourage and promote self-employment. Education
and Human Capital Development 16.
Government
will provide affordable quality education for all Nigerians. The
UBE and mass Adult Literacy programmes will be pursued in earnest.
Government will also encourage private provision of educational
facilities at all levels. Considerable resources will be committed
to rehabilitating and improving secondary and tertiary educational
institutions. Government will pursue other areas of human capital
development through increased emphasis on industrial apprenticeship
schemes and entrepreneurship training. Government will also develop
a database of Nigerian human capital stock. Which will include skilled
non-resident Nigerians, especially those in Europe and North America. Information
and Communications Technology
(ICT) 17. Government will create incentives to expand
access to information and communications technology, which will
facilitate leap-frogging in order to short-circuit the longer span
of development. Government will encourage local production of ICT
equipment and materials (computers, telephones, TVs, etc.). Government
will also encourage the development of payment systems, which will
facilitate the growth of electronic-commerce. Infrastructure 18.
The
government will make available resources for the refurbishment and
improvement of the facilities and management of NIGERIA TELECOMMUNICATIONS
PLC (NITEL), MOBILE TELECOMMUNICATIONS PLC and NATIONAL ELECTRIC
POWER AUTHORITY (NEPA). Government will pursue the privatisation
of these government enterprises. The privatisation exercise will
be accomplished within the life of this Administration. The privatisation
of these parastatals is not an end in itself but a way to achieve
faster increase in services provided and greater efficiency. The
government will no longer permit monopolies in these sectors. It
will create the enabling environment to attract massive private
investments in order to meet projected additional requirements of
a rapidly expanding economy.
Transport 19.
Government
will encourage private investments in roads, railways and air transportation.
Government will also sustain the deregulation in domestic air services,
while it will prepare Nigeria Airways for privatisation. Furthermore,
government will encourage private sector participation in the construction
and management of highways, railways and seaports. To this end enabling
laws will be introduced in year 2000. Oil and Gas 20.
Government
will ensure that there is adequate budget provision to cover its
share of costs of agreed production quotas. The budget provisions
will be released promptly as and when due so as to avoid any disruption
in planned operations. Every measure will be taken to improve the
workings of the joint venture technical committees to ensure that
there is equity in the apportionment of contributions
between the two sides. Government will introduce policies
and incentives to ensure that the local content of oil and gas activities
reaches 40% by the year 2003. Government will also introduce policies,
create conducive environment to make the communities in the oil
producing areas effective and more involved stakeholders in the
exploitation of oil and gas resources. Manufacturing 21.
Government
will move the country away from export of primary commodities to
the export of processed and manufactured products. All necessary
incentives and encouragement will be given for the development of
agro-allied industries. Government will bring back into full operation
the Ethylene Plant in Eleme and will promote related downstream
plants to produce intermediate petrochemical products for local
consumption and export. It will also promote new manufacturing industries
to export plastic household goods and toys, textiles and garments,
furniture etc. To this end, Government will review existing tariffs
and take all possible measures to encourage infant industries, exploiting
fully the delays allowed in applying the new World Trade Organisation
(WTO) regulations in developing countries. Government is reviewing
all uncompleted important projects in the capital sector, e.g. iron
and steel pants, pulp and paper plants, the aluminium smelter, the
purpose being to complete them where viable, and expand them where
desirable. Solid Minerals 22. Government will urgently create a regime of
internationally incentives to attract private capital for the accelerated
development of the country’s vast endowments in solid minerals.
It will provide the resources necessary to enable the National Mining
Corporation complete proving studies to establish the commerciality
of many important deposits of solid mineral. Attracting
financial Resources for Development 23.
In
view of the envisaged accelerated growth and development of the
economy, government will create the necessary enabling environment
to attract large annual inflows of foreign direct investment. In
this regard, government will ensure:
n
Policy
consistency an stability n
Removal
of all bureaucratic bottlenecks n
Improvement
in security of persons and property n
The
conclusion of bilateral and multilateral and intellectual property. n
Sanctity
of contract n
Re-orientation
of the bureaucracy into a friendly welcoming facilitator of investment
and business. By
order of the Federal
Executive Council, Abuja, 8th
December 1999
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