By Onyedika Agbedo
A Professor of Business (Finance and Economics) and Rector of Olawoyin Awosika School of Innovative Studies (OASIS), Lagos, Prof. Abiola Awosika-Fapetu, in this interview says the Economic Recovery and Growth Plan (ERGP) is an ambitious project that is achievable.
How realistic is the Economic Recovery and Growth Plan (ERGP) recently launched by the Federal Government in your view?
I am not sure; realistic is the word to use to judge them by. Anything is possible if you apply the resources and implement appropriately. What I would say is that they have all the theoretical perspectives; all the arguments they have put on the table are all logical arguments. However, a lot is going to ride on several organisations and several factors. First of all, they will have to do some serious balancing because some of their goals are naturally contradictory.
For example, you want to lower interest rate at the same time that you want to lower inflation. They are opposing arguments. Growth is not something that happens when interest rates are low. Now, when they push it down, what it means is that they have pulled money out of the economy so that you don’t have too much money chasing after few goods. And when you pull money out of the economy, the economy slows down. So, when they talk about lowering inflation and interest rate at the same time, those two don’t mix naturally. That’s one area they need to do some balancing.
Another one is that if you put in this growth strategy, how do you ensure price stability? How do you keep your prices steady? So, you are fighting inflation at the same time you want growth. They also need to balance those items.
Then, they want to increase tax on luxury goods, which means the upper class will be funding part of tax. The plan is a good one; let those who have more pay more. But in a nation with a weak tax system, they are going to have a lot of work to build the system up and block all the loopholes where people will circumvent the system.
Given what you have said, the implication is that if they don’t do those balancing, the plan is dead on arrival?
No, I didn’t say that!
But if they fail to adjust the areas you have pointed out, how would the plan succeed?
A lot depends on the implementation. I am concerned that the plan is ambitious; I won’t say overly ambitious but it is ambitious especially for the span of time we are talking about. Like any plan, just like the budget that we make in our homes, there are a lot of dependencies. If you don’t manage it well, it won’t be successful. So, there are lots of dependencies on this plan as well. This includes oil production, oil prices and success in the agric sector. All of these dependencies must be managed. Not only should all the dependencies be managed, all the organisations that are key to the success of the plan should also be managed. The Central bank of Nigeria (CBN) is key to the success of this plan and the commercial banks are also integral. If they don’t support the small and medium enterprises, then our goal for the manufacturing sector is not going to be realised. And if we don’t realise our goals for the manufacturing sector, we will still be speaking the same grammar we have been speaking all these years afterwards. We are now putting all our hope in agriculture. We have really been hopeful on that sector but we are still waiting for even the result of the input so far made into the sector in the areas of locally produced rice, processing of cassava in different forms, etc. All of those things are not materialising; I don’t know what would bring them out in the next couple of years. So, yes, it is doable but it’s a lot of work for a lot of people. And that means that the government must remain focused.
Having said that, I must say that their monitoring and evaluation team has got to be strong and powerful, otherwise this thing is not going to happen. So, I’m hoping that it will come to a point where they will decide to focus on three out of the 60 points in the plan.
So what should be government’s priority areas in implementing the plan?
First of all, the medium and small business enterprises should be a priority because this is a country that virtually does not add value to anything. Even our oil is just oil; we don’t do much value adding because we import. And if we are not adding value, we are not creating jobs. So, the manufacturing sector has to be a priority even if it means manufacturing only the things that we consume. Therefore, import substitution has to be key. Now, when you we talk about manufacturing, we are not just talking about manufacturing in general; the emphasis here is on manufacturing goods that will substitute for things we import. To an extent, we cannot beat China with regards to manufacturing; they have somehow found a way to where they cannot easily be shoved aside in that sector globally. So, while we are not actually saying we want to replace everything, the focus should be on industries that will keep our money in Nigeria. So for now, we have to stop the downward spiral by stopping our money from crossing out of this economy.
Then in the agricultural sector, emphasis should shift from just growing crops to processing and preservation. So, supporting the agro-based industries should also be seen as a priority.
The information technology sector should be treated as a priority as well. And because it is knowledge based, the capital involved is not overly heavy. And getting the sector right will help in finding solutions to blocking wastes in the system and it will take us a long way.
I will also say that the social welfare programmes like N-Power and all that are programmes that will help in the short term. But we have to create real jobs for these youth. So, just superficially putting them in a programme to be able to pay them some stipend is a good solution in the short term but it will not suffice as a long term solution. We have to create real jobs in the real sector.
Therefore, attention should be given to developing the skills of our people and education is a key aspect of this. I always go back to education because everything that we say is wrong with Nigeria has something to do with education. When things don’t work, it’s because people are not educated enough to fix them. So, we have to focus on the foundation that we are giving so that even when we put these solutions in place, we have capable people who will sustain them and then move them forward.
Do you think the plan has the capacity to steer the country out of recession?
Yes, if they can implement it diligently. All the economic principles, the micro principle and macro principle, are stated the way it should be and not the way anybody would like it. But how we implement is going to be critical. How we monitor and buy in is going to be critical. So, it will pull us out of recession but it’s going to be hard work. But it can be done.