Sixth, the PEAC appreciated Mr. President’s prompt response to the COVID-19 induced economic crisis and provided support to the Economic Sustainability Committee, chaired by the vice president, in designing the Economic Sustainability Plan (ESP), which provided a policy framework for the functioning of the economy amid COVID-19.
However, council cautioned Mr. President that the ESP’s 12-month time-frame was too short-term for impact and its ambitious targets and interventions were not in sync with the prevailing fiscal space. The economic paradigm underpinning the ESP bore a striking resemblance to Soviet-era development plans as it assumed that the state would be the sole ‘provider or facilitator of resources’ for its programmes and would ‘ultimately be the buyer of last resort of what is produced’.
Seventh, the PEAC had big plans for agriculture: it was relentless in its call for expedited actions on the elimination of the structural bottlenecks that inhibit domestic food supplies – including post-harvest losses (consistently ranging between 30 – 60 per cent of output) and poor farm-to-market access infrastructure. It was relentless in its call for optimising Nigeria’s full irrigation potential of 3.14 million hectares (of which only 236,000 hectares is being utilised).
Eighth, the PEAC reflected and provided recommendations on several key issues that would ensure macro-economic stability and reshape the state of the economy- notably FX management policy and Ways and Means Advances. The PEAC highlighted the dangers of persistent price distortions occasioned by Nigeria’s exchange rate management policy. It called for urgent reforms to improve exchange rate management towards a single, stable rather than the quasi-fixed exchange rate that then obtained.
On Ways and Means Advances to government by the Central Bank of Nigeria: the PEAC drew the attention of Mr President to the inherent risks to the economy of deficit funding using advances and cautioned that the level of borrowing from the CBN was in contravention of the limits imposed by the provisions of the Central Bank Act of 2007. The PEAC called for an amendment of the CBN Act to enable the FGN to borrow legally from the CBN. It urged the government to take steps to securitise the stock of advances above the legal limit.
Ninth, the PEAC viewed the fuel subsidy regime as a threat to Nigeria’s fiscal viability and sustainability. It was unfair and inequitable to spend more than 1.2 per cent of its GDP to subsidise fuel consumption but only 0.5 per cent on education, 0.4 per cent on healthcare and 0.1 per cent on social programmes.
The PEAC was unequivocal on the need to implement transformative pro-poor interventions to mitigate the risks associated with the withdrawal of subsidy. It called for interventions to re-build social and economic infrastructure to enhance the productive base of the rural economy and build resilience.
Finally, on the closure of the country’s border with Benin and Niger Republics, Council recognised the rights of Nigeria to defend its economic interests, protect its citizens and ensure stability. However, Council believed strongly that border closure could not be part of a sustainable development strategy – especially in the context of the African Continental Free Trade Area (AfCFTA) and Nigeria’s desire to grow its economy and lift 100 million Nigerians out of poverty by 2030.
Now the big question: what exactly happened to these interventions and policy recommendations? At least three factors may have rendered the delivery of these policy interventions inefficient and blunted their impact.
First, it is well known that policy interventions will be more potent and impactful when delivered timely. However, it is also known that the response of the administration to economic crises and critical policy interventions was almost always slow.
A year after its inauguration, the PEAC noted that only three (12%) of the 24 recommendations made by the Council received the blessings of Mr. President. Not much changed by May 2023. An estimated 70 per cent of the recommendations on key issues didn’t benefit from the President’s speedy approval and immediate implementation by line MDAs.
Outrightly ignored were recommendations on border closure, procurement reform, reform of the finances of state-owned- enterprises, harmonisation of FX windows and deregulation of PMS price. Ignoring these represented wasted opportunities in economic management.
Second, for those interventions favourably considered by Mr. President, the responsibility to implement fell on the shoulders of those responsible for the management of the economy including the fiscal and monetary authorities as well as other MDAs. As is well known, the implementation process at all levels (was)/ is weak. Thus, for example, the establishment of the Policies and Programmes Co-ordination Office (PPCO), approved to be embedded in the CoS’s Office, was aborted because of severely constrained capability.
In some cases, implementation was either resource-constrained (Economic Sustainability Plan) or flawed because of unwieldy and inappropriate delivery structure (Economic Sustainability Plan and Poverty Eradication Strategy). For example, a Steering Committee Chaired by the Vice President overstepped the bounds of its authority (coordination and oversight) by attempting direct implementation of the programmes and projects contained in the Poverty Eradication Strategy.
Third, implementation of some interventions was delayed because of poor attitude and cooperativeness amongst the bureaucrats in the MDAs resulting in hesitance and resistance to change. Although approved, the NIG-FUND did not benefit from the fiscal authority’s speedy implementation. Similarly, in spite of its urgency, the recommendation on the securitization of Ways and Means Advances, was eventually implemented nearly two years after presidential approval.
Finally, the PEAC was itself consumed by some behind-the-scenes power plays, turf wars, and dirty bureaucratic politics. (Concluded)
Sagagi was the vice chair, Presidential Economic Advisory Council
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