The 7-Point Agenda: Driving Nigeria’s Transformation: by Tanimu Yakubu
As the driving force of this administration's policies and programme, the 7-Point Agenda constitutes perhaps the most important framework for policy implementation. The success of President Umar Musa Yar'Adua's administration will ultimately be judged by government's achievements in these seven key areas. The 7-Point Agenda must be properly conceptualised and comprehensively articulated, and the implementation strategies adequately laid out to ensure their realisation. The following is a summary of the key aspects of the 7-Point Agenda:
I.0 CRITICAL INFRASTRUCTURE:
The provision of critical infrastructure is vital to President Yar'Adua's determination to make his tenure as the take-off phase of Nigeria Vision 20:2020. The sub-sectors of electricity, transportation, telecommunications, waterways and the national gas grid distribution are prioritised in the Seven-Point Agenda as a consequence of their cross-cutting significance to the Nigerian economy.
In addition to the evolution and development of the electricity industry in Nigeria, the section on electricity traces the causes of the poor performance of the industry. Quintessentially, the section categorises the issues and challenges into the following:
a. Technology-related – Inadequate electricity production and supply infrastructure, inadequate gas supply, dearth of investment and funding, inappropriate pricing, management and ownership, and conflicting goals and objectives; and
b. Reform-related – Inappropriate implementation and co-ordination of initiatives and government programme, inappropriate industry structure, ineffective regulation although nascent, and consequences of reform.
c. Failure to provide adequate and reliable electricity justifies the evolution of initiatives to transform the industry. Central to this transformation strategy are:
· Articulating initiatives to attract private investors;
· Clearly defining roles for private and public sector involvement in power generation, transmission and distribution;
· Improve transmission and distribution networks to support generation capacity; and
· Increase power generation capacity through diversification and installation of gas distribution grids and replacement of existing plants, amongst others.
The thrust of the transport policy is the attainment of efficient inter-modal system that would effectively link the different modes of transport. Not only would this bring down the cost of doing business, but it could as well speed-up the rate of GDP growth.
1.3 Rail Transportation
The issues, listed below, form the basis of the strategy for the sector:
(a) Narrow gauge vs. standard gauge – The debate on gauge is a major impediment to clear and focused FG interventions in the railway sector. Consequently, this administration will resolve the issue fundamentally by addressing the matter in a holistic manner. No fresh investment will be allowed that detracts from both feasibility and viability.
(b) Tracks and rolling stock–The major impediment to effective and efficient rail operations is inadequate tracks and rolling stock. This growing gap will be closed through concessioning.
(c) Expansion of the railways – Apart from the Itakpe–Ajaokuta–Warri line (329km) and the Eleme–Onne Port (19km), which remain incomplete, Nigeria has not added anything of significance to the railway system since 1964.
The 7-Point Agenda proposes some expansions as priority projects to link the Federal Capital Territory to the railway system and also to the three major ports. The seaports in Lagos and Port-Harcourt shall be linked to the railways while feasibility studies shall be commissioned on the possibility of linking major airports with the railway to reduce congestion in intra-city transportation.
The major framework for implementing the transformation of the railway sub-sector is concessioning of the Nigerian Railway Corporation (NRC). The Action Plan, with emphasis on changing the legal and the regulatory frameworks, restructuring and concession of NRC and rehabilitation and expansion of railways, will commence in 2008.
C. Road Transportation
The current issues and challenges confronting the sector include;
§ Over-reliance on road networks;
§ Poor maintenance of roads, inadequate investment to meet the sector's requirements; and
§ A multiplicity of agencies with conflicting objectives.
Concession of commercially viable road networks, as a way of attracting private sector investment and participation, will be the central plank of the transformation of the sector. Issues pertaining to pricing, institutional arrangement and establishment of a Road Fund are considered important elements for the transformation of the Industry.
D. Marine Transportation
The needs, objectives and nature of the proposed transformation of the marine industry form the focus of strategy for this sector. The transformation model revolves around the concession of fixed infrastructure and routes. In order to achieve private sector participation, it is considered that the viability of the waterways will be enhanced when the challenges of draught and dredging of the navigable rivers are tackled.
E. Inter-Modal Transportation
Inter-modal systems – Approaching transportation of people and cargoes from an economic perspective means the development of an integrated inter-modal transport system. The transport system with the constituent arteries (road networks, waterways and railways) will link all the sea ports and airports together. The role railway system is expected to play in the inter-modal system is in the haulage of low value, bulk commodities, containers and petroleum products.
Issues and challenges identified as impediments to efficient delivery of high quality service include the inadequacy of infrastructure backbone, dearth of fixed lines, weak or non-existent regulations to deal with anti-competition behaviour, lack of rural telephony coverage and inability to meet universal service obligation, as well as the decisive resolution of the ownership and control of SAT-3 that links Nigeria to parts of Africa, Europe and Asia.
Strategies that shall be used to improve telecommunication services in the country include:
· Enactment of Anti-trust law;
· Effective regulation;
· Infrastructure upgrade by the national operators;
· Incremental expansion into rural areas;
· Decisive resolution of ownership and use of SAT-3; and
· Effective utilization of the Universal Access Fund
G. National Gas Infrastructure
As gas reserves decline and grow in importance in the industrialised nations, the resultant rising gas prices in the international market continues to create a preferential pull for export of Liquified Natural Gas (LNG). Consequently, there is a disproportionate focus by gas producers in the country for LNG projects. This creates a significant shortfall in the availability of gas for rising domestic utilisation which threatens the economic aspirations of the nation. Gas demand is forecast to grow from the current level of 5 bcf/d to about 20 bcf/d by 2012. Projected growth in the domestic sector is the most visible, growing from less than 1bcf/d in 2007 to about 8bcf/d by 2012.
The energy requirement to sustain an aggressive GDP growth drive is enormous. Currently, demand (export and domestic) for natural gas far outstrips supply, driven by growth in the Power sector and other gas based industries such as fertilizer, cement, methanol, LNG etc. These industries, unable to compete in high gas cost locations, have expressed strong interest in relocating to Nigeria. However, Nigeria needs to demonstrate the availability and affordability of gas or risk losing these industries to competing nations.
H. Challenges of the Gas Sector
A diagnosis of the gas sector concludes that the sector could not possibly respond to the scale of emerging opportunities due to the following challenges:
a. Inflexible Industry structure: The industry is dominated by a few key upstream players. The 5 big International Oil Companies (IOCs) operate over 90% of the total gas reserves in the country and have a dominant downstream interest, primarily in LNG exports. The consequence of this structure is a preferential focus on gas supply to LNG export projects. This has complicated access to gas for third party downstream investors who require the gas for domestic downstream uses, but have no access to upstream gas supply. Some intervention is required, if the opportunity is to be preserved.
b. Infrastructure optimisation: The existing infrastructure in the country is inadequate in the context of future demand. The issues with infrastructure include;
i. Proliferation of processing plants.
ii. Infrastructure Capacity.
iii. Pipeline Connectivity and Redundancy.
iv. Pipeline Optimisation.
Proceeding from the foregoing, Nigeria will embark on overcoming the observed lapses, in addition to installing a National Gas Distribution Grid taking off from the Niger Delta Regional Gas Grid. The latter will be a well thought out strategy to make the region the natural location of a buoyant petrochemicals industry linked to the world markets by sea, and to the home market through an effective intermodal system of transport.
I. FOOD SECURITY
Agriculture contributes 42% of Nigeria's GDP and engages over 65% of the country's workforce. The sector is constrained by enormous challenges, and is characterised by low output, inefficient and antiquated production tools and infrastructure. Approximately 66% of the country's total land mass of 92.377 million hectares is suitable for agricultural production but about half of that is not cultivated. The technological inadequacies in standardisation and quality control have stunted our farm produce, rendering it uncompetitive in local and international markets.
Non-affordability of modern production inputs and equipment, low access to credit/finance and poor infrastructure all combine to make local production uncompetitive. Poor funding which led to total collapse of research and extension services in the sector shall be overcome through the effective deployment of the Natural Resources Fund. Ineffective regulatory framework for enforcing grades and standards for farm produce has made farm output growth difficult.
Government will ensure the optimal performance of agriculture. When left to market forces and pitched against the more efficient, and often highly subsidised external competition, as well as when faced with the vagaries of natural uncertainties, the average, resource-poor, small-holder Nigerian farmer will find it difficult to compete in local and international markets. Critical areas for intervention will include strengthening agribusiness through institution of a profitability and prices support mechanism, land tenure changes, aggressive development and supply of new land resources, technological empowerment of the sector, increased access to credit finance, strengthening of farmer support groups through commercial farmers, improvement of rural access infrastructure, and resuscitation of the River Basin Development Authorities (RBDAs). Central to these mentioned strategies, is the urgent need for the introduction on the supply side, of the Commercial Farmer to professionalise agribusiness in Nigeria. Additional land for cultivation and idle irrigation facilities around our dammed water bodies provide excellent opportunities to increase farm output and employment prospects in rural areas.
On the demand side, the reintroduction of the Commodity Boards and its licensed Buying Agent will be undertaken to boost the marketing prospects of our farm produce. Also, the new National Policy on Agriculture launched by the previous administration shall be made to, among other things, strengthen national food security, increase production and local processing of agricultural raw materials, and increase employment generation opportunities in the food sector.
Government shall embark on the preparation of a comprehensive National Food Sector Plan (NFSP). The Plan, which must be detailed, implementable and result-oriented, will be the tool for realising the desirable goals of the interventions recommended above. The NFSP will be the product of collaboration between all significant stakeholders in the Food Sector. The Development Plan for the Food Sector will have definite implementation timelines classified as; short-term activities (2008 – 2010); medium-term activities (2010 – 2015); and long-term activities (2015 – 2020).
J. NATIONAL SECURITY AND INTELLIGENCE
Security of life and property represents one of the most important constitutional duties of Government. Security and law and order are the foundation on which the success of all initiatives of Government in ensuring good governance is anchored. The authority of government over the people can be legitimised and sustained only to the extent that it guarantees the security of their lives and properties.
The primary challenges of national security revolve around the general economic down-turn. Under no other form of government have the challenges of national security been more daunting and potently sensitive than in a democracy. Lack of security threatens the stability of the polity and the safety of economic and social sectors of society and greatly discourages foreign direct investment, undermining economic growth.
Collaboration of all security organisations in the country is a major step to combating crime. The Military Intelligence Directorate, the State Security Service, the Criminal/State Intelligence Bureau of the Police and the intelligence units of all other agencies must pool resources and create a central crime intelligence directorate. This will also help stem the growing tide of rivalry between the various agencies. The ability to communicate effectively within and between the services will be enhanced.
Government will review the NYSC Act in order to provide legal cover for the youth corpers in crime prevention and community policing. This will be achieved as Nigeria invests heavily on security, and also, properly reward those who put their lives (in the line of fire) to ensure the safety of lives and properties.
Sustained public education campaigns will be used to alert people to the consequences of deviant activities. The community must be directly involved in designing and claiming ownership of programs aimed at reducing crimes. To complement this, government will seriously explore avenues of cooperation with established law enforcement agencies across the world to provide assistance to our law enforcement agencies.
K. HUMAN CAPITAL DEVELOPMENT
The provision of health, education and functional social safety nets are absolutely essential to achieving desirable human capital outcomes. Human Capital outcomes in Nigeria lag behind other countries at similar stages of development. The country's dismal health system is ranked 191 out of 201 in the comity of nations, according to the World Health Organization. Life expectancy is estimated at 45 years for males and 46 years for females according to UNDP Human Development Report, 2006. Infant mortality rate is 260 deaths/1000 live births in the North western and North Eastern parts of Nigeria. This is one of the highest anywhere in the world. About 2.6 million or 4.4% of 15-49year olds are living with HIV/AIDs. Treatment coverage for HIV/AIDs at 100,000 people is highly unacceptable and shall be expanded.
To tackle these disturbing scenarios, several policy options are required. One of the options would be to domesticate the sectoral transformation in order to model globally acceptable health transformation around our unique national culture and institutions. Structural transformation will emphasise on strengthening the management capacity of the National Primary Health Care Development Agency (NPHDA) to co-ordinate Primary Health Care (PHC) Policy, re-establishment or enthronement of the health referral system within 24 months in every state. It will also require improving human resources for tackling maternal and child mortality, and mobilizing additional resources to address funding gaps for health sector programmes. In addition, all public funded health agencies should align their expenditure with key priorities that address basic health services, with effective pro-poor services at secondary and tertiary levels.
In the education sector, literacy level in the country is inherently unsteady. Less than 60% of primary-aged children attend school; estimated 40% or 7 million primary aged children are also not in school. This scenario is more pronounced in the North- West and North -East than the other parts of Nigeria.
Considering the strategic importance of education in human development, a three-pronged coordinated approach is needed, namely: making Universal Basic Education (UBE) Programme more result oriented, with intense monitoring; strengthening of secondary education by focusing on sciences and technology; and raising the standards of tertiary education. Government intervention measures shall address the issues of vocational education and women's empowerment, especially in the northern parts of the country. The issues of teacher-student, classroom-student, science teacher-student and other critical ratios shall be squarely addressed at the three levels.
L. LAND TENURE CHANGES AND HOME OWNERSHIP
Nigeria has a huge housing deficit, evidenced by low levels of the real estate sector and mortgage credits to the sector, accounting for less than 1% and 0.5% of GDP respectively. This is what led to the evolution of the current National Policy on Urban Development and Housing that provides for a private sector-led housing policy with the government providing the enabling operating environment.
The paucity of long term funds has been the bane of housing finance in Nigeria and the banking sector has consistently demonstrated its aversion to financing home ownership. Our legal and regulatory environment is characterised by archaic laws inhibiting efficient land transaction, while prevailing monetary and fiscal parameters are not conducive for sustainable housing finance. Furthermore, the existence of weak primary mortgage structures with attended weak capitalisation, poor corporate governance and technical skill deficiencies have worsened the situation.
The solutions to land administration problems, therefore include: expunging the Land Use Act from the Constitution; review of the Land Use Act particularly removing of the provision pertaining to Governor's consent to assign and mortgage; establishment of specialised courts to determine the terms and timing of challenge/contestation of foreclosure; computerisation of all land related records at all levels among others. Others include the need to persuade State Governments to convert their Housing Corporations into land companies with mandate to develop new towns in the states, reorganising the Federal Housing Authority (FHA) to provide mortgage insurance for affordable housing, passage of foreclosure and securitisation laws, sustaining the Federal Mortgage Bank of Nigeria as a secondary mortgage institution refinancing mortgage loan originators through the capital market and the provision for legal protection of lenders against bankruptcy to attract investors in housing finance.
M. NIGER DELTA DEVELOPMENT
Dependence on the oil and gas industry weakens the other sectors and narrows the region's economic base as the sector is both extraverted as well as capital intensive.
The Federal Government of Nigeria encourages dialogue with stakeholders and has increased derivation on oil and gas revenue due to the region from 3 per cent to 13 per cent. Government also established the Niger Delta Development Commission (NDDC) by an Act of the National Assembly in 2000. The NDDC is currently funded by the Federal Government and the oil companies. The NDDC has received an aggregate of N241.584 billion from 2001 -2006.
Under the proposed big-push approach to develop the region, the following will provide the needed 'quick-wins':
i. Faithful implementation of the Niger Delta Master Plan;
ii. Mainstreaming Small business development initiative;
iii. Enforcement of the local content policy in oil and gas sector; and
iv. A regional gas grid alongside an effective intermodal transport system to enable industrialization and development of the region on PPP basis.
Equally important in this process is better, accountable and coordinated deployment of the Derivation Funds, NDDC and other long term funds available into the right capital projects is an opportunity to be utilized.
N. WEALTH CREATION
· More than two thirds of Nigerians are poor. The incidence of poverty has been increasing at a significant rate since independence.
· The specific areas for Government intervention to enable the environment for wealth creation are as follows:
a. Leadership and Governance: Government will enable the environment needed for the private sector to drive wealth creation. The institutionalisation of leadership and good governance is a prerequisite for an environment that allows wealth creation.
b. Skills Development for Productivity: Government will concentrate on giving functional vocational training to job seekers and encourage the retraining of the existing labour force to meet industry demands. The course offerings in our universities, polytechnics and technical colleges will need be re-orientated to current needs of industries.
c. Promoting a 'Formalised Self Employment' Sector: Artisans, farmers, market women, traders and proprietors of small and medium-scale enterprises (SMEs) will be helped to formalise their businesses and to acquire entrepreneurial skills.
d. Facilitating Access to Credit: The entrepreneurial spirit of the poor would be significantly enhanced through the provision of financing in the form of micro credit. Formalisation of informal businesses and land reform system are key to access to credit by the poor.
e. Non-Governmental Organizations (NGOs): NGOs can facilitate wealth creation through their capacity-building programmes. Government will partner with NGOs and religious groups to execute wealth creation strategies that focus on the empowerment of the poor through capacity-building initiatives.
f. Nigerians in Diaspora: Government will involve Nigerians in the Diaspora in promoting wealth creation through the funding of specific projects of their choice (directly or through the capital market) or the provision of technical and managerial skills which they possess in abundance.
g. Massive retraining of graduates to accelerate the production of health workers, teachers and IT specialists.
By Tanimu Yakubu
Chief Economic Adviser to
The President & Commander-In-Chief,
Federal Republic of Nigeria,