[wa-zo-bia I] OBASANJO'S ECONOMIC DIRECTION 1999-2003
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OBASANJO'S ECONOMIC DIRECTION 1999-2003
FOREWORD
Our Administration assumed office when the Nigerian nation was at the crossroads.
Internationally, Nigeria was perceived as a pariah State and, as such, was treated
with hostility by its strong critics and neglected by its erstwhile benign friends.
Internally the citizens were disillusioned and alienated and there were injured egos
to be soothed and wounds to be healed. Law and order, including respect for
property rights that are the prerequisites for the effective functioning of any
economic system, were lacking. Overall, there was a near-total loss of faith in the
Nigerian State.
The economy was generally riddled with myriads of problems and had virtually
collapsed. In addition to the inherent fundamental structural defects which
persisted, the economy was burdened by mismanagement, which brought additional
problems, such as energy crises, manifested in the scarcity of petroleum products
and an epileptic and erratic power supply; high fiscal deficits, which threw
macroeconomic fundamentals out of order and a near-total collapse of infrastructure
and services. Low output, high unemployment and a crushing external debt
overhang prevailed.
Against this background, on the 10th of March 1999, we inaugurated a Presidential
Policy Advisory Committee for stocktaking and articulation of policies for the present
Administration. Thereafter, several presidential panels, including the Presidential
Panel on Streamlining and Rationalisation of Poverty Alleviation Institutions and
Agencies, were established, for further stocktaking to chart the way forward.
Arising from in-depth studies and evaluation of the prevailing situation, an economic
policy framework is being evolved to provide sustainable and practical solutions to
the nation's economic problems, which are fundamentally, self-inflicted.
Since May 1999, this Administration has taken concrete measures to improve the
performance of the economy in order to enhance the welfare of our people. The
successful handling of the energy crises, which was considered intractable a few
years ago, has led to sustained availability of petroleum products and some
improvement in power supply. These are testimonies to the Administration 5 political
will and determination to solve our national economic problems. Other efforts of our
Administration to improve the economy include measures for restoring international
confidence, to attract foreign investment and debt reduction. These achievements
are a few of the dividends of democracy which Nigerians are expected to reap
during the tenure of this Administration.
All that is required to make a quantum leap forward is for us all to believe in and
practise peaceful co-existence. We should eschew violence and embrace dialogue
as the best alternative for living in a nation blessed with abundant human and
material resources. Our Administration believes in peaceful co-existence, the thriving
of democracy and a stable polity and policy environment. We can no longer accept
the wanton destruction of lives and property that are God-given. We must work
together to move this nation forward. There is enough for everyone to do to earn a
decent living in almost every area of endeavour in this great country.
This handbook attempts to document the initial efforts of this Administration to put
the economy back on the right track as well as plans for the future. It is
recommended for all interested in developments in the Nigerian economy, and in the
efforts and plans of the present Administration for the economy.
CHIEF OLUSEGUN OBASANJO GCFR
President, Federal Republic of Nigeria
INTRODUCTION
The decision to produce this handbook arose from the need to streamline and
present our economic efforts, intentions and aspirations in a single document. Since
the coming to office of this Administration, much has been done to move the
Nigerian economy forward. Many decisions, which have direct effects on the
economy and the lives of the generality of Nigerians, have been taken. Equally,
laudable practical objectives, strategies and measures for stimulating the economy,
have been outlined. Information on the efforts of the Administration and indeed, its
economic direction exists, but not in a single easily accessible volume. Some of the
information may not even have been carefully and fully cross-checked for
consistency and a clear rational articulation.
In a simple framework of Where We Are, as at May 1999; Where We Want To Be,
which states the goals for the various sectors and How To Get There, which states
the strategies for achieving the goals; Government attempts to outline its policy
direction. A brief section on Laying A Solid Foundation, outlines the achievements
of this Administration between the end of May, 1999 and the first few months of
2000.
This handbook complements earlier efforts made by this Administration in charting
the way forward. It will be handy for the purpose of monitoring the implementation
of the Administration's efforts in resuscitating the Nigerian economy. It will also be
invaluable to a large section of the society in understanding and appreciating the
economic direction of the present Administration. It is a practical handbook on
Nigeria's Economic Direction for the present Administration.
However, development efforts would be ineffective in improving the lot of the
society if aspirations and action plans are modelled in watertight compartments of
specific Administrations' tenure in office. Governance is a continuum. It is not
unlikely that some of the national aspirations and targets, which are contained in
this handbook, may extend beyond this Administration's life span.
In the development and production of this practical handbook, a participatory
approach was adopted. It therefore enjoys contributions from stakeholders in the
private sector and various units of the Executive arm of the public sector. I
sincerely thank all those, particularly the participants at the Inter-Ministerial
Committee, whose contributions have made this handbook a reality.
The size and language of this handbook are deliberately simplified for the
understanding of a wide audience. Those who are interested in further in-depth
analysis and information may consult the relevant agencies. Annexed to this
handbook are the addresses and telephone numbers of the relevant federal agencies
and ministries that have direct bearing on economic management, national economic
growth and development efforts. It is intended to make contact with these agencies
easy for interested investors and those who need further information.
PRINCE VINCENT EZE OGBULAFOR
Honourable Minister (Economic Matters)
The Presidency
TABLE OF CONTENTS
FOREWORD vii
INTRODUCTION xi
MAP OF NIGERIA SHOWING THE STATES xiii
MINERAL MAP OF NIGERIA xiv
TABLE OF CONTENTS
xv
CHAPTER 1 1
OVERVIEW OF THE NIGERIAN ECONOMY 1
1.1 Introduction 1
1.2 Agriculture - The Mainstay of the
Economy: 1960 - 73 1
1.3 The Emergence and Dominance of
Crude Petroleum: 1973 - Date 2
1.3.1 The Structural Adjustment
Programme (SAP) 3
1.3.2 Policy Reversal 4
1.4 Policy Redirection 5
CHAPTER 2 7
NATIONAL ECONOMIC DIRECTION 7
2.1 Introduction 7
2.2 Overall Economic Direction 8
2.3 Overall Economic Strategy 9
2.3.1 Private Sector-led Economic
Growth Strategy 9
2.3.2 Poverty Alleviation and Reduction 10
2.3.3 Fiscal, Monetary, Incomes,
Trade and Debts Policies 12
2.3.4 Broadening the Productive Base
of the Economy
13
CHAPTER 3
15
SPECIFIC DIRECTION 15
15
3.1 Real sectors 15
3.1.1 Agriculture
3.1.2 Manufacturing
3.1.3 Steel
3.1.4 Mining and quarrying
3.1.4.1 Solid Minerals
3.1.4.2 Petroleum Resources
3.1.5 Water Resources
3,1.6 Science, Engineering
3.1.7 Environment
3.1.8 Culture and Tourism
3.2 Public Enterprise
3.3 Social Services
3.3.1 Health
3.3.2 Education
3.4 Infrastructure
3.4.0 Introduction
3.4.1 Power Supply
Transportation
3.4.2.1 Road Transport
3.4.2.2 Rail Transport
3.4.2.3 Water Transport
3.4.2.4 Aviation (Air Transport)
3.4.3 Communication
3.4.4 Survey and Mapping
3.5 Trade and Distribution
3.6 Financial Sector
and Technology
CHAPTER 4 81
IMPLEMENTATION 81
Monitoring and Evaluation 82
ANNEX 83
ADDRESSES AND TELEPHONE NUMBERS OF KEY
FEDERAL MINISTRIES AND AGENCIES 83
CHAPTER I
OVERVIEW OF THE NIGERIAN ECONOMY
1.1 INTRODUCTION
Nigeria is a country endowed with abundant human and material resources. The
country has an estimated land area of 923,773km2, with varied vegetation and soil
types that are suitable for a variety of agricultural purposes. It has large reserves of
solid minerals including coal, columbite, lignite, tin, bitumen, topaz, kaolinite, talc,
marble, baryte, gypsum and iron ore. The proven reserves of crude petroleum and
natural gas are well over 27 billion barrels and 120 trillion standard cubic feet,
respectively. These vast resources are capable of forming a solid base for
development. Granted political stability, good governance and exemplary leadership,
Nigeria has a high potential of becoming a great nation in this millennium.
1.2 AGRICULTURE - THE MAINSTAY OF THE ECONOMY: 1960-73
At independence in 1960, Nigerians had high expectations of launching into a "take -
off stage within a reasonable period of time". However, the economy was dualistic,
with a large traditional agricultural-based rural sector and a small modern urban
sector. Most of the manufacturing industries and almost all the modern
infrastructure were located in the urban areas. The majority of the people lived and
farmed in the rural areas with little or no economic and social infrastructure and
services.
The developmental challenges, which faced the post-independence Government in
this traditional agriculture-dominated economy, were enormous. Agriculture provided
over 80% of the export earnings and employment, about 65% of total output or
gross domestic product (GDP) and about 50% of Government revenue in 1960. The
developmental challenges included, at the minimum, the provision of educational and
health services to the people, the establishment of a strong industrial base and the
provision of social and economic infrastructure to the vast majority of the
population that was spread across the large geographical area. The management of
the vast human and material resources in the country was also a serious
developmental challenge. It is worth noting that the manner in which these
challenges were addressed determined the development characteristics of the
country in the later years.
1.3 THE EMERGENCE AND DOMINANCE OF CRUDE PETROLEUM: 1973 - DATE
The emergence of crude petroleum as a major foreign exchange and government
revenue earner was a relief to Nigeria in the pursuit of her developmental objectives.
Crude petroleum accounted for 81.1% and 96.1% respectively of Government
revenue and export earnings in 1980. The resources generated from crude oil sales
were used in the provision of social and economic infrastructure and other facilities,
which enhanced Government delivery of services especially in the urban areas. The
resources also helped in the prosecution of the import- substitution strategy for
industrialisation, which was capped by indigenisation measures and reconstruction
after the civil war.
Structurally, the economy was woven on the illusion of a large and sustained inflow
of resources from crude oil exports. Consequently, the collapse of crude petroleum
prices in the international oil market in the early 1 980s revealed the inherent
structural defects of the economy and the weaknesses of the developmental
strategy adopted. The economic reversal occasioned by the Oil price collapse led to
serious internal and external disequilibria, as the economy experienced chronic fiscal
and current account deficits. Economic and social indicators plummeted and
Government was compelled to borrow from the international capital market to
finance its deficits.
The four-year demand management economic policy regimen adopted in form of the
Economic Stabilisation Act of 1982, the Austerity Programme of 1984 and the
National Economic Emergency Measures of 1985 had only marginal effects. A
two-year Structural Adjustment Programme (SAP) had to be adopted in 1986.
1.3.1 THE STRUCTURAL ADJUSTMENT PROGRAMME (SAP)
The SAP was adopted to broaden the productive and resource base of the
economy, eliminate distortions, reduce the role of government and encourage
competition. The inability of SAP to achieve its stated objectives has been
attributed to many factors, prominent among which were:
i) its short time-frame and poor sequencing of its reform measures;
ii) poor implementation of policies; and
iii) policy instability and lack of political will.
Implemented along with the Structural Adjustment Programme were palliative
measures, popularly called the Social Dimensions of Adjustment, meant to cushion
the adverse effects of the reform. Like SAP their implementation suffered from many
weaknesses and consequently had negligible effects on the poverty situation.
1.3.2 POLICY REVERSAL
The inability of SAP to impact positively on the economy led to a policy reversal in
1994, which combined with the political crisis of that year to worsen an already
deplorable economic situation. The consequences of these developments on
economic and social activities were severe as energy crises joined the long queue of
national problems and overall uncertainty became more visible. It was no surprise
that the poverty situation worsened, with the number of Nigerians in the poverty
range rising from 39.2 million in 1992 to 67.1 million in 1996.
It was obvious that, due to the policy errors of the past, the Nigerian economy,
after about four decades of political statehood and economic management, suffered
from fundamental structural defects and remained in a persistent state of
disequilibrium. The productive and technological base was weak, outdated, narrow,
inflexible and externally dependent. The infrastructure was poor, inadequate and
lacked maintenance. The effectiveness of incentives was generally low, giving rise
to inadequate utilisation of the factors of production. Political and policy instability
discouraged foreign investment, despite the huge domestic market and the strategic
location of the nation. These features combined with other non-economic factors to
produce a weak private sector that was largely oriented towards distributive
activities dominated by the informal sector.
1.4 POLICY REDIRECTION
The need for public policy redirection in Nigeria became even more obvious with the
revelation of the consequences of past policy errors and the emergence of recent
global trends. The poor performance of the centrally planned economies, the
collapse of the Berlin Wall, and the powerful forces of globalisation and localisation
all combined to redirect and reshape public policy, the world over.
The current Administration realises that globatisation, which reflects the progressive
integration of world economies, cannot be ignored by any meaningful national
developmental agenda in this century. Consequently, measures to ensure that
Nigeria reaps maximum benefits from the globalisation phenomenon are being evolved
and would be adopted throughout the life-span of this Administration.
The Administration is also conscious of the fact that there is no magic wand to
econ6mic development in all places and at all times. It realises that economic
progress is contingent upon time and space and goes beyond ideological debates on
the role of the State and the market. Consequently, the economic actions of this
Administration would be guided by the practical realities of the prevailing situation in
Nigeria and by the lessons of experience.
CHAPTER 2
NATIONAL ECONOMIC DIRECTION
2.1 INTRODUCTION
On assumption of office in May 1999, the Obasanjo Administration immediately took
decisive steps to put in place an enabling environment for the thriving of
democracy, regaining international respectability and credibility and putting the
economy on the path to sustainable growth and development. The specific
measures taken included:
a) presenting an Anti-corruption Bill to the National Assembly;
b) reviewing and suspending contracts whose award lacked merit;
c) curtailing excessive and extra-budgetary spending by Government;
d) adopting measures to achieve fiscal prudence, transparency, minimal deficits and
efficient resource use;
e) mounting domestic and international campaigns to recover looted public assets;
I) introducing the Universal Basic Education scheme to wipe out illiteracy and
ignorance;
g) addressing the energy crises;
h) reviewing developments in the various critical sectors of the economy and
outlining measures to move the nation forward;
i) presenting the Niger-Delta Bill to the National Assembly;
j) establishing a Poverty Alleviation Programme;
k) putting in place measures to establish a national minimum living wage;
I) rehabilitation of run-down structures;
m) assisting the private sector to increase utilisation of installed capacity; and
n) establishing prudence and stability in macro-economic management.
2.2 OVERALL ECONOMIC DIRECTION
Improvement in the well-being of Nigerians is the ultimate objective of this
Administration, whose economic policy thrust is to make accessible to every Nigerian
the basic needs of life. Significant reduction of poverty by at least 50% from the
current level must be achieved by the policy and this poverty reduction shall be the
true indicator for measuring well-being, as would be demonstrated by:
Food on Every Table;
unemployment reduction; and
provision of rural infrastructure including potable water, electricity, basic education
and health, roads, telecommunication and housing.
It is the policy of this Administration to make an immediate, visible and positive
impact on the quality of life of the generality of Nigerians.
At the very foundation of the above national objective is the pursuit of a strong,
virile and broad-based economy with adequate capacity to absorb externally
generated shocks. A buoyant economy with a high level of productivity of the
factors of production (land, labour and capital), is the goal of the Obasanjo
Administration. The Administration aims, altogether, at establishing one of the
leading economies in Africa: an economy that experiences rapid and sustained
growth of not less than 6-10% per annum at the end of the present
Administration's tenure, is the target. The creation of a national economy that is
highly competitive, responsive toincentives, private sector-led, broad-based,
diversified, market-oriented and open, but based on internal momentum for
its growth, is the aim.
2.3 OVERALL ECONOMIC STRATEGY
The present Administration's initial effort at putting the economy right on
assumption of office was stocktaking to ascertain the prevailing status of affairs as
a basis for meaningful future actions. Efforts will continue in this direction by the
carrying out of more in-depth investigations on specific critical national economic
issues. Several panels of investigation and commissions of inquiry have already been
set up and the recommendations arising therefrom shall be faithfully implemented as
a logical step to making a positive, effective impact on the well being of Nigerians.
Broadly, the elements of the overall economic strategy are as outlined below:
2.3.1 Private Sector-led Economic Growth Strategy
Government shall promote the private sector as a broad strategy for achieving rapid
economic growth and development. Elements of this strategy include the following:
i) Government is to divest its holdings in enterprises where the private sector can
perform better;
ii) the economy will be deregulated so that there is no sector reserved exclusively
for the Government to operate alone;
iii) bureaucratic bottlenecks will be reduced;
iv) economic decision making will be democratised to enable individual economic
units to interact to take decisions;
v) interaction of actors in the private sector shall be encouraged, to provide the
driving force for economic growth and development;
vi) Government is to be a catalyst that provides the enabling environment for the
private sector to thrive. Such enabling environment includes:
a) legal and regulatory frameworks to ensure the efficient operation of markets;
b) Security to guarantee the safety of life and property;
c) Ensuring the independence, integrity and sanctity of contracts;
d) Provision of infrastructure to facilitate the operations of the private sector;
e) institutional re-establishment and re-orientation of the bureaucracy to make it a
friendly, welcoming facilitator of investment and business; and
f) frontier shifting activities by Government as initial steps to opening new grounds
for the private sector to operate.
2.3.2 Poverty Alleviation
The pursuit of poverty alleviation and reduction, which is the first priority of the
Obasanjo's Administration, shall be adopted as a means and an end to the
achievement of accelerated economic growth and the eventual elimination of
poverty generally. The measures being employed are to empower Nigerians to be
more economically productive, with a view to improving their quality of life. The
measures are to be people-oriented. A poverty reduction fund has been established
with an initial sum of N1O billion, for the creation of 200,000 jobs in the 2000 fiscal
year. The Poverty Alleviation Programme is being implemented as a multi-faceted
programme involving many ministries with the cooperation and commitment of the
three tiers of Government. Specific sectoral targets to be achieved are indicated in
the relevant sectors.
It is significant to note that these measures that reduce the incidence of poverty
are also capable of accelerating economic growth. The Poverty Alleviation
Programme is to engage the unemployed in direct productive activities as a means
of reflating the economy and providing them with direct jobs. Participants in the
year 2000 programme are to be engaged in activities that cut across several
sectors including infrastructural rehabilitation, environmental improvement, housing
and agricultural production.
Specifically the measures planned to address the twin problems of low economic
growth and high poverty incidence by this Administration include the provision of 5
million jobs which also involves the training and settlement of at least 50% of
tertiary institutions graduates estimated at about 130,000 per annum. A 'return to
agriculture' programme, meant to boost agricultural output by various measures,
including enhanced provision of various inputs such as fertiliser and credit, and
modernisation of farming practices, is also part of the poverty reduction
programme.
Government will enhance access to housing by the provision of infrastructure;
promoting the use of improved technology and local raw materials; promoting
competition and making credit more readily available. Other components include the
Universal Basic Education scheme, rural electrification and water supply improved
health services through the Primary Health Care scheme and the establishment of a
Small and Medium Scale Industries Development Agency (SMIDA), for the promotion
of these enterprises. These measures, by tailoring the character of growth to
meet the needs of the poor, are designed to address the twin problems of
poverty and stunted economic growth.
2.3.3 Fiscal, Monetary, Incomes, Trade and Debts Policies
These policies are the potent instruments for the pursuit of the Administration's
economic goals. It is also important to stress that policy consistency shall be the
guiding principle of economic efforts during the period of this Administration. The
policies shall be employed in a non-distortionary manner that should lead to the
effective achievement of goals and the promotion of competition in economic
activities. The policies shall, inevitably, ensure the prevalence of the right
macroeconomic environment for sustained economic development and growth.
Government's expenditure will be prudent, transparent, accountable and void of
inflationary tendencies; hence deficits will not exceed 3.0% of the GDP Efficiency in
the use of resources by effective prioritisation, rationalisation, elimination of
wasteful expenditures and the proper channelling of scarce resources to the most
rewarding areas of the economy shall be the practice. Taxation shall be adopted as
an instrument for promoting economic development and shall be neither distortionary
nor retrogressive. An efficient tax system, devoid of multiplicity of taxes, shall be
evolved and applied.
Monetary policy shall rely on indirect instruments of control that promote growth,
optimal liquidity in the system and financial intermediation. Economic policies shall
also ensure a stable single exchange rate and a strong naira that will become a
convertible currency in the medium-term period. Incomes policy will aim at promoting
increased productivity of labour and will remain deregulated. Trade policy will aim at
maximising the benefits from globalisation, promotion of domestic industries and
value added exports. The potential of the African market shall be maximally explored
to boost exports. Overall, economic policies will aim at steering the
balance-of-payments away from predominant
dependence on crude oil exports to a more diversified export base and a more
mature balance-of-payments structure. While initial efforts aim at debt reduction
through various measures, future strategy shall aim at prompt debt settlement as
and when due.
2.3.4 Broadening the Productive Base of the Economy
Various measures shall be adopted to broaden the productive base of the economy
as a strategy to achieving a strong and virile economy. In this direction, inter-
sectoral and intra- sectoral linkages will be vigorously pursued. Value addition will be
adopted as a strategy to boost domestic activities, including production,
employment and exports. By this policy, primary products from agriculture and
mining sectors shall be processed and possibly used as input for further production
before export or final consumption.
The potential of the informal sectors shall be harnessed to boost activities in the
real and services sectors of the economy. Enhanced availability of credit, improved
technology and extension services shall be employed to buoy informal sectors
activities. State and local governments shall be encouraged to adopt measures for
the integration of the informal sectors into the mainstream of economic activities.
CHAPTER 3
SPECIFIC DIRECTION
3.1 REAL SECTORS
The real sectors, as used here, consist of agriculture; manufacturing; steel; water
resources; environment; science and technology; tourism and mining and quarrying
which is made up of solid minerals and petroleum resources. These sectors have the
highest potential for achieving a broad-based economy. Their performance has been
unimpressive. This Government is determined to re-position them to play the role
expected of them. The specific direction and measures for the achievement of the
goals for these sectors are outlined below.
3.1.1 AGRICULTURE
Where We Are And Why
Agriculture remains the mainstay of the Nigerian economy in terms of national
output and employment generation. However, the potential of the sector was
neither fully developed nor realised. Agricultural practice was characterised by
peasant farming. The application of modem techniques, such as fertiliser and high
yielding crop varieties was fraught with problems. Motorised power accounted for an
insignificant proportion of farm power. Access to credit was also a serious constraint
to the growth of the sector. Farm loss was high, a minimum average of 10% of
harvest. In addition, growth was hampered by policy-induced distortions.
It is arising from the above factors that the agricultural sector's performance was
not very impressive. The output of the traditional cash crops such as cocoa,
cotton, rubber; groundnut and palm produce dwindled continuously over the last
three decades while production of livestock also fell. There was a discrepancy in the
growth rates of foodstuff production and Population to the extent that Nigeria
became a net importer of food. For instance, between 1992 and 1997 alone, Nigeria
imported rice to the tune of699,054 tonnes while about 1,068,802 tonnes of wheat
was imported during the same period.
Laying A Solid Foundation
The present Administration accords the topmost priority to agricultural development,
due to its pivotal role in the economy. Since May 1999, it has critically examined the
status of the sector, identified key areas, and outlined specific measures to achieve
Nigeria's aspirations for agriculture. Such measures outlined, some of which are
already being executed, include the revival of the Strategic Grains Reserves and the
reintroduction of Guaranteed Minimum Price System.
Where We Want To Be
Sectoral Objectives
Nigeria's basic objective for the agricultural sector is to achieve a substantial
turn-around of the sector to adequately play its proper pivotal role in:
i) food supply;
ii) employment creation;
iii) poverty reduction;
iv) supply of raw materials to industry; and
v) achieving a diversified economy.
Specific Targets and Action Plans
The following targets
Administration's tenure is set for accomplishment during this tenure:
a) Fadama Development
150,000 hectares of Fadama land with adequate washbores tubewells and
irrigation pumps
b) Industrial Crop Production
Incremental annual production of:
i) 6 million seedlings of oil palm for 400,000 ha;
ii) 26 million seedlings of cocoa for 25,000 ha;
iii) 9 million budded stumps of rubber for 25,000 ha;
iv) 10,000 tonnes of cotton seed for 400,000 ha;
v) 2 million tonnes of groundnut seed for 50,000 ha; and
vi) 2 million seedlings of cashew for 26,000 ha.
c) Livestock Production
i) Development of 7 cattle breeding centres and 37 settlement centres;
ii) Restock:
- 4 breeding and multiplication centres; and
- 5 small ruminant breeding and multiplication centres.
d) Fisheries Production
Establishment of at least one hatchery per state for fingerling production.
e) Credit
Provision of an investment revolving fund through the
Nigerian Agricultural Cooperative and Rural Development
Bank to the tune of N5 million per local government area.
How To Get There
Government will provide the conducive environment for the private sector to
operate. This will be done in the form of provision of incentives to encourage
farmers as well as sensitisation through promotional and awareness activities and
the provision of infrastructure. The specific measures to be adopted include
modernising agricultural production, processing, storage and other practices through
new and improved technology and improved seedlings. Other measures include:
i) improved provision of inputs such as fertilisers, pesticides, insecticides and better
storage facilities;
ii) encouraging local fabrication of farm machinery, equipment and spare parts;
iii) encouraging private sector establishment of seed multiplication centres, fingerling
hatcheries, livestock breeding and multiplication centres, pest and disease control
centres, etc;
iv) development of simple processes and agricultural machinery and industry;
v) encouraging state and local governments to develop grazing reserves and stock
routes and the provision of other support services to farmers;
vi) encouraging and assisting farmers' associations and ensuring their involvement in
the management of farmers' incentives;
vii) ensuring better and easier delivery of credit to farmers, especially through the
restructured development finance institutions;
viii) encouraging and assisting the unemployed to go into agricultural activities;
ix) revival of the Strategic Grains Reserves Programme, reintroduction of Guaranteed
Minimum Price System and sensitising state governments to revive their buffer stock
facilities;
x) encouraging each state government to concentrate on at least one crop for
massive and intensive production within the state;
xi) massive expansion of agricultural extension services; and
xii) promotion of proper land use and management.
3.1.2 MANUFACTURING
Where We Are and Why
The manufacturing sector was characterised by:
i) low capacity utilisation which averaged 30% in the last decade;
ii) low and declining contribution to national output, which averaged 6% from 1997 -
1999;
iii) declining and negative real growth rates;
iv) dominance of light assembly type consumer goods manufacture;
v) low value-added production due to high import dependence for inputs;
vi) prevalence of unviable state-owned enterprises;
vii) accumulation of large inventories of unsold finished products; and
viii) dominance of sub-standard goods which cannot compete internationally.
The deplorable condition of the manufacturing sector was due to a horde of factors
principal amongst which are:
i) lack of an enabling environment, which included:
a) policy and polity instability;
b) poor macroeconomic environment;
c) Bureaucratic bottlenecks; bureaucratic bottlenecks;
d) poor legal environment which could not guarantee property right and safety;
e) lack of good governance;
f) corruption; and
g) low commitment of past governments to industrial development;
ii) poor and inadequate infrastructure;
iii) poor implementation of incentives to manufacturers, including export incentives;
iv) policy errors of the past;
v) low access to investible funds due to underdeveloped long-term capital market
that match industrial projects' needs;
vi) prevalence of obsolete technology;
vii) dearth of foreign investors and capital due to unfavourable environment;
viii) inadequate domestic demand;
ix) massive dumping of substandard products that are smuggled into Nigeria; and
x) inefficient institutional framework.
In the light of the above, for the past two decades, Nigeria was qualified as a
country experiencing de-industrialisation.
Laying A Solid Foundation For Industrial Development
Achieving rapid and sustained industrial growth is not a sector specific issue. A
multi- sectoral programme that involves both the private and public sectors has to
be adopted. The Obasanjo Administration is strongly committed to the industrial
take-off of Nigeria. It is therefore putting in place the necessary environment for
industrial growth. Such necessary ingredients as good governance and a truly
democratic structure that is based on the
rule of law and respect for property rights are the foundation of the Administration's
industrial game plan. In this direction, the law enforcement agents are being
adequately equipped to enforce laws and maintain peace. The judiciary is also being
revitalised to perform its role.
Peaceful resolution of conflicts in this multi-ethnic nation is being practised. The
Anti-Corruption Bill, meant to track and deal with corruption at its base, has been
passed into law; while other industrial development-inhibiting environmental
problems that relate to the attitude of public officers are being addressed through
various measures, including staff re-orientation, training and institutional
restructuring.
The poor macroeconomic environment is being addressed through fiscal prudence,
transparency and the pursuit of minimal deficits. More improvement in the fiscal
process is to be achieved also by the implementation of the recommendations of a
committee that has examined the budgeting process. The Administration is
addressing the dearth of foreign investors from multiple angles, viz.:
i) reaching agreement with Bretton Woods institutions and
creditors on Nigeria's debts;
ii) deliberately wooing investors to Nigeria;
iii) global information dissemination to investors on opportunities
and potentials for investment in Nigeria; and
iv) amendment of laws inhibiting competition and foreign investment inflow.
Sector specific measures to address constraints to industrial development in areas
such as energy crises, infrastructural development and public enterprise, among
others, have been madeto revitalise the sector and are outlined in the relevant
sections. The specific efforts in the manufacturing sector to revitalise industry
include a review of past developments that led to the current situation and the
review of the current status. An "Industrial Blueprint" which outlined measures to
move the sector forward has been produced.
Where We Want To Be
Sectoral Objectives
The basic objective of the present Administration for the manufacturing
sector is to make it the engine of growth. In this wise, the transformation of
the economy from predominant dependence on primary products to reliance
on industry for sustenance is the ultimate goal. Specific elements of the goal
include:
i) enhanced contribution of industry to national output;
ii) enhanced contribution to foreign exchange and government revenue
earnings; and
iii) significant contribution to poverty reduction.
The sector is also to be relied upon to play the lead role in broadening the
productive base of the economy through increasing inter- sectoral and
intra-sectoral linkages as well as stemming rural-urban drift. The adoption of
a policy of value-added production and exports shall be used as the means
for achieving elements of the goals.
Sectoral Quantitative Targets
The specific quantitative targets for the manufacturing sector include:
i) increasing the contribution of the sector to national output
from 5.86% in 1999 to 12% by 2003 and to at least 24% of national output
by 2010;
ii) increasing the contribution of the sector to total employment to 10% by
2003 and to 30% by 2010;
iii) increasing industrial capacity utilisation from 30% in June 1999 to 65% by
2003;
iv) meeting 50% of domestic demand for basic consumer goods by 2003;
v) attaining at least 80% compliance by large and medium scale enterprises to ISO
9000 and ISO 14000 series of quality management by 2003; and
vi) increasing private sector share of investment in industry to 70% by 2003.
How To Get There
In order to achieve the objectives and targets outlined above,
Government would consolidate on the efforts made since May 1999.
In addition, the following strategies and measures would be adopted:
i) launching and consistent implementation of the Strategic Industries Manufacturing
Initiative, which would ensure the diversification of the manufacturing base;
ii) reviewing of all state-owned enterprises for the purpose of completing the viable
ones, expansion where necessary and/ or refurbishment, rehabilitation and removal
of bottlenecks as necessary;
iii) enabling privatisation to follow value addition efforts in (ii) above;
iv) codification, proper implementation and/or review of incentives including those
for rural industries that shift resources to manufacturing, with a view to enhancing
export production and value addition and for the promotion of SMEs and exports;
v) institutional strengthening and restructuring to adequately perform their roles,
including the provision of infrastructure to industrial estates, the energising of IDCs,
etc;
vi) establishment of the Small and Medium Scale Industries Development Agency
(SMIDA), to promote and address the problems of the SMEs;
vii) strengthening of the interface between research and industrialists and
commercialisation of research findings;
viii) sourcing of technical assistance to assist industrialists in the areas of
technology and other capacity building;
ix) intensification of economic diplomacy to attract foreign investors; and
x) rationalisation and strengthening of the development finance institutions, further
strengthening of the capital market and promotion of venture capital.
In addition, other fiscal, monetary, trade and income measures as well as
infrastructural provision and revival, would be employed for the achievement of the
set targets and objectives.
STEEL
Where We Are And Why
The high priority accorded to steel development by successive administrations in the
country arose from the expected role that it was to play in the broadening of the
productive base of the economy. It was meant to supply basic inputs to industry as
well as form the market for minerals such as iron ore, bauxite, petroleum coke and
pitch, soda ash and calcium fluoride. However, the steel sector performed very
poorly and failed to play the expected rote.
It is worth noting that Government's involvement in operations in this area of the
economy did not improve the fortunes of the sub-sector. For instance, the
construction of the Ajaokuta Steel Plant has gone on for about two decades
without completion. Even the Delta Steel Plant and the three steel rolling mills that
were completed since 1982/83 have not been able to play the expected role. They
were non-functional from 1996 to 1999. When they were operational, they
functioned at very low capacities.
In the area of aluminium, the Aluminium Smelter Plant at Ikot Abasi, jointly owned by
the Federal Government and some foreign private operators, was under construction
for about a decade. It went into partial operation for about a year and half before
shutting down.
The poor performance of the steel sub-sector is attributed to poor planning and
implementation of projects in the sub-sector, inadequate infrastructure,
mismanagement, low staff morale due to non-payment of salaries, poor maintenance
of equipment, high debts and the inability of firms to access funds from the money
and capital markets.
Laying A Solid Foundation
An Inter-Ministerial Committee on National Steel Development, meant to examine the
status of ongoing projects in the sub-sector, proffer recommendations on the way
forward and draw up a programme of implementation, has been constituted. This
Government has commenced action on the technical audit of the Ajaokuta Steel
Plant while private sector investors have been invited to participate in the
reactivation of the Delta Steel plant. In the area of aluminium, the implementation of
a package for the reactivation of the Aluminium Smelter Plant, Ikot Abasi, has
already started.
It is expected that the completion of the on-going construction work on the
Itakpe-Delta Steel rail line will greatly enhance activities at the Delta Steel Plant
when fully completed.
Where We Want To Be
Government wants to achieve a turn-around of the steel sub-sector so that it can
play the pivotal role expected of it by enhancing inter-sectoral linkage to broaden
the productive base of the economy.
How To Get There
Government is to complete the revision of the projects in this sub-sector; with a
view to their completion where viable or expansion or rehabilitation and reactivation
as desired.
Unviable projects will be dealt with in a manner that minimises loss to the nation.
Privatisation will be the major strategy to be employed in this sub-sector. All the
steel plants and rolling mills will be prepared for privatisation. The same applies to
mining companies and the smelter plant. Infrastructure will be provided as desired to
enhance capacity utilisation and value for privatisation. In addition, Government is
to:
i) encourage the development of linkage sectors to steel and aluminium activities;
engage in regular consultation with the private sector; and
iii) formulate a national policy on alumimum.
3.1.4 MINING AND QUARRYING
3.1.4.1 SOLID MINERALS
Where We Are and Why
The Department of Geological Survey, established by the colonial Government in
1919, did extensive work in exploration, identification and evaluation of solid
minerals in Nigeria. The Department established the proven reserves of many
minerals and much activity in exploration for export was carried out. However; the
fortunes of the solid minerals sub-sector declined significantly following the rising
profile of crude petroleum in the 1970s. Mine sites were abandoned as crude
petroleum provided cheaper sources of energy and government revenue.
Consequently, infrastructure at mine sites deteriorated due to neglect. The enabling
environment to make the sub-sector attractive was lacking. The sub-sector
remained largely undeveloped and awareness on solid minerals potentials, their
location and use remained very low. Information on the proven reserves of most
minerals was difficult to come by as it was either outdated or non-existent. In these
circumstances, illegal mining thrived. The country's manufacturing sector was
compelled to depend on the importation of minerals that Nigeria has in abundance.
Laying A Solid Foundation
Efforts to give solid minerals development a new lease of life led to the
establishment of the Ministry of Solid Minerals Development in 1995. The following,
among others, are measures taken to enhance the development of the sub-sector
since May 1999:
i) Government has approved a new National Policy on Solid Minerals Development;
ii) most of the outdated laws and regulations have been updated;
iii) a computerised database on Nigeria's solid mineral resources is being developed;
iv) a National Consultative Forum on solid Minerals Development has been
established; and
v) more effective measures to check illegal mining activities are being worked out.
Where We Want To Be
Objectives
The objective for the sub-sector is the achievement of an orderly development of
the nation's mineral resources to achieve optimum benefits from their production and
use in terms of enhanced economic growth and improved human welfare. The
specific elements of the objective include enhanced contribution to employment
generation, government revenue and foreign exchange earnings. The sub-sector is
also to play a major role in the effort to broaden the productive base of the
economy through its linkage effects.
Sectoral Targets
The specific targets include:
i) reclaiming and putting to use of over 90% of the mined out lands by 2003; and
ii) achieving self sufficiency in the production of road grade asphalt.
How To Get There
Broadly, Government is to create an enabling environment for the private sector to
develop the enormous resources in this sub - sector.
this direction, incentives to attract investors will be put in place. Specific actions to
be taken include:
i) measures to boost domestic demand, ensure value addition and provide relevant
information to investors;
ii) More effective measures to check illegal mining;
iii) institutional reorganisation and strengthening to effectively perform the role of a
facilitator and catalyst;
iv) carrying out environmental impact assessment to curtail the adverse effects of
operations on local communities;
v) provision of necessary central infrastructure;
vi) infrastructural rehabilitation and reactivation;
vii) production of Nigeria's geological map of 1:50,000 for prospective investors by
2001; and
viii) privatisation of some of the sub-sector's activities.
3.1.4.2 PETROLEUM RESOURCES
Where We Are And Why
Nigeria has high potential in the oil and gas sector to play a lead role in the supply
of petroleum products to the African market. Daily crude oil and associated gas
production stood at 2.03 million barrels and 2.5 billion standard cubic feet,
respectively, by April, 2000. Total crude oil and natural gas proven reserves stood
at 27 billion barrels and 120 trillion standard cubic feet during the same period.
Downstream, Nigeria has four refineries with a daily production capacity of 445,000
barrels, a pipeline network of over 5,000km, 21 storage depots and 9 liquefied
petroleum gas depots.
Despite the potential and level of investment, the performance of the petroleum
sector in the last few years was unimpressive. Petroleum products shortages leading
to long queues at filling stations became a way of life in Nigeria, a petroleum
exporting country. Crude oil and gas exploration, production, refining a d distribution
was constrained among others, by:
i) frequent communal strife, occasioned by neglect of the host communities by past
Governments and oil producing companies which disrupted production activities;
ii) untimely and inadequate funding of production activities by Government, leading
to cash-call arrears that ran into billions of dollars;
iii) large scale gas flaring estimated at 2 billion standard cubic feet per day out of a
total daily production of 2.5 billion standard cubic feet, due to the absence of
effective gas utilisation programmes;
iv) inadequate incentives to mobilise operators to increase activities; and
v) unstable terms of business and policy environment.
The downstream activities were characterised by:
i) epileptic and inadequate supply of products leading to adulteration and other
sharp practices and hardship to Nigerians;
ii) low capacity utilisation by refineries which increased the unit cost of operations;
iii) poor infrastructure in refineries;
iv) inadequate price margin to take care of design, maintenance and operations
costs; and
v) products smuggling especially to neighbouring countries.
The major reason for the poor supply situation was the failure to carry out
Turn-Around-Maintenance (TAM) of the refineries and pipeline systems as and when
due. The TAM of the refineries due in 1994 was not carried out. Worse still, the
contracts for TAM were awarded to firms that did not possess the requisite
technical competence for the jobs. The situation was worsened by the cut in the
quantity of crude oil allocation to refineries from 320,000 barrels per day to 250,000
barrels per day. It is saddening that while the present Administration is making all
efforts to redress the deplorable situation it inherited, pipeline vandalisation
assumed an alarming proportion that threatens petroleum products supply in the
country.
Laying A Solid Foundation
The restoration of the petroleum sector to normalcy has been given top priority by
the present Administration. Decisive steps were therefore taken to address the
problems of the sector. The major steps taken include:
i) appointment of a new management for NNPC and its empowerment to function
effectively;
ii) adequate budgetary provision for upstream activities and discussions on the
liberalisation of the downstream activities;
iii) introduction of alternative funding programmes to address the need for adequate
exploration upstream;
iv) articulation of a gas utilisation programme;
v) addition of nearly one billion barrels to the nation's proven reserves within one
year in office;
vi) expansion of the LNG project and delivery of a cargo from the LNG project;
vii) establishment of strategic reserve programme to respond adequately to
emergency situations;
viii) rehabilitation, refurbishment and repair of the refineries as well as, monitoring of
the products pipeline system; and
ix) restoration of adequate petroleum products supplies to the economy.
In addition, measures to improve the workings of the Joint Venture arrangements
are being evolved. Various committees have been t up, including a 25-man Reform
Committee to m e recommendations on required reforms and restructuring for a
better performance of the sector. The presentation of the Niger Delta Bill which
addresses the problems of marginalisation of the oil producing communities, to the
National Assembly was also a major effort to address one of the most serious
problems affecting the petroleum sector.
The present Administration is doing its best to get the possible maximum returns
from the poorly awarded contracts for the TAM of the refineries by previous
regimes. But it is worth noting that the carry-over problems from previous regimes
especially as related to the TAM of the refineries are still serious constraints on
efforts of the present Government. The conditions of the refineries made them
highly vulnerable to accidents, which necessitated frequent shut down for repairs.
Where We Want To Be
Government aims at ensuring the growing of Nigeria's share in the world petroleum
market. The Administration plans to make Nigeria the hub of the petroleum market in
West Africa. Availability of petroleum products on a sustained basis nation-wide and
creation of outlets for gas are key elements of the objective. Government aims at
obtaining maximum benefits from the exploration and utilisation of petroleum
resources of the country. Enhanced employment generation, government revenue
and foreign exchange earnings are the critical elements of the objectives for this
sector.
The specific targets for the sector include:
i) increasing Nigeria's crude oil reserves from 27 billion barrels
in 2000 to 30 billion barrels by 2003 and to 40 billion barrels
by 2010;
ii) increasing the daily production of crude oil to 3 million barrels by 2003 and to 4
million barrels by 2010;
iii) reduction of gas flaring by 50% by 2003 and complete extinguishing of gas flaring
by 2008; and
iv) equation of revenue from gas with that from oil within four years of this
Administration.
How To Get There
Government will adopt measures that will make the petroleum sector internationally
competitive to attract investors and solve the problems of the sector. Gas will be
made a preferred source of energy in Nigeria. Specific measures and strategies
include:
i) exploring alternative funding sources, such as production sharing contracts and
other arrangements that reduce financial strain on Government;
ii) packaging of incentives to sustain competition and encourage investment;
iii) continued refurbishment, rehabilitation and expansion of the existing refineries,
pipelines and depots as necessary steps towards the implementation of the sector's
privatisation programme;
iv) reviewing existing incentives to sustain competition and encourage investment,
in addition to an improved Memorandum of Understanding (MOU) acceptable to all
stakeholders in the industry;
v) encouraging investors to establish more gas-based projects and refineries;
vi) encouraging more indigenous participation in the oil industry;
vii) deregulation of the petroleum products market;
viii) adoption of strict measures to address pipeline vandalisation and products
stealing;
ix) establishing a well defined programme for maximum cooperation between oil
communities and operating companies through the effective implementation of the
Niger Delta Development Bill;
x) faithful implementation of the West African Gas Pipeline project;
xi) substantial domestication of oil technology via measurable policy programmes;
xii) adopting policies to increase local content and value addition in the oil industry;
xiii) calculation of and collection of tax payable by the Joint Venture Companies to
be co-ordinated between NNPC, Federal Inland Revenue Service and the Central
Bank of Nigeria, to ensure full realisation of tax revenues; and
xiv) establishing a national archive centre.
3.1.5 WATER RESOURCES
Where We Are And Why
Nigeria has about 267.3 billion cubic meters of surface water and 52 billion cubic
metres of underground water annually. With proper harnessing, these can satisfy all
the agricultural and other water needs of the country. In terms of investment, from
1976 Nigeria established 12 River Basin Development Authorities to ensure the
optimum development of its water resources. Unfortunately, despite the potential
and the huge investments, our needs were unsatisfied, as less than 10% of our
water resources were effectively exploited annually.
In terms of water supply, only 30% of rural dwellers and 50% of the urban
population have access to potable water. State governments
did not provide infrastructure to extract and treat water for reticulation where
available.
In the area of irrigation, the capacity utilisation of dams was below
30%. Facilities at most of the existing dams were in a poor state.
Large reservoirs of water lay idle due to incompleteness or lack of
downstream infrastructure for irrigation.
In addition, pressure on underground water resources led to the lowering of the
water level in some aquifers. This resulted in saline incursion into coastal aquifers.
Soil erosion, policy inconsistency and under funding were critical factors that
inhibited water resources development.
Laying A Solid Foundation
The present Administration, determined to achieve optimum benefits from the
nation's water resources, took the following decisive actions since assumption of
office in May 1999:
i) stocktaking to ascertain prevailing situation;
ii) institutional restructuring and managerial re-focusing;
iii) sensitising and bringing stakeholders together to discuss how to fully mobilise
resources for improved water supply;
iv) design of an optimisation plan which is still being processed;
v) updating of the National Water Resources Master-plan;
vi) improving the instrumentation of hydrological stations; and
vii) commencing efforts in the physical rehabilitation and development of dams
including downstream activities.
Where We Want To Be
The present Administration has a policy of providing universal access to safe
drinking water and adequate sanitation. In this direction, this Government aims at
creating the enabling environment for access to safe water supply and adequate
sanitation for all Nigerians by 2025. Government also aims at the optimum utilisation
of water resources for enhanced and sustained economic growth. During the tenure
of this Administration, 18,000 water points per year are to be constructed in the
rural areas. The availability of rural water supply is to increase from its current level
of 30% to 50% of the population by 2003.
How To Get There
A participatory approach, involving all stakeholders, including the three tiers of
government and the private sector; will be adopted in the development of water
resources and the provision of water. Government intends to consolidate on the
foundation laying efforts to r
(1833150123)
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