It came with surprise and excitement when it was revealed last month that Nigeria’s economy officially came out of recession. Bloomberg and other international news platforms described it as “unexpected”. According to the National Bureau of Statistics, Nigeria’s GDP grew 0.11% in the three months from a year earlier, compared with a decline of 3.6% in Q3. The statistics made available showed Nigeria’s economy was returning to sustainable growth after two-quarters of contraction. Experts have equally opined that Nigeria may recover faster than expected.
In the words of Imo State Governor, Hope Uzodima, “while notable global economies, including the United Kingdom (UK), the United States of America (U.S.A), Japan, France, and Switzerland, among others, were still battling with COVID-19-induced recession, Nigeria was out of it due mainly to President Buhari’s hard work”.
Nigeria’s Economic Sustainability Plan (ESP) must have pulled the economy out of recession but can this tool keep the economy out of recession? Analysts have always maintained that the right policies are what is needed to advance or salvage any economy.
One of the highlights of Buhari’s administration is the Economic Sustainability Plan. Nigeria’s exit from recession reveals the success of the Nigeria Economic Sustainability Plan (NESP).
The Senior Special Assistant to the President on Media and Publicity, in the Office of the Vice President, Mr. Laolu Akande, corroborated this while briefing the media on ESP progress and reacting to the latest Gross Domestic Product (GDP) figures for the last quarter of 2020. Akande noted that right from the 2020 third quarter, the economy was already on a rebound. The presidential aide said the latest fourth-quarter figures showed that the economic recovery was steady:
“Like we explained late last year after the release of the third-quarter figures, the ESP, which was a calculated intervention by the Buhari Presidency, is driving the Nigerian economy in the right direction – upwards – and Nigerians can expect more because the administration is unrelenting in its determination to pursue the steady recovery and growth of our economy.”
The NESP was put in place by the Buhari-led administration primarily as a response to the challenges posed by the COVID-19 pandemic. It was developed in line with a consultation with cabinet ministers, heads of federal agencies, the Presidential Economic Advisory Council (PEAC), state governors, and the National Assembly.
The NESP was developed as a 12-month, 2.3 Trillion Naira ‘Transit’ Plan between the Economic Recovery and Growth Plan (ERGP) and the successor plan to the ERGP. The ESP includes several packages like MSME Survival Fund, Youth Fund, Mass Housing Programmes, massive Agric plan, solar installations, amongst others.
Vital parts of the ESP are the Micro and Small, Medium Enterprises (MSMEs). The Payroll Support Fund under the NESP was an adequate buffer for MSMEs against the impact of the COVID-19 induced recession. The president under this initiative reiterated that his administration was keen on the survival of MSMEs in the country as it provided adequate support to MSMEs, with staff salaries for 3 months.
Many individuals and businesses were beneficiaries of this initiative. As of December last year, 238, 868 individuals, employed by 41, 276 MSMEs across the country, benefited from the Federal Government’s Payroll Support Programme of the Survival Fund. The scheme was able to salvage many businesses which would have packed up or plummeted owing to the devastating impact of the COVID-19 pandemic. If this had been the case, it would have added to the deficit of the Nigerian business economy, thereby reducing the possibility of exit out of recession.
Presently, there are over 300, 000 beneficiaries of the scheme. 166, 000 verified artisans equally benefitted from the ESP under the Artisans’ Support Scheme, with a grant of N30, 000. The Payroll Support Program also helped loan restructuring and a moratorium for existing debt. Low-interest loans were awarded to several beneficiaries to boost local manufacturing and production across critical sectors, including but not limited to the pharmaceutical, aviation, hotels and the hospitality industry, private schools, road transportation, technology companies, and the creative industry.
A Guaranteed Offtake Scheme for MSMEs was also put in place by making the government a key purchaser of specific priority products made by MSMEs, like PPE, face masks, face-shields, processed food, pharmaceuticals, etc. This made these businesses thrive in a COVID-19 era, adding to the GDP of the economy.
In the same vein, the Survival Fund scheme under the NESP encouraged many existing and new businesses with free registration for their businesses with Corporate Affairs Corporation (CAC). Two months ago, the FG declared it had achieved the milestone of 100,000 business names registered free of charge. Registering these existing and new businesses brought them into the formal economy, with benefits for both the government and the businesses.
Recall that Osinbajo signed the Presidential Executive Order on Ease of Doing Business on May 18, 2016. This Order was aimed at improving businesses and attracting foreign direct investments (FDI) to Nigeria. This Order made it easy for Nigerians to register their businesses with the Corporate Affairs Commission (CAC). As a result of the Presidential Order, Nigeria moved up more than ten steps on the World Bank Ease of Doing Business Index since 2017.
Moreover, the ongoing ESP did well significantly in the areas of job and wealth creation just in the space of few months. The ESP did exceptionally well not just in the area of sustaining jobs but also providing employment which clearly contributes to the economic growth and development of a country. The Guaranteed Off Scheme and Artisan Support Scheme in this regard is commendable as workers were able to produce valuable goods and services locally, and in turn receive a wage, which they can spend on buying the goods produced.
Experts have also attributed Nigeria’s exit out of recession to the growing importance placed on the non-crude sector. Growth in agriculture and telecommunications has offset a sharp drop in oil production. The Buhari-led administration has stated his commitment to diversifying the economy. With oil hitting 65 dollars per barrel now, there will be resources for continuous diversification.
In looking at agriculture, the Nigerian government launched the Agriculture for Food and Job Plan (AFJP), a component of the Nigeria Economic and Sustainability Plan (NESP). The plan was designed to help mitigate the impact of COVID-19 on farmers and the economy, with over 1,100,000 smallholder farmer-beneficiaries in 36 states and the FCT on the Batch A list under six partners. These six partners include AFEX, BabanGona, Value Seeds, Universal, Thrive Agric, and Oxfam.
The recently launched Solar Power Strategy which focused on creating about 250,000 jobs is enabling about 5 million solar-home systems to be installed across the country. Under the Plan, the Central Bank of Nigeria (CBN) will provide structured loans to manufacture these Solar Home systems and many of them are assembled locally in order to promote business in the nation. As for the Mass Housing Programme, 1,500,000 jobs are expected to be created.
Pundits opine that sound economics is about seeking solutions that work or will work to lift the lives of the farmers, rural poor, MSME, youth, women, and the vulnerable who constitute the critical mass of the economy. Therefore, for the country to exit recession when other advanced economies are still neck-deep into recession attests to the meticulous economic management of the current administration. The fact that the Nigerian economy achieved this at such a high speed equally reflects the hard work, resilience, stamp, and competence of the current administration.
Economic analysts have nonetheless warned against complacency. In the words of Boingotlo Gasealahwe, an Africa economist, “The recovery is continuing, supported by easing OPEC production cuts and higher oil prices. That said, recurring waves of virus infection, naira devaluation, high inflation, and ongoing foreign-exchange shortages will continue to pose risks.”
It is evident that President Buhari is delivering on his campaign promises of reinvigorating the economy. The ESP has proven to be the best antidote for a recession and has the capacity to keep Nigeria out of it. The government has also kick-started Batch 2 of the Survival Fund which targets over 200,000 beneficiaries with about 45 percent of them being women and youth-owned businesses. Hopefully, with great consistency, economic recession will remain a thing of the past.