As many may know, the Nigerian economy received much attention and was recognised as one of the fastest-growing economies in the world between 2010 and 2014. Yet, when oil prices fell in 2014, the economy contracted and eventually slipped into a recession by 2016. The economy recovered from the recession and we witnessed 11 quarters of consecutive GDP growth since exiting the recession. The GDP grew from 0.8% in 2017 to 2.6% in 2019 but declined in the first quarter of 2020 to 1.9% and we entered another recession in the third quarter of 2020 as a result of the downward trend in global economic activities caused by the impact of the COVID-19 pandemic. The second quarter of 2020 resulted in a contraction in GDP growth to -6.1% and by the third quarter of 2020, a further contraction for the second time in 2020 at -3.6% indicated we were in a recession. Though we were in a recession, our experience was better when compared to some advanced and other emerging market countries. The United States and the United Kingdom experienced a contraction in GDP to -9.5% and -20% respectively in the second quarter of 2020 while the economy of India and South Africa experienced a contraction of -24% and -17% respectively in the same period. However, Nigeria’s GDP growth is expected to have a modest pickup by the first and second quarters of 2021.
To accelerate the recovery and growth of the economy beyond 2021, the Federal Government has approved and funded an export expansion facility. This will be used to promote export financing, export infrastructure (such as setting up of export warehouses), capacity development for exporters and to facilitate market access for exporters to regional and global markets.
In response to the challenges posed by the Covid-19 Pandemic, the FG developed the N2.3tn Economic Sustainability Plan, which consists of fiscal, monetary and sectoral measures to enhance local production, support businesses, retain and create jobs and provide succour to Nigerians, especially the most vulnerable. The ESP will provide different avenues of government support for micro, small and medium enterprises (MSMEs) to enable them respond to the economic challenges of COVID-19. This includes safeguarding about 300,000 jobs in 100,000 MSMEs by guaranteeing off-take of priority products; and a Survival Fund to support vulnerable SMEs in designated vulnerable sectors in meeting their payroll obligations and safeguarding jobs from the shock of COVID-19.
In addition, the FG through the Central Bank of Nigeria has provided a N1tn Intervention Fund for the manufacturing sector which will ensure a more resilient and self-reliant economy by ensuring funds are available to build a base of high-quality infrastructure.
The FG also set up the Nigeria Police Trust Fund to address issues of security of lives and property as a response to the security issues and challenges confronting the country. It has also approved the sum of N13.3bn for the take-off of the community policing initiative across the country, as part of the measures adopted to consolidate efforts aimed at boosting security nationwide.
Beyond our long-term vision of boosting local production, we must improve the ease of doing business in Nigeria. A common feature of developed markets is a high ranking in the World Bank’s Ease of Doing Business Index.
Nigeria recently moved up 15 places in the World Bank’s Ease of Doing Business Index as a result of the removal of several bottlenecks in government processes. Our efforts at further improving the ease of doing business in Nigeria is based on the implementation of the Presidential Enabling Business Environment Council’s four-year Business Environment Transformation Road map, which we believe will move Nigeria further up and maintain a rate of improvement of 10 places per annum to become a top 100 contender in 2023.
In order to turn this into reality, we’re focused on enhancing the efficiency of port operations, a critical step to securing a greater share of the global non-oil export market. The key initiative here is the implementation of the National Single Window Trade Platform project. The Federal Executive Council approved the setting up of a steering committee which is chaired by the Vice President. The steering committee will supervise the project and drive its delivery and implementation. As a member of the committee, I will play a key role to support the implementation of the Platform, such that, in 2021, E-customs and the National Single Window would be fully operational. As a result of this, we expect the collection efficiency of customs duties and the average time taken to clear goods to improve from 64% in 14 days to 90% collection efficiency in not more than 48 hours.
In addressing our infrastructure deficit, we are currently engaged with the Presidency to fast-track the development of productive infrastructure by directing the further easing of participation by the private sector in the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme, which will help in improving farm-to-factory-to-market networks, as the scheme will enable and encourage private sector participation in road construction and refurbishment.
We are also actively engaged with the Presidency on issues of fast-tracking the issuance of licences and resolution of issues in the Power Sector Eligible Customer Framework. We believe this will help in improving power supply as manufacturers and industries will be able to buy power directly from generation companies.
As part of growing and empowering the MSMEs, we must address the critical issue of financing to ensure that a target of 10 million MSMEs gain access to credit. In total, an estimated N658.7bn is required to fund 10 million MSMEs based on current trends of lending activity by the Bank of Industry. Clearly, this is more funding than government alone can provide, and we are actively exploring sustainable sources to deliver on this target.