There is a saying that every challenging situation presents tremendous opportunities for far-reaching solutions. As Nigeria passes through a difficult economic phase, we have chosen to tackle the issues head on, taking into cognizance the lessons that must be learned from the past.
There is no doubt that in a developing economy such as ours, private capital is crucial. This is why in the Ministry of Industry, Trade and Investment’s diversification and growth plan (otherwise known as the MITI Plan), our strategic focus is partnering with private and development capital to mobilise resources for growth.
Private partnership
The challenge in every economy is that of infinite demands and finite resources. Given the limited resources of government, the MITI Plan, and indeed the overall approach of the Nigerian government to diversification and growth, is based on partnering with the private sector.
There are three core enablers in our policy framework for partnering with the private sector: creating a business-friendly environment; ensuring coherence between monetary, fiscal and structural reform policies so that the overall economic policies of government are well coordinated and targeted at the common purpose; and provision of hard and soft infrastructure for growth.
It is one thing to have ideas, however. It is another to implement them. We have therefore proceeded with the necessary steps to ensure that our vision is realised.
On the business environment, our president, Muhammadu Buhari, has approved the establishment of the Presidential Enabling Business Environment Council. The Enabling Business Environment Secretariat has been set up, experts and technical consultants to support the team have been constituted and the former prime minister of Georgia, Nika Gilauri, is on board to offer support.
The global perception, and indeed the reality, is that our country is a tough environment in which to do business. We must change this negative perception! Positive perceptions will restore confidence, and attract investors/capital, technology and best practices. Some of the much-needed interventions include: establishment of a single window and simplifying the process for registering businesses, obtaining land titles, expedited clearance of goods from ports, obtaining visas and payment of taxes, among others.
Based on this enabling environment and ease of doing business initiative, our goal is that Nigeria should work hard to move up at least 50 places in the World Bank Doing Business rankings in the next couple of years.
Manufacturing growth
Second, the Nigerian Industrial Revolution Plan (NIRP) broadens the scope and accelerates the growth of the manufacturing industry. In order to accelerate diversification and channel resources to sectors where we have a comparative advantage, the NIRP prioritises agro-allied businesses, cotton, textiles and garments, light manufacturing, petrochemicals and automobile assembly and production, which are based on the National Automotive Industry Development Plan.
Start-up work on the policy has commenced. Implementation of the action plan on textiles and garments is ongoing while a roadmap has been developed for the production of tomatoes.
Special economic zones (SEZs) and industrial parks are critical to the successful implementation of NIRP. Pre-development studies on six pilot SEZs in Nigeria, to world-class standards, commenced in December 2016. The ministry, through the Nigeria Export Processing Zones Authority, is working with a world-class team of experts from China. Afreximbank and China Exim Bank have committed $1bn to the project.
Thinking small
Third, micro, small and medium-sized enterprises (MSMEs) are being prioritised for job creation. MSMEs will contribute enormously to the acceleration of domestic economic activity, innovation and wealth creation. We have to intensify implementation of much-needed support for these entities in various ways. One form of support would be access to financing. But SMEs also require support through connecting them to regional and global value chains for the export of their products.
We have identified 23 cluster areas, termed industrial development centres, which will support MSMEs with capacity development. We also launched the business innovation and growth platform, with World Bank funding to provide support and capacity training for MSMEs. This will come in the form of grants, matching funds and technical support.
Trade boost
Fourth, trade and investment are engines for growth. The Economic Community of West Africa States (Ecowas) market and the ongoing negotiations to create the Continental Free Trade Agreement for Africa will expand the markets into which Nigerian manufacturers and providers of service can export. Nigeria is a big market of 170 million people. But we must now strategically seize the opportunities for growth in the 300 million Ecowas market and the continent-wide market of 1.2 billion people, of which more than half are under 18 years of age.
Intra-African trade represents only 12% of the country’s total trading activity. Nigeria needs to improve its trade within Africa. As part of the MITI Plan, we are initiating strategic 21st century free-trade agreements to steer those economies and investors that seek market access to the Nigerian economy to undertake long-term strategic investments with the location of industries, assembly and manufacturing plants in Nigeria, as part of the connection to regional and global value supply chains. The MITI Plan for diversification and growth focuses heavily on linking trade and investment.
A smart response
Finally, to accelerate growth and modernise the Nigerian economy, the MITI Plan is developing a digital-led growth strategy for the Nigerian economy, the Smart Nigeria Digital Economy Project. The objective of this project is to solve efficiency problems and create leap-frog opportunities in the economy, improve competitiveness and foster technology development and innovation more generally.
The Smart Nigeria Digital Economy Project is our response to an area of intense economic and technological activity by young Nigerians, where there is a growing pool of talent. It is a sector of the economy where the private sector already has ownership. The role of government would therefore be to ensure a sound soft regulatory environment and hardware infrastructure to foster the rapid growth of this area.
The potential gains of the digital economy will be manifest in sectors such as financial services (for example, in digital accounts, payments, mobile money), in health and educational services and other sectors of the economy. To imagine the gains that can come from the digital economy, a recent study by McKinsey Global Institute estimates that widespread use of digital financial services alone can add $88bn and create more than 3 million new jobs over the next 10 years in Nigeria. But these gains will not happen by themselves.
It is imperative to say that there are critical drivers for growth, namely energy, agriculture, and manufacturing. Our plan for diversification and growth depends and rests on these critical drivers. An adequate and stable power supply is essential for industrialisation. Agricultural productivity must be scaled up to ensure food security and provide the inputs for agro-processing that is plugged into agricultural value chains. Manufacturing is central to job creation, technology transfer, new ideas and innovation.
Given that the economy is a system where everything is connected, what the MITI Plan seeks to do is to establish synergy and connectivity across different sectors on a foundation of an attractive business environment.
Dr Okechukwu Enelamah is Nigeria's minister for industry, trade and investment.
