Struggling to grow the economy, create jobs
In the last one year, the Goodluck Jonathan administration has tried, but unsuccessfully to grow the economy and create jobs for millions of skilled Nigerians, Deputy Business Editor SIMEON EBULU writes
Today makes it exactly one year since Dr. Goodluck Ebele Jonathan took the oath of office as president of Nigeria. In his inaugural speech, Jonathan seemed aware of the task ahead. He spoke about the problems facing the economy, the lack of jobs for skilled Nigerians and the epileptic nature of public power supply. Expectedly, he promised to make all these things of the past. One year after, some are of the view that things have become worsened; others argue that it is all motion without movement; and some others have said one year is too short to expect the president to solve problems that accumulated over the past decade. Something, however, seems clear in all the opinions: there are problems waiting for the economy management team led by Dr. Ngozi Okonjo-Iweala to solve.
The former President, Institute Of Directors, Dr. Olusola Dada, said unemployment remains a sore point of this administration, and regretted that government has not done enough yet. He challenged the administration to tackle the menace, saying the increasing level of unemployment, especially among the youth is unacceptable.
The Minister of Trade and Investment, Olusegun Aganga, who has been an ardent crusader of the job creation policy of the administration, believes the administration is not sleeping o the matter. In pursuing the goal of getting Nigerians employed, the Federal Government is seeking collaboration with the private sector and other critical segments of industry to make the jobs available, especially as they affect the youth, whose unemployment rate at the moment, is considered unhealthy. Over the past one year, the minister has used every fora to drum support for this project, advocating that a viable and thriving Small and Medium Enterprises (SMEs) regime is better suited to drive the initiative.
At a meeting with the SME Desk Managers of the various financial institutions, he said the best way to checkmate the increasing rate of unemployment is to have a virile Micro, Small and Medium Enterprises (MSMEs) sub-sector of the economy, adding that in the developed economies, such as the United Kingdom, SMEs are the major employers of labour.
Aganga said: “In the United Kingdom, their job creation strategy is heavily focused on SMEs. The assumption is that if they have four million SMEs and about half of those four million create a job every year, two million jobs will be created easily,” he said, adding that if only about a quarter of the 20 million SMEs in Nigeria create one job a year, that would mean about five million jobs created.
Aganga said in the past year of the Jonathan’s administration, the results of new SMEs’ policies and schemes, in terms of job creation, have shown that given the necessary support, SMEs could provide the foundation for sustainable growth and poverty alleviation in Nigeria. He added that the government plans to remove the major barriers to SMEs growth, such as access to affordable finance, low level of business support and high cost of operations, so as to boost the development of the sub-sector.
He observed that Micro, Small and Medium Enterprises remain the backbone in developing the economy and the driving force of national growth. He disclosed that there are currently about 17 million MSMEs, employing over 31 million Nigerians, saying they account for over 80 per cent of the total number of enterprises in Nigeria and employing nearly 75 per cent of the total workforce.
Aganga said the government is providing bailout funds to the real sector, such that credit to the sector is at single interest digit It is also compelling Ministries, Departments and Agencies to source their consumables locally so as to aid job creation.
He said as a key part of the industrial revolution embarked upon by the Federal Government, states, Ministries, Departments and Agencies will now be compelled to buy Made-in-Nigeria products in line with the local content provision for government procurement. He explained that the upward review of the local content of goods procured by government’s MDAs is aimed at increasing the productive capacity of local industries for job creation, wealth generation, and ultimately, economic growth and development.
He said government is looking at the list of things that are procured since the state is the biggest spender in the economy, so that the local manufacturers are adequately patronised.
Financial services sector
The thrust of government’s policy in this sector, in the past year, is the stability of the banking industry, as well as positioning it to play its pivotal role of driving the economy through provision of credit to the real sector. On both fronts, the sector has been found wanting. However, the industry’s regulator has been up and doing, churning out policies and regulations to reposition it.
In the course of the year, the Central bank of Nigeria (CBN), has continued on the path of its reforms, started in 2008. The reforms are aimed, among other objectives, to sanitise the sector and reposition it to fund manufacturing and drive the economy and consequently create jobs. In doing this, the CBN has resorted to direct funding, through the provision of bailout funds, to some critical sectors of the economy. These include manufacturing, SMEs and agriculture. For manufacturing and SMEs, the apex bank has made available N200billion.
The apex bank indicated that part of the objectives of the bailout is to fast-track the development of the manufacturing sector through improved access to credit by manufacturers; improving the financial position of banks, as well as increasing output. It listed other objectives as employment generation, diversification of the revenue base, increasing foreign exchange earnings and provision of input for the industrial sector on a sustainable basis.
Eligibility to access to fund
The guidelines for eligibility to access the fund released by the CBN states: “A borrower shall be any entity falling within the definition of an SME, or manufacturer; a legal business operated as a sole proprietorship and must be a member of the relevant Organised Private Sector Associations such as the Manufacturers Association of Nigeria (MAN), National Association of Small and Medium-scale Enterprises( NASME), NACCIMA, NASSI.”
The CBN has approved the investment of N500 billion Debenture Stock to be issued by the Bank of Industry (BOI).
It said in the first instance, N300billion would be applied to power projects and N200billion to the refinancing/restructuring of banks existing loan portfolios to Nigerian SME/Manufacturing Sector, adding that the guidelines are related to the N200billion re-financing and restructuring of bank loans to the manufacturing sector only.
New funding framework for agriculture
In no other sector, save banking and manufacturing, has the apex bank been more proactive than in agriculture. Over the past year, the CBN has restated its readiness to give its support to agric, as it sees it as a large employer of labour and a source of food supply and raw materials to industry.
In the mean time, the CBN has introduced a new financial model for the sector. Its governor, Sanusi Lamido Sanusi, called it the Nigerian Incentive–Based Risk Sharing System for Agricultural Lending (NIRSAL).
He explained that NIRSAL is a demand driven credit facility, as against the supply driven funding.
The Federal Government’s policy in reducing the number of its agencies at the ports from about 14 to seven, has improved on the number of days spent on cargo clearance.
Before the policy was introduced by the President early in the year, it took importers about 30 days to clear their goods. But with the new policy, the cargo clearance time has reduced to seven.
Operators said they are happy because the policy has impacted well on their businesses.
The President, National Association of Nigerian Licensed Customs agents (ANLCA), Alhaji Olayiwola Shittu, said, although the policy was long over due, its implementation brought appreciable relief.
“The unnecessary delay caused by the huge number of government agencies at the ports before they were streamlined by the President, caused untold hardship to many importers and clearing agents. The President behaved responsively by reducing their number,” Shittu said.
Another good policy of the government is the dredging of the Lagos channel to over 13.5 meter draughts which has made it possible for large vessels to call at the Lagos ports.
Before the current efforts, only small vessels that could carry more than 1,000 containers called at the port. With the dredging, large vessels that carry up to 4,500 containers have started calling at the ports and allowing Nigeria to benefit from the economies of scale.
Importers of second hand vehicles also said they are happy about the increase in the age limit of vehicles that can be imported into the country. Before the policy was introduce, only vehicles under 10 years could be imported. But with the policy in place, vehicles above 15 years are allowed.
Also, the Nigeria Custom Service (NCS) has introduced a new policy guiding importation of vehicles into the country, to block revenue leakages, as the service said it generated over N800billion last year.
The new policy requires all shipping companies to indicate the chassis number and the year of manufacture of all imported vehicles on their manifests to be submitted to Customs for proper declaration. Stakeholders agree that the policy will curb corruption at the ports.
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