Home Business Full speech: AfDB President advises Buhari on Nigeria’s economic resurgence

Full speech: AfDB President advises Buhari on Nigeria’s economic resurgence

Dr Akinwunmi Adesina, President of the African Development Bank Group (AfDB), at the Mid-Term Ministerial Performance Review Retreat organised for members of the Federal Executive Council (FEC) in Abuja on October 11, 2021, spoke about what the Federal Government needs to do to ensure economic resurgence.

THANK you, Mr President, for inviting me as the Guest Speaker on the theme ‘Nigeria’s economic resurgence: Learning from the African experience,’ at this year’s Mid-Term Ministerial Performance Review Retreat.

As we meet today, the world continues to deal with the effects of the global COVID-19 pandemic. The pandemic has caused so many deaths and upended global economic growth. Due to COVID-19, Nigeria’s economic growth rate declined to -1.8 per cent in 2020. This mirrors the pattern across Africa, as the continent posted a -2.1 per cent growth rate in GDP, its lowest in two decades.

The African Development Bank responded rapidly in supporting African countries. We launched a $10 billion Crisis Response Facility to support countries. We provided $289 million in budget support to Nigeria. The GDP growth rate for the continent will recover to 3.4 per cent this year.

We project Nigeria’s economic growth rate will rebound to 2.4 per cent this year and reach 2.9 per cent by 2022. The recovery will depend on two critical issues: access to vaccines and tackling debt issues. Africa has only 2 per cent of its population vaccinated, compared to 54 per cent in the U.S and 75 per cent in Europe.

So, while developed countries are receiving booster shots, African countries cannot get basic shots. Nigeria must build quality health care systems that will protect its population, today and well into the future. Nigeria must also build world-class local pharmaceutical industries, able to effectively tackle the production of therapeutic drugs and vaccines.

Here is the lesson: Nigeria must revamp its local pharmaceutical industry and launch strategic investments for local vaccine manufacturing. Africa should not be begging for vaccines; Africa should be producing vaccines. The African Development Bank will invest $3 billion in support of local pharmaceutical industries in Africa, including in Nigeria.

Your Excellencies, Nigeria must decisively tackle its debt challenges. The issue is not about the debt-to-GDP ratio, as Nigeria’s debt-to-GDP ratio at 35 per cent is still moderate. The big issue is how to service the debt and what that means for resources for domestic investments needed to spur faster economic growth.

The debt service to revenue ratio of Nigeria is high at 73 per cent. Things will improve as oil prices recover, but the situation has revealed the vulnerability of Nigeria’s economy. To have an economic resurgence, we need to fix the structure of the economy and address some fundamentals.

Nigeria’s challenge is revenue concentration, as the oil sector accounts for 75.4 per cent of export revenue and 50 per cent of all government revenue. What is needed for sustained growth and economic resurgence is to remove the structural bottlenecks that limit the productivity and the revenue earning potential of the huge non-oil sectors.

Here is the lesson: Nigeria should significantly boost productivity and revenues from its non-oil sector, with appropriate fiscal and macroeconomic policies, especially flexible exchange rates that will enhance international competitiveness. Your Excellencies, Infrastructure is critical for unlocking the full potential of Nigeria’s economy.

Nigeria will need $15 billion a year for investment in infrastructure.

Financial innovations should be prioritized as governments alone cannot afford these huge financial costs.

The private sector should be given incentives to invest in infrastructure. The Federal Government’s 15 trillion Naira Infrastructure Fund is a good idea, so is the initiative for tax credits for private sector investment in infrastructure.

To be sustainable and more efficient, Public-Private Partnerships (PPPs) should be accelerated to finance major infrastructure across Nigeria. Nigeria’s institutional investors, especially the pension funds, should invest in infrastructure.

Governments can also implement ‘Infrastructure Asset Recycling’ models, where existing infrastructure assets on government books can be turned over to the private sector, freeing up financing for governments to invest in new infrastructure needs.

Here is the lesson: Sustainable financing approaches such as PPPs and infrastructure asset recycling will allow Nigeria to attract significant private sector investment into infrastructure.

Your Excellencies, This brings me to the issue of trade, investment, and competitiveness. The Africa Continental Free Trade Area presents a major opportunity for Nigeria. Consumer and business expenditures in Africa are projected to rise to $6.7 trillion by 2030. Significant support should be directed toward boosting industrial manufacturing capacities.

Nigeria should also move rapidly to the top of selected value chains, such as automobiles, computers and electronics, textile and garments, and food manufacturing, transport, and logistics.

Much will depend on the ports of Nigeria. According to the sector operators, the cost of exporting 100 tons of cargo in Nigeria is $35,000, compared to $4,000 in Ghana.

Today, the leading ports for West Africa are in Cote d’Ivoire, Ghana, Togo, and the Benin Republic. All these countries have modernized their port management systems, leaving Nigeria far behind. Nigeria can learn from Morocco’s world-class Tangier-Med port. The port is unique in that it is an industrial port complex and a platform that has over 1,100 companies.

They collectively exported over € 8 billion worth of goods in 2020. Companies located at the Tangier-Med port have allowed Morocco to move up the global value chains, including automobiles, automotive parts, aeronautics, agriculture and food manufacturing, textiles, and logistics.

Annually, over 460,000 cars are manufactured in the zone for exports. And more interesting is that the bulk of the human resources to do these are Moroccans. I took a walk at the Tangier-Med Port.

I actually thought they were on vacation, as I did not see people — just machines, hauliers, automated systems moving containers in what looked like a well-synchronised maze, with incredible efficiency. There were no kilometres of trucks waiting to get to the port.

Your Excellency, we should not be decongesting the ports in Nigeria, we should be transforming the ports. This must start with cleaning up administrative bottlenecks, most of which are unnecessary with multiple government agencies at the ports, high transaction costs or even plain extortions from illegal taxes, which do not go into the coffers of the government.

Here is the lesson: Nigeria should rapidly modernize and transform its ports. Ports are not there for revenue generation. They are for facilitating business and exports and stimulating industrial manufacturing, and the competitiveness of local businesses and exports. Your Excellencies, We must boost food security, reduce the price of food, and ensure greater competitiveness of the agricultural sector.

While I was Minister of Agriculture, we deployed a highly innovative mobile phone system to reach farmers with subsidized farm inputs, a program called ‘Growth Enhancement Scheme’ and the e-wallet system. To be clear, this was the first time in the world that such a system was deployed to reach farmers with subsidized farm inputs via mobile phones.

And it worked! It brought in transparency. It brought in accountability. It brought in all the major commercial banks.

More importantly, it delivered impressive results and led to massive food production. It reached 15 million farmers with high-quality seeds and fertilizers, right in their villages.

Nigeria’s food production boomed and expanded by an additional 21 million metric tons. The rice revolution started then, in Kebbi State and the Northwest, as we deployed innovative high-quality seeds of FARO 44 and FARO 52 rice, which we introduced to Nigeria from the Africa Rice Center.

I remember visiting the Hadejia Valley irrigation project in Jigawa State, as women farmers told me “thank you, Minister, we get our seeds and fertilizers right here via our mobile phones in our village and men cannot cheat us anymore”! I was elated.

Prices of food fell, as productivity went up. The ‘Growth Enhancement Scheme’ and the e-wallet system have been adopted in Togo, Liberia, and other African countries. Yet in Nigeria where they were developed, they are no longer being implemented.

Your Excellency, Mr President, you will have people telling you it is the lack of rain that is leading to low food production. A little, maybe. That it is insecurity. Yes, maybe, to some extent. That it is middlemen. A little, maybe.

But, Mr President, the main reason is that farmers no longer have access to quality improved seeds, fertilizers, and farm inputs at scale. Farmers across the country are asking for the Federal Government to restore in their words “the popular Growth Enhancement Support Scheme and the e-Wallet system.”

The Chairman of the All Farmers Association of Nigeria (AFAN), Alhaji Farouk Mudi said in March 2020 “These initiatives (the Growth Enhancement Support Scheme and the e-Wallet System) should be restored by the Federal Government.

They will boost farmers’ production, create jobs and increase internally generated revenue for the States.” I would like to urge, Your Excellency Mr President, please re-launch the ‘Growth Enhancement Scheme’ and the e-wallet system and put millions of farmers at the heart of agriculture — at scale.

If this is done, and run well, I can assure you that you will see a dramatic turnaround in national food production.

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