Interview: Laoye Jaiyeola
What reforms has the government instituted, and what more can it do to promote economic growth?
LAOYE JAIYEOLA: In 2015-17 we have seen the enactment of several reforms in the energy sector, which have led to increased efficiency and output. Stakeholders engaged themselves in the Niger Delta, which has stabilised the region; the cabinet has recently approved the National Gas Policy; the senate passed the Petroleum Industry Governance Bill, a subset of the Petroleum Industry Bill; government activities have become more transparent; and oil refineries have been revamped.
Some of these reforms have resulted in greater output of crude oil, which has increased from about 1.6m barrels per day (bpd) to more than 2m bpd. In addition, the annual amount of crude oil processed by the Nigerian National Petroleum Corporation’s refineries grew from 8m barrels in 2015 to 24m barrels in 2016, to 10m barrels in the first quarter of 2017. While these reforms are important to improve production in the sector, their impact is likely to be felt starting in the medium term.
We would also like the federal government to address our inadequate and deteriorating infrastructure, which is one of the greatest challenges facing Nigeria’s private sector. Despite many government-led initiatives, the poor condition of Nigerian roads and weak airport infrastructure are critical challenges that increase business costs and limit growth of the private sector.
How is the government diversifying the economy?
JAIYEOLA: While the government has created several initiatives to diversify the economy, such as the Zero Oil Plan, the Economic Recovery and Growth Plan, and others, we believe that much more needs to be done. In 2017 crude oil still accounts for more than 70% of government revenues and foreign exchange earnings. Many state governments still rely on proceeds from the federal account, and Nigeria’s manufacturing sector is still weak, contributing only 8% to GDP. Going forward, the government should prioritise key markets, such as manufacturing and agro-processing. These are critical in reducing Nigeria’s import demand for consumables and in providing much-needed foreign exchange through exports of finished and semi-finished goods.
How has the exchange rate affected the economy?
JAIYEOLA: Following the rise in crude oil prices as well as the increase in crude production, the exchange rate has stabilised. The gain in dollar inflows has enabled the Central Bank of Nigeria to intervene through dollar injection, thereby closing the exchange rate premium. This relative exchange rate stability has resulted in a declining inflation rate. At the same time, output in some sectors has improved, albeit marginally.
We need to keep gains in monetary policy management. Financial authorities must also curtail non-performing loans within the banking system, which have increased due to the economic recession. Fragility in the banking system creates huge economic and social risks, which we must address as a matter of urgency.
Which measures would encourage inclusive growth?
JAIYEOLA: The private sector is the country’s largest employer and therefore the engine for job creation. The government must remove bottlenecks in the business environment and support the private sector, while stakeholders must partake in planning, evaluation and execution of these government programmes.
The National Assembly Business Environment Roundtable (NASSBER) is an example of an effective partnership between the private and public sectors. NASSBER is a partnership between the National Assembly, the NESG, the Nigerian Bar Association ECONOMY on Business Law and the Department for International Development. Its job is to review, amend and repeal, when necessary, obsolete laws that hinder business. Since NASSBER’s institution, the National Assembly has passed several bills and unlocked huge opportunities for private sector investments and, therefore, job creation.
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