28th Nigerian Economic Summit Themed: ‘2023 & Beyond: Priorities for Shared Prosperity’
ADDRESS BY HIS EXCELLENCY, MUHAMMADU BUHARI, GCFR, PRESIDENT OF THE FEDERAL REPUBLIC OF NIGERIA, DELIVERED BY HIS EXCELLENCY, PROF. YEMI OSINBAJO, SAN, GCON, VICE PRESIDENT OF THE FEDERAL REPUBLIC OF NIGERIA ON THE OCCASION OF THE OPENING CEREMONY OF THE 28TH NIGERIAN ECONOMIC SUMMIT AT TRANSCORP HILTON, ABUJA ON THE 14TH OF NOVEMBER, 2022
Before I continue, let me join others in commending and congratulating my brother and a true patriot, Mr. Asue Ighodalo, the outgoing Chair of Nigerian Economic Summit Group for a remarkable two terms in office and also warmly welcome, His Vice Chairman, Mr. Niyi Yusuf, who seamlessly succeeds him. From one Vice to another, let me say how happy I am that you didn’t have to go through a NESG Primaries! (General Laughter).
I bring you the warm greetings of Mr. President, President Muhammadu Buhari who sent his apologies ahead today.
It’s a pleasure to join you at this year’s Nigeria Economic Summit. Over the years, the Summit has become the forum for high-quality engagements amongst thought leaders, captains of industry, civil society and decision-makers in the highest echelons of government on the economy of this country.
And we must again commend its organizers for their tenacity in not only ensuring that the Summit has been held unfailingly for 27 years, but also for maintaining the depth and breadth of interactions and always with remarkable objectivity and a high sense of responsibility.
The theme for this Summit ‘2023 & Beyond: Priorities for Shared Prosperity’ calls on us to reflect on what our priorities should be to attain inclusive prosperity from 2023 and beyond. This is an important question given the frightening headwinds of the past three years and the emerging local and global trends that will most certainly define the future.
We are, borrowing the expression, “buffeted on all sides”; local security and economic challenges, and global turbulence on the political, economic and social fronts. The Russia-Ukraine war and tensions among the great powers, all of these impacting food prices, and macroeconomic indices and disrupting democratic governance, especially in West Africa.
The global economy is yet to recover fully from the effects of COVID-19 especially the debts that were racked up to cope with the economic slowdown and there is continuing disruption of global supply chains. Added to these, of course, are the existential challenges of climate change – drought, flooding as can be seen from rising sea levels; the terrible impact of which we have recently seen in many States of Nigeria.
Given this background, it is clear that our work is cut out and we have to choose our priorities going forward very carefully. There is of course a whole gamut of things that require our attention and many are well captured in the National Development Plan 2021 to 2025. But permit me the liberty of sharing some of these priorities.
The first of course is improving macroeconomic conditions. On the positive side, the economy continues to grow with GDP growth at 3.54% in the 2nd quarter of this year. Non-oil revenues have similarly continued to improve due in part to strategic revenue initiatives including the annual Finance Act. For instance, the increase in VAT from 5% to 7.5% in the 2019 Finance Act led to an increase in revenues by up to 69% above target in 2021, while in the same period corporate income tax was 15.5% above target, customs duties were 10% above target and independent revenues of government were up by 17.8%.
But it is still our revenue challenges that heighten the notion that we have a debt problem, which is really not the case given that our debt/GDP ratio is just 23%. It is also true though that what matters right now is our debt service to revenue ratio which is undoubtedly high.
But I think it is increasing revenues that must engage most of our attention. We have already seen real improvements in our non-oil revenues but our focus must now be on productivity or encouraging value addition.
Productivity and value addition means the creation of tradeable value, it means jobs, and opportunities and it means more tax revenues. To increase productivity, we must free up our environment for business, make local and international trade easier by fixing the ports, effecting the National Single Window, revamping our customs processes and tariff codes to reduce delays and arbitrariness, removing needless restrictions on imports to enable value-added processes.
Our exchange rate regime remains an issue of some concern. The discussion that we must have, shorn of sentiments, is how best to manage the situation by finding a mechanism for increasing supply and moderating demand which will be transparent and will boost confidence.
I am sure most can recall that the Central Bank some years back, was able to do so, such as the Interbank Foreign Exchange Market, Retail Dutch Auction System, Wholesale Dutch Auction System, etc. All of these price discovery mechanisms were transparent and evidence for all to see and it worked. What we should be looking for are not perfect rules but we must prevent a situation where we have the kind of arbitrage we have. The way to do that is to increase supply, because demand management from everything that we see, is not working. It is important that we focus on increasing supply. This will boost the confidence of local businesses and those of our foreign investors as well. People need to see that they don’t have to, as it has been suggested, have any particular attribute to access foreign exchange.
We will also have to take urgent action to bring inflation down because it is both a tax on the poor and disrupts long-term growth. Inflation in Nigeria is partly structural arising from infrastructural deficiencies etc., but there is also an aspect that is caused by increased money supply, imported inflation and depreciation of the naira.
In addition, therefore to the monetary measures being taken by the Central Bank of Nigeria, we would need to increase domestic production of food and make sure that it gets to the market. In this regard, we must pay closer attention to the institutional insight of the Agriculture for Food and Jobs Programme of the Economic Sustainability Plan which sought to support small-scale farmers by guaranteeing uptake of their production by enabling bigger farmers and suppliers to manufacturing companies and commodity exchanges to support them across every stage of production. All of these have worked and can work better with a great deal of attention being paid to them.
What we have seen in the past few years and months, and the focus of the Ministry of Agriculture is that we can do a lot better. If we look at the figures, yes, we can see a slack, but that already, in my view is being addressed by some of the innovative things being done by the Ministry of Agriculture, especially in improving the lot of private farmers and trying to get inputs across to them as quickly and effectively as possible.
It is now evident that there is one global issue that will impact local economies most profoundly and it is climate change. But it bears repeating that African countries including Nigeria did very little to cause global warming but yet as recent floods all over the country and other parts of the world show, we bear the brunt of climate change despite the fact that we are not responsible for the warming itself and possibly the least emitters as far as our globe is concerned.
We must continue to call for a just transition that enables us to use our abundant gas resources to meet our energy needs including for electricity and cooking. This will enable us to secure the resources needed for investment in natural gas as well as in renewable forms of energy.
One of the key things I’m sure you have heard a lot about is the move to defund gas projects and fossil fuel projects all over the world. But for the war in Ukraine, we would have had a situation where this would have been carried into effect, but I think the countries in the global Northern countries themselves have realized that they need gas especially for their own energy needs and so have continued to fund gas projects in their own economies. It is a time for us to insist that we can’t do much without public funding for gas projects by traditional funders and multilateral institutions.
Nigeria should continue to work alongside G77 and China partners on the issue of compensation for ‘Loss and Damage’. This is essentially requiring that those who caused the climate change-related challenges, the greatest emitters should help pay those of us who are the least emitters to help us overcome these challenges of climate change. I am happy this matter is on the table at the COP27 going on in Egypt now and should be pursued to a logical conclusion of securing additional financing for developing economies.
At the same time, we must also include some of the excellent ideas around debt for climate swaps in our climate finance tool kit. These swaps can be a win-win for debtors and creditors. They will “increase the fiscal space for climate-related investments and reduce the debt burden for participating developing countries. For the creditor, the swap can be made to count as a component of their Nationally Determined Contributions (NDC). Yet another priority in the discussions around climate change is that of unlocking the potential of carbon markets, especially in Africa.
In short, Voluntary Carbon Markets work by the purchase of carbon credits by corporations in the developed world to offset their own emissions. The Africa Carbon Markets Initiative was launched last week at COP27 and it has been estimated that Nigeria could produce more than 30million tonnes of carbon credits annually by 2030 bringing in more than $500million annually.
The future are the jobs and opportunities from the green economy. The future of the green economy is one that we must take seriously, renewable energy for us is a plus. We have the best radiation across the country, especially in the Northern part of our country, so we can take advantage of renewable energy, especially solar. We must press our advantage in renewable energy, the #SolarPowerNaija Programme launched under the Economic Sustainability Plan which is designed to achieve 5 million solar connections impacting over 25million Nigerians will contribute in this regard. We also have off-grid and mini-grids as part of the options. Nigerians will contribute to all of these and it will be helpful in job creation and advancing growth in many other ways. But the impact includes opportunities in manufacturing and maintaining solar equipment and facilities.
Another key priority for us should be to leverage disruptive technologies offered by digitization. Digitization is now upon us and it is different from previous advances in technology because it has become a general-purpose technology affecting nearly every facet of life.
However, we are now on the cusp of the 4th Industrial Revolution resulting from the increasing economic viability of advanced robotics, artificial intelligence, 3-D printing, the Internet of Things, cloud computing, big data analytics, and blockchain technologies.
We have already seen the impact of digitization in FinTech in Nigeria and the story of how our young people managed from 2015 to now, between two recessions, to create six unicorns (companies valued at over $1billion) and that is no mean feat considering that they have done this despite the economic challenges. We must also remember that the reason this was possible is because of the innovative development in licensing of FinTechs that have enabled them to be able to operate without necessarily becoming banks that require N25billion share capital.
A lot of that innovation coming from the Central Bank of Nigeria has helped a great deal in giving some feeling to the ways these companies have grown. Regulation is important here and we must be ready to adapt very quickly, especially with respect to technology. A lot of the regulations that we have now have never been seen before, a lot of the changes have never been seen before.
We must be at the cutting edge of regulation and cannot the same old regulations that we used prior to some of the technological developments that we are seeing. We must continue to involve entrepreneurs and innovators to develop these policies.
We must build on these achievements which also offer us the opportunity to leapfrog by deploying digital technologies in agriculture, health, education, logistics, and even manufacturing, housing and smart power grids.
The last but one priority issue I would like to mention is improving our social safety programmes. This government introduced the most comprehensive and resourced social investment programme in perhaps the history of our country. Something this programme helped us to do is a more bottom-up approach to economic planning and even budgeting.
It also helped us to implement a wealth and opportunity-creating environment as opposed to mere poverty alleviation. We need to take a second look at our social investment programmes, especially with respect to wealth creation. A lot of the components of our social investment programmes have done exceedingly well and added to the several options that we have for economic development but it is time to upgrade and move forward.
Time to look at how we can hone wealth creation, especially with respect to inclusivity and giving people in the hinterland better opportunities and access to credit. What we discovered with our social investment programmes in getting money to the poor and access to credit is the problem with inclusive financing. The banking system is not moving fast enough for that but the good thing is that technology has helped and on the back of that is being able to reach farther places in our countries.
We are far from our set objectives but we have begun and must press forward.
The last priority I will mention on this occasion is the need for more intentional and focused investment in our youth, especially in globally marketable skills, access to credit, protection of intellectual property rights of innovators and inventors and access to global markets. We see a lot of investors coming from different parts of the world and investing in the digital space and of course, comprising the intellectual property that should normally accrue to these innovators. So there’s a need to look at these issues more carefully and invest more in creating the right environment for young people doing incredible things to grow.
I trust that some of these issues will be given deeper attention in your discussions at this summit.
Your Excellencies, Ladies and Gentlemen the task ahead requires partnership, innovative thinking, and most importantly disciplined implementation.
We on the government side look forward with eager anticipation to the conclusions that you will make and all the valuable recommendations.
On this note, it is now my singular honour and privilege on behalf of Mr President to declare the 28th Nigerian Economic Summit Open to the benefit of Nigerians and to the glory of God.