The Lagos Business School Breakfast Meeting On 18/06/2019

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REMARKS BY HIS EXCELLENCY, PROF. YEMI OSINBAJO, SAN, GCON, THE VICE PRESIDENT, FEDERAL REPUBLIC OF NIGERIA, AT THE INAUGURAL LAGOS BUSINESS SCHOOL BREAKFAST CLUB MEETING IN ABUJA ON THE 18TH OF JUNE, 2019

PROTOCOLS

I would like to start by thanking the Lagos Business School Faculty and other members for this opportunity to speak at the very first LBS Breakfast Club Meeting in Abuja. I am also happy that this is a breakfast meeting; usually, the business community meetings to which I am invited do not include an invitation to breakfast. I suppose this is all part of watching the bottom line. But as I have heard politicians say, you chop alone, you die alone.

I strongly believe that focused engagements, such as we have here this morning, will assist us all to better understand and usefully review government plans towards achieving a more positive impact on business and the general public. I do not intend to burden this distinguished audience with information with which you are already very familiar, namely, the country’s macro statistics, fiscal, and the main features of the 2019 budget.

We have also heard from Doyin Salami’s prognosis on the economy this year, which contains perhaps a little more bad news, as it is polite to be fed with at breakfast. Thankfully, economists are usually wrong. And I am quoting “The Economist” and several other good authorities on this matter.

I will focus on the 5 big socioeconomic issues that confront us and how we plan to resolve them.

Human capital development and future jobs, creating wealth and rolling back poverty, how to earn more, domestic resource mobilisation, and how to attract more local and foreign investments. It contains old and new security threats.

Our greatest challenge today is how to take millions of Nigerians out of extreme poverty. It will clearly take a multi-pronged approach; every activity that contributes to creating jobs and opportunities will also invariably touch the poverty problem. There are some things that are clear to us; first is that an oil price-driven GDP growth may have little impact on poverty. Indeed, in our recent history, the years 2010 to 2014, when oil prices were at their highest, were when both poverty levels and debt rose. So, I think that if we take a good number of sensible steps in key sectors of the socio-economic environment, we may be better positioned to surmount the major challenges.

Nigeria is at a very auspicious time in her history, and I strongly believe that the fresh opportunity Nigerians have given to President Muhammadu Buhari and me will enable us to consolidate on some critical reform efforts we had already embarked upon.

After the sudden fall in oil prices (from 110 USD in mid-2014 to 30USD in January 2016) and the almost concurrent drastic reduction in production output, which ultimately plunged the country into recession in the second quarter of 2016, the macroeconomic environment has now stabilized. It has been a big relief to see GDP growth climbing again from 0.8% in 2017 to 2.1% in 2018.

Inflation has fallen from a high of 18.6% in December 2016 to 11.2% in March 2019, while external reserves increased to a high of USD44 billion in April 2019 from USD27 billion in December 2016. We now have renewed confidence in the country’s economic prospects, and 3.01% GDP growth is envisaged in 2019.

The 2019 Budget projects our intention to accelerate transportation and other infrastructure development while cutting down on recurrent spending through prudential measures, including the full implementation of the Integrated Payroll and Personnel Information System (IPPIS) and the deployment of a National Trade Platform (otherwise known as the Single Window) to enhance the collection efficiency of the Nigeria Customs. Out of the total budget of N8.916 trillion, N2.927 trillion is devoted to capital expenditure. This amounts to 31% of total FGN expenditure. Overall budget deficit of 1.918 trillion is envisaged, representing 1.37% of GDP.

To ensure that we keep things on an even keel, a raft of measures is in place to improve revenue and lower the debt service obligations, which currently amount to 27% of revenue. This includes the restructuring of the Joint Venture Oil Assets and the reduction of government shareholding in petroleum joint ventures to 40%. At the same time, all unencumbered oil assets are being recovered for disposal. From an all-time low of 1.4 million barrels per day in 2016, production has reached 1.96 mbpd in Q1 2019. Our aspiration is to reach 2.3 mbpd average in 2019.

We are well aware that our greatest challenge today is how to take millions of Nigerians out of extreme poverty. At least 10 million yearly over the next ten years. The overriding theme of the Federal Government’s priorities in its second term is to build an economy that generates opportunities for businesses and creates jobs for our people. In addition to security and governance-related issues, the Federal Government will focus on seven main priorities in its second term. These are to:

• Build a thriving and sustainable economy
• Enlarge agricultural output for food security and exports
• Attain energy sufficiency in power and petroleum products
• Expand transport and other infrastructure
• Expand business growth, entrepreneurship and industrialisation
• Expand access to quality education, affordable healthcare and productivity of Nigerians and to
• Enhance social inclusion and reduce poverty

Let me dwell a bit more on our agricultural programmes, which impact many of these objectives. Obviously, it is imperative for us to do more on diversifying the economy, and this necessarily entails the sustenance and even acceleration of the agricultural revolution, which is already apace. Of our nearly one million hectares of land, about 77% is confirmed suitable for agriculture. The potentials are therefore huge, both for the domestic and international markets. Mechanisation and the agro-allied industry are very big areas still largely untapped and awaiting prospective investors.

Agriculture and the agro allied value chain tick the important boxes of food security and job creation, so it features prominently in our growth plan. We increased Budgetary allocation to Agriculture from N8.8 billion in 2015 to N46.2 billion in 2016 and N103.8 billion in 2018. Agriculture also grew by 14.27% in 2018 and by 3.17% in Q1 of 2019.  N107.218 is now provided for agriculture in the 2019 budget.

Through the Anchor Borrowers’ Programme, credit totalling N120.6billion has so far been given to 720,000 small holder farms cultivating twelve commodities, including rice, wheat, cotton, soya beans, cassava, poultry and ground nuts, across the 36 States and FCT.

In addition, we launched a Fertilizer Programme to improve local blending capacity, in collaboration with Morocco. Today we have eleven (11) Fertilizer Blending Plants with a capacity of 2.1million. This precipitated the price drop from N13,000 per 50kg of fertilizer to N5,500. To further boost production, more dams are being constructed to strengthen irrigation practices. Seven (7) of such projects were completed in 2018.

I would also like to mention the Green Imperative Programme (GIP), established in partnership with the Brazilian Government. Under the GIP, equipment, input and services will be delivered to Nigeria, including farm machinery assembly plants and process service centres. Five (5) million Nigerians will be impacted by this programme, directly and indirectly. 100,000 technical personnel will be trained, and 4,848 tractors will be assembled each year, resulting in the ultimate injection of $12 billion into the local economy over 10 years.

We are also reorganising and modernising our solid minerals sector. Already, the contribution of the non-oil sector to GDP has increased from 90.4% in Q1 2018 to 90.9% in Q1 2019. We further expect an upward swing of this positive trend in the current year.

In all these, we are paying full attention to Information and Communication Technology (ICT), especially the need for expedited broadband penetration. In fact, we aim to achieve 100% broadband coverage by 2023. We have good reasons to believe that ICT will create immense opportunities for youth employment while affording us the tools to modernise our markets, boost entrepreneurship and create fresh values for the global economy.

To this end, we are already establishing innovation hubs across the country to give start-ups an enabling and supportive environment. We are also in the process of establishing an Innovation Fund on which they can draw for capital. And similar attention is being paid to the creative industries, including music, film and fashion, where Nigerians are already making waves around the world.

As we promote Small and Medium Enterprises and make it increasingly easy to do business in and with Nigeria, we expect a boost in the areas of industrialisation and non-oil exports. In this regard, we are setting up Special Economic Zones (SEZs) across the country, to ensure focused attention and a conducive atmosphere for processing, manufacturing and industrialisation.

Project MINE (Made in Nigeria for Export), is the major plank of our industrial policy, and the idea is to build SEZs to accommodate industries for the local manufacture of goods for which Nigeria has a comparative advantage. These include cotton, garments, leatherware, etc.

The Nigerian EZ Investment Company, a public-private partnership company, is the delivery vehicle for the project, and work has already begun at the Eyinba Economic City, Lekki Model Industrial Park and the Funtua Cotton Cluster in Katsina. With this, we hope to improve the utilization of Nigeria’s resources and comparative advantage whilst creating strong domestic value chains.

We also intend to enhance infrastructure in other small, medium and large economic clusters already in existence across the country. This includes leather hubs in Aba, Abia State, Ogidi in Anambra State and Kano; and iron works and fabrication clusters in Nnewi. In Bauchi, we have provided power and other infrastructure in a shared facility for end-to-end solid and liquid soap production.

Another area in which we expect massive movement is in the power sector. Generation capacity has improved now to 8,342 MW, but it is grossly inadequate for a country the size of Nigeria. Despite that, we are only able to deliver an average of 3,800MWH/H in 2018 due to inadequacies in our transmission and distribution infrastructure.

We therefore expect accelerated investments in the sector, not just to improve the infrastructure but also to recapitalise the distribution companies (DISCOs). DISCOs make the critical last-mile effort to distribute power and recover revenue that feeds back across the entire sector; hence, their failure puts the entire system in jeopardy.

Massive investments are required to get them working the way they should. Also, we are making regulations to enable private power companies that have the capacity to deliver an end-to-end solution – generating, transmitting and delivering power to customers in willing seller-willing buyer arrangements.

A similar concept has already been piloted when the government facilitated the provision of private power under our Energising Economies Programme in Sabongari market in Kano, Ariria market in Aba, Sura market in Lagos, Isikan market in Ondo.

Gas development and supplies are also critical, not just for the power sector but for other industrial and domestic use. Currently, only a small part of our massive gas assets is being exploited. This is an area in which we want to see massive investments in the near future.

We have a Social Investment Programme which has thus far ensured the direct employment of 526,000 youths across the country; service of daily free lunch for 9.5 million pupils in 53,715 primary schools; monthly cash transfers to just over one million of the extremely poor in our society, and microloans to two million small businesses and traders.  In view of the growing population of Nigeria and the unemployment levels, the Government plans to deploy more resources, which will enable us to increase the scope and reach of these programmes.

Permit me a few words on human capital development, especially education and healthcare. The ERGP makes these priority issues in the overall development vision. There is an urgent need to get children into school and to keep them there, especially in the first nine years. The Federal government intends, with the collaboration of States, to enforce free and compulsory education in the first nine years of a child’s life.

The vision of national and economic growth expressed in the Federal Government’s Economic and Recovery Growth Plan situates science, technology and innovation as the key drivers towards fostering our human capital development and transforming our nation into a knowledge economy. Given our limited resources and the current gaps in educational attainment in our country, it became quite clear that we had to adjust both the substance of education that our children receive as well as the methods by which they are educated.

We have identified early-stage investment in primary and secondary school education as key to achieving Nigeria’s economic aspiration of becoming a knowledge-driven economy.

There is also general agreement about the importance of STEAM education in Nigeria – Science, Technology, Engineering, Arts and Math – and the need for a workforce with STEAM skills to drive economic prosperity and the contribution that STEAM can make in solving the tough problems of the world.

We recognise that schooling should support the development of skills in cross-disciplinary, critical and creative thinking, problem solving and digital technologies, which are essential in all 21st-century occupations.

Set against Nigeria’s desire for a strong and functional STEAM education is the fact that decades of neglect of basic schooling infrastructure and adequate teacher training must be matched by a focused investment in large-scale and innovative solutions that overcome current conditions.

“Every Child Counts” is the Federal Government’s roadmap for Digital Literacy, STEAM Education and Teacher Training. The programme is introducing in-class skills development on functional, economic, and interpersonal skills around Science, Technology, Engineering, Arts and Mathematics.  A country-wide curriculum is in development with coding, digital arts, design thinking, robotics, critical thinking and other skills taken into account in interpreting traditional curriculum topics.

The curriculum is one of the crucial components of the programme’s success. It recognises the importance of having a well-rounded curriculum that is global in orientation and local in application.

The most important issue for us going forward is enhancing healthcare financing.

Let me conclude with the issues around the old and new security challenges. We have, for several years now, battled with the Boko Haram Sect, which, at the peak of its influence, was in control of 14 Local Government Areas in the Northeastern part of Nigeria. We also had militancy in the Niger Delta, which resulted in massive vandalization of oil installations and disruption of production and export services. With a multi-pronged effort, these two have been brought under control, such that Boko Haram is confined to some remote areas in the North East and militancy in the Niger Delta is virtually eliminated.

However, we have some new challenges, including the Islamic State West Africa Province (ISWAP), which rampages around Northern Borno, Niger Republic and Chad, recently launching attacks on several Nigerian Military Forward Operating Bases. We are also trying to bring under control the much-reported spate of banditry, armed robbery, kidnapping, cattle rustling and farmer/herder clashes in the North West Zone, which is sometimes replicated in other parts of the country.

The Fulani herder disturbances in some of the states and the new waves of kidnapping in different states. With the Fulani herder situation, there are two broad groups.  First is the encroachment into farms, which results in violent conflicts. This happens across the country. Benue, Zamfara, Plateau, Kebbi, Taraba. But second is the spate of banditry and kidnapping by persons identified as Fulani herders. This group are simply criminals and they have no cattle and, like other criminals, kidnap for ransom.

The farmer-herder conflicts, which have resulted from increasing desertification in the northern parts of Nigeria, have been a major issue. As herders are forced to move southwards for pasture during the dry season, often encroaching on farmlands, sparking violent conflicts is markedly different from the outright criminal activities going on today.

As policy makers and implementors, our priority is to fully understand the issues and not get bogged down with the different narratives, many of which may be politically motivated or out rightly mischievous. We must also be careful of the one-story narrative or the simple stories that seek to explain complex and more nuanced situations.

The Presidency is working directly with the State governments, Police and the Armed Forces on these problems, ensuring that they have all the funds, logistics and other support needed to bring the situation under control.

Difficulties we sometimes encounter in the course of procuring arms and ammunition have often been a major constraint, but we are engaging with the relevant governments with the hope of getting necessary approvals before much damage is done.

With these few highlights of the situation in Nigeria, I think I should take my seat and allow you to ask questions and join in the discussion. In the course of responding to those questions, I will certainly elaborate more on the issues raised and other aspects I may not have touched upon.

Thank you very much.