VP Osinbajo Attends 8th Regular Meeting Of The National Council On Industry, Trade & Investment On 24/10/2016

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REMARKS BY HIS EXCELLENCY PROF. YEMI OSINBAJO, SAN, GCON, AT THE OPENING ADDRESS OF THE 8TH REGULAR MEETING OF THE NATIONAL COUNCIL ON INDUSTRY, TRADE AND INVESTMENT, OGUN STATE – 24^TH OCTOBER, 2016

PROTOCOLS

Let me say how much of a pleasure it is to be here for this 8^th Regular Meeting of the National Council on Industry, Trade and Investment. I’m sure that most of us are getting somewhat tired of hearing this diversification, diversification, diversification. In fact, I was listening one day to an important private sector operator, who complained that he had been hearing this diversification thing for the last 40 years.

So, the issue is, how do we get it done? What do we need to do to get things done? And I am sure that most of us agree that, in our country we are not short of plans, we are not short of policies, we are not short of great ideas.  The issue always is how to get things done.  So the question for us always, and I am sure that the question for you here at this special meeting will be how exactly do we get this diversification done. I will just talk through a few of the policy issues that underpin our own, the Federal Government diversification methods.

I am sure that most of us agree that the monetary policy is crucial in practically all of what we would be doing. A flexible exchange rate policy is a policy that everyone thought was important, and we finally have been able to get a flexible exchange rate policy in place. The implication of that, of course, we are already seeing, and of course, as we perfect the operation of that policy, I am sure we would be able to see even greater benefits of the policy. Already, on account of our relative weak currency, it is cheaper of course to export our agricultural products. I am sure that many are already hearing about what is happening in the farms and farming areas in the north, where people are coming from North Africa, coming to buy our produce, because of course, the weak currency. Now, a lot of that exchange is informal but it is does point to the potential that it is possible for us not only to produce enough, but to export sufficiently if we formalize that process.

I have already mentioned the Nigerian Industrial Revolution Plan; I am not going to go into all of that. But I think it is important to point out that global competitiveness is critical. We simply have to be competitive. The former President, Baba Obasanjo has already pointed out to us, that crucial is trading more, producing more and trading more. We simply need to increase productivity. Not just in farming, not just in our farms, but also in Manufacturing.  But in order to increase productivity, of course, there are so many issues that we need to address, we need to reduce transaction cost, the cost of doing business in Nigeria.  We need to simply focus more on made in Nigeria, buying, producing in Nigeria, buying from Nigeria, eating Nigerian food. But I think that one of the critical issues becoming more competitive is infrastructure and this has also been pointed out.

We simply have to do a lot more, in terms of improving our infrastructure, and the 2016 budget, and also the 2017 budget, which is about ready, focuses on investment in infrastructure.  Infrastructure in power for example, we are doing a lot more in the area of power. I am sure that many of us probably follow that in February 2016, we were producing 5,000 megawatts of power, which is the highest ever in the history of the country. But with the vandalisation of the Forcados Terminal and 3, 4 other extra terminals, we found ourselves down to almost 2500 megawatts of power, that is gradually ramping up again. But substantial investment in the power sector will certainly be key in improving our productivity as we go forward and we are doing quite a bit that area.

Many are probably familiar with some of the efforts being made in improving transmission. There are about 8 or 9 critical transmission projects, which we expect to be completed by the first quarter of 2017 and these projects will substantially increase our general output. We are also looking at being able to supply gas to several now idle thermal plants. These thermal plants have been idle because we simply don’t have enough gas.

With a lot of what is going on now, especially with trying to get gas from some of the sources that hitherto have been lying idle, we think that we will be able to do far more and that our 7000-megawatts target is achievable. Of course, a lot of these depend on peace in the Niger Delta; a lot will depend on whether or not, they are able to ensure that vandalisation stops in Niger Delta on both oil and gas facilities.

The liquidity issue in the value chain, for those who are familiar with the power sector, know that there are problems generally with the whole issue of substantially compensating, generation, transition and distribution. At the moment, a lot of debt is owed across the entire value chain and that is preventing further investments in that sector. There are sorts of issues around it, and we would not have enough time to talk about it. But we are working very closely with the Central Bank to try and improve liquidity in that whole value chain, just so that we are able to ensure that it remains a viable business and then more investments, private investments can come into the sector.

I think the Honorable Minster has already mentioned Special Economic Zones, which we intend as part of our infrastructural development. Rail and roads are critical. The rail, in our current budget and the 2017 budget, we’ll be putting substantial resources of course into the building of the standard gauge-rail from Lagos to Kano, and the Lagos to Calabar rail. The Lagos to Kano single gauge, narrow gauge rail is already being concessioned to General Electric and we are looking at the substantial investment close to $2 billion in that particular narrow gauge rail.

The whole idea is to be able to produce what is possibly the most commercially viable ways of transporting goods from one point to the other. This rail project starts from the seaport all the way to the hinterland. And it’s absolutely important that we are able to complete some of these projects as quickly as possible. But we think that in the interim, the Lagos-Kano narrow gauge, which will be concessioned and the concessionaire will provide the rolling stock and the signages and all of the other services necessary to run that rail service. We think we would be able to provide a viable alternative to transporting heavy goods and services by road.

There are several industrial policies, I am sure we would be looking at many of them as we go along but there are complaints about some of the tariffs and we are addressing so many of them. Of course, I am sure many, especially those in the pharmaceutical sector, there is a complaint about the classification of certain finished goods.

So, there are certain finished pharmaceutical products that have only a 5% tariff, so it makes it easier to import finished pharmaceutical products than to produce them locally. Now that is a wrong classification, and that one classification has led to this paradox.  So what we are trying to do is to change the classification, and redress some of these problems. We are working very closely with the Honorable Minister for Industry, Trade and Investment and his team, we are working very closely on this issue of tariffs, and looking at how we can use the tariff structures to incentivize local production, and as much as possible, discourage imports of those things we can produce locally.

Agriculture is critical in all of our efforts, but we all know that we have a productivity challenge in agriculture, we are not even at the moment meeting the necessary food requirements. And that is on account of the fact that we have an input system, and a farming model that are largely inefficient. We don’t have enough seeds, especially improved seedlings. We have an efficient system of distribution of fertilizers and immigration problems. But, despite that, this season for most of the framing areas there is a bumper harvest.  There is so much more that we can do, so much more that can be done and that’s why we are looking at improving all of the entire value chain.

Our inability to export at levels required for market success is another draw back in agriculture. We simply need to export more,  but the problems are the ones we are working on at the moment. We need to enforce good quality standards. We need better knowledge of target markets. We need to improve our inspectorate system, Federal Ministry of Agriculture; we need to improve the inspectorate system there and of course coordination amongst the agencies.

Again, there are investments and innovations in the area of technology that are crucial to these diversification efforts. We are building at the moment, 6 innovation hubs in the 6 geo-political zones with 2 super hubs, one in Lagos and one in Abuja. That basically is to provide opportunity especially for young people, who are looking at investments in technology. For those who might have followed some of the stories, we had in Abuja, the Aso-villa demo day, which basically was an attempt to bring together young people in technology who have innovative ideas, and who are trying to develop those ideas.

There was a competition across the country, about 4,000 entries, eventually we narrowed down to about 30, and the 30 best visited the President at the Villa, and he had an opportunity to speak with them and look at some of their innovations.

We are going to sponsor some of those innovations; we are going to invest in some of these innovations in order to encourage these young people. But technology is certainly going to be key going forward, and we absolutely have no choice, but to significantly increase our funding for technology and technology related industries.

When you look at what we can invest, when you look at the entire budget and our budget this last year, it was little over 6trillion. Now, 6trillion compared to an economy of this size and the numbers that we have, is still a small amount of money and that’s the reason why we believe that the only way to really ramp up and very quickly the size of our economy and of course, that means the size of our budget and what we are able to spend and invest, is by partnering with private capital and development capital. In fact, our 2017 budget is premised on substantial private capital, and investment capital coming into the mix.

Because we strongly believe that even just encouraging game changing private sector projects will make a huge difference in what we are able to deliver as an economy. For example, there is a private sector company that is developing a refinery, the refinery will be able to refine 650,000 other petroleum products locally. We would be saving 30% of what we are spending currently from our foreign exchange reserves. So, clearly just encouraging private sector participation alone will dramatically increase what it is that we are able to deliver overall as an economy.

I will just leave it there, I am sure that there are so many issues that you would be looking at. There will be a lot of talk on ease of doing business. I am sure that already you are familiar with the fact that the President just inaugurated a commission on Ease of Doing Business and that commission is going to work very closely with the State Governments.

The State Governments will be the major participants in engaging the private sector. Most of the land approvals, building approvals, and several other approvals for doing business will come from the States. So, the major challenge for us would be how the Federal Government and the States can work together to make business easier for those who would want to invest in this country, and I think that for a change, we need to really focus our attention on making it easier to do business both locally and for those who will be investing from other parts of the world.

So finally, I would like to just commend all of the participants at this 8^th Meeting of the National Council on Industry, Trade and Investment for undertaking this important national discourse on how to diversify the Nigerian economy away from the dependence of oil. I certainly look forward to the conclusions of the conversations you would be having and the important recommendations that you would produce.

It is therefore my special pleasure and privilege to declare open the 8^th Regular Meeting of the National Council on Industry, Trade and Investment

Thank you very much.