Nigeria’s Federal Executive Council last week approved the National Poverty Reduction with Growth Strategy (NPRGS), a scheme they say will accelerate the reduction in poverty through economic growth, social protection programs, and others.
The FEC also announced the establishment of a Nigeria Investment and Growth Fund to invest in commercially viable projects in priority sectors that will promote growth and innovation, enhance local value addition, and create employment.
The NPRGS was necessitated by the rise in poverty and inflation which has caused hardships for Nigerians. In a document released by the Presidential Economic Advisory Council (PEAC) a month before the FEC approved the plan, the FG outlined the process needed to implement and achieve their plans.
The four pillars
According to the report, the 4 pillars on which the NPRGS is based include:
a. Macroeconomic stabilization policies to improve the capacity of the economy to absorb shocks and avoid disruptive adjustment.
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b. Industrialization for Economic Growth and Transformation of the economy from commodity-dependent growth path to a diversified, industrialized, knowledge-intensive, and job-creating economy.
c. Structural Policies and Institutional Reforms to engender efficiency in service delivery, promote transparency and accountability in the management of fiscal resources, bridge the infrastructure gap, improve private sector development.
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d. Redistributive Policies and Programmes to reduce levels of risk, vulnerability, shocks, and deprivation. The latter includes programmes aimed at enhancing incomes, job opportunities, and wealth creation through vocational skills training, micro-credit and micro-enterprise development, and livelihood diversification in the agricultural sector.
The report added that over the 10-year programme period (2021-2031), the total cost of the execution/implementation of the policies and programmes underpinning this strategy is estimated at US$1.6 trillion, giving an annual average of about US$161 billion. “This estimated cost covers the dual objective of lifting 100 million Nigerians out of poverty as well as of achieving all the country’s development objectives in line with the Sustainable Development Goals 2030. As a middle-income country, around 50-60% ($80b – $97b) of financing needs are expected to be covered by the government,” they said.
Strategy for Implementation
1) Macroeconomic Stabilization Policies
The FG stated that achievement of the desired outcomes of the programme rests crucially on the implementation of sound macroeconomic policies, citing that consistent implementation of macroeconomic policies would reduce the risks of economic disruption while providing an environment for the smoother transmission of economic policies. Also, it will be seen as a catalyst to incentivize private sector investment and consumption.
The Presidential Economic Advisory Council urged the implementation of:
- A unified and competitive exchange rate;
- Inflation maintained at single-digit;
- Market-determined interest rates;
- Gradual phase-out of subsidies resulting in prices that reflect market conditions; and
- Public debt kept at a sustainable level, especially with respect to the government’s debt service capacity.
2) Economic Growth, Industrialization, Diversification and Trade
The report stated that the new industrialization policy will come in 4 phases which would focus on a radical transformation of Nigeria’s economy, to bring the size and complexity of the economy in line with Nigeria’s peers, the largest 30 economies in the world. The phases are:
Phase I (2021-2022): Implement first-round reforms, increase productivity and job creation in select sectors, capture larger shares of the domestic market.
Phase II (2021-2023): Continue to expand the domestic market, mitigate impediments to trade, and commence increased access to bilateral and regional markets where trade protocols already exist. Examples are ECOWAS regional market and US AGOA trade preference arrangements.
Phase III (2022-2025): Increase productivity in more sectors, move up the value chain to more complex products like large household goods. Build competitiveness and promote access to global markets.
Phase IV: (2026 and beyond): Leverage innovation, science, and technology to create a knowledge economy that enjoys self-propelled growth.
They added that a growth strategy focused on both satisfying domestic demand and exports can deliver double-digit annual economic growth of above 10 percent.
“More than $1,500 billion of exports and 160 million jobs are moving away from China and other rapidly growing economies in search of the new location. Many African countries, including Ethiopia, Kenya, Mauritius, and Lesotho have created the enabling environment to take advantage of these opportunities because most of these jobs are in extremely low skill areas, with only minimal capital intensity, and low lead time,” the report said.
3) Reforms to Support Industrial Deepening, Diversification and Trade
The area cited institutional economic reform in areas including:
- Public procurement and local content guidelines;
- Standards and technical infrastructure;
- Special Economic Zones (SEZ);
- Industrial Incentives;
- Innovation and Technology;
- Access to finance;
- Targeted interventions to reduce skills gap;
- Investment policy and financial and capital market integration and Trade Policy; and
- Regional and Continental integration.
“As the new strategy moves to Phase II, obstacles to imports and exports of both goods and services would need to be reduced. Nigeria has been heavily involved in integration efforts both at the regional level, via ECOWAS, and the Africa Continental FTA. In addition, the country has various bilateral trade agreements with many countries. However, Nigeria has not taken advantage of these trade relationships to grow its exports,” the report said.
4) Redistributive Policies and Programmes
PEAC added that the key elements for a comprehensive redistributive programme aimed at reducing the poverty headcount by 15 million by 2023 are:
- Reforming and expanding social protection programmes to provide income and other support for families without livelihoods through Conditional Cash Transfer, Homegrown School Feeding, and other income subsidy programmes.
- Enhancing youth access to economic opportunities through vocational skills and entrepreneurship training and supporting their transition to gainful self-employment or wage jobs with partner private sector or government organizations. The Programme will target the ultra-marginalized (the poorest and most vulnerable) populations which are under-served by market systems.
- Enhancing access to economic opportunities through MSMEs support. This programme will target support for both survival-oriented activities often undertaken by poor women and growth-oriented micro and small entrepreneurs wishing to set up new businesses or expand existing ones.
- Reforming and increasing investment in health and education sectors, key determinants of poverty outcomes, to enhance access by the poor and vulnerable in society and to improve quality and efficiency in delivery.
- Implementing policies that support better outcomes in the agriculture sector and rural development, where most of the rural poor are concentrated as detailed in Part V.
- Introducing institutional and policy reforms aimed at transforming social protection from a federal to a national programme while improving the organizational framework.
PEAC says the NPRGS emphasizes the principle of shared responsibility between the stakeholders that include the three tiers of government, the private sector, the civil society organisations, and development partners. “Such mutual ownership and the resulting collaboration in the design, resourcing, implementation, and monitoring of the programme will ensure effectiveness, efficiency, and dynamism in poverty reduction,” they said.