• Considers opening border to crash food prices
• Eyes 3.7 per cent output growth, 5m jobs
• Youths to get unemployment benefits after NYSC
In a fresh push to pull Nigeria’s ailing economy out of the woods, the federal government has rolled out new deals under what it calls the Accelerated Stabilisation and Advancement Plan (ASAP).
The deals include consumer credit, N2 trillion infrastructure and housing support, N100 billion ‘You Own’ scheme, N111 billion initiative for rural micro, small and medium-scale enterprises (MSMEs).
Similarly, a proposed executive order equally suggests that the Federal Government may be planning a six-month suspension of import duties on staple food items, drugs, and other essential items as a measure to curb inflation.
Nigerians have continued to struggle with rising food prices with food inflation reaching 40.5%. Among the hardest-hit commodities is rice, a dietary staple.
In the past year alone, rice prices have skyrocketed by 169%, reaching nearly N90,000 per bag in March and April. This sharp increase in food costs is placing immense strain on households across the country, exacerbating an already fragile economy, even as estimates show that around 31 million Nigerians may face severe food shortages by August this year.
The FG believes that these initiatives, among others, will herald a 3.7 per cent gross domestic product (GDP) this year, improve access to finance and create a whopping five million direct and indirect jobs over the next 12 months.
There are also plans by the government to design and commence implementation of a subsidy sunset programme that supports the poor and vulnerable groups.
ASAP, which is chaired by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, admitted that the federation spent N3.6 trillion on fuel subsidy last year with the figure expected to rise to N5.4 trillion this year despite removal of subsidy.
The report added: “Design and commence implementation of a subsidy sunset programme that supports the poor and vulnerable and promotes the adoption of sustainable alternative fuels and energy sources.”
The report also recommended the removal of uncompetitive fiscal incentives dissuading investments such as the immediate implementation of presidential directives such as the removal of signature bonuses to attract investments.
It also urged the government to support the achievement of the final investment decision (FID) for three identified blueprint projects in 2024 and for other projects enabled to attain FID by 2026.
To boost gas investment and production, the report declared that there is an urgent need for the government to improve the incentive structure for investment in the development of non-associated gas (GAS) fields, implement presidential directives improving the gas investment environment and develop a commercial framework for gas supply to the local market for power and gas-based industries.
It stated this will be achieved through value chain financing, accelerating access to funds of N200 billion.
The team also proposed ‘You Own’, which would be an N100 billion fund-supporting youth business development with low-cost financing for about 7,500 MSMEs and the introduction of Rural Area Development (RAPID) that is N111 billion fund-supporting 111,000 rural MSMEs as well as an affordable housing facility of N250 billion that will produce 25,000 units.
To stabilise the FX market and ease the cost of raw materials, the report said the introduction of a manufacturing stabilisation fund of N1 trillion focused on light and heavy manufacturing will ease asset utilisation gaps and inventory refinancing.
However, experts have urged cautious optimism pointing at implementation gaps, incoherence of thoughts and lack of timelines.
An investment banker, Tolulope Alayande, observed that the proposed national council on agriculture productivity will not yield an immediate solution to the soaring food prices.
He also said submitting the report to the Presidential Economic Coordination Council (PECC) and the creation of the Economic Management Team are bureaucratic bottlenecks that are not necessary.
His words: “This government is one year old. It has barely two years of work and yet you create a committee whose work will not manifest in the next two years. This to me, is raising the adrenaline of Nigerians unnecessarily. This will no doubt excite some Nigerians, but I am certainly not expectant.”
For retiree banker, Ande Mohammed, not having a clearly defined timeline for oil and gas is a major drawback and raises questions about the sincerity of the implementation strategies.
He maintained that some of the milestones stated in the oil and gas sector are outside of the control of the government.
“Yes, I understand the optimism that the report raises. However, when subjected to critical analysis, it will be difficult not to notice the huge gaps that are therein. For example, how do you raise the production level to two million? How do you stem oil theft? How do you rev up your investment? How do you achieve insecurity in the Niger Delta that permits unbridled oil stealing? What about gas? There are many more posers that the report is yet to address in concrete terms.”
According to the Chief Executive Officer of Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, noted that the proposed Accelerated Stabilisation and Advancement Plan is a laudable proposition coming from the Finance Minister, adding that it addresses many of the burning economic issues bothering real sector investors.
“The plan contains robust and comprehensive fiscal policy measures that stakeholders in the real economy had clamoured for over the past year. It addresses the concerns of investors on high interest rate, high cost of cargo clearance at the ports, and high import duty regimes.
“The relaxation of import duties on critical raw materials for manufacturers would calm the raging inflationary pressures in the economy, especially food inflation. The fiscal measures reflect the responsiveness of the administration to the concerns of investors in the real economy. We urge for expeditious implementation of the plan, once approved by the president”, he added.
Several executive orders are expected to be signed by the President to give teeth to the initiatives.
One of such orders tagged, ‘Inflation Reduction and Price Stability’, would cover import duty and value added tax (VAT) suspension on specified items, importation of paddy rice by millers, import duty exchange rate pegged at N800 as revealed by Taiwo Oyedele last week, prioritising productive spending, paying down Ways and Means, enforcing executive order on default approval and concessional low-interest rate.
The ‘Non-oil Export Promotion and International Trade’ executive order would take into consideration tax exemption for repatriated export proceeds of services and IP, zero-rated VAT for all non-oil exports, relaxation of restriction on the use of export proceeds, removal of tax clearance certificate as a condition for forex application.
The Prudent Financial Management and Financial Sustainability Executive Order would see MDAs remit operating surplus above N5 billion, no foreign trips for events targeted at Nigerians, electronic payment of estacode, direct payment to MDAs’ contractors, access to funds subject to accounts and payment of fees in naira.
Additionally, the ‘Tax Information Consolidation and Collaboration’ Executive Order is aimed at addressing the tax information consolidation and collaboration initiative and will seek to create a TICC data bank to be managed by the Joint Tax Board, mandatory use of National Identity Number and Registered Company numbers.
It is believed that while import duty adjustment will affect general importation, there is a specific executive order on the importation of paddy rice that there is a possibility of the Federal Government lifting the ban on paddy rice.
Sources in the presidency claimed President Tinubu is interested more in introducing non-monetary incentives as a means of curbing inflation as against salary increments.
Those familiar with the new deal from the presidency said the Federal Government may introduce a ‘social security deduction’ soon as part of the fiscal system as recommended by Taiwo Oyedele’s Presidential fiscal policy and tax reforms committee.
