Trade and investment as drivers of Jonathan’s transformation agenda

Posted by Jackson Obiajulu | 19 September 2013 | 4,198 times

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In the last two years of President Goodluck Jonathan’s administration, one ministry that has been at the centre of business news as a result of its new mandate is that of Industry, Trade and Investment. Headed by Olusegun Aganga, a respected international investment banker, who until his appointment as Nigeria’s finance minister in 2010 was a Managing Director of one of the world’s leading investment banks, Goldman Sachs, the ministry has been at the centre of efforts, which have led to Nigeria’s new found status, according to many experts.

Investment Drive: Various development experts have stressed the importance of increased investments in the face of current harsh global economic realities. This, according to them, makes Jonathan’s initiative of creating a ministry in charge of investment, which is yielding visible gains, a very smart one.

Aside from the ministry’s reports revealing investment commitments of over N8 trillion and reports by world industrial giants that projects are at various stages of execution in Nigeria, observers have said that there is obviously a better image for Nigeria. This is as evidenced by the new interest in the Nigerian economy, shown by the continued visits of Presidents and trade ministers from advanced economies to Nigeria to explore win-win trade and investment relationships. This has been made possible by the aggressive marketing of the country’s potentials by the ministry.

This, among other things, is tied to the aggressive marketing of Nigeria’s potential, especially by people whom the international community considers as trusted in investment and financial matters.

Gains So far: Recently, Nigeria was ranked as one of the four major investment destinations and growth areas in the world. KPMG, one of the world’s foremost audit, financial and tax advisory firms, said Nigeria’s newfound status followed the disappointing returns recorded by the BRICS, with the exception of China.

In the same vein, UNCTAD’s World Investment Report 2012, subtitled ‘Towards a New Generation of Investment Policies,’ released recently, also placed Nigeria as Africa’s biggest destination for Foreign Direct Investment in 2011, quoting total FDI inflows of $8.92bn. According to the report, Nigeria received $8.92bn in FDI, which placed it first in Africa. South Africa was ranked next with total FDI inflows of $5.81bn.

Friendlier Business Environment: There have been a number of efforts by the Ministry of Industry, Trade and Investment, aimed at reforming the Nigerian investment climate and improving the country’s Doing Business ranking.

Under two years, the Doing Business and Competitiveness and Investor-Care committees have been revived; the One-Stop Investment Centre at the Nigerian Investment Promotion Commission (NIPC) has been repositioned and strengthened to pave the way for efficient coordination of investment facilitation between relevant government agencies and achieve a 48-hour response target for all enquiries. The National Competitiveness Council of Nigeria has also been established to drive healthy competition in business. These were all spearheaded by the trade and investment ministry.

Findings have shown that there are modest gains resulting from these efforts. For instance, the Global Benchmarking Network, in its annual Global Competitiveness Reports released in September last year, ranked Nigeria 115th. This indicated an improvement by 12 points from its 127th position in the previous year.

The report is reputed to be one of the most comprehensive ratings of national competitiveness worldwide. It identifies and assesses the drivers of the economies of 144 countries. Nigeria moved up to the 115th place in the ranking due to improved macroeconomic condition, the report noted.

During the inauguration of a taskforce to review investment policies in Nigeria, the Head, Investment Policy Review for Africa, OECD, Mr Alexandre de Combrugghe, said that the organisation’s decision to partner Nigeria was due to the growing global investment interest in the country. This corroborates similar pronouncements by international experts.

Combrugghe said the economic reforms embarked upon by the Jonathan administration had helped to strategically position the country as a major investment destination.

Starting a Business: Registration of new businesses, which used to be so cumbersome, can now be done within 24 hours from Abuja and Lagos. This has paved the way for N1 billion potential annual savings to investors, according to the Corporate Affairs Commission.

There is an ongoing redevelopment of CAC software systems to enable online registration of businesses. The potential annual savings to investors in this regard is estimated at N2.5 billion.

“The Honourable Minister also made it clear to me that I had to deliver 24-hour registration service as a major KPI, and I am happy to say that we have been able to deliver that,”

CAC Registrar-General Bello Mahmud told reporters recently.

The total number of new companies registered within 24 hours, since the commencement of the 24-hour start-to finish business registration by the CAC, currently stands at 10,723. The CAC made this known in its latest report titled, ‘Statistics of New Registration Services for Abuja and Lagos Offices.’

A breakdown of the report showed that the total number of applications for business registration received by the Commission within the last four months was 20,800. Of this number, Abuja Head Office received 19,919 applications, while Oregun and Yaba offices received 653 and 228 applications respectively. According to the report, the total number of applications processed within 24 hours in CAC’s Abuja Head Office was 10,292; while the Oregun and Yaba, Lagos offices processed 398 and 33 applications respectively.

Nigeria’s Trade Position: The ministry has embarked on a multi-focus trade strategy to tackle the various challenges for domestic, regional and international trade based on their peculiarities. This has been yielding results. 

For instance, the Central Bank of Nigeria in its ‘Nigeria’s External Sector Report 2012,’ said: “Nigeria’s trade balance improved significantly from $8.62 billion in Q2, 2012 and $1.60 billion in Q3, 2011, respectively, to US$12.37 billion in Q3, 2012.

“Aggregate exports rose by 8.2 per cent, from $22.53 billion in Q3, 2011 to $24.37 billion in Q3, 2012 while aggregate imports (CIF) declined by 42.7 per cent to w$11.99 billion in the review period. The trade balance position improved due to lower imports of goods and services and increased exports earnings.”

Latest reports from the National Bureau of Statistics also showed that the value of export increased from N19,440.4 billion in 2011 to N22,446.3 billion in 2012. The NBS said the increase in the value of exports contributed to the visible trade balance of N16,821.4 billion recorded in 2012.

The fall in total trade, according to economists, is a positive development for Nigeria. It has been attributed to the massive 42.9 per cent decline in imports in the review period.

This shows that the nation is shifting gradually away from being an import-dependent nation. Increasing export implies increased domestic production, job creation and wealth generation. Throughout 2012, for instance, the Ministry of Industry, Trade and Investment did not issue a single licence for the importation of cement, which has traditionally been a huge drain on Nigeria’s foreign exchange.

“This may also have substantially contributed to a fall in imports. And all these are invariably correlated to the rigorous implementation of growth-enabling policies in the key sectors of the economy.”

Details of Nigeria’s exports to various continents of the world, according to NBS data, revealed that European countries were the highest consumers of Nigeria’s export with N8.2 trillion or 36.7 percent. America accounted for N7.19 trillion or 32.1 percent and Asia (N4.34 trillion or 19.4 percent).

In the African region, Nigeria exported products valued at N2.1 trillion or 9.4 percent of its total exports trade. The country, however, exported products valued at N869.6 billion to the ECOWAS region out of its total export trade to Africa.

Enhancing Industrial Capacity Utilisation: The ministry has commenced the implementation of the National Industrial Revolution Plan. The Plan seeks to increase the contribution of industry to GDP; develop priority sectors to top one in Africa and top 10 globally; reduce dependence on imports; and create jobs. The aim of the plan is to place Nigerian industries on the front seat of inclusive economic growth and development. 

The ministry is, however, rigorously implementing the Backward Integration Policy used in the cement industry in other key sectors. It has developed a new Sugar Master Plan / Policy which will deliver about 1.79 million metric tons of sugar; 161.2 million litres of ethanol; 411 megawatts of electricity and 117,000 jobs when fully completed.

It has also designed the Nigerian Automobile Industry Development Plan to provide the environment for the orderly development of the sector.

These are initiatives, which have already laid the foundation for ample job opportunities for those in the working group, experts have noted.

Gains: According to statistics by the Manufacturing Association of Nigeria, industrial capacity utilisation has risen from 46.44 per cent in 2010 to 48.24 per cent to date. Capacity utilisation in the textile, apparel and footwear sector has also significantly increased from 29.14 per cent to 52.01 per cent.

The Federal Government’s intervention in the textile industry has, in addition, resulted in the reopening of moribund textile mills, saved about 8,070 jobs and created 5,000 new jobs through the disbursement of the N100 billion CTG Intervention Fund. 

The Vice-President, Nigeria Labour Congress and General Secretary, National Union of Textile Garment and Tailoring Workers of Nigeria, Issa Aremu, confirmed that 38 textile firms had so far benefitted from the Fund.

The President of the Manufacturers Association of Nigeria, Chief Kola Jamodu, who spoke during the presentation of NIRP to manufacturers, expressed satisfaction with the minister and the Federal Government for initiating and implementing policies and programmes which, he said, had resulted in improved capacity utilisation of the manufacturing sector.

The Q1 2013 economic report of the CBN also said the Federal Government’s N179.5billion non-oil sector earnings in the first quarter of 2013 were driven largely “by receipts in the industrial sector.”

SME Development: Many activities point to the fact that the Small and Medium Enterprise sector is being targeted for improved performance. First, the National MSME policy is ready for launch. This is the first time such a policy will be in place.

To tackle complaints about non-coordination of the activities of agencies in charge of developing SMEs in Nigeria, the ministry has developed the National Enterprise Development Programme. NEDEP is an initiative spearheaded by the Federal Ministry of Trade and Investment and its three parastatals – the Bank of Industry, Small and Medium Enterprises Development Agency of Nigeria and the Industrial Training Fund.

The Bank of Industry has also increased its focus on MSMEs to 85 per cent of its commitments in total. According to BOI, in the last year, there has been a 30 per cent increase in the number of cumulative loans approved, 67 per cent increase in cumulative value of loans and 161 per cent increase in jobs created.

Obiajulu is an investment analyst based in Lagos. Photo shows Minister of Trade and Investment, Dr. Olusegun Aganga.

Source: News Express

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