THE ATIKU ABUBAKAR POLICY DOCUMENT (The Atiku Formula) . MAKING GOOD THINGS HAPPEN Continued! 2.2 Economic Transformation Job creation must be complemented with economic transformation. Economic transformation in this context refers to changes with the capacity to have a deep and meaningful impact on the Nigerian economy. Some of the economic transformation initiatives are outlined within the Infrastructure section (steady electricity supply and development of a modern road and rail network, development of a gas pipeline network). Others include restructuring the Federal Government and implementation of property reforms. In achieving transformation, attention needs to be paid to comparative advantage. In certain circumstances, comparative advantage can be created, and we need not therefore assume it a natural endowment. The concept of comparative advantage should be linked with SMEs in order to develop value adding products/activities where Nigeria can develop a comparative advantage over a period. Government can create the enabling environment for this to be achieved. 2.2 (a) Land Ownership and Property Rights Reform The big enabler of any people is the land tenure system. In a functional market economy such as we aspire to have, individuals must have clearly-defined and inalienable property rights. The absence of effective property rights is partly responsible for the inability of large numbers of Nigerians to take advantage of the economic reform and formal credit/banking system. Macroeconomic policies can liberalise sectors and open up opportunities but unless economic agents are able to mobilise and take advantage of the opportunities, they will not feel the impact of the reforms. Many Nigerians own land that is untitled, and therefore of no use whatsoever in facilitating access to capital or freeing up tied capital. Instead, land is typically held through informal arrangements that have local relevance but cannot be used in the formal economy. Macro-economic reforms, desirable as they are, cannot achieve their intended objectives unless a serious and concerted effort is made to vest formal title in landowners. Formal title will integrate the poor and the marginalised into the formal economy and enable them leverage their assets to further their well-being by seeking to achieve their individual or community pursuits . Nigeria therefore needs to make an outright commitment to title all land. This will immediately transform a fixed and illiquid asset into a valuable asset capable of generating capital for investment with consequent wealth creation. Allied to the property reforms are availability of affordable housing and mortgage reforms. Nigeria faces a severe housing deficit. Estimates by the Federal Mortgage Bank indicate a deficit of at least 12 million housing units. While the deficit cannot be addressed within the lifetime of an administration, a concerted effort at reducing is however clearly required. This will entail creating linkages between provision of land to property developers, increased availability of housing finance, reduction in property transaction costs and job creation across several sectors ancillary to provision of additional housing stock. Macroeconomic stability is critical in mobilising housing finance (as a result of its impact in ensuring a low rate of inflation, affordable interest rates and in increasing household and corporate savings). The pension reforms will provide a long term funding market, which subject to macroeconomic stability will facilitate the development of the mortgage market. Coherent action is therefore required to increase home ownership and broaden the potential outlets for pension fund assets. 2.2(a)(i) The Initiatives Short-Term • Government shall encourage home ownership and give added impetus to home ownership by introducing tax incentives via mortgage interest relief whereby homebuyers can offset a proportion of their mortgage interest payments against their tax liability. • Encourage a review of pension fund investment guidelines to facilitate enhanced pension fund involvement in provision of financing necessary for the development of the Nigerian mortgage market. • Enact appropriate foreclosure and securitisation legislation to mobilise additional housing finance. • Reduce property transaction costs (stamp duties and other charges). Medium Term • Facilitate an increase in housing stock via 3G and PPP partnerships as well as through housing finance reforms. • Under a 3G partnership (since land matters are a residual responsibility), title, record and map all landed assets in the country. The Federal Government shall achieve this by introducing an initiative that has nationwide acceptance thereby encouraging the States to follow suit. •Review of the Land Use Act and the passage of a revised Land Use Act that is more market friendly while protecting the rights of small holders and the landless • Recapitalise the Federal Mortgage Bank through a partial privatisation in order to allow it play an expanded role in the secondary mortgage market 2.3 PETROCHEMICALS 2.3(a) The Issues • Need to find a way to add value to the local economy via strategic linkages. Development of a petrochemicals industry will allow the country to impact upon so many sectors – o agriculture (85% urea based); o pharmaceuticals (almost wholly reliant on imported raw materials); o textiles; o food technology; o fishing vessels; o construction/building materials; o fibres; o polyesters; o soaps o Tyres •Creation of petrochemical jobs will be significantly accelerated by generating processed local raw materials, especially for SMEs. UNIDO estimates of up to 1 million new jobs can be created in Nigeria within 10 years via petrochemicals/petrochemicals based activities. o Capacity exists in Warri; Kaduna; Eleme and Port Harcourt. 2.3(b) The Initiatives Medium-Term • Support will be given to companies operating in the petrochemicals industry o pioneer industry status; o preferential gas availability and o attractive pricing to enable them operate at full capacity. To be continued tomorrow with MACROECONOMIC FRAMEWORK. Keep reading
Posted on: Fri, 13 Sep 2013 06:58:20 +0000