THE ATIKU ABUBAKAR POLICY DOCUMENT (The Atiku Formula) . MAKING GOOD THINGS HAPPEN Continued! 3. MACROECONOMIC FRAMEWORK 3.1The Issues In recent years, Nigeria has performed relatively well on the macroeconomic front. The performance has been anchored largely on the global commodity price booms rather than structural changes in the economy. In the last three (3) years, all major emerging market countries have amassed strong reserves largely due to the global commodity boom. Commodity prices have been driven higher by strong growth in China and major industrial economies. Within that context, Nigeria’s reserves are below emerging market averages. GDP growth has been fuelled largely by services and agriculture. Nigeria has recorded up to six (6) percent per annum GDP growth, but with more effective policies, this could be ramped up to about 10% per annum. Crop production, retail trade and telecoms have been the highest growth contributors to the economy, while sectors such as cement, water transport, rail transport and pipelines have provided growth challenges. While economic growth has undoubtedly been recorded and has offered new opportunities for new investments, the Nigerian economy has generally underperformed. Government has been unable to use fiscal policy to stimulate the economy. Overall, capital expenditure as a percentage of GDP has been declining while recurrent expenditure has been on the upward trend i.e., the cost of running government is increasing – hence the increase in recurrent expenditure that is clearly not sustainable. Fiscal policy is not being effectively used to accelerate the growth rate – in nominal terms, the economy has been growing faster than the budget, implying that the economy does have the absorptive capacity to absorb some of the excess earnings from crude oil exports Fiscal policy is, therefore, having limited impact on the economy, which necessitates a fundamental reassessment of the budgeting process 3.1 (a) The Initiatives: • The Federal Government will define a clear-cut policy target for the life of the administration 3.1 (a) (i) Inflation Short-Term • Cause the CBN to create a semi-autonomous banking supervision function within the CBN, thereby allowing CBN to concentrate on its key mandate of pursuing price stability and focusing on monetary policy Medium-Term • Pursue a sustained low inflation policy in order to achieve stable and low interest rates • Focus the Central Bank on its key price stability mandate by specifying clear inflation targets, which CBN will be required to deliver. • Provide the CBN with operational independence in accordance with its charter, while the strategic independence should reside with the political leadership. o If the targets are missed, CBN should be sanctioned accordingly. CBN will thus become an instrument for delivering the results. o Review the CBN charter and consider the workability of a banking supervision agency working independently of, but in collaboration with the CBN 3.1 (a) (ii) Reserve Management: Short-Term • Introduce in-house reserve management of a proportion of the foreign reserves within CBN by hiring some of the best asset management professionals globally who will operate within the CBN based on globally acceptable asset management standards; • Accelerate local reserve management albeit with the concept of “readiness” i.e., factor in the skills shortages and accelerate skill acquisition. • Actively encourage global reserve management players interested in Nigeria’s reserves to set up operations in Nigeria; • Reassess the holdings of the nations reserves in US Dollars (gold, an alternative, has appreciated 60% in the last year) and establish an optimal asset mix which shall be reviewed on a regular basis. 3.1 (a) (iii) Budgeting process: 1st 90 days • Create a dedicated Office of Management & Budget within the Presidency, which will be charged with a developmental focus in budgeting. Short-term • Quantify budgetary leakages and redirect to priority savings to priority areas (education, health, funding of revised compensation structure). Based on the above, deliverables can be specified and monitored accordingly. • Improve the budgeting process to facilitate more effective budget impact on the economy by undertaking quarterly appraisals and communicating the status. • Provide explicit commitments/promises, which translate into specific deliverables. • Specify expenditure targets for priority sectors (e.g. education and health) as a percentage of GDP, and undertake specific initiatives to achieve the targets. • Separate the office of the Accountant – General of the Federation (who shall be responsible for the Federation Accountant) from that of the Accountant General of the Federal Government (who will have responsibility for Federal Government’s finances). • Overhaul and institutionalise the due process mechanism to enable accelerated public procurement without compromising quality or costs. • Ensure better planning across government by including all agencies within the 3-year medium term expenditure reviews, and making the outcome publicly available information. Medium-Term • Ensure government wide adherence to the 3-year medium term expenditure framework. • Improve quality of government expenditure by complementing the work of the due process office with operational independence for the office of the Auditor-General of the Federation, who shall be required to present his report within 6 months of the end of each budget year. • Ensure better planning by government agencies thereby preventing bottlenecks being created due to bunching of project approval requests at the due process office. • Ensure streamlined due process system/fast track procurement process: o review the budgeting process and create additional capacity in federal agencies/ departments etc, o reside due process functions in the ministries under sector specialists rather than a central due process office; o develop a better procurement process so that early planning is factored in; and o ensure only projects with due process pre-certification are included in the budget. 4. THE PRESIDENCY – OPERATING ARRANGMENTS Medium-Term The initiatives for improving the efficiency of the office of the President include: • A strong commitment to Federalism as the basis for cooperation amongst all tiers of government o The Presidency shall use the Office of President to achieve the objectives of Federalism, and thereby expand the scope so that exclusive powers are not used as exclusive operating powers; o Create a structure/mechanism for transferring additional powers to states with FGN providing/defining standards (e.g., Education; Agriculture; Health) • Create a mechanism through which the Presidency can obtain feedback from the public. There must be regular interaction between the leader and the people • A concerted effort to do away with micromanagement of issues by the Presidency. This requires a very high quality of public appointees – indeed, one of the most important factors is the quality of cabinet appointees and the senior civil service. o A systemic change is required to be put in place o The President shall assemble an effective team and empower them so that he remains a macro player. o Government will actively engage the best no matter the constraints, empower them, delegate responsibility and create a policy monitoring mechanism for assessing performance of appointees. o Review the size of government – merge functions presently undertaken by some ministries and agencies so that a smaller, leaner government is created • Government’s processes/systems must be streamlined so that businesses are not constrained by bureaucracy. o Presently, there is disconnect between the various departments in government (that is, government becomes an obstacle due to turf battles) and this has adverse consequences on general development. To be continued tomorrow - INFRASTRUCTURE DEVELOPMENT- POWER SECTOR. Keep reading
Posted on: Sat, 14 Sep 2013 06:38:16 +0000
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