As the Federal Government's commitment to economic regeneration continues to yield results, economic managers say the trade and investment ministry deserves support to make the transformation a permanent feat in the economy, reports Festus Akanbi.
In 2001, British economist and retiring Chairman of Goldman Sachs Asset Management, Jim O'Neill, coined the acronym, "BRIC", in a paper titled, "Building Better Global Economic BRICs," referring to Brazil, Russia, India and China, which were all considered to be at similar stages of newly advanced economic development. These countries became the big four! The acronym later became BRICS to accommodate South Africa. But O'Neill did not stop there, he also identified 11 countries - Bangladesh, Nigeria, Egypt, Indonesia, Iran, Pakistan, Mexico, Philippines, Turkey, South Korea and Vietnam - as having a high potential of becoming the world's largest economies in the 21st century, along with the BRICs.
However, following what experts term the disappointing returns of the BRICs with the exception of China, it has been established that global economic growth in the next few years is hinged around the growth of major African countries. Of the N-11 countries, therefore, Mexico, Indonesia, Nigeria and Turkey, called MINTs, are seen as successors to the BRICs and are expected to graduate from emerging markets to developed economies. The MINT, according to Samir Gadio, emerging markets strategist at Standard Bank, London, is believed to be a fertile destination for long-term investors.
This status is definitely a good one for Nigeria as the Federal Government continues in its efforts to demonstrate its commitment to economic regeneration. Recent reports on the performance of the MINT economies, which indicate that Nigeria may be ahead of its peers also imply that Nigeria's economic managers may be working hard after all.
"We believe Nigeria is the fastest growing economy when compared to other MINTs, considering its strongest fiscal balance, lowest public debt. It is the only country with a current account surplus as all other MINTs currently have deficits," Yvonne Mhango, director, sub-Saharan African economist at Renaissance Capital was quoted to have said recently.
Experts see various reasons for expected good performance of MINT economies, like Turkey's robust economic recovery since the Global Financial Crisis and Indonesia's very similar characteristics with the BRICs, among others. For Nigeria, there seems to be a gap between perception and reality, with reports of poverty and corruption covering many opportunities for exciting investment and sustainable economic growth. The administration of President Goodluck Jonathan has, nevertheless, succeeded in winning, to a large extent, the confidence of the international business community if recent comments on the prospects of the Nigerian economy are anything to go by.
The role of trade and investment
In the last two years of the Jonathan administration, one ministry that has been at the centre of business news as a result of its new mandate is the Ministry 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.
The minister's body language and actions since his days at the finance ministry, according to manufacturers, suggested that he might contribute more to the nation's growth by overseeing the affairs of industry. Aganga's appointment as the minister in charge of the trade and investment ministry was therefore well received among stakeholders.
Development economists say that, although there are challenges in the country currently, which normally should have closed the door on increased foreign direct investment, the Nigerian case has almost defied investment rules, going by recent investment reports.
While some experts say the Nigerian case in terms of investment flow is a paradox, others link improved performance directly to the activities of the ministry in charge of investments. The ministry, according to this group, has done so much in the area of economic revitalisation and aggressive marketing of Nigeria as a preferred investment destination, in spite of obvious challenges.
"The heart of the economy everywhere in the world is the ministry in charge of a country's trade, industry, enterprise, investment and youth development. One thing this administration got right was the formation of its cabinet, i.e. putting technocrats in charge of what they know best. By this I mean, Olusegun Aganga in trade and investment, Akinwunmi Adeshina in Agriculture and Okonjo-Iweala in Finance. The result is what we are seeing. Sustaining the tempo may, however, be a problem," a financial analyst on one of Government's reform committees, who does not want his name mentioned, said.
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, which is yielding visible gains, in order.
Aside from reports from the trade and investment ministry, stating investment commitments of over N8trillion 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 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, among other things, may be linked to aggressive marketing of Nigeria's potential, especially by people the international community consider trusted in investment and financial matters, according to investment experts.
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. This has been a major source of concern for businessmen at home and abroad.
But the ministry said to ensure that we tell a new story, going forward, 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 board of the National Competitiveness Council of Nigeria was also recently inaugurated 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 economy 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 investment interest in the country globally. This corroborates similar pronouncements by international experts.
Combrugghe said the ongoing economic reforms embarked upon by the Federal Government had helped to strategically position the country as a major investment destination.
Starting a Business
Registering new businesses in Nigeria has not been without difficulties. The amendment of the regulations of the Corporate Affairs Commission, a parastatal under the supervision of the Ministry of Industry, Trade and Investment, is however said to be tackling this issue. This has paved the way for N1billion potential annual savings to investors, according to the Commission.
The Registrar-General, CAC, Alhaji Mahmud Bello, added that there was an ongoing redevelopment of CAC software systems to enable online registration of businesses. He said potential annual savings to investors in this regard was estimated at N2.5billion.
"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," 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.
Mahmud said that it was important, in line with Aganga's directive, to let the public know that the 24-hour registration service was working and also state common errors that had made some applications fall out of the 24-hour deadline.
Nigeria's Trade Position
The fact that trade figures have continued to improve indicates that there are some deliberate new efforts to grow this important sector, analysts said. This may give some weight to Aganga's explanation that 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.
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 Bureau said the increase in the value of exports contributed to the visible trade balance of N16,821.4 billion recorded in 2012.
Analysing the trend, an economist and financial analyst, Dr. Oluwole Akinwunmi, told journalists that the fall in total trade was a positive development for Nigeria, attributing it to the massive 42.9 per cent decline in import in the review period.
He said, "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, it has been established that no single licence was given for the importation of cement, which has traditionally been a source of heavy drain on our foreign exchange.
"This may also have substantially contributed to a fall in import. 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
There are consistent "Buy Made-in-Nigeria" jingles on air, which indicate that this administration may actually be determined to see the Nigerian industrial sector grow in the real sense. But this cannot be a yardstick for performance. Experts have, however, assessed the ministry's direct roles as regards efforts aimed at revitalising Nigeria's industries.
The National Industrial Revolution Plan, according to the ministry, seeks to increase the contribution of industry to GDP; develop priority sectors to top 1 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. Enablers of the plan are already being put in place.
Reports from the ministry also show that it is rigorously implementing the Backward Integration Policy used in the cement industry in other key sectors. Such efforts include the development of the National Sugar Masterplan to aid self sufficiency in sugar production and the formulation of 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.
But manufacturing is already picking up. 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.
"We want to thank the Minister of Trade and Investment, Mr.Olusegun Aganga; and President Goodluck Jonathan for their manufacturing - friendly policies and look forward for more of these policies. We are committed to partnering with the government in order to transform the industrial sector and the economy in general," he noted.
Many activities point to the fact that the Small and Medium Enterprise sector is being targeted for improved performance. First, the National MSME policy, to be launched in the second quarter of this year, indicates that this administration means business. This is the first time such policy will be in place, stakeholders note. But it should not be much talk, little action, they have warned.
To tackle complaints about non-coordination of the activities of agencies in charge of developing SMEs in Nigeria, the ministry developed the National Enterprise Development Programme recently. 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.
In an interview with journalists on NEDEP, the minister said, "It is the first time ever that the three major agencies under my ministry - responsible for MSMEs development, finance and industrial skills development - have come together to drive and implement a programme that will revolutionise the growth of the MSME sector in Nigeria. While SMEDAN will provide business training and support, ITF will provide the skills required for specific or specialized businesses and BOI will provide the funding. "The development of NEDEP was guided by similar enterprise development models in Asia, Africa and the One Local Government One Product (OLOP) pilot projects in Kano and Niger states. Our objective is that within the next two years of implementing NEDEP, the programme will generate 3.5 million jobs and an estimated five million direct and indirect jobs."
The Bank of Industry has also performed better. "There was a stronger performance in 2012 as the bank (BOI) increased its focus on MSMEs to 85 per cent of its commitments in total. 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," the Bank of Industry said.
From findings and reports alike, it appears that the Ministry of Industry, Trade and Investment is pursuing the necessary policies for trade, industry and investment to grow. Experts agree that what the country needs at this critical time in the history of its growth efforts is to harmonise its reforms across all sectors of the economy to pave the way for inclusive and visible economic growth. Right now, the modest growth appears to be 'statistical', some observers note.