2013 FGN Budget- Implications for Macro-Economic Objectives by Adedoyin Salami (PhD)

Transcription

1 2013 FGN Budget- Implications for Macro-Economic Objectives by Adedoyin Salami (PhD)

2 Content Summary of 2012 Key Elements of 2013 budget Implications for Macroeconomic Objectives Short Term objectives Medium term Objectives Long term Objectives Outlook What might 2013 look like? 2

3 Data Acknowledgements IMF WB NBS OPEC CBN WEF International Monetary Fund World Bank National Bureau of Statistics Organisation of Petroleum Exporting Countries Central Bank of Nigeria World Economic Forum 3

4 Executive Summary 2012 Year of Unrealized Expectations The assumptions on which the budget proposals for 2012 were made largely unrealized Assumption Outturn Output Growth (%) Price Inflation (%) Oil Prices Bonny Light (US$/barrel) Oil Output (Mbd) Exchange Rate (N/US$) Weak global environment, flooding and the domestic cost of reform were the factors which created the observed divergence 4

5 Executive Summary FGN budget President assents to 2013 budget just before the 30 day deadline House of Reps threatened to override President s veto if budget was not signed The budget was passed as an agreement was reached between the Executive and Legislature A supplementary budget is underway BUDGET ASSUMPTION Benchmark oil price(us$/barrel) 79 Oil production(mbpd) 2.53 Exchange Rate(N/US$) 160 GDP Growth(%) 6.5 Aggregate Expenditure( N Trillion) Fiscal Deficit(N Trillion)

6 Key Elements of the FGN budget for

7 Key Elements of the 2013 FGN Budget Benchmark oil price(us$/barrel) 79 Oil production(mbpd) 2.53 Exchange Rate(N/US$) 160 Gross federally collectible revenue(n Trillion) Oil Revenue(N Trillion) 7.25 Non-oil Revenue( N Trillion) VAT( N Billion) 945 FGN Independent Revenue 447 Aggregate Expenditure( N Trillion) Capital Expenditure( N Trillion) 1.54 Recurrent Expenditure( N Trillion) 2.41 Statutory Transfer(N Billion) Debt Service GDP Growth(%) 6.5 Fiscal Deficit(N Trillion) Source: 2013 Budget Speech 7

8 Sectoral Allocation of FGN Spending-less would be spent on housing, health and transport SECTOR 2012 (N Bn) 2013 (N Bn) Difference (N Bn) % Change Education MDG Programmes and Projects Finance and Investment Environmental Development Water Supply and Resources Housing and Urban Development Health Agriculture Power Transport Aviation Source: Various Budget Speeches 8

9 Fiscal policy in 2013 Higher nominal spending, but lower than inflation and consolidating if GDP grows as projected At NGN11.25trn, budget by the State Governments and the 2013 FGN budget spending is 6.3% higher than in FGN Spending Proposals NGN 4.987trn 4.857trn State Government Spending Proposals NGN 6.259trn 5.724trn Total NGN11.246trn trn Spending as % of GDP The nominal increase in spending is below the increase in output. In other words, the share of government spending in total expenditure looks set to fall Furthermore, allowing for inflation, projected at 9.76%, announced plan show lower than inflation spending plan Expansion cannot be ruled out as Actual spending has typically outstripped budget proposals withdrawals continue to be made from Excess Crude Account (ECA) 9

10 Expansionary Fiscal Policy Fiscal Policy likely to be expansionary Given production observed in 2011, effective budget benchmark price of oil is US$108 Budget benchmark for FG budget raised by National Assembly and assented by the president from US$75/barrel proposed by the Federal Government to US$79 Possibility of FG acceptance of raise in interest of reducing policy uncertainty Announced State Budgets already showing 9% uplift compared to 2012 which is at per with inflation rate for January Applied across all States, Implies aggregate State-level spending rising from NGN5.74trn to NGN6.24trn 10

11 Fiscal Policy 2013 Will oil prices and volumes support spending plans Production is the critical budget assumption for 2013 FGN Proposals assume 2.53mbd Production figures for 1 st 3qtrs of 2012 show production at approximately 2.1mbd Revenue projections in the revised budget amount to US$72.952bn Key question Is the revenue assumption realistic? Using 2.1mbd as oil output Total revenue amounts to US$60.553bn production a shortfall of 32% At this level of production, price would have to be US$108/barrelto realize the revenue assumptions Price assumption may also be suspect given changing dynamics of oil market lower American imports (EIA forecasts that US imports will decline to approximately 6mbd by 2014), new discoveries and investments in Shale Oil Political uncertainty is the only basis for keeping oil prices where they are US$90 may be the new cap for oil prices!!! Fiscal Cliff approaching for Nigeria!!!!!!!!!!! 11

12 2013 FGN Budget-Allocation to housing declined Budget allocation to the housing sector declined by 7.7% from N26bn in 2012 to 24bn in We have an housing deficit of about 12 to 16 million units it is the intent of the government to allow for more private participation the ability of the Federal Government to put structures in place to ensure that Nigerians are not exploited is however daunting However, the effect of this will trickle down to the Real estate sector as more private involvement will result to less government bureaucracy 12

13 Infrastructure Capital Expenditure-mixed outcomes in Education 200 power 250 Health N'billion 200 N'billion 100 N'billion recurrent capital recurrent capital recurrent capital 40 Information and Telecoms 150 Transportation N'billion N'billion recurrent capital recurrent capital 13

14 Fiscal Framework FISCAL ITEMS 2011 Budget Amendment(N'B) 2012 Projection(N'B) 2013 Projection(N'B) 2014 Projection(N'B) 2015 Projection(N'B) KEY PARAMETERS, ASSUMPTIONS & INDICATORS Average Budget price per barrel (in US$) Average Exchange Rate (NGN/US$) Total Production (mbpd) GROSS FEDERALLY COLLECTIBLE REVENUE 9, , , , , Total Oil & Gas Revenue 6, , , , , Total Non-Oil 2, , , , , Special Levies for Targeted Expenditure Other Non-Federation Account Items -Education Tax SUMMARY OF FAAC & VAT POOL FGN 3, , , , , STATES 1, , , , , LGCs 1, , , , , Total 6, , , , , FGN BUDGET REVENUE (INFLOWS) Unspent balance from previous FY FGN BUDGET Share of Federation Account (48.5%) 2, , , , , FGN BUDGET Share of VAT (14%) FGN Independent Revenue Estimated FGN's Balances of Special Accounts end Dec Total 3, , , , , Source: Various Budget Speeches, Ministry of Finance 14

15 Implication on Macroeconomic Objectives 15

16 Macro-Economic Objectives Stability Economic Growth Economic Development Macroeconomic Objectives Reduction in Unemployment Rate Balance of Payment Equitable Income Distribution 16

17 2 Budget Interaction Formal Institutions Constitution Law Regulations Budget process- Formulation Budget Outcomes- Pro-poor / Consistent with plan Pro-poor/ Consistent with plan Government Legislature State govts. Political parties Oversight agencies Public Civil society Actors Capacity Constraints Commitment Interests Incentive Implementation Pro-poor/ Not Consistent with plan Pro-poor/ Not Consistent with plan Informal Institutions- Political bargaining Patronage Constituencies Allegiances Business interests, etc Scrutiny, oversight & Evaluation Achievement of Macroeconomic Objectives Source: Lagos Business School, Edward Kingston Research 17

18 2013 FGN Budget-Fiscal Consolidation Policy with Inclusive Growth The fiscal Consolidation Policy which aims at minimizing deficit without accumulating more debt that the government started adopting since 2012 will help to strengthen our finances. the sinking fund of N100 billion is being established for repaying Government s maturing debt obligations and to curb the rising domestic debt profile. annual domestic borrowing has been reduced from N852 billion in 2011, N744 billion in 2012, and to N727 billion in the fiscal consolidation would have a greater impact on lowering interest rates and unlocking credit than easing monetary policy in the medium term would. The amount of capital expenditure in the total budget is increasing as recurrent expenditure is gradually reducing Modest governance cost saving The government aim at Reducing the cost of governance by reviewing the recommendations aimed at rationalizing Agencies of the Federal Government with overlapping functions and was taken into account in the preparation of the 2013 Budget 18

19 On Stability the reduction in inflation The attempt made by government to cut down on expenditure would complement the efforts of the monetary policy authority at maintaining stability in the economy. The pursuit of single digit inflation remains the primary objective of monetary policy Policy context in 2013 defined by Possible (likely?) expansion of fiscal policy, Structural Inflation is also likely to pose a challenge in 2013 the task of monetary policy in this context is to prevent aggravation of price pressures Attracting capital inflows (at least, using market instruments to prevent capital outflows) Striking a right balance for the exchange rate to ensure reserve protection Furthering reform of the financial system It is clear from the tone and content of MPC communiques that monetary policy is unlikely to be accommodating 19

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21 Cost of borrowing moderating Nigeria s debt continues to be sought far and beyond despite moderating yields The announcement of the inclusion of FGN bonds in Barclay s Emerging Market Local currency government bond index this month has improved the credit rating and increased investor s appetite for FGN bonds Has implication for the Eurobond to be floated later this year 21

22 On Stability the reduction in inflation The attempt made by government to cut down on expenditure would complement the efforts of the monetary policy authority at maintaining stability in the economy. The pursuit of single digit inflation remains the primary objective of monetary policy Policy context in 2013 defined by Possible (likely?) expansion of fiscal policy, Structural Inflation is also likely to pose a challenge in 2013 the task of monetary policy in this context is to prevent aggravation of price pressures Attracting capital inflows (at least, using market instruments to prevent capital outflows) Striking a right balance for the exchange rate to ensure reserve protection Furthering reform of the financial system It is clear from the tone and content of MPC communiques that monetary policy is unlikely to be accommodating 22

23 Sovereign Wealth Fund- better late than never Now with US$1 billion, Nigeria s SWF accounts for 0.05% of a US$5.3 trillion global SWF market, and 0.03% of specific oil and gas related global SWFs (valued at US$3.1 trillion). Nigeria s SWF is the fifth largest of eight oil funds in Africa, but continues to rank low amongst other oil producing states. Countries Norway Saudi Arabia Russia Libya Algeria Angola Nigeria Ghana Sovereign Wealth Fund $ Billions Source: World BANK, Edward Kingston Associated 23

24 FGN Budget, Inflation and Growth Year Budget (trillion Naira) Inflation Rate Real GDP Growth Rate(%)

25 Unemployment across educational qualificationsno respecter of degrees Age -group, Sex and Sector (2011) Educational Level Urban Rural Composite Never Attended Primary School Modern School VOC/COMM JSS SSS 'O LEVEL' A LEVEL NCE/OND/NURSING BA/BSC/NHD TECH/PROF MASTERS DOCTORATE OTHERS Source: NBS, Socio Economic Survey Unemployment

26 What might 2013 look like? 26

27 Global Environment: 2013, a better year aheadalthough with possible intermittent landmines While a tentative recovery is visible in the global economy, a number of fiscal-related issues in the developed countries remain and are likely to impact growth in the coming months the budget impasse in the United States sequester could change the direction austerity survival UK looses top credit rating from Moody s China becomes world s top oil importer as "Shale revolution reduces United States need to import crude Prospect for commodity prices likely to depend on activity and climatic conditions Food prices likely to remain strong as climatic conditions expected to remain uncertain and prone to excesses 27

28 .2013 a better year ahead- Activity growth in Nigeria will be better than in 2012 driven by recovery in the non-oil sector. Nigeria s GDP growth this year 2013 projected by the NBS to be 6.75%, compared to 6.58% actual growth in 2012 and a Q4 growth of 6.99%. Non-oil sector continues to be the major driver of the economy expanding slower at 7.88% in 2012 compared to 8.80% in Non-oil activities in 2012 fell as a result of the effect of subsidy removal, flooding and insecurity caused by Boko Haram. The Non-oil sector is however in recovery mode as output grew from 7.55% in Q to 8.21% in Q Oil sector growth decelerated to -0.91% in 2012 form 0.14% in

29 Output already in recovery mode, 2013 likely to build on 2012 successes 29

30 Agricultural sector credit finally improvingreforms to encourage more investment Source: CBN 30

31 Domestic Conditions-activity growth expected in key areas Policy Outlook Fiscal Policy likely to be expansionary Trade policy likely to be driven by import-substitution strategy Despite continuing fragility in the global economy, activity growth in Nigeria will be better than in 2012 driven by recovery in key sectors Agriculture, Telecoms, Nigeria s GDP growth this year 2013 projected by the NBS to be 6.75%, 6.73% (WB), 6.74(IMF) and our projection at Edward Kingston is 6.9%. RealGDP (%) (Nigeria) F 2014F World Bank IMF NBS E represents estimate; F for Forecast IMF International Monetary Fund NBS National Bureau of Statistics 31

32 Inflation unlikely to be a problem, exchange rate to stay within band Inflation should be less of a problem. Inflation inched down to 9% in the month of January from 12% December 2012 and is expected to remain as a single digit. Exchange rate expected to remain stable especially in the face of Crude Oil Prices which should be above the budget benchmark and improving reserves accretion Sectors to look out for in 2013 include: Agriculture- Large Scale commercial Wholesale and Retail(FMCG) Spurred by rising incomes and the development of the railways Oil and Gas-especially post PIB Manufacturing Against the backdrop of an improvement in the power sector Telecommunications Infrastructure(transport, Power) -Energy reforms likely to be key Commercial Real Estate Against the backdrop of organized retail and rising income concentration 32

33 2013 FGN Budget: Drivers of Economic Growth Development of Non-Oil Sectors Reform Agenda Continuing progress and investment in the Energy sector Progress in the power Sector Passage of Petroleum Industry Bill (PIB) Assumption that No further progress on Price Deregulation (budgetary provision of NGN971bn made in 2013 budget; unlike 2012 when no provision was made) Agricultural Sector Budgetary allocation to the Agricultural sector improved by 3.8% from N78bn in 2012 to N81bn in 2013 Resolution of security issues and subsidence of effect of flooding. Nigeria is looking to become more self-reliant again for food security, and increase local content in our manufacturing processes. Movement to market philosophy Evidence of increasing investment (especially Fertilizer) and access to credit Improvement in Infrastructure- An early passage into law would have afforded the country ample time to plan ahead and take advantage of the dry season for the implementation of capital projects. Changing Spending Pattern Women and Youth empowerment- Recovery in private consumption Squeeze on household consumption from fuel price increases absent in 2013 Strong diaspora inflows increase in 2012 to US$24bn placed Nigeria recipient of 5 th larger inflow Expansionary fiscal policy stance in prospect 33

34 FGN s priority Sectors Policies geared towards import substitution -measures that took effect from January 2013 include: Agriculture NIRSAL intervention fund of USD 500million to be invested in the agricultural sector Fiscal Policies implemented in 2013 include: Sugar Rice Raw Sugar-levy:50%, duty:10% Refined Sugar-levy: 60%, duty: 20% Machinery and Spare parts imported for the establishment of local sugar manufacturing industries shall attract zero percent import duty. Brown and Polished Rice levy:100%, duty:10% 34

35 FGN s priority Sectors Transportation Commercial and Aircraft Spare parts to attract an import duty rate of zero percent. Import VAT-0 % Import duty rate on Completely Knocked Down components for Mass Transit Buses have been reduced from 5% to 0% Solid Minerals Machinery and equipment imported for the development of solid minerals to attract an import duty rate of zero percent. Import VAT-0 % 35

36 FGN 2013 Budget and the achievement of the Millennium Development Goals 36

37 Budget Allocation increases to meet up with the Millennium Development Goals Budget allocation to the millennium goals and projects increased by 166% from N3bn in 2012 to N8bn in 2013 Nigeria continues to rank low in its attainment of its Millennium Development Goals when compared with other countries 37

38 average performance in meeting the MDGs Will target be met? Potential MDG 1: Eradicate extreme poverty and hunger Target Halve, between 1990 and 2015, the proportion of people whose income is less than one dollar a day. Target : Halve, between 1990 and 2015, the proportion of people who suffer from hunger MDG 2: Achieve universal primary education Target: Ensure that, by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling MDG 3: Promote gender equality and empower women Target : Eliminate gender disparity in primary and secondary education preferably by 2005 and to all levels of education no later than Average Average Average Average MDG 4: Reduce child mortality Target : Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate. Note: Good potential, Average Potential, and Weak potential refer to the potentialsof the targets being met. MDG indicators with good potential have better potential of been realised by 2015 due to their progress over the course of the years, than those with Average and Weak respectively. Average Source: 2010 Millennium Development Goals Report 38

39 average performance in meeting the MDGs MDG 5: Improve maternal health Target: Reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio Target: Achieve, by 2015, universal access to reproductive health. Average Average MDG 6: Combat HIV/AIDS, malaria and other diseases Target :Have halted, by 2015, and begun to reverse the spread of HIV/AIDS. Target: Have halted, by 2015, and begun to reverse, the incidence of malaria and other major diseases. MDG 7: Ensure Environmental sustainability Target : Integrate the principles of sustainable development into country policies and programmes and reverse the loss of environmental resources. Target : Halve, by 2015, the proportion of the population without sustainable access to safe drinking water and basic sanitation. Good Average weak weak MDG 8: Develop a global partnership for development Target : Deal comprehensively with the debt problems. Good Target : In cooperation with the private sector, make available the benefits of new technologies, especially information and communication technology Good Note: Good potential, Average Potential, and Weak potential refer to the potentials of the targets being met. MDG indicators with good potential have better potential of been realised by 2015 due to their progress over thecourseoftheyears,thanthosewithaverageandweakrespectively. 39 Source: 2010 Millennium Development Goals Report

40 MDG -Goal 1: Eradicating Extreme Poverty and Hunger-Nigeria seems not to be making progress 80 Employment to population ratio, 15+, total (%) GDP per person employed (constant 1990 ppp US$) % US $ brazil india china nigeria malaysia turkey brazil china india malaysia nigeria turkey Source: United Nations 40

41 Consistency between budget provisions and extreme poverty and hunger alleviation Alleviation of hunger made the Agricultural sector on of the priority Sectors Allocation to the agricultural sector increased by 3.8% from N78bn Favourable agricultural policies like the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) which will guarantee 75% of loans by DMB s to farmers up to a ceiling of N600M also state governments contribution to the sector The goal of creating 3.5million jobs by the government in agriculture in 2013 is probably feasible Employment generation The sustainability of the YouWIN Programme; the Community Service Women and Youth Empowerment Programme (established in Feb 2012). The graduate internship Programme (part of the Subsidy re-investment Programme Sure-P), in which enrolled private companies provide one-year internship to 50,000 graduates who apply to the scheme. 41

42 Goal 3:Promoting Gender Equality and Empowering Women- No improvement in gender equality Proportion of seats held by women in national parliaments (%) Ratio of Female to male Labour participation Rate(%) % % brazil china india malaysia nigeria turkey 10 0 brazil 2006 china 2007 india 2008 malaysia 2009 nigeria 2010 turkey Source: United Nations 42

43 Women Empowerment to improve Nigeria s human development indicator- N3bn set aside N3 billion to be disbursed to participating MDAs as incentives for them to deliver on integrating women into 5 pilot ministries Agriculture, Health, Communication Technology, Water Resources and Works. These ministries are signing MOUs with the Ministry of Women Affairs to deliver on specific services for women. The Ministry of Agriculture-ensure that 5 million women farmers and agricultural entrepreneurs receive mobile phones to be able to access information on agro-inputs through an e-wallet scheme. The Ministry of Health-scale up the ongoing Save a Million Lives initiative; give back health and hope to one-third of the pool of young girls and women who have been waiting for Vesicovaginal Fistula (V.V.F) repairs through surgery and economic rehabilitation. The Ministry of Works-scaling up the number of women that are employed in public works programmes as contractors, workers and project evaluators, setting itself a target of 35% for women in FERMA rehabilitation work. In every geopolitical zone, at least 3 roads leading to areas where women s socio-economic activities are concentrated, will be prioritised and completed. To support these activities, we have set aside the sum of N3 billion to be disbursed to participating MDAs as incentives for them to deliver on these targets. Our focus on empowering women is part of our agenda for improving the country s human development indicators. In this regard, we shall not relent in our efforts to improving access and quality in our health and education sectors. 43

44 Goal 7: Ensuring Environmental Sustainabilityperformance still remains the same over the years Terrestial protected areas (% of total surface) brazil china india malaysia nigeria turkey 30 brazil china india malaysia nigeria turkey percent 15 percent Source: United Nations 44

45 .. Ensuring Environmental sustainability Improved sanitation facilities (% of pop with access) % brazil china india malaysia nigeria turkey Source: United Nations 45

46 Increase in budget allocation to the Educational Sector Budget allocation to the educational sector increased from N397bn in 2012 to N427bn in This 7.6% increase in budget could go along way if properly channeled towards empowering the youths to be entrepreneurs 46

47 Decrease in budget allocation to the health Sector Save a Million Lives initiative, plans to give back health and hope to one-third of the pool of young girls and women who have been waiting a long time for V.V.F repairs through surgery and economic rehabilitation Besides, we are up-scaling routine immunization and driving aggressively towards the eradication of polio. 47

48 Nigeria continues to rank at near the bottom of the financial development index 48

49 The Human Development Index The Human Development Index for Nigeria in 2011 is the position of the country is 156 out of 187 countries and territories. South Korea Average HDI ( ) Mexico Between 2005 and 2011, Nigeria s HDI value increased from to an increase of 7.0 percent of an annual average of about 1.1 percent. N11 Countries Iran Turkey Philippines Egypt Indonesia Vietnam Pakistan Bangladesh Nigeria

50 Vision 2020 infrastructure financing Sector Proposed Amount ( ) Total Spend Social Development N billion NA Power N billion NA Transport N242billion N2.216 trillion Oil and Gas N billion NA Housing N billion N2.825 trillion Education N billion. NA Health N billion NA Source: Vision

51 Thank you for your attention 51

52 Appendix A Fiscal Framework

53 Fiscal Framework FISCAL ITEMS 2011 Budget Amendment(N'B) 2012 Projection(N'B) 2013 Projection(N'B) 2014 Projection(N'B) 2015 Projection(N'B) KEY PARAMETERS, ASSUMPTIONS & INDICATORS Average Budget price per barrel (in US$) Average Exchange Rate (NGN/US$) Total Production (mbpd) GROSS FEDERALLY COLLECTIBLE REVENUE 9, , , , , Total Oil & Gas Revenue 6, , , , , Total Non-Oil 2, , , , , Special Levies for Targeted Expenditure Other Non-Federation Account Items -Education Tax SUMMARY OF FAAC & VAT POOL FGN 3, , , , , STATES 1, , , , , LGCs 1, , , , , Total 6, , , , , FGN BUDGET REVENUE (INFLOWS) Unspent balance from previous FY FGN BUDGET Share of Federation Account (48.5%) 2, , , , , FGN BUDGET Share of VAT (14%) FGN Independent Revenue Estimated FGN's Balances of Special Accounts end Dec Total 3, , , , ,

54 ...Fiscal Framework FISCAL ITEMS 2011 Budget Amendment(N'B) 2012 Projection(N'B) 2013 Projection(N'B) 2014 Projection(N'B) 2015 Projection(N'B) FEDERAL GOVT. OF NIGERIA BUDGET FGN REVENUE (INFLOWS) 3, , , , , Less Statutory Transfers NJC NDDC UBE (2% CRF) INEC NASS Sub-Total Debt Service Recurrent Service on Domestic Debt Service on Foreign Debt Sub-Total MDA Spending 3, , , , , Of which: Non-Debt Recurrent 2, , , , , Personnel Costs (MDAs) 1, , , , , Overheads CRF Pensions Multi-Year Tariff Order Other Service Wide Votes Sub-Total 2, , , , ,

55 Fiscal Framework Budget FISCAL ITEMS Amendment(N'B) Projection(N'B) Projection(N'B) Projection(N'B) Projection(N'B) Capital Spending 1, , , , , Aggregate Expenditure 4, , , , , Fiscal Deficit -1, , GDP 38, , , , , DEFICIT/GDP -2.96% -2.77% -2.04% -1.42% -1.03% Deficit Financing 1, , Sales of Government Property Privatization Proceeds FGN's Share of Signature Bonus Sharing from Stabilisation Fund Account (ECA) New Borrowings Domestic Borrowing Financing Deficit/Surplus

56 Appendix B Vision

57 Nigeria and Vision 2020 Nigeria s Vision 2020 s intent is to position Nigeria to become one of the top 20 economies in the world by 2020 The key parameters of vision 2020 include; Macro-Economy: A sound, stable and globally competitive economy with a GDP of not less than $900 billion and a per capita income of not less than $4000 per annum. Agriculture: A modern technologically agricultural sector that fully exploits the vast agricultural resources of the country, ensures national food security and contributes to foreign exchange earnings. Health: A health sector that supports and sustains life expectancy of not less than 70 years and reduces to the barest minimum the burden of infectious and other debilitating diseases Manufacturing: A vibrant and globally competitive manufacturing sector that contributes significantly to GDP with a manufacturing value added of not less than 40% Infrastructure: Adequate infrastructure services that support the full mobilization of all economic sectors, which includes power, transport, oil and gas infrastructure, housing and water resources. Education: Modern and vibrant education system which provides the opportunity for maximum potential, adequate and competent manpower Polity: Peaceful, harmonious and a stable democracy. 57

58 Vision 2020 The various sectors were grouped into different thematic areas: Physical Infrastructure: This area covers Power, Transport, Oil and Gas, infrastructure, Housing and Water Resources. Productive Sector: This area covers Agriculture and Food Security, Trade and Commerce, Manufacturing, Small and Medium Enterprises. Solid Minerals, Oil and Gas, Culture and Tourism, and the Film and Entertainment Industry. Human Capital Development: This area covers Education, Health, Labour and Productivity, Sports Development, Food and Nutrition, Youth Development, Women and Child development and social protection and safety nets. Developing a knowledge based economy: This area covers Information and Communication Technology, Postal Services and Science Technology and Innovation. Government and General Administration Regional Geopolitical Zone Development 58

59 Physical Infrastructure This thematic area covers 5 key sectors: Power, Transport, Oil and Gas infrastructure, Housing and Water Resources Power: Aggressive rehabilitation of power installations, expansion of generation, transformation, and distribution networks, It also involves widening the scope of Independent power Projects(IPP), feasibility studies for alternative energy sources. The Federal Government proposed an investment of N billionapproximately and minimum target of 16,000MW during the plan period. Transport Sector(Roads, Railways, Ports, Inland waterways and Airports):To develop an intermodal transportation network which will link rail, sea, air and road network in strategic locations across the country thereby, introducing efficiencies in the distribution of goods and services. Oil and Gas Infrastructure Development Strategy: Prioritization of gas infrastructure expansion across the country during the plan period, with the gas infrastructure network from Calabar to Ajaokuta through Umuahia and from Ajaokuta to Kano through Abuja and Interconnector pipelines from Obiafu/Obrikom in the East to Oben node in the West to increase gas supply to the west and create redundancy in the system. This will also help to provide alternative supply nodes to the frequently vandalized Escravos-Lagos Pipeline System (ELPS) pipeline. The target is to increase the transportation of gas, crude oil and PMS via pipelines. The major strategies are to construct new, and rehabilitate aging pipelines Housing Development: construction of 600,000 Housing units by the Federal Ministry of Housing, 240,000 units by the Federal Housing Authority and 500 prototype units by the Public private partnership (PPP) across the federation, the provision and equipping of building materials testing workshops as well as the re-capitalization of the Federal Mortgage Bank of Nigeria. The proposed allocation, during the plan period is N billion. 59

60 Power The sectoral goals include; The broad vision is to meet the demand for adequate and sustainable power in all sectors by the Nigerian economy and in all parts of the country at affordable costs To generate, transmit and distribute 35,000MW of electricity by the year The strategic objective is to ensure that the sector is able to efficiently deliver sustainable, adequate, qualitative, reliable and affordable power in a deregulated market, while optimizing the on and offgrid energy mix. To ensure that the electricity supply industry will ultimately be private sector driven. In the medium term, the goal is to generate, transmit and distribute 16,000MW of electricity by 2012 the overall target for the plan period is to increase electricity generation, transmission and distribution from the 3,700MW capacity as at December, 2009 to 8,000MW by 2010, and 16,000MW by The total proposed investment in the sector, during the Plan period is N880.98billion.It covers investment in four major areas: power generation; transmission; distribution; and alternative energy. This is a critical infrastructure for a sustainable economic growth and development. 60

61 Transport The sectorial goals: To evolve a private sector led multi-modal and integrated transport system To create an enabling environment for Public Private Partnership (PPP) through enactment of appropriate legislations, policies, design an Institutional framework that will support the envisaged positive transformation of the sector To ensure that transport services are adequate to meet the social and economic needs of the country, and to provide an effective instrument of national development To ensure that the transport system is developed and operated in an integrated manner that promotes the efficient use of resources within the sector to improve productivity and enhance the level of service provided to Nigerians To provide a safe, efficient and cost effective transport service for the country To develop the capacity to sustain and continuously improve the quality of transport infrastructure and service delivery in the country. The estimated total investment for the transport sector during the Plan period is approximately N2.216 trillion. The figure has been disaggregated on annual basis and by subsector. The subsectors are: roads; railways; inland waterways; ports and airports development. 61

62 Housing The sectorial goals: Creation of enabling environment for private sector investment in housing development Provision of adequate public building policy for effective service delivery Establishment of national housing data bank Harmonization and standardization of land administration process nationwide through a national technical development forum Work with States and Local Governments to produce and implement a unified and integrated infrastructure development for housing, to open up new layouts and provide site and services for private sector to develop affordable and decent mass housing. Work with financial sector operators and regulators to develop an effective primary housing finance system, and facilitate linkage of that market to the capital market to provide long term affordable and sustainable liquidity for housing. Embark on land reform to facilitate private sector investment in housing. The proposed total estimated investment for the Housing sector, during the Plan period (2010 to 2013) is N billion. It is expected that an intensive housing programmewill expand the construction sector, mortgage market and increase the quality of life of Nigerian s. 62

63 Agriculture and Food Security Sectorial goals: To Secure Food and Feed Needs of the Nation by increasing agricultural productivity to a 3-fold by 2015 and 6-fold by 2020.To transform the Nigerian agricultural production system to a substantially mechanized system by and also expand dairy production and milk yield from less than 2,000 kg to 5,000kg per cow per lactation by To enhance generation of National and Social Wealth through greater Exports and Imports substitution. To enhance Capacity for value addition leading to Industrialization and employment opportunities Efficient Exploitation and Utilization of available Agricultural resources Enhance the development and dissemination of appropriate and efficient technologies for rapid adoption The proposed total estimated investment for the Housing sector, during the Plan period, is N billion. It is expected that an intensive housing programmewill expand the construction sector, mortgage market and increase the quality of life of Nigerian s. 63

64 Oil and Gas The Vision aims to increase crude oil production and refining capacity to stimulate local value-addition and to put the country in a position to meet its domestic demand for refined products and even export refined products. To develop the gas sector to meet domestic and industrial demand and to take advantage of global markets. The proposed investment in the Oil and Gas down stream and up-stream activities under the productive sector for 2010 to 2013 is approximately N billion 64

65 Manufacturing The main aim of vision 2020 for the manufacturing sector is building a vibrant and growing manufacturing sector which can create competitive advantages in the face of rapidly increasing globalisation. 65

66 Education The goal of Vision 2020 in education sector is to ensure that all children, irrespective of ethnicity, gender, or disability, complete a full course of basic education which is 12 years of formal education comprising three years of Early Childhood Care Development and Education (ECCDE), six years of primary schooling and three years of junior secondary schooling. To establish a modern and vibrant education system that ensures the maximum development of the potentials of individuals and promotes a knowledge-driven society that propels the nation s development. providing access to quality education at all levels, improved learning and teaching infrastructure with greater emphasis on science, information technology, technical, vocational education and training. 66

67 Labour, Employment and Productivity Sectorial goals include: Creating job opportunities for Nigerians and enhancing labour productivity Formulating appropriate implementation framework, structure and governance for productivity improvement ( skill development and productivity enhancement schemes) Formalizing the informal economy to boost employment generation Enhancing industrial peace and harmony, and the protection of workers 67

68 Women Affairs and Social Development Goals related to women Affairs and Social Development Include: Reducing violence against women Empower and support women to improve their income Promote gender equity and significantly bridge gender divide in all aspects of the economy Develop mechanism to increase socio-economic and socio-political participation of women. Improve the Health status of Women 68

69 Telecommunications Sectoral Goals Developing a sufficient, efficient and affordable ICT infrastructure to accelerate and sustain economic growth and development A rapid ICT penetration and diffusion for efficient and affordable service across the socio-economic sectors of Nigeria Develop globally competitive indigenous human capital and Knowledge based Products and Services in targeted areas of ICT (software, hardware, networks, card technologies, security/biometrics, web and digital content development, etc) Deploy ICT in government for transparency and accountability as well as to enhance efficiency, effectiveness and increase government capacity on services to attain national competitiveness. Promote research and development (R&D) activities to stimulate and sustain innovation in ICT solutions. Develop the ICT industry for the production of software and hardware to global standards. 69

70 Appendix C Acceleration of Credit in Sectors 70

71 Acceleration of Credit-2010 DMBs Credit to sectors Q2: '10 Public Utilities DMBs Credit to sectors Q3: '10 Agric. Sector DMBs Credit to sectors Q3: '10 Exports Agric. Sector Government Solid Minerals Finance & Insurance Real Estate & Construction Exports General Commerce Manufacturing Transport & Communication Credit to Others sectors Source: Edward Kingston Research Government Exports Manufacturing Finance & Insurance Public Utilities Real Estate & Construction Solid Minerals Transport & Communication General Commerce Credit to Others sectors Source: Edward Kingston Research Manufacturing Transport & Communication Agric. Sector Finance & Insurance Solid Minerals Real Estate & Construction General Commerce Government Public Utilities Credit to Others sectors Source: Edward Kingston Research Source: CBN 71

72 2011-Credit to Real Estate and Construction on a decline, manufacturing on an increase DMBs Credit to sectors Q1: '11 Exports Manufacturing Transport & Communication Agric. Sector Solid Minerals Credit to Others sectors Finance & Insurance General Commerce Real Estate & Construction Public Utilities Government DMBs Credit to sectors Q3: '11 Exports Transport & Communication Manufacturing Credit to Others sectors Finance & Insurance Agric. Sector General Commerce Solid Minerals Real Estate & Construction Government Public Utilities DMBs Credit to sectors Q4: '11 Public Utilities Agric. Sector General Commerce Finance & Insurance Credit to Others sectors Solid Minerals Transport & Communication Manufacturing Exports Real Estate & Construction Government Source: Edward Kingston Research Source: Edward Kingston Research Source: Edward Kingston Research Source: CBN 72

73 Agriculture employs the largest proportion of the labour force 73