The Centre for Democracy and Development (CDD) has identified open government and reforms in the Nigerian human capital sectors as crucial for economic development. The development organization said an open government can be achieved by leveraging new digital technologies in formulating programme strategies and implementation.
CDD made the recommendations in its report, “Fluctuating Fortunes: A 5-year Economy Assessment under the Buhari Administration”. The report analysed the five-year term of President Muhammadu Buhari-led administration, its achievements, and shortcomings. According to CDD, the report used a vast array of data sources in assessing and interrogating core issues and conversations around building an economy.
Also, the report credited reforms in the business environment and described the 2019 Finance Act as a policy game-changer. “The Act provides Companies Income Tax (CIT) and Value Added Tax (VAT) exemptions for small businesses (those with a gross turnover of ₦25 million annually). In addition, it reduces the tax rate for medium-sized businesses (those with a gross turnover of between ₦25 million to ₦100 million annually) from 30% to 20%. Similarly, the Finance Act exempts the profits of small businesses earned from dividends within their first five years of operation from being taxed, and provides a five-year initial tax exemption period for businesses engaged in agricultural production which may be renewed for additional three years,” the report said in part.
The Centre for Democracy and Development also highlighted the Anchor Borrowers scheme as another important programme in the current administration. The programme, according to CDD has reportedly contributed to the improvement in food availability across the country. The report reads, “With the programme supporting over 1.5 million farmers in cultivating 16 agricultural commodities in its four-year existence, it has been celebrated as one of the milestones in the much talked about the push for the diversification of the economy.” In terms of delivery and impact, however, there are objections in the report that that key processes for the delivery of such programmes have not been efficient, including unsavoury reports such as non-repayment of loans and diversion of input, which should go to farmers who need them the most.
In the report, CDD, therefore, expressed worries that if key processes are not firmed up, there could be large scale loan default, which in turn could have adverse the sustainability of the programme and lead to its termination.
On the flip side, the report also assessed limited access to electricity and financial credit as well as inadequate measures towards resolving insolvency. It noted that “power cuts remain relatively frequent as substantial progress, particularly in the distribution network, has not been made towards providing better power supply to customers. Besides, the report refers to how lower government revenue resulting from the “twin shocks” (COVID and Oil) will further saddle Nigeria with a huge debt burden. The point is made with clarity about how the federal government borrowing has grown by more than 100 percent since 2015.
“Although the federal government’s current debt stock of about N22 billion is less than 20 percent of GDP, the continuous accumulation of debt appears unsustainable as servicing of the debts is already accounting for more than 60 percent of government revenue.” The wobbly shape of the economy, according to the report is further underscored by the recent downgrade in Nigeria’s credit rating by key international credit agencies (S&P and Fitch) in the first half of 2020. It was argued that with the twin shocks resulting from global oil glut and the COVID-19 pandemic, the country’s debt burden is expected to further increase in 2020 especially if the government fails to be more decisive in its debt management policies.
Job losses and the increasing poverty rate in Nigeria were also identified as shortcomings of the President Buhari-led government.
Key recommendations
In proffering solutions, the report suggests that Buhari should focus on a few key areas: reducing the quasi-fiscal role of the CBN and improving credit infrastructure. It also advises the government to leverage digital technologies to embrace open governance principles and make good plans to invest significantly in human and physical capital while addressing long-term bottlenecks to growth.
The full report can be downloaded on www.cddwestafrica.org .