The Federal Executive Council last week approved the sum of N2.3 trillion as stimulus package for the Nigerian economy, in response to the complement of dislocations caused by the COVID-19 pandemic. The package which is the main plank of the recommendations by the Economic Sustainability Plan is a 12-month transit programme aimed at stemming off a likely slide of the economy into a new round of recession, courtesy of the pandemic.
Hence it will be directed at reviving the economy through creating new jobs, reflating the economy through making more money available, supporting small businesses, and driving the development of local content.
Articulated by the Economic Sustainability Plan Committee set up by the President Muhamadu Buhari, the plan was premised on a complement of empirical data which dictated the need to anticipate and contain the likelihood of emergent depression in the economy with conditions worsening after the pandemic rolls over. For instance, following the drastic drop in its revenue, the committee reduced the country's expectation from oil revenue to an average of $30 per barrel which will fetch for the country about N88.4 billion monthly.
This will lead to the total allocation to Federation Account Allocation Committee (FAAC) of N484 billion a month, when compared to N669. 9 billion by this time last year. This contraction of the FAAC largesse which is to be shared by all tiers of government translates into severe revenue shortfalls for several states which depend preponderantly on it to deliver the dividends of governance.
In the same vein, the committee projects that unemployment rate could rise from the 2018 figure of 23.1% with 20.9 million Nigerians out of jobs to 33.6% with 39.4 million out of the labour market if urgent steps are not taken. Among the various scenarios explored, the committee settled on the recommended plan as such that will clear the economy from stagnation and even recession as well as provide sustainable traction to move it into winning ways. As part of resolving the unemployment problem, the Committee adopted the engagement of 774 unskilled Nigerians on the basis of providing 1000 jobs in each of the 774 local government areas of Nigeria as a temporary measure.
With respect to funding, the committee settled on the following options: N500 billion already incorporated into the revised 2020 budget, N1.2 trillion loan as structured low cost loans from interventions by the Central Bank of Nigeria (CBN), along with other development fund administrators, N344 billion to be sourced from bilateral and external sources, and other funds to be sourced locally.
Considering its timing and assumptions on which it is based, the stimulus plan remains commendable since it is intended to ameliorate whatever challenges are presently confronting the Nigerian economy, and may remain hereafter. However as has always been the case, the problem is expected to manifest with the question of implementation.
The country has a disturbing history of articulating well thought out plans which are compromised at the point of implementation. Reasons for such serial plan failures include faulty assumptions that often do not reflect realities on the ground, especially when empirical factors which are not based on verifiable facts and figures, are adopted as planning inputs.
Other factors that often derail development plans include political considerations which are intended to protect vested parochial interests. For instance, even this current stimulus package which is yet to be implemented, has run into a maelstrom of crisis with the proposed 774,000 jobs scheme suffering a face-off between the National Assembly and the Minister of State for Labour and Productivity, Festus Keyamo, over his failure to clarify on the protocol for selecting beneficiaries of the job scheme.
Some of these factors manifesting in various forms had derailed past development and stimulus plans for the economy, making them achieve lass than they were intended to. Example was the ERGP which was launched in the wake of the 2016 recession that is yet to be fully impactful. Meanwhile, the present stimulus package is intended to follow up on the ERGP.
Against the critical need to succeed with the stimulus plan, there is need for the administration to ensure a disciplined disposition by all factors in its implementation.