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How He Plans To Stimulate The Economy
Are you one of those wondering how President Bola Tinubu plans to stimulate the economy? We can tell you how. Everything is contained in his Renewed Hope Manifesto. There is an aspect of the document which reveals his plans, some of which he is now unfolding.
In his Manifesto Renewed Hope he explained that when he was Governor of Lagos, “My team and I developed institutions and policies that changed the face of the state. It became a safe place for its residents and an engine of prosperity for all those willing to work in pursuit of their economic dreams.”
“What my team and I achieved in Lagos, together we all can achieve for Nigeria. Our objective is to foster a new society based on shared prosperity, tolerance, compassion, and the unwavering commitment to treat each citizen with equal respect and due regard.”.
“Standing on the foundation emplaced by the Buhari administration, we shall: Build a Nigeria, especially for our youth, where sufficient jobs with decent wages create a better life.”
“Manufacture, create, and invent more of the goods and services we require. Nigeria shall be known as a nation of creators, not just of consumers. Export more and import less, strengthening both the naira and our way of life.”
“Continue assisting our ever toiling farmers, through enlightened agricultural policy that promotes productivity and assures decent incomes, so that farmers can support their families and feed the nation. Modernise and expand public infrastructure so that the rest of the economy can grow at an optimal rate. Embolden and support our Young people and Women by harnessing emerging sectors such as the digital economy, entertainment and culture, tourism and others to build the Nigeria of tomorrow, today.”
“Train and give economic opportunity to the poorest and most vulnerable among us. We seek a Nigeria where no parent is compelled to send a child to bed hungry, worried whether tomorrow shall bring food.
Generate, transmit and distribute sufficient, affordable electricity to give our people the requisite power to enlighten their lives, their homes, and their very dreams.”
He is also planning the Approach of Prosperity. “Under our government, our cities and towns will witness a level of industrial activity unprecedented in our nation’s history. In this, our youth shall become a leading catalyst driving the economic resurgence. This goes beyond the provision of decent jobs. It speaks of empowering those who see their future as
starting and owning businesses in the new economy. It goes to opening the economy in a way that encourages the best that the modern digital and IT-driven sectors have to offer.”
“We will improve existing industries and sectors. We will be brave and innovative enough to see how new economic vistas powered by today’s technology can create jobs and provide goods and services that will propel us toward greater prosperity and development.”
“In helping to shape this more dynamic economy melding the best of the extant sectors with what is new on the economic horizon, our government will be fiscally active; yet equally prudent in the ‘how and why’ of public expenditure because public money is also a storehouse of public values and public trust.”
“The allocation of revenue between the federal and state governments will be adjusted to give states greater flexibility to foster grassroots economic development. We will build an economy that produces more of the everyday items, both agricultural and manufactured goods, that define an individual’s and a nation’s standard of living.”
“Compelled by the unassailable fact that an economy cannot exceed the capacity of the available infrastructure to service it, we shall bring the National Infrastructure Policy to life, harmonising it with the National Industrial Policy to ensure optimal development of key sectors and rapid acceleration of our GDP growth.
He plans to also review the Federal Budgetary Methodology. “Budgetary custom bases our annual budget and fiscal policies largely on the dollar value of projected oil revenue. Not only does this practice artificially restrict the Federal Government’s fiscal latitude, it also unduly attracts the nation’s attention towards a single source of fiscal revenue to the detriment of others.
To achieve optimal growth in the long term, we must wean ourselves from this limitation. A more efficient fiscal methodology would be to base our budgeting on the projected level of government spending which optimises growth and jobs without causing unacceptable levels of inflation. As part of this prudent growth-based budgeting, we will establish a clear and mandatory inflationary ceiling on spending. However, we must break the explicit link between Naira expenditure and dollar inflows into the economy.
Much like the European Union has done, we too must be realistic and legislatively suspend the limits on government spending during this protracted moment of global economic turmoil exacerbated by domestic challenges in security, economy and demography.
With the fiscal latitude provided by the above mentioned budgetary reform, government can hire millions of unemployed Nigerians to modernise national infrastructure. A truly national highway system must be built to make road transportation faster, cheaper, and safer.
There is also the issue of National Infrastructure Campaign Fiscal Policy. “A national potable water supply campaign will be established. We must commit to a Nigeria where, by the end of this decade, no one lives more than five minutes away from a reliable source of potable water. Major dams will be reticulated to ensure better power generation and provide water for year-round agricultural purposes. Small-scale irrigation and water catchment systems will be built in rural areas throughout the nation. Using technology and equipment easily maintained at the local level with minimal costs, these systems will boost agricultural production and employment while mitigating dangerous cycles of flood and drought in many areas.”
“The Great Green Wall of the North will be fully completed. By mitigating the effects of desertification and deforestation, this lessens forced economic migration and resultant social dislocation and instability in many parts of the country.”
“Using commercially valuable yet environmentally viable flora to construct the green wall, the project will provide employment for tens of thousands of youths and farmers.”
To encourage the use of Public Private Partnerships, a Tinubu administration will work with the CBN, federal ministry of finance and other relevant federal agencies to expand the availability and scope of credit guarantees to attract more private sector investment in needed infrastructure projects.
There is also the issue of Import Substitution. “We must curb our reliance on imported goods. Importation of non-essential products will be discouraged through policy measures including luxury taxes, higher tariffs, and higher processing fees. At the same time, international brands will be incentivised with tax credits, rebates and other fiscal incentives to establish manufacturing plants in Nigeria both for export and to meet the needs of the large population of consumers in Nigeria and the wider ECOWAS region. We shall also enact new policies to exploit the framework provided by the African Continental Free Trade Agreement (AfCTA) to further boost domestic manufacturing and production. Tax Reform
During times of economic weakness, increasing taxation is counterproductive. Higher taxes drain an already weakened private sector, inviting possible economic contraction and higher unemployment.
We shall review the corporate tax system and deploy technology and effective policies to better rationalise the system. Our aim shall be to create a progressive tax regime, plug harmful loopholes, enhance the efficiency of collection and give the people a greater sense of responsibility in relation to their taxes.
Fight Corruption, Inefficiency and Waste in Government
We will continue the work of the current administration in reforming the civil service to fight corruption, reduce bureaucracy, streamline agencies and decrease inefficiency and waste. We will streamline the amount that government spends on itself. A cap will be placed on fiscal expenditures for the construction of government buildings and on the salaries and related compensation packages of elected officials and senior personnel in the executive branch of the Federal Government. Such expenditures will have a low priority in our administration.
Bonafide hard-working members of the civil service are to be commended for their public service and shall be protected. However, we will continue the process of weeding out ghost workers, as well as ghost projects and expenditures from the system.
Our administration will adhere strictly to the principle that public funds are only to be spent on the public good and we shall strive earnestly to reduce the overall cost of the Federal Government.
A Tinubu government shall deploy the same skills and expertise used in Lagos State to generate record levels of internally generated revenue, create wealth and attract investment.
We shall also improve and significantly expand the current administration’s efforts to generate revenue by reducing leakages in the financial system and create the enabling environment to expand the private sector initiatives undertaken by the Buhari administration. We will mobilise private sector investment, processes and people to raise the revenue profile of our great country and achieve our ambitious plans for the nation’s rapid development.
He is also committed to Optimisation of Government Revenue. “To achieve optimal growth and broadly shared prosperity, monetary policy must complement fiscal goals.
The efficiency of monetary policy in driving overall economic goals is limited. Fiscal policy has numerous channels and transmission mechanisms by which it can affect the economy. Unlike monetary policy, fiscal policy can be channelled directly and even exclusively toward the poorer segments of society. Monetary policy transmission mechanisms are largely limited to banks and other financial institutions. By itself, good and wise monetary policy is insufficient to produce the level of growth we seek. However, bad monetary policy is sufficient in itself to sink the best of our economic dreams.
Monetary policy must focus on the exchange rate, interest rate and price levels. This trio must serve the objective of fiscal policy, which is broadly shared prosperity. In essence, money lends nominal economic value to anyone who owns it or anything to which a monetary price is attached. Idle people and resources are said to have scant economic purpose or value. They are wrongfully derided as “useless.” When money becomes attached to them either through a living wage or capital investment, what was once idle becomes valued and productive.”
“Our fiscal strategy is to spend public money in a way that maximises employment of people and resources, especially those previously idle. Monetary policy must buttress this approach.”
There is also the issue of Monetary Policy Exchange Rate Management
“The exchange rate is perhaps the most evocative monetary issue of the day. It stirs emotions and feelings of national pride or embarrassment, depending on the rate of the day and the trend it suggests.”
The exchange rate influences the costs of imports, competitiveness of exports, and net capital flows among other things. It cannot be ignored nor left to the vagaries of an unrestrained market.
Yet, we must be precise regarding economic cause and effect. The recent dip in our exchange rate is primarily due to global supply and production shortfalls caused by global factors well beyond the scope of our control. Our diminished levels of oil production and the modest capacity of our manufacturing sector to expand production both serve to compound the pressure on the naira.
Further compounding our difficulty is the fact that we are tied to an ineffective regime of multiple, somewhat arbitrary, exchange rates. This situation gives rise to financial dislocation, currency speculation and arbitrage. These practices divert much needed funds away from productive endeavours that could employ hundreds of thousands of people and create products that improve average living conditions.
To ensure that exchange rate policy harmonises with our goals of optimal growth and job creation driven by
industrial, agricultural and infrastructural expansion, we will work with the Central Bank and the financial sector to carefully review and better optimise the exchange rate regime.
Our economic policies shall be guided by our desire for a stronger, more stable Naira founded upon a vibrant and productive real economy.
There is also the Inflation Targeting & Management Policy. “The current surge of Inflation is essentially driven by global supply and production disruptions beyond the control of any one government, including Nigeria’s. This is supply-driven inflation, not inflation caused by excess demand in an overheated economy.”
“To impose the usual anti-inflation medicine of higher interest rates and tighter money-supply will only weaken the patient. The answer to supply-driven inflation is not to suppress normal aggregate demand levels. The better solution is to find ways to increase production and supply. To suppress demand will result in the overall loss of economic activity and jobs. Worse, since the inflation is grounded in supply side issues, placing this weight on the demand side will do little to answer the root causes of current inflation. In short, we punish the national economy and the people without deriving any meaningful benefit.”
“In this complex economic environment, we must more studiously assess the sources and causes of inflation so that we deploy the right mix of fiscal and monetary tools to contain it; instead of copying the policies and practices of economies different to our own.”
We can protect our exchange rate, guard against inflation and preserve foreign currency reserves by limiting our exposure to large debt obligations denominated in foreign currency.”
He plans to limit foreign debt obligation. “Our administration will engage in extraordinary prudence in contracting debt in foreign currency. Our policy will be such that new foreign currency debt obligations will be linked to projects that generate cash flows from which the debt can be repaid.
Where possible, we shall limit such foreign currency denominated debts to essential expenditures that cannot be adequately addressed by either Naira denominated expenditures or debt obligations.”
There is the National Industrial plan. “Our government will make it a priority to encourage industries vital to national development. This means growing our industrial base to provide jobs to an expanding urban population.”
“Through the development of an industrial development master plan, we will: (i) Extend tax and other credits as well as urban youth employment incentives to domestic manufacturing entities. Tariffs and other measures will be implemented to safeguard such industries. (ii) Encourage domestic manufacturers and producers to add value to basic products thus promoting value-added industry and production. These incentives will include lower import tariffs on semimanufactured goods production lines such as the automotive and IT industries. (iii) Develop major and minor industrial hubs in each geopolitical zone. (iv) Promote IT to boost industrial creativity while spurring the financial inclusion of larger segments of the population by encouraging greater use of innovative new technologies. (v) Provide Tax credits, holidays and reduced interest rate loans to businesses that hire a certain percent of youth in their workforce and provide genuine on-the job training and mentoring for their young employees.”
He is also committed to an Industrial Policy. “In the North West and North East, new industrial hubs will focus on textiles. In the South East and South South, a new hub and dry port will focus investment on labour intensive manufacturing. In the South West, fine quality sand will be turned into the highest-quality glass items.
In areas with deposits of clay, household items such as dishes and pottery will be manufactured.
In the North Central, emphasis will be placed on solid mineral exploration and exploitation.
In the North West and North Central, clandestine, environmentally harmful unlicensed gold mining activities will be ended. Regulated mining will be instituted such that environmental protection is maintained and local artisans and craftsmen can earn income turning raw gold into finished jewellery.”
There is also the Mortgage & Consumer Credit Reform. The various federal agencies meant to promote home ownership are too small and fragmented. To address the `, we will ensure greater cohesion and efficiency by merging these agencies into a new, more competent body. This new entity will inherit the functions of existing housing authorities and shall be adequately capitalised by the Federal Government.
The agency will have a three-fold mandate to (i) grant low interest rate mortgages directly; (ii) guarantee qualified mortgages issued by banks; and (iii) purchase mortgages from private banks.
The guaranteeing and purchasing of mortgages will incentivise banks towards mortgage lending and will deepen the secondary mortgage market.
Banks will also be encouraged to engage much more in the provision of affordable consumer loans for automobiles and expensive domestic appliances. A certain portion of bank lending must be earmarked for the consumer. All noncompliant banks will pay a penalty to government. Compliant banks will be entitled to tax breaks and credits as well as favourable treatment by the CBN regarding inter-bank transactions and other monetary policy ratios.”
