When this Administration took office in May 1999, it inherited an economy with the following characteristics: declining capacity utilization in the real sector, poor performance of major infrastructural facilities, large budget deficit, rising level of unemployment and inflation. In addition, the economy had grave problems of import  dependence,  reliance on  a single commodity (oil), weak industrial base, low level of agricultural production, a weak private sector, high external debt overhang, inefficient public utilities, low quality of social services and an unacceptable rate of unemployment.

Guiding Principles

Since its inauguration, the Administration of President Olusegun Obasanjo has been pursuing an economic policy inspired by the following guiding Principles:
 

• The economy exists for and belongs to the people, and at all times the general well-being of all the people shall be the overriding objective of the government and the proper measure of performance.
• Given the state of the economy which is equivalent to national emergency, economic management shall involve total commitment of the leadership at all tiers of government, and the mobilization of the populace without creating a bloated government.
• Government shall be lean, efficient, honest, transparent, cooperative and friendly, operate on the basis of extensive devolution of power; and shall function mainly as a facilitator.
• Government’s primary role shall be to ensure, in cooperation with the private sector, the urgent creation of adequate and efficient infrastructure, particularly of energy, telecommunications, water and financial services, to bring about a positive and internationally-competitive environment for economic activities.
• Private enterprise, private effort, and non-governmental action shall play the major role in achieving the goals of the society and the derived targets of the government.
• Everything shall be done to foster a strong work ethic to drive productivity.

Type of Economy

Based on these guiding principles, the Administration shall operate an economy which is
 

• market-oriented
• private sector-led
• highly competitive, internally and globally, particularly in areas of comparative advantage
• technology-driven
• broad-based
• humane
• open and
• internationally significant

Objectives 

Given the poor state of the economy which it inherited, the Administration shall:

a. Revive and grow Nigeria's comatose economy.

b. Significantly raise the standard of living of the people.

c. Put Nigerians back to gainful work and  create new employment opportunities

d. Reposition the economy to participate beneficially in the global economy.

e. Make Nigeria the hub of the West African economy.
 
 

The instruments which the Administration shall use will include the following:
 

• Stabilized market-responsive exchange rate (within narrow bands and with sufficient Predictability)
• Reduced interest rate (to reach single digit as soon as possible).
• Reduced total tax burden to a maximum of 3O per cent of corporate and personal incomes as Soon as possible.
• Low Customs Tariff, especially for production inputs (at less than 10 per cent,with built-in incentives for local producers).
• Shift in government expenditure structure in favour of productive, economic and social sectors.
• Ensuring steady and adequate fuel supply.
• Rehabilitation and reconstruction of infrastructure, such as electricity, roads, water supply, railways and so forth.
• Enhanced incomes for workers, particu-larly in the public sector
• Significant poverty reduction.
• Special focus on Education and Human Capital Development.
• High priority to Agriculture, Manufacturing, Small/Medium Enterprises and the Informal Sector.
• Institutional rationalization of government.
• Privatization.
• Cooperation with the National Assembly.
• Generous incentives for local and foreign direct investment.
• Reduction of Nigeria's external debt burden through negotiation.
• Promotion of the deepening and increased efficiency of the financial system.
• Operation of cooperative federalism to ensure inter-tier policy consistency and effectiveness.

With vigorous implementation of the policies and programmes which have been described, it is expected that by the year 2003 the following targets would have been achieved, compared with the year 1999 position.
 

	Targets 2003	1999
GDP Growth Rate	10%	2.4%
Inflation Rate	Single Digit	13%
Gainfully employed labour force (both formal and informal)	70%	50%
Population access to safe water	60%	40%
Household access to electricity	60%	34%
Functional telephone lines per 1000 persons	30	4
Population of School-age Children in School	90%	50%
Population literacy level	80%	57%
Nutrition level (Daily Calorie)	2500	2120
Other basic Human Needs (Level of Satisfaction)	Medium/High	Low
Reduction in child malnutrition	20% of total population of Children	46% of total population of Children
Infant Mortality	50 per 1000 births	78 per 1000 births
Maternal Mortality	400 per 100,000 births	800 per 100,000 births
Promotion of women's participation in informal sector and food processing and subsistence agriculture	Recognition and inclusion in the national accounting system of the economy	Invisible

 

The Administration shall ensure that henceforth the assessment of the performance of the economy will derive from guiding principles.
 

Arising from all the foregoing general principles and targets, government shall pursue a regime of macro-economic and sectoral policies as follows:
 

• Monetary policy will focus on price and exchange rate stability, and healthy balance of payments.
• Government will pursue a low interest rate regime in order to support the real sector of the economy. More effort shall be made to narrow the gap between savings and lending rates.
• Government shall pursue policies which will ensure the achievement of a moderate inflation rate in the mediurn term (even after allowing for a possible modest rise during the reflation of the economy).
• The exchange rate of the Naira will be stabilized and made market-responsive. Government will sustain the Inter-Bank Foreign Exchange market (IFEM).
• Fiscal policy will be designed to increase the level of government revenues and to promote overall economic development. In this regard, priority sectors like Oil and Gas, Export Processing Zones, Solid Minerals and Agriculture will continue to receive increased fiscal incentives. However, government will curtail borrowing through CBN's Ways and Means. Advances to a maximum of 12.5% of estimated current revenue, while additional loans will be sourced through the financial market without crowding out the private sector.
• Government will rely basically on good faith collective bargaining for the determination of incomes in both the public and private sectors.

The strategy to be employed shall be to empower Nigerians in both rural and urban areas to become more economically productive, with a view to improving their quality of life.  To avoid the mistakes of the past, projects and measures to be implemented will be people-oriented. The people concerned, as stakeholders, will be fully involved in determining the projects and will take owner-ship. The Poverty reduction programme will involve the immediate improvement of infrastructure in the urban and rural areas, with government taking the leadership in mobilizing the necessary resources. Significant improvements in the supply of water, energy, basic educational facilities (both under the Universal Basic Education (UBE) scheme and Mass Adult Literacy Programmes). Basic health facilities, roads and transportation projects will be embarked upon immediately on a nationwide basis. There will be established a Poverty Reduction Fund.

In view of the foregoing a number of Federal Ministries/Institutions have been entrusted with the mandate for the primary effort to eradicate poverty in Nigeria.
These are:

(i) Federal Ministry of Education to take charge of Universal Basic Education (UBE).

(ii) Federal Ministry of Health to take charge of Primary Health care programmes.

(iii) Other Ministries and relevant agencies will take charge of employment generation, development of rural infrastructure and economic empowerment.

4 - Year targets have been set as follows:
 

• Population Literacy rate in the country to increase from its current level of 57% to 80% by the Year 2003.
• Access to Primary Health Care to increase from its current level of 40% to 70% by the Year 2003.
• Immunization of children to increase from its current level of40% to 100% by the Year 2003.
• Infant and maternal mortality to be reduced by 50% by 2003.
• Access to safe potable water supply to increase from its current level of 40% to 60% by the Year 2003.
• Access to electricity in rural areas to increase from its current level of 34% to 60% by the Year 2003.
• Training and settlement of at least 50% of tertiary graduates estimated at about 130,000 per annum.
• Improved rural transportation through construction of more rural feeder roads, stock routes and jetties.
• Development and nation-wide distribution of simple processes and machines for agriculture and small scale industries; and
• Development and provision of soft funds and management services for small and medium scale industries to enhance employment and value added to the economy.

Sectoral Policies

Government will continue to implement sectoral and structural policy measures geared towards attaining short, medium and long-term goals  of improved  economic  growth, complementarity, external sector competitiveness and poverty reduction. However, special emphasis will be given to the following areas:
 

Agriculture will be given the highest priority both for poverty reduction in the rural areas, and for the improvement of the economy generally. New technology, improved seedlings, better storage facilities, fertilizers, pesticides, etc. will be made readily available. Government will rely on private sector enterprises to provide these inputs. Furthermore, government will embark on massive expansion of agricultural extension services and will ensure better and easier delivery of credits to farmers. The government will embark on a massive  campaign, with appropriate policies designed to achieve self-sufficiency and expanded export volumes in crops such as rice, maize, millet, sorghum, ginger, groundnuts, cocoa, coffee, etc. as well as self-sufficiency in industrial crops such as soya beans, palm produce, rubber and cotton. Government will encourage the involvement of Non-Governmental Organizations in all these measures. Effective protection, consistent with new international agreements, will be given to operators in the sector to ensure success. Guaranteed producers prices will be established in line with the  national priorities for self-sufficiency and increased exports. Government will concentrate on sectors where the country has comparative advantage and will change the nature of Nigeria's exports from primary to processed and manufactured goods.

The policy thrust in the health sector will be the reduction by more than half of infant mortality and maternal mortality rates, and increase in general life expectancy of Nigerians by the provision of high quality health care services which are accessible and affordable to all. Priority will be given to rehabilitation of facilities in the existing hospitals and secondary health care institutions, intensification of primary health care delivery programmes; Completion of on-going University Teaching Hospital Projects; provision of counterpart funding for donor-funded projects/prograrnmes, provision of funds to sustain projects/ prograrnmes which were at one time or the other fluided through external loans; establishment of Federal Medical Centres in the new states; and the continued phased prosecution of the development of the permanent sites of the five hospitals on stream.
 

Emphasis will be placed on achieving breakthrough with regard to some key projects such as on-going Research and Development Supports for Health Care, and for Honey husbandry; upgrading traditional technology to small scale level  and patenting such technologies for adaptation in the informal sectors and subsistence agriculture sector for higher performance and  wealth generation. The formulation of a national policy on the acquisition of computer technology shall be completed. Other areas of emphasis will include acquisition and commercialisation of Research and Development results; research into enhanced agricultural productivity. The Federal Ministries of Science and Technology (FMST) and Defence will collaborate in War Gaming to enhance the status of the National War College.

To promote the goal of full employment and address the critical concern of youth employment, Government will continue to support the activities of the National Directorate of Employment (NDE) and Micro Credit Institutions, while concerted efforts will be made to encourage and promote self-employment.
 

Government will provide affordable quality education for all Nigerians. The UBE and Mass Adult Literacy programmes will be pursued in earnest. Government will also encourage private provision of educational facilities at all levels. Considerable resources will be committed to rehabilitating and  improving secondary and tertiary educational institutions. Government will pursue other areas of human capital development through increased emphasis on industrial apprenticeship schemes and entrepreneurship training. Government will also develop a database of Nigerian human capital stock, which will include skilled non-resident Nigerians, especially those in Europe and North America.

Government will create incentives to expand access to information and communications technology which will facilitate leap-frogging in order to short-circuit the longer span of development. Government will encourage local production of ICT equipment and materials (computers, telephones, TVs, etc.). Government will also encourage the development of payment systems which will facilitate the growth of electronic-commerce.

The Government will make available resources for the refurbishment and improvement of the facilities and management of NIGERIA TELECOMMUNICATIONS  PLC (NITEL), MOBILE TELECOMMUNICATIONS PLC and NATIONAL ELECTRIC POWER AUTHORITY(NEPA). Government will pursue the privatization of these government enterprises. The privatization exercise will be accomplished within the life of this Administration. The privatization of these parastatals is not an end in itself but a way to achieve faster increase in services provided and greater efficiency. The government will no longer permit monopolies in these sectors. It will create the enabling environment to attract massive private investments in order to meet projected additional requirements of a rapidly expanding economy.

Government will encourage private investments in roads, railways and air transportation. Government will also sustain the deregulation in domestic air services while it will prepare Nigeria Airways for privatization. Furthermore, government will encourage private sector participation in the construction and management of highways, railways and seaports.  To this end enabling laws will be introduced in year 2000.

Government will ensure that there is adequate budget provision to cover its share of costs of agreed production quotas. The budget provisions will be released promptly as and when due so as to avoid any disruption in planned operations. Every measure will be taken to improve the workings of the joint venture technical committees to ensure that there is equity in the apportionment of contributions between the two sides. Government will introduce policies and incentives to ensure that the local content of oil and gas activities reaches 40% by the year 2003. Government will also introduce policies, create conducive environment to make the communities in the oil producing areas effective and more involved stakeholders in the exploitation of oil and gas resources.

Government will move the country away from export of primary commodities to the export of processed and manufactured products.  All necessary incentives and encouragement will be given for the development of agro-allied industries. Government will bring back into full operation the Ethylene Plant in Eleme and will promote related downstream plants to produce intermediate petrochemical products for local consumption and export. It will also promote new manufacturing  industries to  export plastic household goods and toys, textiles and garments, furniture etc. To this end, Government will review existing tariffs and take all possible measures to encourage infant industries, exploiting fully the delays allowed in applying the new World Trade Organisation (WTO)  regulations  in developing countries. Government is reviewing all uncompleted important projects in the capital sector, e.g. iron and steel plants, pulp and paper plants, the aluminium smelter, the purpose being to complete them where viable, and expand them where desirable.

Government will urgently create a regime of internationally competitive incentives to attract private capital for the accelerated development of the country's vast endowments in solid minerals. It will provide the resources necessary to enable the National  Mining Corporation complete proving studies to establish the commerciality of many important deposits of solid minerals.

In view of the envisaged accelerated growth and development of the economy, government will create the necessary enabling environment to attract large annual inflows of foreign direct investment. In this regard, government will ensure:
 

• Policy consistency and stability
• Removal of all bureaucratic bottlenecks
• Improvement in security of persons and property
• The conclusion of bilateral and multi-lateral agreements on protection of investments and intellectual property.
• Sanctity of contracts
• Re-orientation of the bureaucracy into a friendly welcoming facilitator of investments and business.

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