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Indonesia offers economic lessons to Nigeria as FG prepares five-year plan

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NIGERIA has some lessons to learn from Indonesia as the Federal Government prepares a five-year medium-term plan, economic analysts have said.

The Federal Government  has disclosed plans to unveil the Medium-Term National Development Plan spanning 2021 to 2025.

The development plan is coming 10 months after the expiration of the Economic Recovery and Growth Plan (2017-2020).

The ERGP, which was introduced in 2017 by the Federal Government, was deployed to restore growth, invest in people and build a competitive economy.

However, findings show that the Federal Government failed to meet most of its targets. For instance, beyond a GDP growth rate of seven per cent, the ERGP was aimed at ensuring a 9.90 per cent inflation rate, oil production of 2.5 million barrels per day, and 11.23 per cent of unemployment rate, among others, by 2020.

However, available data at the end of 2020 showed that the real GDP grew by 0.11 per cent, the unemployment rate was 33.3 per cent, oil production stood at 1.42 mbpd, while the inflation rate was 15.75 per cent.

Indonesia shares several similarities with Nigeria in terms of diversity. The country, like Niogeria, is also richly endowed with natural resources such as coal, gas, and oil resources.

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According to records, Indonesia records giant feats in agriculture and is one of the largest producers of palm oil globally.

In both countries, agriculture makes double-digit contribution to the Gross Domestic Product.

However, Nigeria has not made more than $3 billion from non-oil exports since 2013, according to findings from the Nigerian Export Promotion Council (NEPC), but Indonesia non-oil exports in 2020 stood at $131.13 billion.

Experts attribute it to inability to process several raw materials into finished and semi-finished products in Nigeria, unlike Indonesia which produces and exports mainly finished products.

Indonesia has the largest economy in South-East Asia. In the same vein, Nigeria has the largest economy in Africa.

Indonesia, like Nigeria, is a member of the Organization of Petroleum Exporting Countries (OPEC).

Indonesia previously subsidised fuel prices to reduce prices for the majority of citizens. By 2014, subsidies had cost the country $7 billion. The following year, it ended the subsidy regime, saving huge resources for other areas in need of development.

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But Nigeria is yet to end its own petrol subsidy regime, which gulps N120 billion annually. Petrol is also stolen in Nigeria, with several elements making money off an unscrupulous and opaque subsidy regime.

Senior Economist at the Nigerian Economic Summit Group Wilson Erumebor said to make sustainable progress in economic growth, Nigeria needed a long-term development plan that would feed into respective agenda of administrations, irrespective of any political party in power.

He explained that like Indonesia, Nigeria must have a specific law on development planning which would transcend any administration.

”This brings in some measure of stability in terms of government’s procedures,” he stated.

“The development plan is such that the government defines the part it wants the economy to go and the private sector coordinates resources within the economy. So, it’s not the laissez-faire type where the government sits back and the private sector dictates the pace of the economy.

“These countries have been able to institutionalise government’s policies irrespective of the political party in power.”

“What this means is that any president coming in plans himself within the first three months to suit the development plan of the nation. This ensures lots of consistency. What this does is that we don’t make progress in one breath and retrogress in the other breath.”

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Checks indicate that trade between Nigeria and Indonesia has been on the upward swing with the balance in favour of the former by more than $500m.

On comparative analysis of both countries, Wilson noted that “It is interesting to note that in the ’80s, Nigeria was doing better than Indonesia, looking at key economic indicators back then. In terms of GDP, Nigeria has a larger GDP then than Indonesia. Nigeria has $165 billion back then, whereas Indonesia has $86 billion.”

Fast-forward to 2020, the story is different, he said.

“The reverse is the case and Indonesia has grown its GDP to over a trillion-dollar and is the 15th largest in the world.”

The ICIR findings show that Indonesia recorded an investment inflow of $29 billion into the country. Nigeria, on the other hand, attracted only $2.6 billion in 2020.

Further records show that Indonesia has 9.8 per cent of its population in poverty in 2020. In Nigeria, however, poverty is 51 per cent, according to the World Poverty Clock.

Comparatively, Nigeria recorded better statistics than Indonesia in the 80s, but over time, Indonesia did significant market reforms and bettered Nigeria in several economic fronts.

Development Expert and Associate Consultant for the British Department for International Development Celestine Okeke told The ICIR that lack of a national plan for Nigeria that would feed into other medium-term plans had been the bane of Nigeria’s development.

“A national development plan is key, which helps other plans to feed into the general plan. This is where we have been getting it wrong as a nation. I don’t want to be pessimistic, but the way we plan shows we can’t make much progress. That is the reason why we throw money at problems without solving them as should with the proper diagnosis.”

Political Economist Katch Ononuju noted that Nigeria’s economic growth and planning had not properly reflected on the local economy as most of the plans were still not impacting the lives of the people.

“Our development plans must connect to the local economy. That is the only way we can make bold to say we are lifting people out of poverty,” he noted.

Speaking on Nigeria’s recorded 5.01 per cent GDP growth in the second quarter, and its planning model, Former Director-General of the Abuja Chamber of Commerce and Economist Chijioke Ekechukwu said year-on-year GDP growth of 5.01 per cent did not mean the country was out of the woods.
“About this time in 2020, the entire global economy was shut down, and so was the economy of Nigeria. So to have a year-on-year growth of 5.1 per cent shouldn’t be seen as all uhuru.”
“We need to be looking at the lost opportunities in all sectors during and after COVID-19. Opportunities in DFIs, DPIs, in manufacturing,  in agriculture, in employment, among others, and strive to have an economic catch-up. Only after then can we say we are out of the woods. Insecurity would have been taken for granted and non-existent in such circumstances.

“To sustain growth, the government needs to continue creating more and more good investment climates for the private sector.”

 

 

 

 

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