The Central Bank of Nigeria unveiled a five-year plan recently and it seems that was the first time the institution would present such “long” term monetary plan. It is not in the nature of monetary authorities to prepare that seemingly long term plans because, by nature, monetary policy is mainly a short term policy which can be extended to medium term of say, three years. Unveiling a five-year plan is uncommon and properly novel. But, the long term nature of the plan is understandable because it goes beyond monetary policy but includes direct intervention in the real sector of the economy. More importantly, it points towards where Nigeria’s economic management should head towards. There is the need for a long-term national plan. Except that such a national plan should have a minimum of 20 years. Not the traditional five-year national development plan we used to have up to 1980s.
The Vision 2010 and Vision 2020 somewhat capture the nature of current development plans but still fall short of it. In the first term of President Muhammadu Buhari’s governance, the romance was with Medium Term Plan which derives its strength from nowhere. We cannot continue to run the economy on such an ad hoc plan. The country requires structural transformation which firm foundation must be based on a long term national plan with appropriate flexibility, veracity and sound judgement.
The CBN’s direct intervention on real sector is an indictment on financial institutions that are supposed to service those sectors and possibly indictment on the CBN itself. The CBN had funded agricultural production in a number of locations in the country and also funded some production activities of the small and medium scale businesses as well as export promotion. The apex bank governor, Godwin Emefiele, hinted at the continuation of such direct participation under the five-year plan. But what are the roles of specialised banks like the Bank of Industry and Bank of Agriculture? Is the Nigerian Export and Import Bank not supposed to promote agricultural and industrial exports? Are these banks properly supported with funds from the CBN and the respective Ministries, Departments and Agencies to perform their functions but failed to do so? Are there records of incompetence and appropriate sanctions on the managements of those banks? Or, is it in the amended Act of the Central Bank that it can compete rather than promote and encourage the specialised banks to achieve stated objectives? These are issues for the CBN and the banks to answer and resolve in view of the comprehensiveness of its five-year plan to continue with directed intervention which is also linked to the policy of financial inclusion being driven by the bank.
However, financial inclusion, which is a major thrust in the plan, is quite desirable and must be an agendum for all stakeholders in the financial system, not just the CBN. Albeit, the other banks and non-bank financial institutions need the support of the Central Bank to drive financial inclusion. Instead of competing with these institutions in their functions, the CBN should, as stated in its developmental functions, provide conceptual and operational framework to assist and promote them for effective and efficient service delivery. The collective action is likely to promote financial inclusion in a more rapid and all-inclusive manner and for the greater benefits of the Nigerian economy.
One can aver that the preoccupation of the CBN with other organisations’ functions has contributed to its inability to tackle some major problems of operational efficiency in the banks. The issue of excess charges by banks, excessive liquidity in the economy side by side with high lending rates, growing fraudulent activities and sharp practices of bank staff, high ratio of banks to the population are major challenges that the CBN needs to resolve in order to further grow people’s confidence in the financial system. Thus, working with or along and through the specialised banks would allow the CBN to achieve its primary objectives as well as the secondary objectives stated in the five-year plan.
The foregoing does not however take the credit away from the Central Bank for calling on the other organs of government to return to long-term planning. The benefits of such long-term planning for a developing economy like Nigeria can be seen in the international planning framework. The Millennium Development Goals plan and its successor, the current Sustainable Development Goals were conceived for 15 years while the African Union/Economic Commission for Africa Development Plan for Africa is to be executed up to 2063. Short and medium term plans are no longer fashionable because time runs so fast that flexibility and sustainability required in achieving goals of plans will be missed in such plans.
Having gone through the current World Bank-induced medium term Plan that ends in 2020, I found that it follows the footstep of others like the NEEDS and 7-Point Agenda under the Peoples Democratic Party. They were prepared to last the lifespan of the particular regime in power. A national plan is a development plan that should be adopted to last beyond a democratic regime since economic development is a continuum. Successive regimes, irrespective of party affiliation, should pursue the achievement of national development goals, even if they are to adopt different modus operandi to get the results. This implies that the national plan will need to be developed by a cross-section of Nigerians viz technocrats, academics, professionals, et cetera, with the final output passed by the National Assembly.
A national plan promotes orderly growth of various sectors and regions of the economy because it contains measurable objectives, policy measures to achieve the objectives, the resources to be committed to achieving the goals and sources of funding. The roles of public and private sectors, local and foreign entrepreneurs are properly spelt out in a national plan. There are international data projections on Nigeria’s population in 203 and 2050; expected depth of poverty and income inequality in 2030 and beyond, the number of out of school children in Nigeria in 2040 and so on. Based on information in a national development plan, Nigerians should be able to say where the country will be in education, health, industrial growth and agriculture in 10 or 20 years’ time. Recently, President Muhammadu Buhari challenged his government to take 100 million Nigerians out of poverty in 10 years but this is part of what is articulated in a national plan: the policy statement, the policy measures or plans to get there and the resources to be committed should all be part of the national plan. What is the basis for such statement? Where is the approved plan or is just political statement? In fact, the President should be talking on development from a guided national plan for him to be taken seriously. Even the state governors and chairpersons of local governments should also be making promises and assertions on the basis of the plans at their levels. All the plans are aligned at some points for an integrated execution and orderly development.
A long term national plan not only captures available data set at the planning stage but shows how the country hopes to overcome or solve the problems over time; the roles to be played by the government, the private sector and foreign allies, and the gradual achievements as the plan is being executed. It is time the country returned to long term national plan for economic transformation and sustainable development.
Tella is a Professor of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun State
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It is quite unfortunate that the Central bank has taken up the responsibility of funding the real sector when it should be developing framework to enable Commercial banks perform this function effectively. When the central banks is borrowing at an average of 13% from commercial banks through issuance of treasury bills, its only commonsense these banks will rather focus on this risk free lending rather than create productive risk assets by lending to the real sector of the economy. Also absence of clear fiscal policy direction makes it difficult for the banks to determine where to focus on in respect to lending to the real sector of the economy.