OBG talks to Frank Nweke II, Director-General, Nigerian Economic Summit Group (NESG)

Interview: Frank Nweke II

What specific reforms are needed to accelerate and sustain economic growth in Nigeria?

FRANK NWEKE II: The issue of security – of both lives and property – should be at the top of the Nigerian government’s agenda. Rule of law is crucial. If you look deeper, issues of property rights have to be guaranteed on a continuous basis and one must be able to resolve commercial disputes in a timely manner. This set of rules or this environment is not critically different for many countries, and if you want to attract investment, these issues must be addressed by the government.

Of course the matter of policy consistency over a prolonged period is equally important and has been a point of concern for some investors. These matters are so basic that unless we can guarantee these developments, Nigeria may attract investors to do business in the country but fail to hold on to them.

In respect to progress, reforms are taking place and these underpin the strong performance of our economy. The reforms are visible, and there is some commitment on the part of the government to see them through. That said, Nigeria is not currently on track to become a top-20 economy by the end of the decade, but that is not to say this target cannot be met. Nigeria will fulfil its potential if the leadership is right, if there is consistency in policy, and if there is commitment from government. However, the existing structure and standard of public service needs to improve to meet the country’s economic development goals. The government works through the civil service and there are significant deficits in terms of capacity, expertise and skills. There must also be more commitment from citizens. Everybody has an important role to play.

How can risk-sharing in the current public-private partnership (PPP) framework be improved?

NWEKE: The Infrastructure Concession Regulatory Commission has tried to build a transparent framework for engagement in PPPs, in particular regarding infrastructure. The government has shown commitment to the PPP model, which offers an opportunity to reduce the country’s fiscal burden and an opportunity for private investors to gain a solid return. The government does need to ensure that the risk factor is spread, but it is up to the investors to take responsibility for decisions and not make investments that limit returns.

Where do you see the greatest room for improved efficiency in the public sector?

NWEKE: The NESG has been pushing for consolidation of ministries, departments and agencies (MDAs) since its foundation, and a number of governments have made inroads. There remains, however, a strong call for the merging and scrapping of departments to reduce the overall number of MDAs. When you have an unwieldy structure it is expensive to maintain, and the cost of running the government in Nigeria today is excessive. If you look at the budget, more than 70% is spent on personnel and overheads, so less than 30% is available for capital development. Looking at the scale of Nigeria’s current infrastructure requirements, this expenditure is counterproductive. As such, we need to wait and see whether the government has the political will to make that happen and over what period.

In many parts of the world the wheels of government turn rather slowly, and we would certainly like to see reforms happen a lot faster. Two years ago the budget deficit was in excess of 3%. For 2013 this value came down towards 2%. Meanwhile, capital expenditure went up by approximately two percentage points. These are noteworthy adjustments to government expenditure and illustrate that progress is being achieved. It also demonstrates that the government understands these issues and is making a greater commitment in bringing down the deficit in line with the Nigeria Fiscal Responsibility Act. The increased spending on infrastructure also shows an understanding and commitment from the government that this needs to happen, and the medium-term expenditure framework highlights further budgetary improvements to capital expenditure.