7Point Policy Nigeria

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The Nigeria Projec t Age nda 1

TABLE OF CONTENTS

1.0 ABSTRACT...........................................................................................................................................2

2.0 INTRODUCTION...................................................................................................................................9

2.1 THENIGERIA PROJECT AND SHARED ASPIRATIONS ..................................................................................... 102.2 VISIONS OF THE FUTURE AND THE NOTIONS OF A BETTERNIGERIA .................................................................. 102.3 THE CHALLENGES, THE OPPORTUNITIES AND THE PROMISE............................................................................. 102.4 NIGERIA WITHIN THEGLOBALCONTEXT.................................................................................................... 11

3.0 THE NIGERIA PROJECT AGENDA- VISION .......................................................................................12

3.1 KEY OBJECTIVES .................................................................................................................................... 12

4.0 STRATEGIC FRAMEWORK FOR POLICY GUIDANCE......................................................................... 13

5.0 SUSTAINA BLE GROWTH IN THE REAL SECTORS OF THE ECONOMY................................................14

5.1 MACROECONOMIC POLICY.................................................................................................................... 145.2 AGRICULTURE......................................................................................................................................... 195.3 MANUFACTURING AND SMALL AND MEDIUM ENTERPRISES(SMES) .............................................................. 235.4 SOLID MINERALS.................................................................................................................................... 275.5 HOUSING .............................................................................................................................................. 325.6 OIL& GAS............................................................................................................................................ 39

6.0 PHYSICAL INFRASTRUCTURE............................................................................................................. 49

6.1 POWER.................................................................................................................................................. 496.2 TRANSPORTATION ................................................................................................................................... 59

7.0 HUMAN CAPITAL DEVELOPMENT.....................................................................................................62

7.1 EDUCATION SECTOR............................................................................................................................... 627.2 HEALTH SECTOR ..................................................................................................................................... 67

8.0 SECURITY, LAW AND ORDER............................................................................................................72

8.1 LAW ENFORCEMENT................................................................................................................................ 728.2 JUSTICE................................................................................................................................................. 76

9.0 COMBATING CORRUPTION .............................................................................................................79

10.0 NIGER DELTA DEVELOPMENT...........................................................................................................84

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1.0 ABSTRACT

Distinc tive national a c hievem ents a re usually p rec ed ed by c om prehensive plans, direc ted

ac tions and the c onc erted w ill of a united p eople in the fac e o f seem ingly insurmo untab lechallenges.

In the past eight years, and particularly in the last four, Nigeria has witnessedunpreced ented , but w ell artic ula ted ec onomic a nd soc ial reforms ge ared to wa rds settingthe c ount ry on the p a th of de velop me nt. These reforms we re c onsidered nec essa ry,

indeed inevitable, if the country was to break away from the cycle of poverty andunde rde velopm ent a nd ta ke her rightful plac e a s the p urveyor of growth a nd prospe rity to

Afric a and inde ed the b lac k rac e. These reforms will be sustained and inde ed de ep ened .

The Na tiona l Ec ono mic Emp ow erment and Deve lopm ent Stra teg y (NEEDS), the e c ono mic

development blueprint, developed by the Peoples Democratic Party (PDP) ledgovernment, as well as the 2007 Manifesto (Programme Implementation) of the PDP, aretwo distinctive documents that have influenced the creation of President elect Umaru

Musa Yar’Adua’s 7-Point Agenda; an articulation of Policy Priorities that will strengthen thereforms and build the economy, so that the gains of the reforms are felt widely by citizens

ac ross the c ount ry.

The Nigeria Projec t Agend a p rovides a c om prehe nsive a rticulation o f how e ac h Priority

Polic y will be ac hieved and the spe c ific time fram es.

The Nigeria Projec t Agend a a pp roa c h to a ll round p rosperity is based on c onsolida tingand sustaining the reform process, while also creating and maintaining a higher standard

of living a nd a bette r qua lity of life fo r a ll. To me et this c ha llenge , the foc us of the Nige riaProject Agenda is to drive the type of growth which recognizes the economic value ofnatural and huma n c ap ital.

In othe r words, the Nige ria Projec t Ag end a provide s the una mb iguo us answe r to “ how ” thec am pa ign p rom ises pred ic ate d o n the 7-Point Age nda c an b e translate d into widespread

ec onomic ga ins and democ ra tic divide nds for the b enefit of all Nige rians.

The Priority Policies, hinged on refo rms, de rived from the 7-Point Agenda , ad dress:

• Susta inab le growth in the rea l sec tor of the ec ono my

• Physica l Infrastruc ture: Power, Energy & Transportation• Agriculture• Huma n Ca pital Deve lop me nt: Educ ation & Health

• Sec urity, Law and Orde r• Comb ating Corruption, and

• Nige r Delta Developm ent




There is som e a c knowledg em ent a s we ll as evidenc e tha t the reforms have rec orded

suc c esses. How eve r, these nee d to b e d eep ened and imp roved up on. The c halleng e forongoing and future reforms is to ensure that the benefits positively affects and impacts allNigerians.

There is a lso a need to emp loy more effec tive com munic a tion stra teg ies, so tha t the

incoming Government can ensure the buy-in of all Nigerians for current and future reformsto ac hieve widespread ac ce ptanc e.

The Nige rian midd le c lass has a ll but d isappea red . Part o f the a im o f the the Nigeria Projec tAgenda is to introduce policies and measures that would lead to the re-emergence of a

vibrant middle class with positive impact on the quality and standard of living of allNigerians.

The ne ed for refo rm in Nigeria c annot be o veremphasized . Fac ed with limited resource s,competing demands, unmet expectations and the very high aspirations of the Nigerianpeop le, the reforms must be c onsolida ted , susta ined , imp roved and ac c elerate d .

The inc oming go vernment need s to a pp rec iate the huge g ap be tween w here w e a re a s a

nation and whe re we wa nt to be or whe re we should be. This ga p c an only be na rrow edby well-planned and implemented reforms across board, affecting all aspects of theeconomy and institutions. Public sector in partnership with the private sector should be a

key strate gy in na rrow ing the g ap.

It is envisaged that in the next four years the incoming government shall be propelled bythe historical challenge of making the common man a major beneficiary of the nation’sc om mo n resources. For an end uring d emoc ra tic go vernme nt, our performance in the next

four years must be assessed on the basis of the impact of the Nigeria Project Agenda on

the va st ma jority of the p eop le.



The Nigeria Projec t Age nda

From the Very Beginning – Set the Tone for…

…Deepen ing The Reforms For The BenefitOf All

…A Responsive Soc ial Policy …A Clean Go

• Dec lare em ergenc y in Pow er Sec tor• Constitute a c red ible Econo mic Tea m• Present a p rioritized supp leme nta ry

budget• Co mmit to Fisc a l Responsibility• Com mit to prudent b orrowing p olic y• Initiate a land reform p roc ess• Rev iew a nd a dop t NEEDS II doc ument• Pursue the imp lementa tion of

Review ed Trade Polic y

• Develop a nd Launch Marsha l Plan forNige r-Delta de velopme nt

• Enhanc e rate of investme nt ined ucat ion, hea lth and infrastruc ture

• Immed iately resov le ASUU strike a ndother lab our-rela ted issues

• Co mm it t• Constitut

guided b• Asset d ec

the entire• Demonst

transpare• Gove• Oil bl• Fertiliz• Sale o

• Initiate a reform

• All major

c ontrac tsto b e rev

• Inc rea se governm

• Grant PreDelta m ilidetainee




After the First 100 Days Until the First Annive rsary – Beg in the Quest For…

…Job Creation …Imp roving the living c onditions of allNigerians

…Genuine NRec onc iliatio

• Foc us on Privat e-Pub lic Partnership

(PPP) a s a key too l for infrastruc turedevelopment

• Develop a c om prehensive SMEframework

• Have a c omp rehensive b ac k to farmprog ram me and ag gressive treeplanting ca mpa ign

• Effect ively implement loca l contentpolicy in the oil and ga s industry

• Alter investment gu ide lines for pensionfirms in favour of rea l sec to r andhousing

•

Commit to building gas infrastructure(pipelines) to increa se ga s utiliza tion inthe c ountry

• Introd uce Ma nufac turing Expa nsionGrant (MEG)

• Sup port four yea r mass housing

schem e through a gg ressive mortga gefinance

• Enhanc e enrollme nt in prima ry andsecondary schools.

• Inc rea se resource alloca tion foruniversa l ac c ess to c ost effec tiverelevant he alth services

• Design a n institutiona l frame wo rk forevaluation of soc ial and ec onom icprog ram me s which w ill rep ort direc tlyto the President

• Coordinate efforts to roll bac k pove rty

throug h fisc a l and mo neta ry policiesthat are self-reinforc ing a nd withpositive feed bac k on PPP.

• Ac ce lera

police , pra ll other i

• StrengtheNige ria p




After the First Year – Foc us on…

…Sustainable Growth …Streng thening Human Deve lopme nt …A Functiona

• Promo te susta inab le large

sc a le c om me rc ia l ag ricultureba sed on plantationec onomy, ca sh, c rop s,orcha rds, irriga tion a ndproteins p rod uc tion

• Inc rea se p ublic and privatesec tor investment inagricultural R&D

• Evolve w ays of enc ourag ingflow of c ap ital the rea l sec torof the eco nomy

• Boo st po we r ge neration bybuilding more hydro a nd c oa lpo wer plants

• Link the evo lving housingma rket / need s with c ap italma rket to raise ho meow nership rate

• Emb ark on c om prehensive reform of tertiary

institutions• Susta in increa sed fund ing of Prima ry and

Sec ond ary level of ed uca tion• Susta in increa sed fund ing p rov ision o f b asic

health services• Resolve d ysfunc tiona l educa tiona l system

• Introd uce

policing• Comp reh

ba nkruptcand strenprocedure

• Deep en EMa nag em




By Mid -Term – Advance Towards…

…Long – Term d eve lopme nt …Sustainable Soc ial Program me s …Quality ser• Lay e mp hasis on b io-tec hnology and

Genetica lly Mod ified Foo ds (GMF) tobo ost food supp ly

• Launc h new targeted investmentdrives in spec ific industries whe recompetitive advantages exist

• Estab lish a nd ad op t a routine p roc essto annua lly me et JV c ash c a lls in oiland ga s industry

•

Expand ra il and road netw ork andmaintain existing infrastructure

• Strateg ic de velopme nt of mineralresources

• Estab lish a com prehe nsive set of fisc a lince ntives to enc ourag e thede velopme nt of high po tentialindustries

• Evolve w ays to enha nc e all sea sonsfarming through irrigation

• Encourage linkages between formaland informa l sec tors of the ec onomy

• Susta in the deve lopm ent of rura linfrastruc ture

• Tac kle environm enta l de grad ation

• Expa nd the c overage of healthinsuranc e a nd p rovision of b asic hea lthc are for all

• Create Youth Developm ent Fund forc ap ac ity building

• Help p oo r to b roa den the ir asset b aseand increase a cc ess to financ ialservices

• Ac ce lera• E-Gov• Civil S

• ReforJudic

• Prop e(leg a




And by The End of Four Yea rs – Ac hieve…

…A more prosperous ec onom y …Substantial p rogress towa rds ac hievingthe MDGs

…A more sta

• Country with a high c red it rating• Func tiona l and e ffic ient infrastructu re• Effic ient a nd Ad eq uat e Pow er supp ly• Ade qua te supp ly of refined pe troleum

prod uc ts (emphasis on loca l refineries)and do ubling of loca l content in the oiland ga s industry

• Significantly red uc ed cost o f doingbusiness

• Substantial reduc tion in the numbe r ofpe op le living b elow po verty line andinco me inequa lity

• Eradicate preventa ble d isea ses

• Easier access to Anti-retroviral drugs• Tow ards achieving environm enta l

sustainability• Elimina ting g end er d ispa rity in p rima ry

and sec ondary educa tion

• A c ountrya d isc iplin

• Low er Co• Responsi

service• Corruptio

system• Ad op tion

struc ture different tc om men




2.0 INTRODUCTION

Nigeria is a t the threshold o f history. The te mp o o f change ha s ac c elera ted in rec ent years.At the same time, the polity, economy and society have undergone some profound

c hang es. The d emoc ra tic order tha t eme rge d e ight yea rs ag o w as premised on the w ide -ranging expectations of a prosperous, secure and stable country. Efforts have been madeto build the pillars upon which these expectations could be realized and to satisfy the

yea rnings and asp ira tions of Nige rian c itizens. These e fforts ha ve c ulminated in anunprecedented series of economic reforms, specifically meant to address themismanagement, waste and corruption that have for two decades destroyed the

ec onomy a nd in so d oing laying the found a tion fo r sustainab le growth thereb y unlea shingNigeria ’ s pote ntial as a m a jor growth d river in the Afric an continent.

In the last eight years, the internationa l c ontext has bee n quite favo urab le fo r the Nigerianec ono my. This is ind ic a ted by high oil p rices, foreign investment flows and a land ma rk deb t

exit. Thanks to d ec isive a nd b old g ove rnme nt’ s dec isions, we have experienc ed improvedmacroeconomic stability, robust economic growth, and have also built up a healthy

foreign reserve p osition. In a dd ition, c onsiderab le p rog ress has been made in investment inphysic a l infrastruc ture, in our renew ed foc us on huma n c ap ita l deve lop ment, in improvedpublic debt management, and favourable credit ratings. We also have a more improved

environment for do ing b usiness. These a re o pportunities tha t must be seized andconsolidated now. We cannot afford to revert to the old ways of doing things, withadverse consequences on economic growth, confidence, good governance and social

cohesion.

This me ans tha t we must b uild on a solid found a tion a lrea dy laid; a dep arture, for the first

time in the nation’s history from recent trends whereby incoming governments had causeto “change the course”, a habit that further compounded our developmental dilemma

and made it quite difficult to build enduring institutions which would guarantee goodgovernance and continuity of effective policies. More importantly, however, we are

building the c ountry on a founda tion laid b y the stea dfa st c om mitment to reform, growthand p rosperity tha t was c ha rac teristic o f the Obasanjo go vernment. From this p rem ise, theNige ria Projec t Ag end a will, perforce , delinea te a b roa d -based framewo rk for c ontinuity of

reforms with a view to underpinning the strategic decision-making, as well as achieve ana tiona l co nsensus on Nigeria ’ s polic y ob jec tives and asp irat ions.

In seizing these o pportunities, howe ver, we must b ea r in mind the fac t tha t a lot of w ork liesahea d . From the ec onom ic pe rspe c tive, the mo dest grow th rate s we ha ve a c hieved must

be sustained through the adoption of appropriate measures aimed at sustaining andincreasing economic growth to reduce poverty and maximize social welfare. From thepolitic a l perspe c tive, there is a huge task of evo lving a c om mo n na tiona l ide ntity that will

unde rp in the soc io-ec onomic and po litic al integ ration of the p olity.




2.1 THENIGERIA PROJECT AND SHARED ASPIRATIONS

Although never loud ly expressed , there ha s a lways been a ‘Nige rian Drea m’ . The Dream

of every Nigerian is to live in a peaceful and prosperous society, managed by trustworthyand credible leaders who will ensure the provision of equal opportunities for economic

em pow erment, as well as the p rote c tion of ba sic hum an rights. This Drea m c ould b ea llude d to the fac t that Nige rians have long be en frustrate d by inexplic able p ove rty in themidst of a n ab unda nc e o f resources.

At the he art of our Nigeria Projec t Agenda is the Nige rian Drea m. It is our histo ric

responsib ility to ensure the rea liza tion of this Drea m and put b ehind us the ec hoe s of yea rsof political uncertainties and economic wastes and mismanagement that haveconstrained our ability to become a modern and industrial economy. We have at our

d isposa l the evide nc e o f the p rog ress we have m ade, as well as the missed op portunities inour effo rts to build the c ount ry. This c ould p rovide us with va luab le lessons on how toac c elerate d eve lop ment and imp rove the living c ond itions of our pe op le. Ac c ordingly, we

will emphasise community empowerment and direct participation of the citizens as a

fulcrum around which our development initiatives should revolve, thus putting the peoplein cha rge o f their destiny.

2.2 VISIONS OF THE FUTURE AND THE NOTIONS OF A BETTERNIGERIA

If Nigeria is to occupy its rightful place in the comity of nations, we must first define thed irec tion o f our deve lop me nt and artic ulate a shared vision o f wha t we desire a s a nation.The Nationa l Ec ono mic Emp ow erment & Deve lopm ent Stra teg y (NEEDS), Nige ria’ s muc h-

internationally-ac c la imed p olic y doc ument, has be en the key driver of our develop mentaleffo rts since 1999 with ve ry far rea c hing results. To e nsure c on tinuity, we a re c urrently in the

p roc ess of d eve lop ing the NEEDS II polic y d oc ume nt which w ill serve a s our de velop me nt

polic y blueprint for the next few yea rs. Our aim would be to a c c elerate ec onomic g row th,eng end er enhanc ed pub lic sec tor effic ienc y, as we ll as add ress the c halleng es of huma n

capital development, poverty reduction and regional development, especially in theNige r Delta.

2.3 THE CHALLENGES, THE OPPORTUNITIES AND THE PROMISE

Nigeria, like any developing country faces a myriad of opportunities and challenges. How

we deal with these opportunities and challenges will define the future of the country forma ny generations to c ome . Nigeria c an o verc ome its c hallenges and take a dva ntage of

its op portunities by d raw ing on its streng th, d iversity, resilienc e and ente rp rise. There is anurgent need for this Government to promote a shared notion of a progressive Nigeria toove rc om e our limitations and ma ke Nige ria a viab le, prospe rous and united c ountry.




2.4 NIGERIA WITHIN THEGLOBAL CONTEXT

The g lob al landsc ape for deve lop ment has c hang ed quite d ram atically in rec ent yea rs,

with the rapid growth in world trade, capital flows and communications technology. Forcountries in transition like Nigeria, these changes have presented both challenges and

opportunities. It is widely agreed that by ensuring the emergence of more efficient andcompetitive financial markets, globalization provides vast opportunities for greaterfinanc ial intermed iation and c ap ital forma tion, and hence , the a c c eleration of ec onom ic

grow th in these c ountries. These opportunities include : grea ter sc op e to ac hieve a bette rallocation of financial resources domestically and internationally, better portfolio

diversification, expanded investment outlets, easier and cheaper access to internationalfinance.

Nigeria is richly endowed with vast economic potentials: physical, human and naturalresources. The pote ntials in the o il and gas sec tors, ag riculture and ma nufac turing , as wellas investment pote ntials in infrastruc ture a re und oub ted ly huge. As a ma jor grow th d river in

the West African sub-region and the African continent, Nigeria has enormous geopolitical

and strategic advantage that must be leveraged upon to foster growth. Nigeria is anemerging mass market given its sizeable population, with a highly educated andente rp rising wo rkforce.

In view of the rapid integration of global economies, the place of Nigeria within thisprocess must necessarily become an issue of policy relevance. In this regard, a key

ob jec tive o f this Go vernment w ill be to streng then existing relationships with Nigeria ’ s ma jordevelopment partners and maintain the current high level of foreign investor interest inNigeria.




3.0 THENIGERIA PROJECTAGENDA- VISION

“ To d eve lop a united and sec ure soc iety unde rpinned b y strong democ ratic p rinc iples

and a modern and industrialized economy, which is fair, just and especially socially

inclusive, environmentally responsible and a key player in the regional and globalec onomy. “

3.1 KEY OBJECTIVES

3.1.1 Consolidate and deepen the economic reforms to impact the lives of all

Nigerians3.1.2 Address the c urrent d eve lop ment c hallenges fac ing the Nation3.1.3 Ma ke significa nt prog ress tow ards the a tta inme nt of the MDGs

3.1.4 Prop el Nige ria into one o f the 20 la rge st ec ono mies in the wo rld by 2020.3.1.5 Run a respo nsible, ac c ounta ble a nd transpa rent g ove rnment

3.1.6 Reform and streng then the d em oc ratic a nd p olitic al proce ss




4.0 STRATEGIC FRAMEWORK FORPOLICY GUIDANCE

PovertyReduction

Wealth Creation Emp loyment

Sustaina ble Rea l Sec tor Growth

RegionalDevelopment

(Niger Delta )

Peac e &Sec urity

Human Dev.(Educ ation& Health)

PhysicalInfrastructure

Macroeconomic Stability /

ServiceDelivery

Cross-c utting Issues: National Re-orientation, Gender Programmes,HIV/AIDS Preve ntion, Environm ent , Na tiona l Eme rgenc y




5.0 SUSTAINABLEGROWTH IN THEREAL SECTORS OF THE ECONOMY

5.1 MACROECONOMIC POLICY

5.1.1 CURRENTPOLICIES Nigeria ’ s ec ono mic refo rm a ge nda , wh ich ha s largely been d riven b y the NEEDS polic y has

involve the application of fiscal, monetary, trade and exchange policies to stabilize theeconomy in the short-run, achieve internal balance in the medium term and move theec onomy tow a rds the atta inme nt of external ba lanc e in the med ium a nd long-term. In the

main, macroeconomic management in Nigeria has been directed at achieving a highand susta ined non-infla tionary ra te o f growth. The spec ific me asures tha t have b eenapp lied since 2003 are as follows:

5.1.1.1 FISCALPOLICY

The p reva iling Fisc a l polic y is intended to a c hieve mac ro-ec ono mic stab ility and interna lbalance. Fiscal policy is also aimed at achieving fiscal transparency, viability, efficiencyand imp rove d revenue b ase. Under the refo rm, a M ed ium-Term Expend iture Frame work

(MTEF) wa s adop ted as an instrume nt of streng thening p ub lic expe nd iture manage me ntby outlining stra teg ic p riorities for expend iture a lloc a tion and eng end ering fisc a l disc ipline.

An important initiative in this regard was the introduction of an oil price-based fiscal rule,which seeks to de-link government expenditure from the volatility of oil prices andeffec tively ensures tha t excess c rude revenues a re saved .

The g overnment also made effo rts to c urta il budge t de fic its by limiting it to no more than3% of GDP. This had served to reduc e und ue b urden o n moneta ry po lic y and provide the

right environm ent for priva te investme nt.

To c om pleme nt fisc al reforms, gove rnanc e reforms which are a nc hored on the tenets oftranspa renc y, ac c ounta bility a nd anti-c orruption w ere introd uced . These inc lude : the “DueProcess” mec ha nism; the Nige ria Extrac tive Ind ustry Transparenc y Initia tive (NEITI); OPEN–

Ove rsight o f Pub lic Expend iture in NEEDS; pub lic sec to r restruc turing; as well as anti-c orrup tion agenc ies (EFCC and ICPC).

5.1.1.2 MONETARY POLICY

Monetary reforms largely focused on the maintenance of price stability. Also a number of

step s we re a do pte d aimed a t streng thening the financ ial sec tor and enha nc ing its ab ilityto provide credit to the private sector, as well as creating an environment for effective

mo neta ry po licy and financ ial interme d ia tion. The mone ta ry autho rities have a lsoembarked upon implementing more active, transparent and predictable

http://www.cenbank.org/MonetaryPolicy/Policy.asp - top#topinterest rate and exchange rate

polic ies. These m ea sures a re expec ted to p reve nt the financ ial system from being the

wea k link tha t c ould p rec ipitate instab ility in the even t of d om estic or externa l shoc ks.




5.1.1.3 STRUCTURAL REFORMS

The struc tura l refo rms have enta iled liberaliza tion, de reg ula tion a nd p riva tizat ion o f keysec tors of the e c ono my. The o b jec tive wa s to e nsure tha t the p riva te sec tor rem a ins the

d river of ec onomic a c tivity.

It is noteworthy that several legislation designed to deregulate and govern key sectors,such as telecommunications, electricity and public-private sector partnership (PPP) ininfrastructure development, have been passed. For instance, the liberalization of the

telec om mun ic a tions sec tor had eng end ered a boo st in investment in the sec tor (over US$1billion a year for the past four years) as well as provision of telecommunications services

(from just fewer than 500,000 to ove r 30 million GSM lines since 2001).

5.1.2 PRESENTPERFORMANCE: APPRAISAL OFPOLICY MEASURES

The ultima te o b jec tive of e c ono mic refo rms is the stimulation o f a susta inab le, non-

inflationa ry ec onomic growth. Inde ed , p rude nt fisc a l po lic y supp orted b y sound mo neta rypolicy has bee n large ly suc c essful in Nigeria. The suc c ess of fisc a l refo rm effo rts have

ushered in a period of improved macroeconomic stability. Fiscal operations of thego vernment ha ve b ec ome more transpa rent than in the pa st.

The exc hange rate has be c om e relatively mo re stable a nd is unde rpinned by thesuc c essful introd uc tion o f a wholesa le ma rket for foreign exc hange. The liberaliza tion of

the foreign exchange market in 2006 allowed the unification of the exchange rate andgreater exchange and interest rate flexibility. Inflation has been significantly reduced from23% in 2003 to below 10% in 2006. Chronic fiscal deficits have given way to consolidated

surpluses, thus improving the overall fiscal balance. Government fiscal balance moved

from the previous 3.5 percent of GDP deficit to a consolidated fiscal surplus of about 10%of GDP in 2004, and 11% in 2005.

A sizea b le reve nue w indfa ll has a lso b ee n saved . By the end of Dec em ber 2006, Nige ria ’ s

external reserve stoo d a t over US$40 billion. Conseq uently, a strong ec ono mic grow th o falmost 7% in 2005 and 2006, including strong non-oil sector growth of 8%, particularly in

agric ulture, which is key for employment ge nera tion a nd po verty red uc tion, wa s ac hieved .

The reforms c ontributed to a tta ining the landma rk Pa ris Club d eb t relief d ea l that Nigeria

suc c essfully negotiated w ith its c red itors in 2005, which in turn is a lrea dy ha ving a bene fic ia limp ac t on investment and growth in the ec onom y. As pa rt of the de bt relief de al, saved oil

revenues were used to eliminate payment arrears and buy back foreign debt at ad isc ount and this led to a red uc tion of fo reign d eb t to below 5% of GDP from 57% in 2003.The relatively go od deb ut sove reign c red it rating of (BB-) with a sta b le o utlook whic h

Nigeria sec ured from two ma jor interna tiona l ra ting age nc ies (Fitch a nd Standard & Poo r’ s)was regarded in international circles as a vote of confidence in the government’sec ono mic refo rm e fforts. The rating ha s put Nige ria a t pa r with othe r em erging markets

suc h as Brazil, Turkey, Venezuela a nd Vietna m. It ha s benc hmarked Nigeria internat iona llyand ena b led the p ricing of her risk. It a lso ena b les Nigerian b usinesses to have ea sier andmo re a fforda ble ac c ess to internationa l financ e a nd c ap ita l ma rkets.




5.1.3 CHALLENGES

From the foregoing, it is clear that the reforms have resulted in stable macroeconomicpolicies, which have helped build investor confidence in the economy. However, the

expectations that employment in the real sector of the economy would greatly expandhave not been significantly realised. Improvements in poverty and social indicators havebeen less than imp ressive (mo re tha n ha lf of the pop ula tion is still in the pove rty trap , with

high incide nc e o f extrem e p ove rty pa rticularly in the rura l a rea s). Desp ite stea dy growth inthe non-oil sec tor expo rts, the envisaged d iversifica tion of t he ec ono my is still proc eed ing

a t a slow pac e, as the o il sec tor continues to b e the do minant sourc e o f foreign excha nge .

Regarding fiscal policy, there are still challenges on both the revenue and expenditure

sides. Notw ithsta nd ing the red uc tion in fisc a l de ficits, fisc a l po lic y in Nigeria is still limited byits low reve nue b ase. While tax reve nues have g row n in rec ent years due p artly to ne w ta xmeasures, it is still low . The re is still a high level of ta x eva sion. On the e xpe nd iture side , there

is the still the challenge of responsibility in spending and borrowing, getting value formo ney, as we ll as mo nitoring a nd e va lua tion of expe nd itures.

With respect to monetary policy, the challenge remains the persistence of high interestra tes desp ite me asures to c ontrol infla tion.

Evide ntly, the rec ent strong ec onom ic growth has be en fa r too short to m ake a signific ant

imp ac t on p ove rty and red uce unem ployme nt. There is need for the b enefits of ec onomicgrow th to tric kle d ow n to a ll Nigerians and ac hieve the ob jec tives of NEEDS. There is a lsothe need to involve Nigerians in the reform process which should have the restoration of

the midd le-c lass as one o f its goa ls.

Besides the above, a recent study concludes that a range of shortcomings in the Nigerianbusiness environment significantly impedes the possibility of sustained high economic

grow th. The key sho rt c om ings a re (i) Poo r physica l Infrastructure – inad eq ua tetransportation, epileptic power supply and poor communication systems (ii) a burdensome

administrative, regulatory and institutional environment for businesses that significantlyraises the cost of doing business and (iii) lack of access to long term finance which is anessentia l prereq uisite to financ ing long term p rojec ts.

5.1.4 POLICY

OPTIONS

While reforms have a dva nc ed in key a rea s, there rema ins a substantial unfinished age nda.Nigeria needs to continue with prudent macroeconomic management while making

further efforts to foster an environment conducive to private sector and employmentgrowth.

For Nigeria to consolidate the economic gains achieved in the last four years, it mustdeepen reforms that improve human capital, promote high-quality public infrastructure,

and enc ourag e c om petition. The p illa rs to susta in this c onsolida tion must inc lude a firm




fisc a l polic y, transpa rent fisc a l ope rations, deve lop ment o riented mo neta ry and excha nge

ra te polic ies, and streng thening of the financ ial sec tor. In a ll of these, Nigeria has roo m forprogress.

5.1.4.1 MACROECONOMIC MANAGEMENT

A key and c entral polic y option is to c ontinue with sound m ac roec onomic ma nag eme nt.This will supp ort and c onsolidate the c onfide nce in the ec onom y, and enc ourage foreignd irec t investment (FDI). This would en ta il:

• Concerted stakeholder buy-in through policies that generate quick-wins for those

mo st a ffecte d by the reforms.• The assertion of politica l autho rity, intelligenc e and politica l will are a lso impo rtant

pre-req uisites for ad vanc ing the reform p roc ess and streng thening m ac roec onomic

management.

5.1.4.2 FISCALPOLICY

Fiscal policy should involve strengthening the tax administration system and ensuring fiscalresponsibility a t a ll leve ls of government. Fisc a l policy should foc us on :

• A comprehensive framework for fiscal coordination at national level that will entailthe enactment of the Fiscal Responsibility Law.

• A comprehensive reform of the public sector with a view to creating a more

effic ient wo rk forc e.• Participation of the private sector in the provision of some infrastructure and other

pub lic good s. This will enta il develop ing a solid lega l, institutiona l and fisc a lframework for PPP operators, including the reporting of contingent liabilities arisingfrom gua rantees p rov ided to PPP firms.

5.1.4.3 MONETARY POLICY Monetary policy should involve the emergence of an independent but development-oriented Central Bank, that will use instrument of policy to support the developmentalob jec tives of gove rnment. Moneta ry po lic y should c ontinue to foc us on:

• streng thening the financ ial system • Encouraging domestic savings

• Deepening of the do mestic c ap ital market • Proa c tive mana gem ent of systemic risks (the Basel gu ide lines).

5.1.4.4 STRUCTURAL REFORM Struc tural reforms need to b e d eepe ned and a c c elerate d w ith unfinished reform ag end a

in the follow ing a rea s:• Privatisation/concessioning of key infrastructure (power, communications systems,

ports, etc.).

• Improved Infrastructure: the development of medium term investment strategies forall infrastructure sectors would be critical in developing a clear vision that willfacilitate the selection of the most cost efficient projects and provide clear

pe rforma nce indica tors




• Improve the lending environment by accelerating the establishment of credit

bureaus, strengthening creditor rights and the insolvency framework and contractenforcem ent proc ed ures in gene ral

• Building Human Capital

• Linking R&D and innovation to the real sector and improve capacity to managetechnologic al c hanges




5.2 AGRICULTURE

At the m om ent the ag ricultura l sec tor is the fastest g row ing sec tor in the non-oil sec tor. In2005, it contributed 6.81% out of the 8.21% growth rate recorded by the entire non-oil

sec tor (see figure 1 below ).

Percentage of Agriculture to Non-Oil GDP Growth Rates (%)

0

5

10

Years

G r o w t h R a t e s

Non-Oil GDP Grow th

Rate (%)

% of Agriculture

Non-Oil GDP

Growth Rate

(%)

4.54 8.27 5.17 7.76 8.21

% of

Agriculture

3.86 4.22 6.64 6.5 6.81

2001 2002 2003 2004 2005

Figure 1. Perc enta ge of Ag riculture to Non-Oil GDP Growth Rates (%)

5.2.1 CURRENTPOLICYSeve ra l refo rms, p rog ramm es and polic ies have b een introd uc ed by suc c essive

Governments to boost production in the agricultural sector (including foreign fundedp rojec ts). Som e of t he initia tives include the formula tion o f irriga tion p olic y for Nige ria,introd uc tion of Agricultura l Deve lopme nt Prog ramm e (ADP) and Nationa l Seed Servic e

(NSS) programme, esta b lishment of Fed era l Ag ric ultura l Co ord inat ing Unit (FACU) with theresponsibility for the provision of planning and implementation support to the activities of

the ADP in Nige ria. Other projec ts and p rog ramm es initiated by pa st Go vernments inc ludethe establishment of National Agricultural Land Development Authority (NALDA),Ag ricultura l Cred it Gua rantee Sc hem e (ACG S) and Nigerian Agric ultural Co op erative and

Rural Development Bank (NACRDB), among others.

The p resent Go vernment ha s undertaken a numb er of p olic y initiatives sinc e 1999 with aview to boo sting p rod uc tion in the a gric ultura l sec tor. These initiatives include theliberalization of different agricultural input delivery systems, introduction of measures to

involve the p riva te sec tor in the agric ultura l sec tor, Spec ial Prog ramm e o n Foo d Sec urity(SPFS), Fadama II, Stra teg ic G rains Reserve (SGR) and SMEDAN a nd inc reased bud geta rya lloc a tion to the agric ultura l sec tor. In the NEEDS doc uments, ag ric ulture wa s identified as




a major priority and performance targets were set for the sector in terms of annual growth

rate of 6%.

The Gove rnment equa lly set up President ia l Co mm ittees (on rice , c assava and veg eta b le

oils) with the mandate to initiate p rog ramme s tha t will boo st ag ricultura l p rod uc tion.

5.2.2 PERFORMANCE After a long period of sluggish growth, the country’s agriculture has recorded significant

g row th of a bout 7% in two suc c essive yea rs (2005 and 2006). The p resent Go vernme nt ha sshown commitment in the area of increasing private sector participation in the different

sectors of agriculture especially in the distribution of fertilizers and other farming inputs. Inthe area of agricultural finance, some measures were also introduced to encourage thegrow th of microfina nc e institutions and SMEDAN.

How eve r, the Go vernment rec orded only mo de st imp rove ment in the ove rall pe rforma nc eof the sec to r. Agricultura l GDP grew from 4.1% in 2000 to a bou t 7% in 2006. It is importa nt to

note that the sector was characterized by inefficiencies in the supply and distribution offarm inputs, especially the distortions in the fertilizer markets, protectionist policies in the

form of imposing import duties on several agricultural products and inadequate marketlinkages.

5.2.3 CHALLENGES Although the agricultural sector has strong potentials, it is faced with a lot of challenges

which have imp ed ed substantial growth in the sec tor. Som e o f the key c halleng es thatfac e the sec tor inc lude the follow ing:

5.2.3.1 LOW PRODUCTIVITY There is an inverse relationship betw een g row th in the area of land c ultiva ted and yields forvirtua lly all c rop s. Nigeria ’ s yield is low er than those o f her com petitors, bo th in the a rea s ofc ash c rop s and food c rop s and anima l husband ry. The low produc tivity in the sec tor ca n

be attributed to weak resea rc h a nd extension servic es, low use of imp roved ge netics andpurchased inputs, low levels of mechanization and irrigation, poor access to production

credit especially in accessing micro credit facilities, decline in soil fertility, ageing farmpopulation, rural-urban migration by the youths, high drudgery (physical effort per output),una ttrac tiveness and na tural fac tors.

5.2.3.2 LOW QUALITY OF PRIVATESECTOR INVESTMENT

Private investment in agriculture, both in primary production as well as processing (valueadded ), is c urrently low. Fac tors c ont ributing to the low leve l of investme nt include high riskof investment caused by policy inconsistency, low investor confidence in the sector, high

production cost, insecurity of land tenure, insufficient institutional and infrastructuralsupport (roads, national railway network, electricity, and storage facilities), low use ofbusiness c red it and unfavourab le business c lima te.

5.2.3.3 NON-COMPETITIVENESS




The sec tor cannot c om pete in the interna tiona l ma rkets. This non-c om petitivene ss c an be

attributed to several factors, including: high cost of marketing, high production coststructure, processing, and transportation to trade points, exchange rates, difficulty ofaccessing regional and global markets, domestic policy-related obstacles that

d isc riminate a ga inst export and the pric e of c om pe ting p rod uc ts.

5.2.3.4 WEAK DOMESTIC POLICIES AND INSTITUTIONS Succ essive go vernme nts have formulated and imp lemented c onflic ting polic ies to supp ortagricultural production, and as a result agricultural policies have tended to change

freq uently with changes in politica l lea dership . Co nseq uently, there a re ineffec tive linkag esbetw een polic y-resea rc h-extension and farmer-input-ma rket-fac tory/industry, etc . This

fragmented approach to policy making has constrained agricultural growth because ithas p revented a sustained c ommitment to a c oherent, integ rate d stra teg y for ag ric ultura ldeve lop me nt. The loo se po licy frame work does not enc ourag e stab ility in imp ort-expo rt of

certain crucial items (either as raw materials or finished products such as textiles,vege tab les oils, etc ).

5.2.3.5 INADEQUATEFUNDING Inadequate and untimely funding of agriculture by the public sector coupled with

inefficient and/or ineffective application of such funds (budgetary or otherwise), alsoc onstitute b ottlenec ks to a gric ultural develop me nt.

5.2.3.6 LAND OWNERSHIP AND TENURE Incentives to invest in agriculture are undermined by policies regarding land ownership

and land tenure. The Land Use Ac t o f 978, invested p rop rieta ry rights to land in the Sta te.User rights are granted to individuals through administrative systems rather than a marketa lloc ation system. Individua l and pub lic ow nership of land are o ften imp lemented side-by-

side , and rathe r than seek a lloc ations from the loca l go vernment, peop le a c quire a c c ess

by a va riety of informa l me ans. The Land Use Ac t do es not recog nize the informa lc ontrac ts, so most of these a re leg a lly sec ure. The insec urity of tenure is the refore aconstraint to expanding production in agriculture and also serves as a disincentive toma king long te rm imp roveme nts of the land .

5.2.4 POLICY OPTIONS

Achieving substantial and sustainable growth in the agricultural sector can be realized ifp rod uc tivity, p rofitab ility and c om petitivene ss of ag riculture c an be imp rove d . For this tohap pen it will be imp ortant for the Go vernment to a do pt the follow ing sugg ested stra teg y

policy options:• Review existing policies such that a functional public-private sector collaborative

approach will be developed in pursuance of a fully integrated and coordinatedagricultural revolution in Nigeria.• Review the agricultural input supply and distribution system with a view to

developing an effective and sustainable private sector-led input supply andd istribution system

• Address cross-cutting constraints like the exchange rate constraint, monetary

po lic ies espe c ially in the a rea of c ost o f bo rrow ing, ac c ess to a pp rop riate financ ialservices suc h a s micro c red it fac ilities, NACRDB and AGS. The Nigerian Ag ric ultura l




Cooperative & Rural Development Bank (NACRDB) needs to become a more

pivota l and rea l fulc rum/ c ata lyst to real ag ric ultural de velopm ent.• Support all-sea son fa rming b y p rom oting rain-fed and irriga ted farming, with an

empha sis on Fad ama agric ulture.

• Develop markets and agribusiness with the provision of adequate infrastructure inthe area of transport (rural feeder roads, good rail network, and water

transpo rtation), comm unic ation, powe r and wa ter resources.• Put measures in place to minimize or completely eradicate post-harvest losses

resulting from inad eq ua te storag e fac ilities.

• Streng then agricultura l resea rch a nd streamlining the extension delivery systemthroug h the invo lveme nt of NGOs.

• Imp rove the c om petitiveness of Nigerian agric ulture in the internationa l ma rkets.• Expand and possibly consolidate existing initiatives e.g. Bio-fuels as a globally

favoured sec tor ca n a ttrac t substantial foreign investme nt as we ll as c a rbon c red its.

• Resusc itate the Greenb elt Prog ramm e. The Greenb elt Prog ramm e should beresuscitated with due cognizance given to the menace of desertification in thenorth, erosion and flood in the middle belt and south; and the coastal/riverine

pollution in the c oa stline a nd neighb oring Sta tes.• Take ad vantag e of the va rious c onc essiona l arrang em ents p rovided by the World

Trade Orga nizat ion (WTO), Africa n Growth and Opportunity Ac t (AGO A), theEuropean Union-African-Caribbean and Pacific states agreement (EU-ACP),National Partnership for African Development (NEPAD).

• Inc rea se b udg eta ry a lloc ation to the a gric ultura l sec tor• Refo rm the land tenure system

5.2.5 EXPECTED OUTCOMES The suc c essful imp lem enta tion of the stra teg ic op tions and p rog ramm es will ena b le the

Go vernment to ac hieve the agric ultural targe ts set in NEEDS 2 and the Party Manifesto,

with a po sitive imp ac t on the lives of the pe op le. Spe c ific expec ted outc om es inc lude :

• Diversified Ec onom y• Foo d Sec urity

• Emp loyme nt G eneration• Economic Linkages

• Exports• Pove rty Red uc tion




5.3 MANUFACTURING AND SMALL AND MEDIUM ENTERPRISES(SMES)

5.3.1 CURRENTPOLICY

Manufacturing contributed only an average of 3.6% to Nigeria’s GDP over the 2001-2004period, trailing behind agriculture that contributed an average of 41% over the sameperiod. In 2005, manufacturing contribution to GDP slightly improved to 3.8%. Capacity

utiliza tion ha s no t b ee n ve ry imp ressive, as it averaged on ly 53% over 2004-2005 period .

With the privatization p rog ram me , manufac turing ac tivities a re no long er under the a mb itof the p ublic sec tor. A b roa d frame wo rk that takes c are of the ma nufac turing a nd SMEnee ds is infrastruc ture a nd p rivate sec tor de velop me nt as we ll as an investme nt c limate.

A major policy issue that aimed at an accelerated manufacturing activity is theesta b lishment o f the Expo rt Expa nsion Grant (EEG). With rega rds to the Small and Me d ium

Ente rprises (SMEs), the Small and Me d ium Ind ustries Equity a nd Investm ent Sc heme (SMIEIS)

which m andated banks to set a side 10% of the ir a fter tax profit for SME financ e w asintrod uced ab out four yea rs ago . It w as aimed at resolving the financ ing c onstraints fac edby the SMEs. To c om p lem ent it, the National Credit Gua rantee Sc heme wa s c onc eived tohelp m itiga te risks assoc iate d with lend ing to SMEs.

5.3.2 PERFORMANCE

In general, Nigeria recorded a very steep fall in its competitiveness, ranking only 101stworldwide, down 18 places from 2005 in the World Economic Forum’s GlobalCompetitiveness Index (GCI) rankings in 2006. Moreover, it lost 34 places (falling to rank

112) in the basic req uirem ents sub-index, which highligh ts the fundame nta ls for ac hievingsustained growth namely strong institutions, adequate infrastructure, a supportive

macroeconomic environment, among others. By contrast, the country did better oninnovation (52), improving its position vis-à-vis last year by 12 places by raising its rankingsfor company spending on Research and Development R&D and university/industry

research collaboration. Nigeria has also boosted its technological readiness, especially inthe areas of Foreign Direct Investments (“FDI”) and technology transfer and firm-level

technology absorption.

As government is no longer at the commanding heights in driving the sector, progress

made so far is measured in terms of privatization; the establishment of new regulatoryarrangements to govern infrastructure market development as well as improving theinvestment c lima te.

On the pa rt o f the MSME/ SMEs, prog ress is mea sured in terms of p olic ies put in p lac e to

resolve the tee thing p rob lems identified in the d iagnostic stud ies. Prog ress made in respec tof these drivers include, changes in customs and business registration procedures.

Priva tiza tion p olic y to role b ac k the frontiers of Sta te c ap ita lism ma de substantial p rog ress,but remain incomplete as the major public enterprises especially power remains in

absolute government c ontrol. So fa r, over 100 Sta te -Owned Ente rp rises (SOEs) have bee n




p riva tized or conc essioned with p rivatiza tion proc eeds exceed ing US$3b illion. A c oup le o f

productive sector privatization also yielded some positive economic stories aboutem ployment inc rea se a nd inc om e g row th espec ia lly in the c em ent a nd suga r sub-sec tor.There exist elem ents of transparenc y in the system a lthoug h with sub sta ntia l sc op e fo r

improvement.

SMEs c rea te more job op portunities tha n large enterprises. The Figure 4.1 below c on firmsthis assertion.

Figure 4.1

Number of jobs for every N12m Invested by Firm

Size

0

20

40

60

80

100

120

Micro small Medium Large Very large

Series1

5.3.3 CURRENTCHALLENGES

Diagnostic work has been done on the sector in the last couple of years which indicatesfour key c onstraints to ente rp rise g rowth a s follows:

• Co st-inc rea sing fa c to rs suc h a s insufficien t and inefficient infrastruc ture services;• Grow th inhib iting fac to rs suc h as lac k of fina nc e espec ially with the MSME/ SMEs;• Investment constraining factors informed by uncertainty about government policies;

• Profit-sapping factors associated with poor laws, regulations and inefficientadministration o f business environment.

A major challenge in freeing resources and encouraging private sector development isc om pleting the p riva tiza tion ag end a. There is sc op e for imp roving the transpa renc y of the

p roc ess. Top on this age nda should b e manufac turing and servic e rela ted Sta te-Ow ned

Enterprises (SOEs) as well infrastructure. Infrastructure is relevant because the reform of thepower sector is of great importance to the overall performance and competitiveness ofthe manufac turing sec tor.

Another issue that a poses major challenge to manufacturing growth in Nigeria is the factthat most manufacturing outfits lack the capacity to resolve basic competitiveness

bottlenecks on their own and the Public-Private Partnership mechanism to achieve that isvery wea k. There is nee d the refo re to streng then inter-ag enc y co ordina tion a nd p rovide




standard procedures to achieve a cost effective PPP that targets infrastructure

development.

Sma ll firms lost 24 per ce nt o f their output to pow er outa ges; med ium firms lost 14 per cent

and la rge firms 17 per ce nt.

To make SME’s more c om pet itive , ma jor refo rm issues need to be add ressed . This isnec essary g iven the SMEs em p loym ent gene ra ting c apab ilities. In this reg ard , thepolicy/implementation inadequacy to resolve the infrastructure, finance and overall

c om petitivene ss p rob lems nee ds to be fully a dd ressed . The follow ing initiatives c ould helpto kick-sta rt the SME sec to r in Nigeria:

• There is an urge nt nee d to simp lify the SMIEIS ac c ess and d isbursem ent p roc ess.Latest statistics indicate that projects financed by the scheme are in the region of

250 ac ross the c ountry;• Public sector intervention and facilitation to enhance collaboration to resolve the

c om petitivene ss ob stac les amo ng the SMEs;

• Public sector intervention in Value Chains development that provides competitiveop portunities among SMEs. Without these va lue c ha ins the possibility of instiga ting

new non-oil growth is grossly undermined.

Figure 4.2

0% 10% 20% 30% 40% 50% 60%

Source: UNIDO Manufacturing Survey

(2005-2006)

Skilled labour

Policy uncertainty

Inflation

High interest rates

Cost of domestic inputs

Cost of imported inputs

Insufficient demand

Access to credit

Physical infrastructure

Percieved Main Problem by the SMEs

Series1





5.3.4.1 PRIVATIZATION There is an urgent need to fo llow throug h on the p riva tiza tion agend a whilst streng thening

and improving the leve l of transparenc y a lrea dy estab lished . Other issues to b e a ddressedinclude:

• A prog ramm e to dea l with a p ossible ma ssive retrenc hme nt during the exerc ise.• Complete the establishment of new regulatory agencies that have enabling Acts.

This should be done in c lose c onsultation w ith the p rivate sec tor. These agenc ies

should have a time-bound and me asurab le outc om e. This is to he lp resolve likelyteething inter-age nc y c oo rd ination p rob lem s.

Before proceeding to privatize the major public enterprise, the provision of an enhancedme c hanism to imp rove proc ess transparenc y has to b e frontload ed .

5.3.4.2 SMALL AND MEDIUM ENTERPRISES(SMES)To address the p rob lem of ma nufa c turing and SMEs, key infrastructure issues espec ially

po wer needs to b e ta c kled through:• The a ntic ipa ted unbund led pub lic sec tor do minated Pow er Com pa ny. This is to b e

c om pleme nted by a n increa sed numb er of IPPs;• Public sector-driven cluster formation across the country, depending on regional

resource leverage;

• Priva te sec tor-d riven c onsortia forma tion a c ross a ll SME relate d ec ono mic ac tivities;• A value chain initiative that encompasses minimum infrastructure platforms,

targeted investment climate reforms and capacity building at institutional andhuma n resource levels;

• Alternative sources of energy should be sought and developed by both the

government and the manufacturing sector. More research should be encouraged

in this regard ;• Ga s p ipelines should be e ffic iently netwo rked na tion w ide to ensure full utiliza tion by

c onsumers. An effec tive g as po lic y should b e p ut in p lac e b y the p olic y ma kers aswe ll as a wo rkab le g as pric ing mec hanism;

• The g uide lines for ac c essing SMIEIS Fund should b e relaxed and imp lemented .• Streng then the Bank of Industry throug h the injec tion of ad d itiona l eq uity c ap ita l to

support the ma nufac turing sec tor and SMES

5.3.5 EXPECTED OUTCOME

5.3.5.1 To inc rea se c apac ity utiliza tion in the m ed ium-term (2007-2009) to 70%.5.3.5.2 Have at lea st 3 func tiona l SME c lusters ac ross the c ountry, dep end ing on

reg iona l resource leve rage by 2009.5.3.5.3 Increase manufacturing sector contribution to GDP to 10% within the samep lanning horizon.

5.3.5.4 Provide a business climate conducive to manufacturers by loweringinfrastruc ture, reg ulatory and other c osts by 45% by 2009;

5.3.5.5 Inc rea se a nnua l grow th rate in ma nufac turing to 10% by 2009;

5.3.5.6 Inc rea se ma nufac tured g oods.




5.4 SOLID M INERALS

5.4.1 BACKGROUND

Mineral de velop me nt in Nige ria ha s been highly foc used on the oil industry. The miningindustry ha s been neg lec ted but interest in the industry ha s been rekind led by the Ministryof M ines and Stee l Develop me nt (MM SD), intent on increasing the role o f this sec tor of

Nige ria’ s ec onomy.

Thirty-four minera ls have b een identified , and a re c urrently be ing p rom ote d fo rc om merc ial exploitation a nd produc tion. Rec ently, the Nige rian Geo log ic al Survey

Ag enc y (NGSA) identified the oc c urrenc e of add itiona l forty-two minera l resources ac ross

the c ountry and these a re b eing cap tured on the m inera l c om mo dity ma ps of the NGSA.

Deve lopm ent o f the Solid M inera ls sec tor of the ec ono my is key to the c urrent g ove rnme nt

polic y of d iversifying the revenue b ase o f the ec onomy a nd the a ttrac tion o f FDI

The Key ta rge ts enum erated in the NEEDS doc ume nt fo r the sec tor include s;

• Promote vigorously the exploration and exploitation of solid minerals to provide

inputs for loc a l industries and exports• To m ake m ining fields a ttrac tive to investors and forma lize informa l and a rtesana l

mining a c tivities to c ont ribute to e xports

• Inc rea se o pportunities for self emp loym ent throug h m ining• Inc rea se revenue to go vernment

• Red uce environmenta l deg rad ation

• Diminish soc ial and hea lth prob lem s- child labor and the sprea d of HIV/ AIDS

5.4.2 PRESENTPOLICY

5.4.2.1 THENATIONAL GEOLOGICAL SURVEY AGENCY

The Ag enc y is in the p roc ess of upd a ting a nd reviewing the g eo log ic al ma p of thec ountry. NGSA ha s a lso em ba rked on sta ff training in the use of softw a re for interpreting

and imp leme nting g eop hysic al da ta.

5.4.2.2 SEEKING SUPPORT FROM HOST COMMUNITIES

There have bee n severa l Ministerial visits to host c om munities to solicit sup port foreng agem ent in environm enta lly consc ious mining a c tivities.




5.4.2.3 THEARTESANAL AND SMALL SCALEM INING DEPARTMENT

The dep a rtment is in the p roc ess of a ssisting a nd orga nizing a rtesana l miners into

c oo peratives. These c oo peratives have led to b ette r mo nitoring o f the ac tivities of sma llsc a le miners and have p rovided a c hannel for imp roved fund ing of their p rojec ts. The

MMSD is in the process of securing a N15.6 billion facility from the World Bank, of whichN1.43 billion has bee n received and d isbursed .

5.4.2.4 REVOCATION OF DORMANT MINING TITLES

Government has adopted a policy of revoking all dormant mining titles awarded tod ifferent mining c om panies. This exercise ha s since been c om plete d and new titles a re

being issued. A policy of openness and due process in the award of new mining licenses

has been ad opted .

5.4.2.5 ESTABLISHMENT OFPROCESSING CENTERS

In a b id to increase the export of more value add ed p rod uc ts, the MM SD has enc ourage dthe p riva te sec tor to set up p roc essing c ente rs.

1.1.1.1 PRIVATIZATION OFGOVERNMENT OWED M INING COMPANIES

THE PRIVATIZATION OF THENIGERIAN M INING CORPORATION AND THENIGERIAN COALCOMPANY IS gearedtowards making the sector private sector driven. It is expected that the private sector will

bring improved managerial expertise and skills, make new investments, encouragetec hnologica l transfer and inc rea se c om pe tition a nd e ffic ienc y.

5.4.2.6 PROVISION OF BUYING OUTLETS FOR MINING PRODUCTS

Prom otion o f mining a c tivities by the MMSD has been further deep ene d throug h the

p rov ision o f buying ou tlets for sma ll sc a le miners.

5.4.3 CURRENTPERFORMANCE

• The Minerals and Mining b ill after being thoroug hly sc rutinized to ma ke it mo reprivate investor friend ly and to p rote c t p ub lic interest ha s been p assed into law. Thelaw will serve a s the b ac kbone o f op erations in the mining sec tor, it g ives the M ining

Cadastre Office autonomy to grant mining titles and licenses and it establishes thesec urity o f tenure o f mining leases. Furthermo re, it removes Ministe rial d isc retion from

the g ranting o f licenses and p rovides for the estab lishme nt o f a Solid MineralDevelopm ent Fund, whe re a c ertain percentag e o f fede ra l revenue is set a side for

the d eve lopm ent o f the solid mineral resources.

• The NGSA ha s a lmost c om p lete d the geo log ica l survey o f the entire m ineral sitesand the Skills and Co mp ete nc e o f the sta ff of NGSA have b een imm ensely




increased in the d isc ha rge of their duties. The Mining Ca dastral Offic e is in the

process of setting up computer based cadastral system for accelerated and

transparent p roc essing a nd g ranting o f titles.

• Education on the environmental impact of mining has taken place in several host

c om mun ities. The MMSD and the World Bank have a lso und ertaken a n aud it ofmining environmenta l mana ge ment.

• There is now bette r mon itoring of t he ac tivities of sma ll sc a le miners wh ic h ha sprovide d a c hanne l for imp roved funding of their mining p rojec ts.

• Mining license b ids a re no w a dvertised by the MMSD under the open te nder systemand a due p roc ess office has bee n set up in the m inistry.

• Privatization of the Nigerian Mining Corporation and the Nigerian Coal Company

has be en co mp leted• Award of contracts for the building of buying centers for small-scale miners

na tionwide is in progress and the Abuja Sec urities and Co mm od ities Excha nge ha s

minerals marketing as one of its c ore responsibilities.• The MMSD has a lso esta b lished the Susta inab le Ma nagem ent of Mineral Resourc es

Projec t (SMMRP). A ma jor c om pone nt o f the p rojec t is to support artisana l and sma llscale miners to have access to better mining facilities (financial, capacity building

and equipme nt).

5.4.4 CURRENTDEVELOPMENTCHALLENGES

Absenc e of a c om prehensive Geolog ica l Survey of the entire c ountry for mineral dep osits:

a c om prehe nsive survey o f the ent ire c ount ry using rem ote sensing e quipment a nd a lso to

d igitize the ma ps has to b e c om pleted .

Problems of Environmental Degradation: The e stab lishment a nd enforcem ent o f global

best practices of environmental standards for mining activities is also a major challenge.Mining a c tivities c an lea d to environm enta l po llution w ith the c rea tion o f ab and oned p its,

sha llow pond s, po isono us wa ste, rad ioac tive w astes etc with severe hea lth imp lic a tions.

Imp roved training of staff of mining regulatory ag enc ies: To ensure tha t Nige ria is abrea st o fglobally acceptable methods in mining regulation, staff of regulatory agencies should

possess the p rop er skills and expertise to d isc ha rge the ir duties effec tively.

Promotion of small scale miners: To p rom ote a vibrant m ining sec tor, the G ove rnmentshould a llow sma ll sc a le m iners to c ap ita lize explora tion and p re-deve lopm enta l expe nses.

Prevalence of informal and illegal activities: There a re severa l illeg a l mining op era tions inthe c ountry at the mo me nt. These illeg a l mining ac tivities a re usua lly p rac ticed by sma ll

sc a le m iners.

Absence of adequate buying centers: The esta b lishment o f buying c enters for sma ll-sc a le

miners to interfac e with loc a l users/ expo rters is a lso a ma jor c ha lleng e. The loc a tion o f the

buying c enters and mod es of op eration must be ag reed upon.




Inadequate mineral processing centers: Presently, there are inadequate processing

c ente rs and reve nue from exports c an be increased . The few p roc essing c ente rs forminerals a re o perate d by the p riva te sec tor and a re very sma ll sc a le. Therefore, theestablishment of central mineral processing centers should be a major objective of the

government.

Lac k o f Mod ern Mining Tec hnology a nd Skills: Lack of new technologically advanced

mining e quipm ent b y sma ll ope rato rs ham pe rs effic ienc y and growth.


• As in the oil industry, the MM SD should em bark on a n aggressive c amp a ign topromote sound environmental management in minefields and penalise offenders.

Proactive enforcement of environmental standards by mining companies shoulda lso b e e nsured by the MMSD.

• FG should ensure that constant training is undertaken for staff in the industry to keep

up with the latest knowledge and modes of application of skills required in the

sector.• In addition to the disbursement of the World Bank facility, tax holidays and low

roya lties. The MM SD should link the sma ll sc a le miners c oo peratives with the bankssaddled with the responsibility of disbursing the loans and ensure that there are

standard rules and p roc ed ures for eligibility.• The MMSD should a lso esta b lish an illega l mining monitoring dep artment. As part of

the small scale mining department. Informal and artesanal mining activities shouldbe fo rma lized . To e nab le the fo rma liza tion of a ll ac tivities, CAC should expe d ite andsimplify the registration of business names of all small scale miners. It should also be

affordable.• FG should ensure that the Abuja commodities exchange commences operations

and the M MSD should e nc ourage the p riva te sec tor to estab lish b uying c enterswhile streng thening its reg ulatory role.

• The FG should a ssist the p rivate sec to r in esta b lishing imp roved p roc essing c enters

by p rovid ing fund ing a nd ta x breaks in line w ith internationa l standards. MMSDshould a lso reg ula te their ac tivities to ensure internationa l c om petitivene ss.

• FG should encourage banks to set mining equipment loan desks. Furthermore,

leasing companies can be encouraged to purchase and lease important miningmachinery or a government backed company can be established to lease them

with a view of p riva tizing it la ter. MM SD should a lso o rganize training p rog rams forsma ll sc a le op erato rs to ac quire new skills.


• Sound environmenta l mana gem ent b y mining c omp anies

• Inc rea sed op portunities for self- emp loym ent through sma ll sc a le mining• Ease in marketing p rod uc ts by miners• Enhancement of local expertise in processing minerals and increase the local

c ontent va lue in exports of m inerals and c om mo dities• Prog ress in the d iversific a tion of the reve nue b ase o f the e c ono my




• Deve lop me nt o f rura l co mm unities and mining c ities as a result of m ining




5.5 HOUSING

5.5.1 CURRENTPOLICIES

Institutional framework for housing delivery: The institutiona l frame work forms the basis of

the entire ho using d elivery system:

The firm resolve b y the Fed eral Governme nt to add ress the na tion’s housing p rob lem is

shown by its adoption of a new national policy on housing and urban development in

2002. The polic y is an em bod ime nt o f workab le stra teg ies to refo rm the na tion’s housingsec tor to ensure tha t Nige rians have ac c ess to a ffordab le a nd de c ent rental housing andhom eo wne rship. This is to be ac hieved throug h a p rivate sec tor-led housing d elivery systemanchored o n ma ss c onstruc tion o f houses and strong mo rtga ge financ e.

The m a in ob jec tives of the c urrent housing polic y d riving the ong oing reforms in the sec tor

a re summarized as follows:• Ensure that all Nigerians own or have access to decent, safe and sanitary housing

ac c omm od ation at a fforda ble c ost with sec ure tenure.

• Pursue vigorously the imp lem enta tion o f p riva te sec tor led ma ss c onstruc tion o f houseswith go vernment enc ourag eme nt and involveme nt.

• Provide adequate incentives and an enabling environment for greater private sector(forma l and informa l) pa rticipa tion in the p rovision o f housing.

• Streng then existing institutions involved in housing d elivery at the Fed era l level.

• Promote measures that will mobilize long-term and affordable funding for the housingsector.

• Prom ote the use o f loc a lly p rod uc ed build ing ma teria ls as a m ea ns of red uc ing ho usingc onstruction c ost.

• Promote the use of Nigerian professionals, appropriate designs and technologies in

housing delivery.• Enc ourag e a c tive pa rticipa tion of othe r tiers of gove rnme nt in housing delivery.• Imp rove the qua lity of rura l housing and infrastruc ture.

5.5.2 EXPECTED PERFORMANCE

Once significant progress is made with the ongoing reforms in the sector, the sector’sregulatory body as well as operators will be better positioned to meet the housing

need s of the na tion:

Federal Gove rnment:• Federal Housing Authority• Fed eral Mortgag e Bank of

Nigeria

Sub Nationa l Government• Sta te Government s Housing

Agencies• Loc al Gove rnments

Agencies

Private sector• Prima ry Mortga ge

Institution’s• Bond & Ca pital Market• Sec ond ary Mortgag e

Markets




• The housing financ ing stra teg y of the c urrent refo rms should deliver rob ust mortga ge

finance through secondary mortgage and capital market operations to effectivelyde al with the huge housing d efic it and give Nige ria a respe c tab le home ow nership ratein the nea r future.

• Relying on the capital market rather than depository funding, a responsive mortgagesystem will ultima tely be estab lished wh ic h w ill be rea d ily a c c essib le for hom eownership

loans. First home origination will be broadened by bringing universal banks, life funds,insurance companies and pension funds into the primary mortgage market for thebene fit of Nigerians seeking to be home ow ners.

• The c ap ital ma rket and the financ ia l system as a who le w ill be deepe ned by anupsurge expec ted in the trad ing of m ortgag e instruments.

• The reforms will lea d to the estab lishment of a strong mo rtgage e nab ling lega l system .• The reforms offer an opportunity to exploit the p ote ntial of the mo rtga ge industry to turn

around the Nigerian ec ono my. The industry has assoc iated multip lier effec ts wh ic h

contribute to the improvement of the macro-economic indices such the GDP,unemp loyment rate, etc . Sinc e the ad vent three yea rs ag o, the ho using reforms havestimula ted high levels of a c tivities in mortga ge financ ing and housing c onstruc tion from

the NHF window to the imp roveme nt of the Nige rian ec onomy.


5.5.3.1 CURRENTSTATE OFHOUSING INFRASTRUCTURE AND SERVICES

The follow ing g ives a p ic ture of the p resent sta te of ho using infrastructure a nd servic e in thecountry:

• A situation of gross inadequacy of infrastructure and service provision, coupled with

inad eq uate ma intenanc e is p reva lent in urban and rural settlements nationwide .• The existing tec hnology for infrastruc ture de velopm ent and ma nag em ent is

rudimentary.• Settlem ents, espec ially in urban c ente rs, a re c ha rac terised by overc row ded

hab itations, tra ffic c ong estion, grow th o f slums and inc rea sing c rime rate .• Limited private sector involvement as government (whether federal, state or local) are

pre-eminently responsible.• With government failure to fulfill its obligations on primary infrastructure, developers are

c onstra ined to fund same and b uild suc h c osts in to p rojec ts, thereb y esc a la ting ma rket

p ric es and ultimately frustra ting m ass and a ffordab le housing p rovision.

5.5.3.2 FACTORS

DELIMITING

HOUSING

INFRASTRUCTURE

PROVISION

• The m isma tc h be twe en urba n po pula tion g row th and infrastruc ture d evelop me nt rate .

• Legal and constitutional constraints: Government monopolies foreclose competitionand, where existent, metropolitan administration agencies are grossly inefficient. Inadd ition, loca l governments have limited pow ers to borrow funds. The p rovisions of the

Land Use Ac t a re hea vily stifling to infrastruc ture deve lop me nt.




• Resource supply constraints: Due to limited available revenue-generation sources,

gove rnme nts’ infrastruc tural investments a re me agre. On the other hand , financ ialinstitutions a re unwilling to lend long -term and find infrastruc ture financ ing una ttrac tive.

• Wrong institutiona l frame wo rk a rrangem ents.

• Sc arcity of c omp etent tec hnic al and ma nag erial c ap ab ility.• Inadeq uate support institutions.

• Imp rop er pric ing and poo r ma rketing of pub lic fac ility servic es.• Overbearing political influence in commercial decisions.

5.5.3.3 CHALLENGES IN AREAS& SEGMENTS

• Urban Area: The housing p rob lem in the urban a rea s is not only restric ted to quantitybut also to the poor quality of available housing units, infrastructure and the

environment. The result is manifest in grow ing overc rowd ing in homes and increa singpressure on infrastruc ture.

• Rural Area: The sc ena rio is on ly slightly different in the rura l area s where the p rob lemsare primarily that of quality of housing and inadequacy of infrastructure like roads,

drainag e, wa ter and po wer supp ly, etc .

• Another imp ortant c harac teristic of b oth the urba n a nd rura l sc enes is the d ominanc e

of the p oo r and low incom e g roup s. It has be en estima ted that o ver 70% of the na tion’ spop ula tion fall within this c a teg ory.

• Housing Finance: The ma jor wea kness of the p ast housing financ e systems was entiredependence on depository arrangements as the source of funding, the lack of a

de libe rate effort a t linking the housing financ e sec tor to the c ap ital ma rket, and that o f

integrating the sector into the nation’s overall financial system, for a robust mortgagefinanc e environm ent.

Thus, the housing financ e system wa s seve rely under-deve lope d and ill-equ ipped to

mo b ilize a nd c hannel ad eq ua te resource s to the ho using sec tor. The p ast housingstrategies depended entirely on depository arrangements, relying on the meager long

term savings mobilized through the National Housing Fund (NHF) and augmented bythe Prima ry mo rtgage Institutions (PMIs). The d efic ienc ies of the d ep ository approa c hhave resulted in a large d eficit of long term fund s for housing. The financ ing need to

red ress this housing shortag e based on a ffordab le housing lies betw een N31 trillion andN44 trillion.

Furthermore, although the Federal Mortgage Bank has been created to essentiallyserve as a wholesale and apex institution, the other institutional component of the

financ e m arket in terms of p rima ry mortgage institutions (suc h as; Build ing Soc ieties,Housing Associations, Credit Unions and Housing Co-operatives) still remainunderdeveloped.

• Low Income Housing: Is where the greatest challenge lies. Hinged on the concept of

‘Soc ial housing’ , it is be st unde rstood in the c ontext of ec onom ic and ge og rap hic al




pec ulia rities. Whethe r as the p rovision of sta te-ow ned renta l housing or c hea p housing

on ow ner-oc c up ier basis, the c om mo n indice s of d iverse interpreta tions rem a ins shelterprovision for relatively economically disadvantaged target groups for the goals ofpreserving the dignity and upholding the social status of beneficiaries. Implicit in the

‘ soc ia l housing’ c onc ep t is the e lement o f go vernment subsidy in one form or the othe r.

In Nigeria the direct construction of low income housing has been a failure given thehigh cost of construction, given its high import content, inadequate and poorstructuring of loans, given the low and short funding channels available to

intermediaries’ amo ng other fac tors.

Within this c onte xt, soc ial housing c an b e sa id to be virtua lly non-existent in Nige ria , asthe only beneficiaries are civil servants, who constitute a minute proportion of thepo pulac e. With a po pulation estima ted a t over 140 million , a c ountrywide housing unit

demand of about 16-17 million requiring over N36 trillion, and a per capita scoreplacing the country among the league of Least Developed Economies, Nigeria, morethan most countries requires a robust social housing system capable of meeting

g lob a lly ac c ep tab le ho using standards, in the shortest time p ossible.

Compounding this problem is the ineffectiveness of a one-size-fits-all (or rather), one-pattern-fits-all approach to social housing in Nigeria. Mapping out a social housingscheme requires the factoring-in of local sensitivities and cultural diversities. A typical

case is the Gwaris who, in the course of being resettled, outrightly rejected occupyinggove rnme nt-co nstruc ted houses for the reason o f d istaste.

Currently, social housing institutions are limited to government-owned housingautho rities (fed era l and sta te ), and non-existent p rivate initia tives in this reg ard. There is

little o r no a ttention p aid to the rural areas; with the d rying up of b udg eta ry alloc ations

for soc ia l housing, most (sta te go vernment) housing authorities a re finding the Nationa lHousing Fund (NHF) estate development loan the only source of funds for executingtheir statutory functions. Private-owned housing corporations largely focus onde veloping sale and renta l ac c om mo dation for med ium and low incom e c lasses of the

society.


5.5.4.1 RURALHOUSING

Given tha t the housing prob lem in the rura l a rea s is ma inly that o f qua lita tive improve me nt

in terms of sanitation and infrastructure for existing housing stock, emphasis should beplac ed m ore towa rds:

• Promoting orderly development of rural areas by improving infrastructure andsanitation.

•

• Support the imp rovem ent in the q ua lity of rura l housing.




• Extending the benefits of new technological findings on building materials and

construction to the rural communities so as to improve the quality of housing andred uc e the c ost of c onstruc tion.

• Working to link research in the development of local building materials with the

industrial sector for mass production and distribution.• Supporting a nd d eve lop ing e xisting loc a l thrift, c red it and m utua l financ e a ssoc iations

as veh ic les for financ e.• Ensuring that all relevant strategies earlier formulated with regards to low income

housing a re vigorously pursued .

• Increase the quantity and improve the quality of manpower skills and needs in thesector –particularly in the rural areas. Utilize housing location as an instrument for a

balanced population distribution to minimize associated problems of overcrowdingtransportation a nd othe r servic es.

5.5.4.2 URBAN HOUSING

Although Governments’ housing schemes have in the past been concentrated in the

urban areas, the specific needs of the low income group, for access to habitable anda ffordab le a c c om mo da tion have not b een a de qua tely ad d ressed . To reverse this trend

and ensure a de qua te a nd effic ient housing d elivery there is the nee d for go vernment to:

• Encourage massive private sector investment in cheap habitable rentable

accommodat ion.• Provide access to building finance at favourable terms to developers of low income

accommodat ion.• Co nsider the p rovision of servic ed land a t subsidized ra tes to deve lop ers.• Give a pprop ria te tax inc entives to investors invo lved in providing ho using.

• Determine the short-fall in supp ly of m a jor building materia ls and wo rk towa rds me eting

same by appropriate fiscal and economic measures so as to substantially reduce thec ost o f build ing ma teria ls.

• Re-orga nize and fund the va rious Fed eral and Sta te housing ag enc ies, to ena b le themdevelop and make available subsidized rentable housing for the urban low income

group;• Extend necessary infrastructural facilities to vacant lands to make such areas

developable and habitab le.

5.5.4.3 LOW INCOMEHOUSING

• Work through c oo peratives for direc t c onstruc tion and d istribution of b uilding m ateria ls.

• Link long term funding pools with low-cost housing schemes, by altering the presentinvestment pa ttern of pension fund a dministrato rs to a c c om mo date same .

• Adopt functional design standards to reduce cost and enhance socio-culturalac c ep tab ility, sa fety a nd sec urity.

• Providing a lternative c hea pe r and durab le b uilding m ate rials to initiate a c hang e in the

rura l housing o utput.




5.5.4.4 STRATEGIES FOR EFFECTIVE MOBILIZATION OF FUNDS FOR HOUSING FINANCE

• Create mandatory schemes while still ensuring government Budgetary Allocations &

Financ ial Transfers.

• Over 50 -60% of building cost constitutes of building materials and components, thusemphasis should be placed at developing local capabilities and resources whilestemming the current indiscriminate importation of building materials. [strategic

ma nufac turing polic ies should a pply here]

• Efforts should be also made towards developing, enhancing and positively alteringpresent b uilding me thod s and de sign.

5.5.4.5 MOBILIZING PRIVATESECTORPARTICIPATION

• Grant c ap ita l a llowa nc es on residentia l build ing and exemp t interest on loa ns from tax.

• Strea mline the p roc ed ure a nd spe ed up the issuanc es of c ertific ate s of oc c upa ncy

and c onsent to mortga ge .

• Encourage employers of labour in the private sector to set up building societies to

p rovide housing loa ns to their sta ff pa rticularly low inco me ea rners.

• Provide sites and services to facilitate home ownership and orderly urban and ruraldevelopment.

• Encourage continual flow of funds from various sources into the Apex institution

[Fed eral Mortga ge Bank] for on-lending to o ther mo rtgage institutions.

• The d iffic ulty of p roviding long term fund ing fo r loa ns ma y be add ressed throughspecial arrangements with long term fund deposits like: Pensions Funds –which has

grown signific antly and is p resently in exc ess of 100billion Na ira - as well as the Life Fund sof insurance companies, particularly given that they will be more robust following the

industry’s c onsolida tion exercise.

In this regard, there is need to ensure that the investment pattern of Pension Fund

administrators support housing, as is the case in Brazil and Jamaica. In Nigeria, theinvestme nt p a ttern of the se c om panies is skewe d a lmost entirely tow a rds investment in

c om pany stoc ks and Government deve lop ment stoc ks.


On c onc lusion of the reforms in the sec tor and the ad op tion a nd imp lem enta tion of theab ove e numerated strate gic p olic y op tions it is expec ted that:

• The p resent housing d efic it will be signific antly red uc ed from its c urrent leve l of 17 millionhouses – in mo neta ry te rms, this translate s to approximate ly N31 trillion.




• There w ill be a c ontinuous flow of long funds from the c ap ital ma rket to the housingsec tor –thus streng then ing the housing financ ia l system to bette r intermed iate.

• The ec ono my w ill be g rea tly stimulated , as aggreg a te d em and w ill rise throughinvo lvem ent o f other sec to rs of the e c ono my m ob ilized for the c onstruc tion proc ess.

• Furthermore, e ffic ient housing d elivery w ill p rovide bases for imp rove d ac c ess to mic roc red it by home owne rs for investme nt.




5.6 OIL& GAS

5.6.1 CURRENTPOLICY

The Upstrea m (Oil and Ga s Prod uc tion) ta rge ts a re:

Oil:• Grow reserves to 40billion barrels by 2010,

• Grow produc tion c ap ac ity to 4.5 million b arrels per da y b y 2010• Ma ximize o il sec tor value a dd ition to nationa l ec onomy b y;

o Imp roved Nigerian c ap ac ity and c ontent

o Enhanc ed multiplier effec t of o il in the na tiona l eco nomy• Move from a n Oil industry to a n Integ ra ted Oil & Gas industry

Gas:

• Gene rate as muc h revenue from ga s as oil within the d ec ade• Ad dress the environm enta l issues and end fla ring (in line w ith g ove rnme nt p olic y of

stopp ing gas fla ring by 2008)• Enab le loc al industry a nd energy requirem ent w ith a n effic iently deve lop ed Dome stic

Gas market / business

• Crea te new industries out of t he old Oil industry

The Downstrea m g oa ls a re a ll ta rgete d in the short term a t imp roving c apac ity utiliza tion of

the existing infrastruc ture (c onsisting of Refineries, Dep ots, Pipe line systems), while the longte rm g oa l is the p rivat iza tion of refineries and dep ots. This is d irec ted tow ards a ttrac ting

additional investments, improving efficiency through experienced downstream operatorsand, signific antly growing infrastruc ture to supp ort dom estic and reg iona l dema nd.




5.6.2 CURRENTPERFORMANCE

Currently, there is a rob ust portfolio o f projec ts p lanned to g row Oil c apac ity further. These

will mitiga te aga inst natural dec line and ena ble growth to a bout 4mmb / d b y 2010. Theprojected sector capacity growth is one of the most aggressive in the global oil industry,

and should c rea te sign ifica nt investment p ote ntial for all p layers.

Like o il, the g as sec tor is experienc ing a m a jor expansion in utilisa tion op portunities. A

demand explosion underpinned by growth of diverse demand sectors is re-positioningNigeria from being a leader in gas flaring to being the most aggressive in gas utilisation

growth. Dema nd is forec ast to grow from ab out 5bc f/d to ove r 20bc f/ d b y 2010/2011

Two key fac tors unde rpin the g as demand growth (1)susta ined rising gas p ric es in Weste rn (US and Europ e)and Pac ific ma rkets (2) Unprec ed ented Pow er sec torgrowth in Nigeria arising from government reforms.

The g as sec to r ha s bee n positioned to susta in thislevel of demand to ac hieve its go a ls.




Robust Growth in the last 5 – 10 years has delivered a rich Gas sector portfolio that should

generate significant income for the country in the future as well as fuel the continuousgrow th in the Nige rian ec ono my. The d rive rs inc lude the follow ing:

Domestic a nd Reg ional sec tor:

Pow er Sec to r

• 4 new PHCN (Power Holding Company of Nigeria) power plants (in Omotosho,Geregu,Papa lanto and Alaoji)

• 7 new Pow er Plants in the c ore o f the Niger Delta• new JV Oil Com pany IPP Plants

• new Third Party IPPsFertiliser

• A Refurb ished Plant (NAFCO N)

• new Third Pa rty PlantsMetha nol & Other related projec ts - 3 Me tha no l p lants and 2 Ga s-to-Liquids PlantCement - 2 new p lants

Steel & Aluminium - 2 Refurbished Steel Plants & 1 Refurbished Alum inium PlantStrategic Inter-Go vernment Projec ts

• 2 Pipe line p ro jec ts to West Afric a• 1 Pipeline p rojec t to North Africa (supp ly Europ e)

Export (Internationa l) Sec torNige ria has the sec ond fastest g row ing LNG c ap ac ity in the wo rld , sec ond only to Qa tar.

And the b uilding b loc ks inc lude :

• NLNG (Nigeria Liquified Natural Ga s) c om pany g row ing to about 30 MTPA (m illion

tone s per annum ) by 2012

•

OK-LNG (Olokola Liquified Natural Ga s) com pany will ac hieve 22 MTPA by 2011• Brass LNG c om pany w ill ac hieve 10MTPA b y 2010


Inadeq uate loc al c ontent

Between $12 to $15 billion is invested in the Oil & Gas Industry annually to fund operatingc osts and c ap ital projec ts. These signific ant investme nts a re no t ha ving the desired impac ton the national economy. Current estimates suggest that less than 30% of this amount is

actually value added in Nigeria because most of the services, fabrication anddeve lop me nt are undertaken offshore.

Unrest in the Niger Delta Reg ionThe Nige rian Petroleum Industry, bo th in the upstrea m and dow nstrea m sec tors, is

significantly affected by the unrest and agitation that has characterized the Niger Deltareg ion over the past 5 – 10 yea rs. The unrest a nd ag itation is for resource c ontrol as the re isperce ived injustice . The inhab itants of the reg ion b elieve tha t they a re no t rec eiving the ir

fair sha re o f oil proc eeds which is being used to deve lop other reg ions. This is evidenc ed bythe lac k of infrastruc tura l deve lop ment in the Nige r Delta c om pa red to o ther pa rts of the

country.




Arguably, the agitation within the Niger Delta can be divided between (a) the just

community demands based on their yearnings for development and a fair share of thebenefits of oil & gas obtained from their land, (b) the criminal activities of a few, hidingbehind the c loa k of c om munity ag itation. The latter ap pe ars to b e the element tha t is mo st

destruc tive to the oil & ga s ac tivities in the Nige r Delta.

The e ffec t of the c rises on the Nigeria Petroleum Industry and the o verall c ountry can besummarized as follows:

• Oil and Servic e c om panies a re lea ving the Nige r Delta a s it is c onsidered a veryunsafe area for their staff and their assets (related to the hostage taking and the

violence)• Loss of revenue due to interruption of production operations and theft of crude oil

from p ipelines and ta nk fa rms

• Escalating operating and development cost (of operations and project activities),arising from (i) the requirements of additional security for oil company and

contractor staff and assets, (ii) increasingly significant demands from the hostcommunities, and (iii) the cost premium of operating in a very unstable businessenvironment.

• Lower than expected rate of growth of the Nigeria Oil & Gas Industry (in terms ofproduction and industry capability), as a result of (i) delayed and abandonedprojects in communities where companies are unable to sustain a License-to-

Operate (e.g. Ogoni and several parts of the Western Delta), (ii) diversion ofinvestment capital to other less risky environments, and (iii) lower return on

investment c ap ital.• Comparatively, an unattractive environment for Investment, thus making oil

companies limit their exposure in Nigeria within their overall global portfolio, and

increasingly a higher investment risk for other (service & supplier) companies• Inab ility to a ttrac t first c lass c om panies and skills, bec ause of the un-attrac tiveness

of Nige ria a nd Niger Delta as a base loc a tion a s we ll as the high sec urity risk p rofileof the Niger Delta in the glob a l Oil & Ga s Industry

• Generally, more inefficient and less effective operations due to incessant

disturba nc es that prevent stab le a nd c ontinuous op erations

The e ffec t of the se d isturbanc es in the Nige r Delta c an be q uantified a s follow s (whenc om pa red to whe n c om munity disturba nces we re neg ligible, say p re-1994):

• Inc rea se in (direc t and in-direc t) unit op erating a nd d eve lop ment costs of b etween

50 –200%• Erosion of production growth levels of between 25% - 50% as a direct result of

c om munity ag itation and disturba nce, c riminal ac tivities• Erosion of botto m-line p rofit to the FGN a nd the O il Comp anies• Decline in industry execution capacity and capability due to the exit of several

service companies from some parts of the country and in certain cases, from thecountry). Example is the exit of approx. 90% of all the major service companiesoperating in Warri between 1996 to date, and over 50% and increasing from Port-

Harcourt to da te.




OPEC Constraints

Nigeria is a member of the Organization of Petroleum Exporting Companies (OPEC) andalong with other members voluntarily subscribes to oil production quota restrictions tosta b ilize o il p ric es. The g oa l of a c hieving o il p rod uc tion of 4.5million b arrels per da y will be

significa ntly hampered if the c urrent O PEC c onstra ints a re no t removed .

FGN’s Inability to Mee t Cash CallsThe O il and Ga s Ind ustry req uires up to $15 billion per yea r to exec ute a ll the d eve lop me nts

tha t w ill de live r 4.5 million barrels of O il per day b y 2010 and over 4 billion standard c ub icfee t of g as per da y by 2012. The Fed eral Government of Nigeria is expe c ted to p rovide its

share of this investment, about $8 billion. Despite this investments being the most attractiveto FGN in terms of return and revenue generation, it still struggles to deliver appropriatefund ing to susta in business grow th.


Unleashing the Nigeria Oil and Gas Industry for growth and added revenue generation tothe benefit of Nigeria and international investors requires a focused solution to keydeve lop mental cha llenges disc ussed ab ove .

Realise Economic

Benefit to Nigeria

• New Funding solution toenable sustainable growth

• Optimise NNPC, DPR

• OPEC quota increase

Creating an EnablingEnvironment in the

Niger Delta

• Realise the potential of theNiger Delta

• Law & Order a MUST

• Freedom to Operate for the

Industry

Structural FundingSolution

& Industry Re-Structure

• Gas Utilisation / Infrastructureto support local industry

• Nigeria Content Development(Local content)

• Linkages to the NigerianEconomy

Realise

Value & Revenue

and Growth

4.5 million BOPD (oil)

+

4 Billion scfd (gas)

Un-Leashing the Nigeria Oil and Gas Industry

Realise Economic

Benefit to Nigeria

• New Funding solution toenable sustainable growth

• Optimise NNPC, DPR

• OPEC quota increase

Creating an EnablingEnvironment in the

Niger Delta

• Realise the potential of theNiger Delta

• Law & Order a MUST

• Freedom to Operate for the

Industry

Structural FundingSolution

& Industry Re-Structure

• Gas Utilisation / Infrastructureto support local industry

• Nigeria Content Development(Local content)

• Linkages to the NigerianEconomy

Realise

Value & Revenue

and Growth

4.5 million BOPD (oil)

+

4 Billion scfd (gas)

Un-Leashing the Nigeria Oil and Gas Industry




It is recommended that Government’s strategy for the Oil and Gas Industry should be

unde rp inned by the follow ing:

• Creating a n enab ling environment in the Niger Delta

• Rea lizing ec ono mic bene fits to Nigeria throug h grea ter linkage s• Struc tural solution to the issues of the Oil and Ga s Ind ustry with respec t to fund ing,

ena b ling p olic ies and an e ffic ient NNPC/ DPR structure.

Most of these issues have been studied and recommendations are available to be

implemented, but it is important that the solutions be integrated and targeted at thewhole rathe r than a sum of its parts.

5.6.4.1 CREATING AN ENABLING ENVIRONMENT IN THENIGERDELTA It is evident that Nigeria will not realize the economic benefits the Oil and Gas Industry

portends if it do es not quickly find solutions to the Niger Delta issue.

The p rob lem the Petroleum Industry fac es in the Nige r Delta c an b e summ arized as follow s:• Absenc e of law and order and related lac k of sec urity

• Inadequate infrastructure (basic infrastructure as well key developmentalinfrastructure)

• Low literacy levels due to a poor/limited education system, resulting in inadequatec apab ility of the w ork-force to servic e / support the loc a l oil industry

• Extremely high unemployment levels as well as limited income generating

op portunities ac ross a d iverse range o f wo rking and skills g roups.

The ag ita tion o f the Nige r Delta c om munities is spurred on by the desire to have solutions to

a ll these m onumenta l p rob lems as soo n as possible a nd in the b elief tha t it is w ithin the ir just

right to ac hieve the ir go a ls by any mea ns. Sugge sted solutions to the a bove p rob lems a refully d isc ussed in Cha pter Eight (Niger Delta ) of t his rep ort.

5.6.4.2 OIL AND GAS INDUSTRY – LINKS AND ECONOMIC IMPACT The Oil & G as Industry ha s failed to c a ta lyse the rap id growth o f our industries and relate dbusinesses. To reverse this und esirab le trend , the Fed era l Government should d rive the

realization of the goals in each of the following four initiatives to the benefit of the countryand ec onomy.

5.6.4.3 NIGERIA CONTENTDEVELOPMENT (ACHIEVING LOCAL CONTENT)The Fed eral Go vernment o f Nige ria (NNPC) ha s a Nige ria Conte nt Polic y to ensure tha t

investments made in the Oil & Gas Industry have a significant trickle down effect on theNige rian ec ono my, and has set loc a l c onte nt ta rget o f 70% by 2010. The o verall ob jec tiveof the policy is to create an economic engine for growth, driving employment, wealth

c rea tion a nd imp roved linkage be tween the Oil and Ga s Industry and other sec tors of theNigerian ec onom y. This policy nee ds to be p ursued vigo rously w ith emphasis on utilizingNigerian (i) Human resourc es, (ii) Ma teria l resourc es and (c ) Loc a l Services




5.6.4.4 TECHNOLOGY DRIVE

The O il and G as Industry is dep end ent on new innovat ions and te c hnolog y to ena b le itop en up new frontier oil and ga s fields, optimize a nd introd uc e ne w effic ienc ies to ho w it

discovers, develops and operates it’s assets and ultimately create value for it’ssha reholde rs. Mo st of this tec hno logy is imported into Nigeria for imp leme nta tion. The

industry represents an opportunity for Nigeria to grow its technology developmentcapabilities.

It is p rop osed tha t the Fed eral Government should ident ify key Tec hnolog ies tha t a repertinent to the growth of the Oil and Gas Industry and create tripartite partnerships with

Inte rna tiona l Tec hno logy Cente rs (Oil Co mpany Resea rc h Ce nte rs / Universities), NigerianUniversities and Local Enterprises/Companies that will be the implementation vehicles forthese technologies.

Forward a nd Bac kward linkag es to the Nige ria Ec onomy




The Oil and G as Co mp any’s and the rela ted Servic e Co mp any’s throug h their Projec ts and

Operations directly employ in the range of 25,000 and 50,000 personnel and spendbetw een $12 - $15 billion. How eve r, if forwa rd and bac kwa rd linkages a re e stab lished withother business sectors as shown in the diagram above, it will have significant benefits in the

follow ing a rea s:

• Potentially a 10 – 100 fold increase in direct and indirect employment generation inthe Ind ustry

• Growth in the emp loyment op po rtunities in the ma nufac turing a nd servic e sec tor

• Significa nt p rop ortion o f the $12 - $15 b illion reta ined in the Nigerian ec ono my• Significa nt revenue ge neration fo r FGN through ta xes

• Inc rea sed c ap ac ity utilization in the ma nufac turing and servic e sec torsInc rea sed business effic ienc y ac ross a ll sec to rs

5.6.4.5 CAPACITY BUILDING Capacity building involves developing the skills at the technician, engineering, support &general services, management and executive level to appropriately support the

req uirem ents of the industry. This is essen tia l if we a re to ha ve an industry tha t is suc c essfullyrun and m anag ed b y Nige rians and the ap prop riate a mo unt of expa triate s.

Ca pa c ity b uilding should foc us on the follow ing areas:

• Foc used develop ment o f Tec hnica l Tra ining Institutes (suc h as the Nigeria Institute ofWelding a nd the rang e o f Polytec hnics and Tec hnica l Institutes in the c ountry)

• Upd ate the c urric ula and qua lity of the Engineering a nd G eosc ienc es dep a rtme nts

of the Universities (foc us c ould b e o n the Niger Delta universities, as well as other topuniversities)

• Upgrad e o f the Petroleum Tra ining Institute into a top c apac ity build ing institute in

support o f the resource req uirem ents of the industry.

5.6.4.6 ADEQUATEFUNDING OF THEOIL& GAS INDUSTRY The O il and Ga s Ind ustry req uires up to $15 b illion p er yea r to e xec ute p rojec ts tha t willdeliver 4.5 million barrels of Oil per day by 2010 and over 4 billion standard cubic feet of

gas per da y by 2012. As mentioned ea rlier, the FGN is expe c ted to p rovide its sha re o f thisinvestment, whic h is about $8 b illion

Currently the Joint Ventures and other related Oil & Gas Ventures are funded from thefollowing sources:

• Government funding of it’s equity share from appropriated funds from the FGN

budget• Projec t Financ e throug h Bank/ Financ e Institution

• Internationa l Oil Co mp any Partner Financ ing conc ep ts (ca lled Alterna tive Fund ing )• Short Term C orpo ra te Loa n for venture pa rtners of b anks• Minor equity sell-down to raise c ap ital for ma jor projec ts

However, going forward, a structural and permanent funding solution is required toadeq ua tely fund the grow th of the business. The FGN would need to foc us on solutions

such as:• Inc orpo ra tion JVs




• Co mm erc ialisa tion o f NNPC

• Co nve rsion o f the JV/MO U business to PSC• Struc tura l Partner Financ ing solutions• Third party Financ ing solutions

5.6.4.7 UTILISATION OF THEGAS TO FUEL THE NIGERIAN ECONOMIC GROWTH

The hug e g as resources in Nigeria w ill p lay a ma jor role in fuelling the ec ono mic grow th ofthe country. A Gas Utilisation Master Plan will be required to give focus to how Nigeriarea lizes the true p ote ntial of this huge g as resource to the b ene fit of the ec ono my in terms

of revenue ge neration a s we ll as assoc iated e c ono mic ena b ler/b ene fits. The Plan willdefine the investment requirements, the sequence of activities and the role of respective

stakeholde rs (bo th in governme nt and the p riva te p a rtners).

Ga s p rovide s the op portunities to sa tisfy:

(i) Energy requirem ents;a . Ga s to Pow er (Elec tric ity)b . Ga s to Liquids

c . Gas as a fuel (Liquified Petroleum Gas (LPG) / Compressed Natural Gas(CNG))

(ii) Feedstoc k into our Petroc hem ica l Industriesa . Fertiliserb . Plastic

The m a jority of the gas resources a re in the Niger Delta , and there w ill be need to d eliver

gas across the country if we are to achieve the balanced economic growth across thecountry

A s s a N

E L P S

2 0 ” x 2 2 5 k m

750 mms cf d

250 mms cf d

250 mms cf d

250 mms cf d

250 mms cf d

250 mms cf d

3 2 ” x 3 0 0 k m

2 8 ” x 1 7 5 k m

3 2 ” x 2 0 0 k m

2 4 ” x 2 0 0 k m

Phase 1 1 .2B$

Phase 2 0 .6B$

Phase 3 0 .9B$

A s s a N

E L P S

2 0 ” x 2 2 5 k m

750 mms cf d

250 mms cf d

250 mms cf d

250 mms cf d

250 mms cf d

250 mms cf d

3 2 ” x 3 0 0 k m

2 8 ” x 1 7 5 k m

3 2 ” x 2 0 0 k m

2 4 ” x 2 0 0 k m

Phase 1 1 .2B$

Phase 2 0 .6B$

Phase 3 0 .9B$




As shown above, the Federal Government of Nigeria will develop the back-boneinfrastructure for the d elivery of ga s to the key ind ustria l and ma jor c ities in the c ountry. TheGa s Utilisa tion Ma ster Plan w ill de fine the ma jor bac kbone p ipeline and d istribution system s

tha t will ena b le g as ava ilability ac ross the c ountry.




6.0 PHYSICAL INFRASTRUCTURE

6.1 POWER

6.1.1 CURRENTPOLICY

In 1999, averag e annua l ava ilable a nd installed ge neration c ap ac ities we re 1750MW a nd5906MW, respectively. Of the 79 generation units in the electricity system, only 19 were

op erationa l. This led to frequent system c ollapses and widesprea d na tiona l outages. By2000, availab le c ap ac ity had plummeted to a bo ut 25 perc ent of tota l installed c ap ac ity.

Electricity supply was falling in the face of growing demand, which was estimated at4,500MW.

It was against this backdrop that the Obasanjo Government adopted a two-pronged

approach to addressing the problems of the electricity industry, namely, addressing the

electricity supply gap by rehabilitating existing plants and constructing new plants; andimp lementing a holistic reform o f the industry.

The first aspec t of the two-p rong approa c h, termed “ short-term a c tion p lan (STAP)”

required the rehabilitation of existing plants (a goal of 4000MW available generationcapacity was set) and the construction of new capacity to be contracted under IPPs

(800MW in 2001 and 700MW in 2002).1

The sec ond aspec t of the two-p rong ed approa c h is the ho listic refo rm o f the industry.

Quintessentially, this is comprised of restructuring of the industry (vertical and horizontalunbund ling o f NEPA into suc c essor c om panies, esta b lishme nt o f a reg ula tory c om mission,and instituting wholesale electricity market), liberalisation of industry (encouragement of

private sector participation and investment),23 and privatisation of the PHCN successorcompanies.

The c a rd inal thrust of the reform p rog ram me is the introd uc tion o f c om petition a nd c hoiceto imp rove efficienc y in operations and e lec tric ity supp ly. The reform c om me nc ed in 2001

with the lega l and reg ulato ry review, whic h culminated in the prepa ration of the NationalElec tric Pow er Policy a nd Elec tric Pow er Sec to r Refo rm Bill. These doc uments wereadopted and enacted in 2001 and 2005, respectively. In the intervening period, BPE with

the mandate to undertake the reform, worked with NEPA/PHCN and the erstwhile FederalMinistry of Power & Steel in ensuring the suc c essful unb und ling of NEPA, institut ion o f

shadow wholesale trading arrangement, and the establishment of the regulatorycommission.

1 See Nationa l Elec tric Powe r Polic y, 2001.

2 Rea sons add uce d to ea rlier lac k of succ ess with attrac ting private sec tor investment in electricity includ e: (a) m aintainingNEPA as a monopoly, (ii) failure to institute appropriate incentives and firm securitisation arrangement.

3 NERC has issued 14 licences to private developers – 12 for construction of independent power plants and 2 for privatedistribution operations.




6.1.2 PERFORMANCE

STAP was only pa rtially suc c essful. Firstly, there w ere c onside rab le imp rove ments inava ilab le g ene ra tion and elec tricity supp ly – see figu re b elow . These imp rovem ents,however, were constrained as the majority of the rehabilitated plants were existing plants

that we re a ge d (betw een 18 and 43 yea rs old). Sec ond ly, the fragile a nd unstab letransmission and d istribution netw ork only rec eived a frac tion of the investme nt required forreinforce me nt a nd expansion. Third ly, apa rt from the c ontrove rsial 270MW ENRON (late r

AES) projec t, no a dd itiona l IPP c apac ity was added to the system until 2005 when the450MW AGIP Okp a i Plant w as c om missioned .

Generation Capacity & Production, 1999 - 2006

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1999 2000 2001 2002 2003 2004 2005 2006

Year

M W

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

G W h

Installed capacity

Annual average generation

Total energy generated

By 2002, the failure of private investment to materialise in electricity generation led the

Federal Government to directly fund the construction of new host plants (Afam V,Papa lanto , Omo tosho, Geregu, and Alao ji – som e of w hic h a re o nly being c om missioned

now ). The rec ent o il reve nue w indfa ll is fac ilita ting a rene we d d rive in elec tric ityinfrastructure expansion in generation (target of 10,000MW installed capacity),transmission, distribution a nd gas supp ly ta gged National Integrated Power Projec ts (NIPP).

Co nstruction o f NIPP c om me nc ed in 2005 and is expe c ted to b e c om p lete d in 2008. Thenameplate capacities of the (7) generating plants range between 188MW and 561MW

and a re expe c ted to a dd an ad ditiona l 2743MW to the na tiona l grid . Installed ge nerationcapacity is expected to exceed 10,000MW by end of 2008. In addition to NIPP,government is also committed to the construction of Mambilla, Zungeru and Dadinkowa

hyd roe lec tric ity p lants.




Electricity production and supply are capital intensive. An estimation of the cost of

government’s efforts in addressing inadequate and unreliable electricity supply in Nigeriabetween 2000 to date has been conservatively estimated at US$10 billion by industryexperts.

While the reform programme is now at an advanced stage, some have argued that it

seem s to be losing foc us and unde rmining the op erationa l performanc e of the industry.


It is safe to assert that in spite of the numerous attempts to remedy the problem,imp rove me nts in provision of a deq ua te a nd reliab le e lec tricity supp ly in Nige ria is yet to be

ac hieved. . The c hallenges fac ing the sec tor have b een c lassed unde r two hea d ings: (a )op erationa l and (b) reform.

6.1.3.1 OPERATION-RELATED ISSUES AND CHALLENGES

Tec hnology

Broa d ly spea king , generation c apac ity is inadeq uate a nd p oo rly ma inta ined . This situa tionis further compounded by lack of knowledge of the total electricity requirement of the

country.

The transmission network is radial and not robust enough to support more than 5000MW

generation capacity. Further, the dispatch facilities and control system is grosslyinad eq ua te. To c ap the c ha lleng es in transmission, there is no p rop er or coordina tedsystem planning.

Distribution has rec eived the lea st a ttention in the last fiftee n yea rs. Most o f the d istribution

networks are old and dilapidated and are characterised by high technical and non-tec hnica l (theft) losses. The me te ring a nd b illing systems a re g rossly inadeq ua te . Further,limited resources compounds operations as faulty or obsolete equipment are not easily

repaired or replaced. Finally, poor planning results in haphazard expansion of network toac c om mo date g row ing d em and . It is estimated tha t a m inimum o f US$400 – 500million pe rannum will be req uired in the first 5 years post-unbund ling to ena b le the distribution system s

to b e fully effec tive.

The c om bined e ffec ts of these a re inad eq uate g ene ra tion and high system losses.

Gas supply and ava ilab ility

Ga s supp ly is a c ritica l input in elec tricity gene ra tion. Lac k of integ ra ted p lanning betw eengas and electricity has meant that gas supply and availability are major and binding

c onstraints in elec tric ity p rod uc tion. The lac k of ga s supp ly infrastructure exp lains thep rep ond eranc e of g as-fired pow er sta tions in the Niger Delta reg ion. This rea lity p oses a

considerable challenge for evacuation of electricity from the point of generation tode ma nd c enters.




Delving into the gas supply and availability problem reveals that the challenges are two

fold: (a) supply and (b) price-related. According to NNPC sources, current gas availabilityc an only mee t 10,000MW gene ration c ap ac ity. Add itiona l ga s req uirem ent for elec tric itygeneration will require a minimum of three years (from when investment is committed) to

develop field a nd build p ipe lines to sup p ly p lants. There a re a lso the tw in issues of m ilitanc yand sabo tag e tha t co ntinues to a ffect g as supp ly.

The p ric e p a id by PHCN a nd what new IPPs wo uld like to pay is not a ttrac tive enough forga s produc ers to w ant to invest in ga s produc tion a nd supp ly.

Investment and Funding

The c apac ity inadeq uac ies tha t charac terises the Nige rian elec tricity industry co up ledwith the capital-intensity of electricity infrastructure means significant investment is required

not just across the electricity industry but the whole energy spectrum (including gasproduction and supply) if the industry is to support national economic and socialdevelopment aspirations. For instance, a ball-park estimation of the amount of investment

required to expand capacity to 30,000MW (from a base of 10,000MW) is in the order ofUS$25 – 30b illion.4 It is ob vious that p rivate investment must be e nc ourage d to c om pleme ntpublic investment.

Yea r Installed Capa c ity Cumulative Cost of Gene ration,Transmission and Distribution (US$bn)

2008 10000

2011 13333 3.20

2015 19565 8.58

2019 28710 12.58

Tota l 24.34

The c onseq uenc e o f systemic defic ienc ies (low ta riffs (see below ), high system losses,

inefficient cost structure etc), and reluctance of Federal Government to givegua rantees makes p rivate investo rs risk averse. The c ha llenge is not the dea rth ofinvestme nt c ap ital at t he d isposa l of the industry but m ea sures and initia tives tha t must

be put in plac e to a ttrac t the muc h req uired investment.

Cost Struc ture and Elec tric ity Pric ing

A c onseq uenc e o f ab ove -ment ione d system ic d eficienc ies is high c ost struc ture. The c ost

of p rod uc ing 1kWh o f elec tricity is estimated a t N12 – 14 per kWh, whe rea s N8 pe r kWh isconsidered reasonably efficient. Juxtaposing this with current approved tariff of N6 per

4 This figure will increa se substa ntially if provisions for ga s prod uc tion a nd supp ly were to b e m ade .




kWh shows a significant revenue gap – this is further exacerbated by poor revenue

c ollec tion prac tic e.

Two signific ant c osts element in PHCN’ s op erating expe nd iture a re labour-relate d c ostsand c ost o f elec tricity purchased from IPPs. Given the burge oning sta ff streng th (in exce ss

of 35,000), the monthly salary and wage bill in 2005 was about N4billion (compared to

mo nthly reve nue c ollec tion o f N7billion). Also, while AES and AGIP jointly g ene ra te about20 percent of grid electricity, they are paid in excess of N2billion per month for electricitythey produc e.

Without imp rovem ent in the financ ial pe rformanc e of PHCN, this situa tion is not susta inab le.To a llev iate the financ ial pressure, PHCN has c lamoured fo r a ta riff inc rease – the latest

attempt was in 2006 with a request for tariff increase to NERC. Although the review wascarried out, it remains inconclusive. Although tariff increase will ameliorate the parlousfinancial status of the industry, it should not be seen as a panacea. High costs and

inefficiencies must be simultaneously addressed.

Without p utting an ap prop riate tariff reg ime and firm off-take a rrangeme nt in p lac e, it w ill

be extrem ely difficult to c onvinc e the p riva te sec tor to invest in the industry.

Management and Government Involvement

The e xperienc e o f the Nige rian e lec tricity industry is tha t government involveme nt in

management selection and decisions have not stood the industry in good stead. Further,appointment of board members based on political consideration has underminedc orporate g ove rnanc e a nd, co nseq uently, the performanc e of the industry.

As a consequence of the compromise on management, the industry has witnessed less

than best practice in allocation of resources, lack of proper planning and co-ordinationand op erational and c omm erc ial prac tic es etc . Both p rincipal (government) and ag ents

(ma nag ers) over-em pha sise supp ly and pa y sc ant reg a rd to c om me rc ial c onside ration.

Econom ic, soc ial and po litic al objec tives

While the National Electric Power Policy emphasises the need for separation of economic

and political objectives, PHCN is still used as a tool for achieving social and politicalobjectives at the expense of economic objectives. For instance, universal access toelectricity and politically determined electricity prices (usually below true costs) distorts

signalling effect of pricing and encourage over-consumption. Also, inadvertent policy ofem p loym ent of sta ff without d ue c onsideration fo r optima l input m ix distorts c ost struc ture,

which ultimately leads to misallocation of resources and worsening of financial

performance.

6.1.3.2 REFORM-RELATED ISSUES AND CHALLENGES

Impleme ntation and Co -ordination

Electricity industry reforms, without the additional challenge of chronic poor performance,is c om p lex on its own. There are policy, tec hnica l, organisa tiona l, institutiona l, ma rket

design, and regulatory issues to contend with in the electricity industry, which make




imp lementa tion of reform a da unting c halleng e. It requires c lea r, unamb iguo us foc us on

issues to be a dd ressed , which usua lly form the imp etus for cha nge. The BPE is c urrentlylea ding the c oordination o f

Industry Struc ture

Cho ic e and c om pe tition, which a re an integ ral to imp roving pe rforma nc e of the electric ityindustry, are being introduced via wholesale electricity model.5 Moving from an integratedand publicly owned structure to a disaggregated industry led by the private sector is

p roving to be a ma jor challeng e to different stakeho lde rs.

Management of PHCN have opposed reform for similar reasons including staff

retrenc hme nt and the p rospec ts of losing pe rks of office .

Ministry officials oppose reform because of the loss of authority and fiduciary responsibilityover PHCN and reassignment of some of their roles and responsibilities to other agencies(suc h as NERC a nd Rural Elec trifica tion Ag enc y).

There a re other c lasses of stakeholde rs op posed to refo rm; those tha t enjoy free or hea vilysubsidized elec tric ity, imp orters of e lec tric ity genera to rs, ma jor d iesel importers etc

Effec tive Reg ulation

The EPSR Ac t e sta b lished a sec to r reg ulato r, Nigerian Elec tric ity Reg ulato ry Com mission

(NERC), for the e lec tric ity industry. NERC was offic ially inaugurate d o n Oc tober 31, 2005and has begun putting structures in place. NERC’s key functions include licensing, andimp leme nting e ffec tive e c onomic and tec hnic al regulation.

Independence, accountability, adequate funding, legitimacy as well as professional andtec hnica l expe rtise a re som e o f the a ttributes of a go od reg ula tor. There a re, howeve r, a

numb er of reg ula tory c hallenges that ha ve to b e a dd ressed . These include the nee d tobuild professionalism in regulation, the need for regulatory discretion and independence,the pric ing a pp roa c hes to b e a do pted by the c omm ission a nd the p hasing o f co mp etit ion

in the market. Another major challenge relates to the functional competence of theregulatory commission and the need for NERC to protect customers and market

participa nts through a tten tive a nd fair oversight of the transitioning e nergy ma rket.

Funding Consequence of Restructuring

One of the p rimary ob jec tives of the reform p rog ramme is to a dd ress system ic d eficienc ies

such as over-employment, removal of monopoly powers in sectors that are naturally

c om pe titive e tc . These d efic ienc ies have c onseq uenc es that ha ve to be funded . Forinstance, dealing with the problem of over-employment requires right-sizing of staff.

Seve ranc e p ac kage s have to b e p rovided for. In the c ase o f PHCN this is expec ted to runinto te ns of b illions of Na ira , which it canno t a fford. There is a lso a signific ant p ension fund

liab ility tha t has to b e a ddressed .

5 This mo de l has som e similitude to wha t ob ta ins in the G SM sec tor in so fa r as it is multiplicity of pa rtic ipa nts in upstrea m,midstream and do wnstrea m ac tivities. The o verall imp ac t of efficient and be tter qua lity of service to c onsumers is the de siredoutcom e tha t will adva nce public interest.




The c onseq uenc e o f non-ec ono mic p ric e in the short term is revenue defic its, wh ich a re

expected when proper arms-length trading relationships are established. Government willhave to p rovide financ ia l supp ort for a p re-defined p eriod of time .


For consistency, the measures, policy options and programmes are, to a large extent,c orrespond to the issues and c ha lleng es ident ified in the p rec ed ing sec tion.

6.1.4.1 OPERATION-RELATED Tec hnology

• Unde rtake a national dema nd study to d etermine the exac t electric ity req uirement

and long -term projec tion.

• Develop an integrated least cost system expansion plan for the efficientde velopm ent o f the Nige rian electric ity industry in med ium and long -term.

• Deve lop initiatives for d iversifying elec tricity ge neration so as to improve sec urity ofsupply.

• Develop framework for encouraging development of electricity generation closerto de ma nd c enters.

• Co mp lete p rojec ts to c onvert the rad ial transmission netw ork into a rob ust g rid w ith

ap propriate dispa tch a nd c ontrol equipm ent for effective ma nag eme nt.

• Upgrade and reinforce distribution networks to support expected increase ingeneration.

Gas supply and ava ilab ility

• Develop appropriate gas policy to encourage production and supply of gas for

elec tric ity ge neration.

• Develop appropriate pricing regime and incentive measures to attract investment

and effic ient operations

• Deve lop g as p rod uc tion and supp ly infrastruc ture

• Explore and develop measures for ensuring long-term supply of gas for electricitygeneration.

Investment and Funding

• Based on proposed system expansion plan, ascertain financing requirement and

identify funding sources and develop long -term financ ing plan

• Ad op t rigorous investme nt appra isa l frame wo rk (to inc lude investment incentives)

• Establish electricity infrastructure development fund




Cost Struc ture and Elec tric ity Pric ing

• Deve lop me asures for imp roving efficienc y in the p rovision of e lec tricity servic es

• Implement appropriate tariff methodology and pricing regime (NERC hasdeve lop ed the Multi-Yea r Ta riff Orde r. The me thod olog y ha s in-built p rice reviews toensure prices do not fall below costs while concomitantly providing operators with

c onfide nc e and pred ic tab ility, and c onsume rs with stab ility.)

• Embark on aggressive measures to reduce excessive cost of production includingstaff right-sizing.

• Estimate financ ial support req uired to mee t energy p urc hasing ob liga tions

• Develop policy position on IPPs and appropriate take off arrangement to giveprivate investors c onfide nc e.

Management and Government Involvement

•

Clea r and unamb iguous sep ara tion of roles and responsibilities of p riva te a nd pub licsector on one hand, and clearly defined objectives and targets between

management and government qua owner of assets in the electricity industrypend ing p riva tisa tion, where fea sible.

• NERC to effectively monitor and supervise industry for efficient operation andprov ision o f services

Econom ic, soc ial and po litic al objec tives

• Policy and initiatives should be primarily predicated on economic objectives butcould be tempered by social and polit ical consideration and not the other way

round.

6.1.4.2 REFORM-RELATED Impleme ntation and Co -ordination

• Imm ed iate estab lishment of a preside ntial task forc e to artic ulate how the Yar’Ad uaGovernment will address the problems of inadequate and unreliable electricity

services. The ta sk force should rep ort d irec tly to Mr. President.

• Establish a n e lec tric ity c ounc il for prope r co -ordination a nd develop me nt p lanning

of industry. The C ounc il is to c ham pion e ffective a nd time ly develop me nt of the

Nigerian electricity industry• Develop realistic programme plan starting with a 100-day plan based on Mr.

President-elect’s promise of tackling the perennial problem of electricity supply inNigeria.

• Deve lop c om munic a tion stra teg y for sensitising and increasing the awa rene ss of theimperative o f refo rming of the industry




• Review and undertake re-assignment of responsibilities to reduce overlaps,

conflicting objectives and ensure smooth implementation of reform andde velopm ent of elec tric ity industry

Industry Struc ture

• Review on-going reform and government to make unambiguous and realisticp rono unc em ents on p olic y and strateg ic issues

• Comp lete the restruc turing of PHCN in line with the wholesa le e lec tricity mod el

• Deve lop a b roa d -ba sed c onsensus to m inimise opposition to refo rm

Effec tive Reg ulation

• Ensure NERC, still in its infancy and regulation nascent, is appropriately staffed andsupp orted to m eet g ove rnment’ s ob jec tives and set goa ls

• Ensure c onsistenc y betw ee n p olic y, leg islation a nd reg ula tion

• Measures to be taken to protect autonomy and independence of NERC anddeve lop me c hanisms for avoiding excessive pow ers of NERC

Funding Consequence of Restructuring

• Government to provide adequate financial support to see reform to its logicalc onc lusion and efficient op eration of the industry

6.1.5 EXPECTED

OUTCOME

There is a strong positive c orrelation b etw een elec tricity and ec ono mic g row th. If job s andwea lth are to b e c rea ted and po verty red uce d, as enunciated in the National Ec onomic

Emp ow erment a nd Deve lop me nt Strategy a nd the Millennium Deve lop ment Goa ls,elec tric ity infrastruc ture will nec essa rily ha ve to be imp roved .

Sta rting w ith a 10,000MW ge neration base, e lec tric ity infrastruc ture will need to beincreased annually by a minimum of approximately 1000MW, 1500MW and 2000MW

annually in the short-term, medium-term and long-term, respectively, if GDP per capita (orsom e o ther human de velopm ent indices) are to be doub led within ten yea rs. For this to b eac hieved, the minimum e c onomic g row th rate is 7 pe rc ent pe r annum.




Period Add itional Cap ac ity(MW)

Average Annual Inc rease inGeneration Capa c ity (MW)

2008 – 11 4674 1169

2012 – 15 6859 1715

2016 – 19 10065 2516

The overall imp ac t on the soc io-ec onomic d evelop me nt and be nefit to c onsumers areexpected to be significant with corresponding multiplier effects on the economy. Per

capita consumption, which stands at about 200kWh would be expected to increase toapproximately 1,000kWh at around 2019 when installed capacity would have grownsubsta ntia lly to a bout 30,000MW.

Projected Generation Capacity & Per Capita Electricity Production

2006 - 2019

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6.2 TRANSPORTATION

6.2.1 CURRENTPOLICY

Roads: Road networks are limited and in poor condition, with only 31 percent of them

paved . In the Roa ds Vision 2000 stra teg y, the g ove rnme nt rec og nizes the ne ed to to ta llyoverhaul the sub-sec to r. This doc ume nt p rovides the basis for the w ay forwa rd , inc luding aproposal for the establishment of an autonomous Highway Authority. Establishment of a

Roa d Fund d ed ic ate d to the maintenanc e o f the strate gic road ne two rk is also underway.

Further policy improvements were made in 2005 with the enactment of the InfrastructureConcessioning Regulatory Commission Act to better regulate and enhance theparticipation of the private sector in the financing, construction, maintenance and

op eration of infrastruc ture. In 2006, the Fed eral Go vernme nt of Nigeria a dop ted theNationa l Policy on Rural Trave l and Transport which g ives p riority to the c ore rura l roadnetw ork with p rivate sec tor pa rtic ipa tion as one of its key ob jec tives.

Railways: Nigeria has recently embarked on a railway revitalization programme. Amilestone s in this p rog ramm e w as the signing o f a $8.3b illion agree me nt c ontrac t w ith theChinese government. The p lanned p rojec t of ra ilwa y mod erniza tion wa s signed in twotranches which includes the main contract covering the first rail that would connect the

nation’s economic capital Lagos to the largest commercial city in the north, Kano whichwo uld be c onc lude d in five yea rs by a Chinese firm a nd an Italian c onsultancy outfit.

The railwa y projec t is a part of a n integ ra ted transportation system for the c ountry cove ringland , air and ma ritime transpo rt. The c onstruc tion o f the ne w stand ard ga uge trac k north-

south is only the first phase of a modernization programme that would cover two majorlongitud ina l lines. The sec ond wo uld link Port-Harc ourt a nd Jos and another wo uld link a ll

the 36 sta tes’ c ap itals in Nigeria.

Aviation: A cursory look at the Nigerian aviation industry suggests that some degree ofliberalization has taken place since the collapse and final liquidation of the national

c a rrier-the Nigerian Airwa ys. This is c ha rac terized by the entranc e o f a c oup le o f p riva teop erato rs. It is important to note tha t, poor investment, wea k reg ula tory ove rsight ha s ove rthe years rend ered the Nigerian Airspac e unsa fe. Som e p rog ress has bee n ma de in po licy

reforms. In 2006, the Federal Government enacted the Civil Aviation Act with the aim ofmaking the Nigerian Civil Aviation autonomous with increased funding. An accidentinvestigation Bureau was also created. Another forward-looking decision in the transport

sec tor wa s the c onc essioning of Ab uja Airport in Nove mb er, 2006.

6.2.2 PERFORMANCEANALYSIS Roads: There has be en a noticeab le sc ale-up in terms of funding road ma intenanc ep rojec ts ove r the last few yea rs. There w as a lso apprec iab le p rog ress in ha nd ling road

ma intenanc e over the c ountry. This helped to red uc e the level of roa d ac c ide nts whichc la ims lives higher tha n the AIDS/ HIV p andem ic.




Railways: Modernization work on the Western line has made some progress. About

US$10billion is being p lanned for the exec ution o f the p rojec t, with som e 35% externalfunding.

Aviation: The Nigerian Civil Aviation Autho rity has been undertaking interna l c apac itybuild ing b y partnering w ith interna tiona l orga niza tions. It ha s a lso em ba rked on retrenc hing

unqua lified sta ff and has a lso p rep ared a Sa fety Ma na ge me nt System . The rehab ilita tion ofPart the Harcourt runway is equally nearing completion. In terms of improving theirc apab ilities for prop er a ir tra ffic surveillanc e.


Roads: Poor roads and weak regulatory environment with respect to transportinfrastruc ture and services have made Nige rian roa ds unsa fe in the p ast. This a lso lea ds tovehicle overloa ding which da ma ge s roa ds prema turely.

The p resent c ond ition of Nige rian roa ds is suc h tha t, de sp ite the higher spend ing leve ls, theimp ac t of this highe r expe nditure ha s be en limited partly due to :

i. Weak strategic planning, oversight and regulatory functions on the part of thepub lic sec tor.

ii. Weak c ontrac ting proc ed ures, qua lity c ontrol and reg ulato ry functions.

Railways: The Nige rian Railwa y polic y is c harac terized by high de pe nde nc e on p ublic

sec to r sub sidies. The ra il system c onsists of on ly two na rrow gauge lines originat ing from thec oa st in the South dow n to the North, the West a nd Eastern lines, and an unfinished

standard ga uge Central line. The infrastruc ture is highly dilap ida ted and there is a lac k ofservic ea b le loc om otives and rolling stoc k.

Aviation: Nigeria has a total of 20 airports and 62 airstrips spread all over the country. Many

of them , inc lud ing the internat iona l airports a re in a poo r sta te of d isrep a ir. These a irportsare equally supported by inadequate and non-state-of –the art visual and navigationala ids. This situat ion led to the freq uent a ir c rashes. Part o f the p rob lems highlighte d is d irec tlylinked to lack of a well-articulated national air transport policy and weak enforcement of

c urrent p olic es.

6.2.4 POLICY OPTIONS Roads:

(a) A mechanism to ensure adequate, timely and predictable funding for roadinvestments as well as maintenance of the existing assets needs to be put in place with

d ispa tch. This c ould involve the ad op tion o f a user-c harge op erating unde r a revised leg a land institutiona l arrang em ent. The funds ge nera ted should be m anag ed by a ninde pe nde nt entity –for exam p le, Roa d Fund Boa rd .

(b) Ano ther polic y tha t should be v igorously perused is ensuring fac ility up grad es and sc a leup. This wo uld involve the a dop tion a nd utilization of m od ern metho ds and tec hnologies

for better efficiency and effectiveness in Road maintenance. A strong and professionallyma nag ed Highw ay Authority is nec essa ry to b e a ble to hand le road planning, designing,




implementation and maintenance. Other tiers of Government should be involved in the

process.

Railways: (a ) Present effo rts to rev ive the railway system should b e susta ined . Private sec to r

involvement is crucial, while the Nigerian Railways Corporation should be streamlinedfunctions and should op erate in a c om me rc ially oriented ma nner.

(b) The Federal Government should c onsider renegotiating the overall cost of modernizingthe Western line by the Fed eral Go vernme nt. All other future simila r engage me nts should

be thoroughly backed by vigorous feasibility studies to ensure value for money for thepublic.

Aviation:

(a) Government should give the highest priority to the establishment of an autonomousand technically competent NCAA as it is the cornerstone of any reform in the aviationindustry.

(b)Recertification project should be undertaken seeking the assistance of the Banjul

Ac c ord spec ified in Coo pe rative Developm ent of Op erationa l Sa fety and ContinuingAirworthiness Program (COSCAP).

A c ross c utting p olic y op tion with respec t to transport in ge neral is tha t the e ffort to p rovideplatforms for Public-Private –Partnership arrangements covering infrastructure should be

sustained and fast- tracked. All legal and institutional arrangements should be completedwith d ispa tc h to a llow fo r priva te sec tor pa rticipa tion. This will req uire m assive c apac itybuild ing for PPP imp lementa tion ac ross ministries and agenc ies.




7.0 HUMAN CAPITALDEVELOPMENT

7.1 EDUCATION SECTOR

7.1.1 CURRENTPOLICY The c urrent p olic y of the go vernment revolves a round the 10-yea r Stra teg ic Plan by the

Fed era l Ministry of Educ a tion a s well as the NEEDS doc ument. The refo rm p roc ess isintended to overhaul the entire ed uca tion sec tor and to promo te q uality educ a tion for life

–skills acquisition, job creation and poverty eradication. It will put in place a sound

framework that will enable implementing authorities to widen access, increase equity andenha nc e the quality of ed uc ationa l provision. In a dd ition to the e duc a tion sec tor reforms,there are othe r initiatives that ha ve b een introd uc ed by the c urrent G ove rnment. Som e o f

which include:

Structural and Institutional ReformsIn July 2006, the Fed eral Go vernment launc hed a ma jor restruc turing of t he Fed eral Ministryof Educ ation and a reform p ac kage for the entire ed uca tion sec tor. One of the outco mes

of the restructuring exerc ise is the d ra fting o f a Fed era l 10-Yea r Educ a tion Sec to r Plan, witha re-c lassific a tion o f the ed uc a tion system as follow s:

Basic EducationThis inco rporate s Early Childhoo d Ca re a nd Deve lop me nt, and Prima ry and Junior

Sec ond ary educ ation a nc hored on the UBE p rog ramm e. The Fed eral Government throughthe UBE program aims to tackle gender disparities in enrolment, attendance, and lowc om pletion rate s. The c urrent Prima ry net enrolment is about 61 perce nt a nd 7-8 million

c hild ren a re c urrently still out o f sc hoo l. An estimated 35 perce nt of the releva nt age group

a ttend s junior sec ond ary sc hoo ls.

Senior Secondary EducationThe ob jec tive is to de velop a fram ew ork for imp lementing the pub lic / private pa rtnership

model for management of unity schools. Other goals include reforming science,tec hnolog y, tec hnic al and voc ational educ ation to increase its relevanc e to the ec onom y

and labour market. It also aims to attract and retain teachers, encourage private sectorpartic ipa tion a nd enc ourage stude nt enrolme nt a t senior sec ond ary sc hoo l level.

Spec ial Educ ationThe a im o f the Fed eral Government is to d evelop a formula for funding a dult and non-

forma l, spe c ial need s and noma dic ed uca tion.

Tertiary Educ ation

The vision is to a dvanc e Nige ria’ s ec onom ic growth and global c om petitiveness throughthe provision of accessible, affordable, relevant and high quality education in our tertiary

institutions.




Universal Basic Educ ation ProgrammeThe c urrent go vernme nt introd uc ed the UBE p rog ramm e in 1999, making it co mp ulsory forevery child to rec eive nine yea rs of “ free ” ed uc a tion. The C hild Rights of 2003 also p rov ides

a leg islative frame work to p rote c t c hild ren a nd sec ure the ir basic rights, including the rightto ed uc a tion. The introd uc tion of the UBE prog ramme is in line with the Fed eral

Government’s effort to achieve education-related Millennium Development Goals(MDGs). Conc erned w ith the ac hieveme nt of educ ation related MDGs, the Fed eralGo vernment estab lished the Assessme nt and Monitoring C om mittee on the MDGs, c ha ired

by the Preside nt, to fa st-trac k de c ision m aking a nd guide and mo nitor the imp lem enta tionof MDGs relate d p olic ies and p rog ramm es in all sec tors of the e c ono my.

Post-Basic Educ ation InitiativesAt the post-basic education level, Nigeria has adopted a strategic vision for tertiary

ed uc ation w ith em phasis on Sc ienc e a nd Tec hnology. Current educ ation p olic ies c all forincreased enrolment in science and technology programmes, improved research andtec hnolog y infrastruc ture, and strong qua lity assuranc e m ec hanism.

7.1.2 PERFORMANCEANALYSIS There have be en rema rkab le imp roveme nts in the e ducation sec tor with adult literac y raterising from 57 perc ent in 2001 to 62 percent in 2005. Prima ry sc hool enrolme nts rose from

ninete en million in 2001 to over tw enty-six million in 2005 (see figure 1).

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Figure 1: Numb er o f Primary School Enrolme nts

In the primary school category, the percentage of females in educational institutions rose

to 53 percent in 2005 from 51 percent in 2001. However, there was a decline in thepercentage of female in both the secondary and tertiary institutions from 47 percent in




sec ondary sc hool in 2001 to 44 pe rc ent in 2005. The tertia ry institutions a lso witnessed a

dec line in the num ber of fema les from 45 perce nt in 2001 to 43 perc ent in 2005. With theimplementation of the UBE programme, the number of primary schools rose from slightlyover forty-nine thousand in 2001 to o ver fifty-nine thousand sc hools in 2005 (see figure 2).

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Figure 2: Numbe r of Primary Educ ational Institutions

The Fed eral Government to tal expend iture on e duc a tion from 2001 to 2005 ave rage d 6percent of the overall budget, with the exception of 2002 which had a percentage ofa lmost 11 pe rc ent (see figure 3). This is well be low the UNSECO benc hmark tha t

recommends budgetary expenditure on education of at least 20 percent of the overalltotal budget.

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Figure 3: Total Federal Governme nt exp enditure as a perce ntage of Overall Budget & GDP





Equity and Ac c ess to Educ ationDesp ite signific ant e fforts since the launc h of its UBE programme, Nigeria is fa lling b ehind in

its progress towards achieving the education related MDGs and Education For All (EFA)goals. Nation-wide, 64 percent of school-age boys and 53 percent of school-age girlsa ttend p rima ry sc hoo l. There a re large g end er, inco me and reg iona l d ispa rities in

enrolment rates. Enrolment ra tes for g irls in some No rthern Sta tes a re on ly around 20%. Thec ost of sc hoo ling, bot h d irec t and indirec t op portunity c osts, rem a ins the key reason fo r low

enrolme nt and for dropp ing o ut of sc hoo l.

Quality and Releva nce of Educ ation

The qua lity o f ed uc a tion is we ak and va ries c onsiderab ly w ithin a nd ac ross Sta tes. There isinad eq uate systematic and reliab le informa tion on student’s lea rning outc om es. Availab lesurveys show ed tha t lea rning outc om es in prima ry sc hoo ls a re w ea k and va ry considerab ly

ac ross sta tes (see World Bank Polic y –DFID-USAID on Nige ria Educ a tion Policy No tes).The m a in c ontributing fac tors to low lea rning outc om es a re (i) the p oo r c ond itions of the

lea rning environm ent to supp ort effec tive tea c hing and lea rning (e.g., poo r cond itions ofphysical facilities), (ii) shortage of textbooks and essential instructional materials, (iii)ineffec tive pre- and in-servic e tea c her tra ining, and (iv) outd ate d c urric ula .

Inadequate Funding

Despite increases in public spending on education, available funding (based on thecurrent trends) is insufficient to achieve the education-related MDGs and improve thequality of post-basic ed uc ation. The b udg eta ry spe nd ing on educ ation as a p ercenta ge

of G DP still rem a ins less tha n one perc ent.

Monitoring and Eva luationWeak management information systems have resulted in a scarcity of quality data forpolic y making a nd m onitoring p erformanc e on the ed uca tion system .


In view of the c halleng es fac ed by the ed uc ation sec tor, the Fed eral, State s and Loc alGovernments must ensure an effective implementation and sustenance of some policyop tions to b ring about the desired c hanges in the sec tor. Som e o f these p olic y op tions

inc lude the follow ing:• Provision of adequate resources for the entire education sector and improving the

effic ienc y and effec tiveness of the use o f availab le funds for the imp lem enta tion o fthe MDG and UBE p rog ramm es, espec ially a t the sta te leve l. The c urrent leve l ofpublic spending is insufficient to fill the financing gap to achieve UBE and improve

the quality and relevance of post-basic education in Nigeria. Further increase insupport to the education sector through additional resource mobilization fromdomestic (including the private sector), development partners and other

internationa l age nc ies, is req uired .




• Physica l Rehab ilitat ion o f a ll Sec onda ry and Prima ry sc hools in the c ountry, using

add itiona l 0.1% besides the 2% c ontribution to the Educ a tiona l Tax Fund (ETF) andpartnering w ith the p rivate sec tor.

• Deve lop a t lea st 10% c om puter and internet ac c ess in all Primary Sc hoo ls, at lea st

30% in a ll Sec ond a ry Sc hools and a t lea st 70% in a ll Tertia ry institut ions.• Enc ourag e loc a l internet c om panies to sponsor connec tivity to sc hoo ls.

• Prov ision o f free text bo oks in Primary and Sec ond ary sc hools.• Streng thening the c apac ity of the Ministry of Educ a tion a nd its releva nt institutions,

at all levels of gove rnme nt, for planning and m anag ement a nd the ope rationa lizing

of the Fed eral Government 10-year Educ a tion Sec tor Plan.• Design and implementation of state education reforms based on the ongoing

fede ral ed ucation reforms.• Removing barriers to girls’ basic education especially in the Northern regions and

boy’ s sc hoo l drop-out in the Southe rn regions, inc luding c om munity mo b iliza tion

and advocacy, recruitment and deployment of women teachers, andimprove me nt o f physica l fac ilities.

• Design and implement strategies to increase school enrolment, train, increase and

reta in the num ber of tea c hers a t a ll leve ls of ed uc a tion. The c urrent e ffort by theFederal Government to provide one free meal per day for every pupil at the

prima ry sc hoo l leve l should be susta ined .• Preparation of a national post-basic education strategy, focused on science and

tec hno log y q ua lity innova tion, in line with the ob jec tives of NEEDS tha t w ill re-a lign

ed uca tion with the need s of lab our ma rket.

7.1.5 EXPECTED OUTCOMES A successful implementation of the strategic policy options and the sustenance of theongoing reform programme are essential if Nigeria’s quest to build human capital for a

knowledg e-ba sed e c onomy is to be realized . Som e expec ted o utcom es inc lude :

• Imp roved qua lity educ ation that wo uld mee t the need s of the lab our ma rketespec ia lly in area s of ICT, Sc ienc e and Tec hno log y

• Inc rea sed priva te sec tor pa rtic ipa tion

• Substa ntial p rog ress towa rds ed uc a tion rela ted MDGs

• Gend er ba lanc e in Educ ation• Inc rea sed sc hoo l enrollme nt• Inc rea sed literac y ra te




7.2 HEALTH SECTOR

7.2.1 CURRENTPOLICY

Current Federal Government health policy is anchored on the ongoing health sectorreform which has resulted in the formal launching of the National Health Insurance

Sc hem e, a revised Nationa l Hea lth Polic y, a d ra ft Nationa l Hea lth Bill and the designing o fa frame wo rk for ac hieving the Hea lth-Relate d M DGs in Nige ria.

7.2.2 PRESENTPERFORMANCE The c ountry has made som e signific ant p rog ress in the hea lth sec to r as result of reforms

introd uc ed in the sec tor. Along side the Hea lth Sec tor Refo rm Prog ramm e, seve ra lsignifica nt new polic y initiatives in the hea lth sec tor we re d eve lop ed . These inc lude theRevised Nationa l Hea lth Polic y; a d ra ft Nationa l Hea lth Bill; forma l launc hing o f the Nationa l

Hea lth Insuranc e Sc hem e; Nat iona l Drug Polic y and othe r sub -sec toral p olic ies inc lud ing,Ma ternal, Neonata l and Child Hea lth. Gove rnme nt effort in the fight a ga inst HIV/ AIDS wa sfirmly demonstrated with the creation of National Action Committee for Aids (NACA) in

Nigeria . Currently the p reva lenc e ra te for HIV/ AIDS has dec rea sed from 5.8 perce nt in 2001

to 4.4 pe rc ent in 2006, thoug h the p reva lenc e a mo ng som e Sta tes is still high . Other a rea sof ac hievem ent inc lude the imm unization of Children with mo re tha n 75 pe rc ent succ essrate , increase in the number of hea lth institutions espec ially Prima ry Hea lth Care institutionswhich rose f rom less tha n 11,000 in 2001 to o ve r 18,000 in 2005 (see figure 1)

0.0

2000.0

4000.0

6000.0

8000.0

10000.0

12000.0

14000.0

16000.0

18000.0

20000.0

N u m b e r

2001 2002 2003 2004 2005

Years

Primary Health Care Institutions

Primary Health

Care

Figure 1. Primary Health Care Institutions 2001-2005

Infant m orta lity rate dec rea se from 80.2 per 1000 in 2001 to 76 per 1000 in 2005 (see figure

2); however, maternal mortality rate and total fertility rate remained constant between2001 and 2005.




73

74

75

76

7778

79

80

81

p e r ' 0 0 0

2001 2002 2003 2004 2005

Years

Infant Mortality Rate

Infant MortalityRate

Figure2: Infant Mortality Rate

The Fed eral Government budg eta ry spe nding on the hea lth sec tor rem ained at a n

average of 4 pe rc ent o f ove rall bud ge t expenditure b etween 2001 and 2005. How ever, it isimportant to note that there are other areas of Federal Government intervention in the

hea lth sec tor suc h as the NACA and Nationa l Prog ramm e on Imm uniza tion.

Figure 3: Tota l Federal Governme nt Exp on Hea lth % of ove rall budge t exp a nd GDP

Figure 3 above shows that the Fed eral Governme nt bud ge t expend iture a s a pe rc enta ge

of GDP rem a ins below one perce nt b etw een 2001 and 2005, though this is higher whe nexpe nd itures from othe r sources suc h a s NACA, Na tiona l Prog ramme on Imm unizat ion and

MDGs hea lth-related spe nding a re a dd ed . The a verage life expec tanc y at b irth rem aineda t 54 years betw een 2001 and 2005, but Pop ulation p er Physician dec rea sed from 3,373.6in 2001 to 3,059 in 2005 (see figure 4), a longside Pop ulat ion p er Nursing Sta ff which

dec lined from 1082.1 in 2001 to 714 in 2005 (see figure 5).

total exp. on health % of overall budget exp and GDP

0.0

1.0

2.03.0

4.0

5.0

6.0

7.0

2 0 0 1

2 0 0 2

2 0 0 3

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Years

P e r c

e n t a g e s

tot.exp on health % of

overall budget exp

tot.exp on health% of GDP




29002950

30003050310031503200

32503300

33503400

Number

2001 2002 2003 2004 2005

Years

Population per Physician

Population per

Physician

Figure 4: Populatio n pe r Physician

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

Number

2001 2002 2003 2004 2005

Years

Population per Nursing Staff

Population

per NursingStaff

Figure 5: Population per Nursing Staff

The situa tion d id not imp rove in the a rea of p rovid ing hosp ital beds. The Popula tion perHosp ita l Bed inc reased from 1,651.6 in 2001 to 1,806 in 2005 (see figure 6).




Figure 6: Popula tion p er Hospita l Bed

Nigeria has a lso p layed a key lea dership role on hea lth in Africa . Nigeria hosted the A frica nUnion Summits on Ma laria in 2000 and on HIV/ AIDS, Tub erc ulosis (TB) and Othe r Related

Disea ses in 2001, and a fo llow-up Summit on AIDS, TB and Ma laria in 2006. These resulted inthe Ab uja Dec la ra tions, to w hich a ll Africa n Union memb er sta tes have signed up .

7.2.3 CURRENTCHALLENGES Desp ite som e prog ress ma de in the he a lth sec tor, a lot of c ha lleng es still rem a in. Som e of

these include the follow ing:

• Poor health indicators: Infant and child mortality rates are extremely high, even

when c om pa red to other Sub-Saharan A fric an c ountries and other pa rts of theworld.

• There a re large reg iona l and inc om e ineq ualities in hea lth outcom es and in hea lthc are ut iliza tion in the c ountry

• Ineffective Primary Health Care System (PHC): Public Primary Health Care facilities

and their personnel offer low quality services partly due to chronic under-fundingand to the insuffic ient a c c ounta b ility of the level of go vernment in cha rge of PHC.

• Ac c ess ba rriers: There a re very high financ ial, physica l and c ultura l ba rriers tha tprevent access to effective health care by much of the population, especially therural poor. Only three out of every five Nigerians receive medical care when in

need.• Inad eq uate and inap prop riate resource a lloc a tion: The internationa lly ac c ep ted

benchmark for adequate financing of a comprehensive basic health care

package is $34 per capital per annum. Although there is no complete account ofpub lic expend iture o n hea lth, som e e stima tes indicate that be twe en 1998 and 2002

the a verag e p er ca p ita expe nd iture on hea lth wa s less than half of this a t $16.

1550

1600

1650

1700

1750

1800

1850

Number

2001 2002 2003 2004 2005

Years

Population per Hospital Bed

Population per

Hospital Bed




• Institution and Ma na gerial wea kness: The Nige rian hea lth system is ve ry fragmented ,

with poor coordination at all levels, contributing to and exacerbated by weakmanagement systems.

• Role o f the p riva te sec tor: The p riva te sec tor (forma l and informa l) provide s a la rge

share of health care service delivery, but its potential benefits have not beenexp loited fully as pub lic -priva te pa rtne rships a re still very limited .

• High p reva lenc e ra te of HIV/ AIDS.


• Ad dressing the Institutiona l and Ma na gerial Wea kness: To e liminate thefragmentation of the system, its waste of scare resources and the negative

c onseq uenc es on servic e de livery, there are three a rea s whe re G ove rnment need sto ta ke ac tion: (i) the further definition and c larific a tion of hea lth ca re responsibilitiesbetween the three level of government; (ii) the coordination between levels; and

(iii) the ra tiona liza tion o f the Fed eral Go vernme nt struc ture• Increasing resource allocation to ensure universal access to basic package of cost-

effec tive hea lth servic es.

• Revitalizing the Primary Hea lth Ca re System through increased a lloc a tions,stewa rdship and c om munity emp owe rment.

• Adequate dissemination of practical information on government’s actions toimp rove hea lth outc om es, in p artic ular on a c tions by State and Loc a l Governments.

• Red uc ing barriers to a c c ess hea lth c a re b y ensuring financ ial ac c ess throug h soc ial

insurance, community financing and targeted subsidies and also through rationaldeployment of physical and human resources, education and effective

communication.• Exploiting the full potential o f Pub lic -Priva te Partnership.

• Inc rea sed ac c ess to Anti-retrovira l drugs

• Substantial red uc tion in infant a nd m a ternal morta lity ra tes

•Substantial prog ress tow ards hea lth relate d MDGs

• 100% suc c ess ra te in c hild immuniza tion• Easy ac c ess to hea lth insuranc e fo r a ll Nigerians




8.0 SECURITY, LAW AND ORDER

8.1 LAW ENFORCEMENT

Few institutions have a bigger impact on the daily life of ordinary citizens than lawenforcement, yet relations between the police and Nigerians continue to becharacterized by distrust and mutual hostility. In 1999, the Nigeria Police Force numbered

about 138,000, servicing a c ountry of over 120 million p eo p le. The transition from militaryrule ma rked the first rea l efforts to undertake refo rm of t he Nige rian Polic e Force.

In 2000, the Ministry of Polic e A ffairs p rod uc ed a five-yea r deve lopm ent p lan for the p olic eforce and with support from the United Sta tes and British gove rnme nts, d rew up a deta iled

stra teg ic p lan to gu ide its imp lem enta tion. This inc luded the d ra fting of a mission andvalues statement for the Nigerian Police Force and the identification of six organizational

go als and strate gies to a c hieve them.

This sec tion looks a t the p resent polic ies a imed a t p olic e reform a nd othe r law

enfo rc em ent age nc ies, assesses their pe rformanc e and sugg ests possib le wa ys forwa rd .

8.1.1 CURRENTPOLICIES The p resent Government set out to c rea te a n ima ge of a new po lic e tha t is c ourteous,polite, we ll d isc ip lined , well beha ved polic e force tha t will truly serve the p eop le. There was

a massive recruitment drive to increase Police strength, the promotion of senior policeofficers and members of the rank and file, the provision of training and developmentfac ilities and imp rove me nts in the sa lary and we lfa re p ac kag es for offic ers.

To a ddress the c ontinued shortag e o f pe rsonne l, a five year p lan wa s launc hed to rec ruitan average of 40,000 new officers per year. Under the plan, police ranks increased from138,000 to 320,000 in four yea rs. In a dd ition to this, the Polic e Service Commission (PSC) ha s,since Novemb er 2001, p rom ote d ove r a hund red thousand office rs. Sa la ries we re

increased by o ver 30 perc ent and are now pa id on time.

Welfare packages were improved and even more officers were promoted. An initiativewas also launched to tackle low level corruption, especially at road blocks were policeofficers extort money from passing motorists. In 2003, a Police Complaints Bureau and

Human Rights Desks were established in all state commands, these measures were aimeda t improving the p olic e’ s relationship with the g eneral pub lic .

A p ilot c om munity polic ing projec t wa s introd uc ed in Enugu State , formally launche d by

President Obasanjo in April 2004, the community policing program aims to transform theculture and organization of the police, improve relations with ordinary citizens and qualityof servic e d elivery. The p rog ram has since bee n rep lica ted in othe r sta tes of the fed eration.

Ac c ording to the c om munity po lic ing p rojec t plan, the six key comp onents of the p rog ram

are:




• Creating a wa reness of c ommunity polic ing b oth w ithin the force and wide r soc iety;

• Introducing intensive skills development and leadership training of local policeofficers;

• Examining polic e structures and orga nizat ion;

• Reviewing training c urric ula and me thod ologies of the po lic e;• Developing intellige nc e led p olic ing a nd the use o f new te c hnology; and finally,

• Review ing legisla tion and p roc ed ures.

“ Op eration Fire-for-Fire” introd uc ed in 2002 wa s a imed p rimarily at c om bating rising c rime

and the resultant insecurity felt across the Nation, particularly in urban centers. Howeverthis initiative raised concerns that the police would take it as an invitation to engage in

d isp rop ortiona te use of force.

On his app ointment in 2005, the new Inspe c tor General launched a new ten-point ag end a

on a b roa d range of issues, suc h a s:

• imp roving the intellige nc e a nd investiga tive c ap ac ity of the po lic e,• c omb ating violent and ec onom ic c rimes,• c onflic t p revention,• community policing,• improving relationships w ith the ge neral pub lic ,

• anti-corruption and

• Imp roving the salary and we lfare pa c kage of offic ers.

A review of the Police Act started in November 2004 and is being undertaken by an

interag enc y c om mittee c omprising po lic e, go vernment a nd c ivil soc iety representa tives.

Othe r law enfo rc em ent age nc ies, suc h a s the Custom s Servic e, NDLEA, and Imm igra tion

and Prison services have also seen initiatives aimed at improving their services. As in thePolice, motivation was low, salaries were poor and not paid promptly, and promotions

were rare, with o ffic ers freq uently stuc k at the same rank for upw ards of 10 yea rs. Internal

and e xterna l ac c ountab ility wa s either we ak, ineffec tive, or nonexistent.

The c urrent Gove rnme nt has ma de e fforts to b oo st office r’ s mo ra le, enha nc eaccountability and effectiveness and check corruption. Other initiatives aimed at

improving internal and external communications as well as the provision of adequateresources have b een a dop ted . The resource alloc a tion to these a ge nc ies has also be enincreased; and this has facilitated the purchase of modern equipments and conduct of

training to bo ost ca pac ity.

The Nigeria Sec urity a nd Civil Defense C orps was esta b lished in June 2003. Governed bythe Imm igra tion Prisons Servic es Boa rd , the a genc y was formed to further enha nc e sec urityby assisting in the maintenance of peace and order and also in the protection and

rescuing of the civil populace during periods of emergency. Furthermore, they areresponsible for monitoring the activities of private guard companies, surveillance ofinfrastruc tures and a rrest, investiga te and handover of suspec ted c rimina ls to the Polic e.




8.1.2 PERFORMANCEANALYSIS

Although these reforms ma y need mo re time to ma ke rea l impac t, initia l ob servations haveshown no significant changes in the conduct and attitudes of the Nigerian Police Force.Problems of torture and deaths in custody have still not been addressed. Local human

rights orga niza tions and lawyers say there ha s bee n no significa nt reduc tion in the level ofhuman rights violations, such as torture, killings and extortion, committed by the police

since 1999.

Nevertheless, their have been increased information on the activities of law enforcement

agenc ies via p rograms a ired on TV sta tions. Furthermo re, a genc ies suc h a s the FRSC havema nag ed to a void some of the p itfalls like ram pa nt co rruption and having a lac kad aisic a la ttitude tow ards wo rk like the Nige rian Polic e. Ag enc ies suc h a s the Custom s servic e have

shown improved effectiveness evidenced in their interception of more contraband and

inc rea sed revenue c ollec tion o f behalf of the Fed eral Governme nt.

8.1.3 CURRENTCHALLENGES While welcome, these new policies and programs have not significantly changed the

behavior of officers on the streets in Nigeria, nor has public perception of the policeimproved significantly. Citizens continue to complain of human rights abuses by police,including extortion, brutality, torture, and even extra-judicial killings.

The Nigerian Governme nt must support co mm unity polic ing initiatives c ount rywide,improvements in police training and a nationwide campaign to raise awareness that

torture and other abuses are forbidden und er Nige rian and international law.

Internal and external ac c ounta bility mec hanisms suc h a s the PSC a nd the PublicComplaints Bureau are still under funded and enjoy little support in the discharge of their

functions.

The c apac ity of polic e training sc hoo ls must be increa sed in orde r to d eliver more q ua lity

training to officers. In the Government’s drive towards increasing manpower, policesc hools are be ing stretc hed to b rea king p oint be c ause they d on’t have the c ap ac ity to

ta ke on so m any rec ruits.

Even more d isturbing , there a re still reports of c ross border c rimes w ith grea t imp lic a tions for

na tiona l sec urity. The d anger of having p orous was undersc ored by the recent c lash offoreign fighters with the Nigerian Army in Kano. Also, social and economic problems such

as unemployment, tribalism, cultism and religious intolerance still plague the countrylead ing to further insec urity.

Soc ial and ec ono mic p rob lem s suc h a s unem p loym ent, triba lism, c ultism, religiousintoleranc e still plag ue the c ountry lea d ing to further insec urity felt b y Nigerians.

8.1.4 POLICY OPTIONS • The g ove rnment should p lac e a c ap on further rec ruitment a nd instea d

immediately launch a program of retraining for all those recruited in the last fouryears.




• Accountability processes and mechanisms should be given greater political supportand a highe r priority in po lic e b udg eting.

• Investments in social and economic measures for crime prevention should beincreased in order to make community policing more effective in building

partnerships betw een the p olic e a nd the c om munities they serve in Nige ria .

8.1.5 EXPECTED OUTCOMES

Increasing investments in social and economic measures will prevent crime caused bysocio-economic problems such as unemployment. Furthermore, it will serve to promote

harmony a mo ng Nige rians, and thereb y p revent ethnic and religious alterc ations.

More emphasis on accountability processes will help to reduce incidences of Police

b ruta lity, to rture, exto rtion and extra-judic ial killings. This policy will serve as a vehic le forfurther cooperation with international organizations such as the British Department forInternationa l Deve lop me nt (DFID) and the United Sta tes Agenc y for Internat iona l

Deve lop me nt USAID, who have show n w illingness to c ont ribute, financ ially, to lawenforcem ent training program s.

These w ill a ll help to c rea te a peop le o riented defense a nd sec urity personne l who respec tand p rotec t the citizenry and a re c ivil and c ourteous when hand ing them .




8.2 JUSTICE

The NEEDS doc ument ide ntifies the following p rob lems with the Nigerian justice system:

• Enormous loa d of p end ing c ases

•

Freq uent ad journme nts• Ineffective dispensation of justice• Oc c asiona l pe rversion o f justice

In ana lyzing the Nige rian Judic iary, this paper asks three questions

• Is it timely?• Is it fa ir?

• Is it ac c essible?

8.2.1 PERFORMANCEANALYSIS

Timeliness: According to the World Bank, Nigeria ranks among the countries with the leastefficient system s of enforcing c ontrac ts and settlement o f com me rc ial disputes. Co urt rulesand procedures are complex and are riddled with poor management, even corruption.Furthermore, slow polic e investiga tions and enfo rc em ent of judic ia l dec isions c ontribute to

delays in justice delivery. It ta kes an a verag e of 50 mo nths to resolve c ontrac t d isputes, 42mo ths to resolve a land or prop erty case a nd 27 mo nths for c rimina l ca ses (World Bank)

Fairness: An inefficient justice system is likely to lead to resorting to illegal means likec orrup tion to solve d isputes. Enforcem ent o f court de c isions dee p ly a ffec ts the q ua lity of a

judicial system. Nigeria is notorious for not enforcing court decisions and if its done it takesa very long time. Furthermore, d elays in resolving d isputes ma y c om pel c ourt users to pay

bribes to speed up court proceedings thereby diminishing trust in the judicial system.According to the World Bank, as high as 82% of lawyers in Lagos say they had to paymo ney to exped ite c ourt proce ed ings.

Furthermore, delays in judgem ents c ause suspec ts to be remanded in p rison for som etimes

even longer than the sentence of the offence which they are a c c used of. More tha n halfof Nige ria’ s p rison inma tes have not b een c onvicted of any c rimes in a c ourt of law .

Other short comings also plague the Nigerian Judicial system; this includes obsolete lawswhich a re not up to da te w ith the ongo ing e c onom ic reforms whic h d eny the nation theadd ed advantag e o f its judiciary co ntributing to business and investme nt in the c ountry. As

a result many small businesses enter into agreements based on personal trust or family tiestherefore limiting their sc op e for expa nsion.

Accessibility: Complexity of process, high cost of legal services and the length of processare the main obstacles to accessibility by disadvantaged groups like the poor,

uneducated and even women.




Smaller com panies too, tend to have a lower level of trust in the c ourt system. This is

because they have the worst experience in terms of delays, service delivery, corruptionand a fforda b ility.

8.2.2 CURRENTPOLICIES

Presidential Commission on the Reform of Administration of Justice (PCRAJ): Thiscommission was set up in March 2006 to review the state of administration of justice inNigeria . The c om mission ha s issued its final rep ort ta king into c onside ra tion

recommendations proposed by the commissions of justice, police and awaiting trialp risone rs.

Bills: A number of bills have emerged from the presidential commissions aimed atimp rov ing the Nigerian Jud icia l system. These b ills inc lude :

• Bill on Criminal Justice Administration• Ad ministration o f Justice Commission Bill

• Leg al Aid Counc il Act (amend me nt) Bill• Human Rights Co mm ission Ac t (a me ndme nt) Bill

• Co mmunity Service Bill• Police Act (amendment) Bill• Vict im o f Crime Rem ed ies Bill

• Eliminat ion o f violenc e in the soc iety Bill• Prison Act (amendment) Bill

• Ac t to am end the Lega l Prac titioners Ac t

The President ha s d irec ted the At torney Ge neral of the Fed eration to c om p ile key

recommendations from all the commissions, which will form the basis for the government’s

jud icial reform stra teg y. This will also p rovide a frame wo rk by w hich internationa lorga niza tions c an c ontribute to refo rms.

The Atto rney General of the Fed eration has a lso estab lished a National Com mittee on the

Review of Nigerian Investme nt laws, with the view of c rea ting a n ena bling environment forinvestment. He a lso c rea ted the Na tiona l Committee o n the Reform a nd Ha rmo nization o f

Nigeria’s Arbitration and Alternative Dispute Resolution Laws to recommend improvedleg islation rela ting to ADR.

Seve ra l far rea c hing refo rms have a lso b een prop osed by the National Summ it on Judic ialReform c rea ted by the Chief Justice o f the Fed eration. These reforms a re c onc erned w ith:

• Refo rming c ourt struc tures and jurisd ict ions• Loo king a t the viab ility of introd uc ing spec ia lized c ourts and sma ll claims c ourts

• Reforming civil procedures rules and courts rules to address problems of delays

• Develop ment and imp leme ntation o f effective c ase ma nag eme nt system• Ca pac ity b uild ing fo r Judge s, reg istra rs, court c lerks and othe r sta ff

• It a lso ma de rec om me nda tions on the use o f ADR, with a view of p rom oting it.





• Imp lementing p rop osed reforms

• Passing o f p roposed reform b ills into law• Initia tives on how to ma ke the justice system (a) t imely (b) fa ir (c ) ac c essible


1. Action Plan: The m yriad o f Jud ic ia l Refo rms needs a c lea rly de fined ac tion plan w ithmilestone s to be a c hieved if it is to be imp lem ente d effec tively. The Presidentia l

Committee on Judicial Reforms has already recommended the basis for the reformstrateg y and an a c tion p lan.

2. Pushing through the reforms to become law: The Fed eral Gove rnme nt and a llc onc erned stakeholde rs must join in the e fforts to m ake sure the va rious rec om me ndedbills are passed into law by the National Assembly. Civil society and advocacy groups

should participate in publicity activities to educate people on the importance of theprop osed b ills and a lso take p art in Nationa l Assem b ly p ub lic he arings.

3. (a) To ma ke the judicial system mo re timely , refo rms aimed a t c ivil p roc ed ures rules andc ourts rules to ad d ress p rob lem s of d elays and the d evelop me nt and imp lementa tion

of effective case management system should fully implemented. Clear yardsticksshould a lso be estab lished to me asure their effec tiveness.

(b) Improvements in Prisons and the initiation of other methods of punishment can beexam ined by the gove rnment. The Nige rian p rison system is in d ec ay a nd serves as a

breeding ground for criminals instead of rehabilitation. Furthermore, reforms in

investment and commercial laws - where commercial disputes are resolved quicklyand impartially - will bolster the confidence of the business community; encouragegreater investment and support increasing numbers of transactions. Every measurege ared tow ards imp rovem ents in Judicia l integ rity must be vigo rously pursued to c rea te

a fairer jud icia l system.

(c) In improving accessibility, the ADR system should be expanded to all states andenforcing o f c ourt orde rs must a lso b e imp roved by law enforcement. Imp roveme nts intimeliness and curbing corruption our justice system will encourage disadvantaged

group s to seek justice in our co urts and enjoy the bene fits of a fair and just soc iety.

8.2.5 EXPECTED

OUTCOME

Creating an effective justice system which is considered fair, timely and accessible willstreng then the Nige rian lega l system which is fundame nta l to ensuring the rule o f law and

improving Nige ria's investment c limate.

Rule of law - including systems which ensure the sanctity and enforcement of contracts -

p rovides p red ic tab ility and stab ility for investors, without w hich they will go else we re.




9.0 COMBATING CORRUPTION

9.1 INTRODUCTION

Corruption has been identified as one of Nigeria’s major problems. Corruption damagesNige ria’ s rep uta tion in the internationa l c om mun ity, und ermines her ab ility to fight p ove rty,stifles the inflow of Foreign Direct Investment (FDI) and economic growth and leads to a

lac k of p rop er servic es by the g ove rnment.

Sinc e 1999, signific ant in-roa ds have been m ade in the fight aga inst c orrup tion. Theestablishments of the EFCC, ICPC, the passing of the Fiscal Responsibility Law (FRL) and therestruc turing and refo rms of the c ivil servic e a mo ng others have a ll contributed in tac kling

c orruption. Corruption ha s be en foug ht on seve ral fronts but a lot m ore has to b e d one.

9.1.1 CURRENTPOLICIES The fight a ga inst c orrup tion in Nigeria c an be c lassified und er two ma in hea d ings:

• Enforc em ent: This refers to the a c tivities of the Co de o f Cond uc t Bureau, the EFCCand ICPC in investiga ting and p rosec uting offenders.

• Preventa tive Mea sures: This refers to the laws and po lic ies put in p lac e suc h as thepub lic a tion of fed era l budgets, pub lic p roc urement refo rms, due p roc ess, FRL, EITIand the elimina tion of p ayroll fraud . These m ea sures have c ontributed imme nsely in

the preventing corruption through improvements in accountability andtransparency.

9.1.2 Current Performa nc e

Enforcement

• The Econo mic a nd Financ ial Crimes Commission (“ EFCC” ): EFCC has recorded

unprec ed ented suc c esses in its fight against c orrup tion. Besides the p rosec ution o fhigh profile government officials, the Commission has also recorded successes in the

fight against advanced fee fraud, securing at least 15 convictions and thec on fisc a tion o f ove r $750 million in assets since its incep tion.

• The Independ ent Corrup t Prac tices Commission (“ ICPC” ): The ICPC ha s a lso

rec orde d suc c esses in the p ersec ution of c orrup t g overnment o ffic ia ls. Thesuccessful prosecution and subsequent sentencing of several government officials

including heads of governments agencies, Local Government Chairmen is a strongtestimony to the c om mission’ s effo rts.• The Code of Cond uc t Burea u (“ CBC” ): This ma inly eng ages in the monitoring assets

declaration of public officials. It complements the EFCC and ICPC, by identifyingoffenders.

• Financ ial Inte lligenc e Unit (“ FIU” ): FIU increa ses c apac ity for monitoring andenforcing law s aga inst mo ney laund ering a nd other ec onom ic c rime s.




The c om bined a c tivities of these a genc ies has led to:

• The delisting of Nigeria from the FAFT list no n-com plianc e c ountries.• Stea dy imp rove me nts in the Transparenc y Internationa l’ s annua l ra tings of c orrup t

countries• Preve ntion of corrup t p rac tices for fea r of p ersec ution

• Stea dy imp rovements in internationa l rep utation a s evidenc ed by theimprovem ents in Nigeria ’ s position in the annua l c orrup tion pe rc ep tion index

• Bette r servic es in the c ivil servic e and increased of ac hieving the MDGs.

Preventative Measures

• EITI: As most of government revenue is obtained from oil and gas, Nigeria hasadop ted the Extrac tive Industries and Transparenc y initiative a nd is now c onsidered

a glob a l lea der in its imp lem enta tion. Sinc e Feb rua ry 2004, the Gove rnmentlaunched a communication strategy aimed at engaging civil servants and privatesec tors sta keholde rs on the imp ortanc e o f this initiative, which c a lls for indep end ent

audits of the oil and gas sector towards contributing to a culture of transparencyand ac c ountab ility in that sec tor. Under EITI, tec hnica l work done by the sta ff Oil &

Ga s ac c ounting unit have led to the rec ove ry of monies due to the gove rnment b yoil c om panies estimated a t ab out $ 1 b illion.

• Public Procurement: A major avenue for corruption and waste in Nigeria’s

Governme nt is in the a wa rd of c ontrac ts. The Public Proc urem ent refo rms have ledto the reduction of costs of government contracts and have increased the

ac c ountab ility of c ontrac tors. The BMPIU (Budget Monitoring a nd Pric e Intelligenc eUnit) has led to the estimated savings of $800 million in inflated governmentcontracts.

• Budge t and Fisc al Transparenc y : Tow ards ensuring transparenc y in Budgeta ry and

Fiscal activities, the Government adopted a policy of publishing its details of thefunds disbursed to all levels of Government.

• Tac king Payroll Fraud : At both the Fed eral and Sta te leve l, payroll fraud has bee n

reduced through the improvement of payroll and HR systems which havec ontributed to the de tec tion o f ghost wo rkers.

• Monetization: Abuse of privileges and entitlements by the public officials have beenreduced through the monetization policy, thus enabling the FGN to reduce publicexpenditure.

The World Bank Institute a nd Transparenc y Internat iona l have rep orted tha t b ribery in

Nige ria has red uc ed and their surveys have sugge sted tha t the fight aga inst c orrup tion hasbeen intensified.





Percep tions of Selec tive Justice

Although anti-corruption agencies have recorded unprecedented success, rightly orwrong ly, Nigerians believe tha t the c rusade is selec tive. They feel tha t those w ho ha ve

fallen o ut of favo r with government a re b eing victimized .

Further streng thening o f anti- c orruption a genc ies

The EFCC , ICPC etc must ha ve the resource s in terms of fund ing a nd training o f sta ff forbetter investigation and prosecution of offenders. Intelligence gathering into off-shore

ac c ounts and c om panies and a lleg ations of mo ney laund ering a c tivities req uire a c ertainamo unt of expe rtise to prove.

Operation within the limits of the lawIn seve ral instanc es, anti-c orruption a ge nc ies have be en ac c used of b rea king the law s ofthe land in the c arrying out o f the ir duties. This is a serious c onc ern a s it diminishes pub lic

supp ort and undermines muc h of the g ood work they have d one.

Ministerial anti-corruption unitsAnti-c orrup tion units in all Go vernment M inistries, Depa rtme nts and Agenc ies must b e mo reeffective and there should be strong links between these units and anti-corruption

agencies.

Grea ter transpa renc y in budg etary and fisc al a c tivitiesIssues such as inadequate personal accountability of public officials, insufficientinformation on actual budget execution and inadequate public access to government

monitoring a c tivities must be d ea lt with.

The Aud itor-GeneralThe c apac ity of the Aud itor-Genera l’s office m ost be further imp rove d fo r it to c a rry outeffec tive a udits of government ac c ounts.

Impend ing Anti-c orruption Bills

The Go vernment must ensure tha t imp end ing b ills a re passed in ea rnest. These b ills inc lude :• The Free dom of Informa tion Bill• The Pub lic Proc urem ent Bill


Correct Perceptions of Selective Justice : The government must no t interfere w ith a nti-c orrup tion a ge nc ies investiga tions into a lleged improp riety of p ub lic officials. This c an b e

ensured by making the agencies truly independent and communicating to Nigerians thestrenuous steps in terms of evidence and other information gathering before suspectedoffenders c an b e c harged to c ourt.

Further streng thening o f anti- c orruption a ge nc ies: Gove rnment must imp rove the fund ing

of the anti-corruption agencies and encourage the training of staff in new anti-money




laundering detection skills. Increase in manpower and equipment will also be effective in

this regard. More so, the government must vigorously pursue the support of theinterna tional c om munity for assista nc e in investiga tion, ca p turing offend ers or even furtherfund ing of the a nti-c orrup tion ag enc ies. The c hoic e o f lea ders of these a genc ies is of

utmost importance as it ensures effectiveness of the agency and demonstratescommitment.

Operating w ithin the limits of the law : Anti-corruption a ge nc ies c an set-up internal c hec ksand b a lanc es of its ac tivities to m ake sure tha t they operate with the rea lm of the law . This

will lead to better prosecution and convictions rates, plus continued public support as thega thering of evidenc e a nd m od e of arrest are done in a lawful ma nner.

Ministerial anti-corruption units: All Ministries must work out a more effective mode of

operation of these units for them to be more effective and performance must be closelymo nitored . Work on this has a lrea dy be gun.

Greater transparency in budgetary and fiscal activities: The G ove rnme nt may alsoconsider making public actual amounts that have been spent on all its projects and

contracts awarded.

Involvement o f NGOs and Civil Soc ieties: Civil Soc ieties and NGOs should be e mp ow ered

to a sk questions abo ut how go vernment mo ney has be en spe nt.

The Auditor-Genera l’s Offic e : A wa y forwa rd is imp roved funding of the O ffic e a nd strong erfollow -up on its rec om me nda tions by the executive.

Further suggestions

• Public perception surveys can be carried out in all the states of the federation tofind out a bo ut p eople’ s op inions on the anti-corruption d rive

• Programs of Ethical reorientation of the Nigerian public in offices, schools, tertiary

institutions and the using the media can also be embarked upon to reduceinstances of bribery

• Strong and ethica l lea ders should b e a pp ointed to anti-corruption a ge nc ies andother ag enc ies such as the p olic e a nd c ustom s

9.1.5 EXPECTED OUTCOMES A vigo rous and sinc ere c amp aign to ba ttle c orruption in Nige ria will:

•

Imp rove Nige ria’ s ima ge ab roa d• Boost efforts to fight poverty because corruption diverts resources from the provision

of basic servic es which the po or are m ost dep end ed on

• Ec onomic growth a nd go vernment p erformanc e w ill be imp roved as resources willnot diverted away from genuine economic growth policies and the business ofpo lic y ma king by the go vernment is not subve rted by the sea rc h of p roc eeds from

infla ted c ontrac ts.







10.0 NIGERDELTA DEVELOPMENT

10.1 CURRENTPOLICY

In 1999, the Obasanjo Government encouraged dialogue with the Niger Delta region.Firstly, the government increased derivation albeit somewhat belatedly, from 3 per cent to13 per cent in line with the 1999 Nigerian constitution, as well as allocations to states and

LGAs, empowering the tiers of government to improve conditions within theirconstituencies.

Sec ond ly, the go vernme nt forwa rded a b ill for the e stab lishme nt of the Nige r DeltaDeve lop me nt C om mission (NDDC) to the Nationa l Assem b ly. The Co mm ission w as duly

established by an Act of the National Assembly in 2000 as an agency mandated tofac ilitate the sustainab le de velopm ent of the Nige r Delta region.

NDDC is currently funded by both the Federal Government and the oil companies.Ac c ording to the Ac t, The FGN is supp osed to g ive NDDC the eq uiva lent o f 15 pe rc ent o f

the to tal mo nthly statuto ry a lloc ations of the nine m ember state s while the oil c om pa niesare supposed to contribute 3 percent of their annual budget to the NDDC fund. In

addition, 50 percent of funds due to the member states from the ecological fund is alsoa lloc a ted to the NDDC. Finally The NDDC a lso ha s other fund ing sourc es suc h as g rantsetc.

10.2 PERFORMANCE

From 2001 to December 2006, NDDC has received an aggregate of N241.584 billion.

Co nsidering the enormity of the c ha llenge s and the c ove rage a rea (Nine Sta tes) this figureis c onsidered inad eq uate. This amo unt when d istributed to the 9 Sta tes on an even b asisave rag es ab out N4.4 b illion pe r Sta te p er yea r. It should b e no ted tha t NDDC ha s to d a te

not b een fully funded as presc ribe d by the Ac t.

In the six years of its existence, NDDC has recorded some progress particularly ininfrastructural development in the region. However, it has be noted that the NDDC hasbeen the subject of recent criticism, following allegations of corruption, project

aba ndo nme nt, op erating indep end ently igno ring inputs from state go vernments by w ay ofide as, etc .

10.3 CURRENTCHALLENGES Four ma jor challenges fac ing the Niger Delta c an b e identified :

• Economic• Environmental

• Infrastruc tural, and• Soc io-po litic al c hallenge s




Econom ic Challenges

High Unemployment: A major challenge is that of the very high unemployment in theregion. About 73 per cent of the households in the Niger Delta have five or more

dependants without a job and a majority of them are youths who present securityconcerns, as well as difficult economic and empowerment challenges. For instance, thefailure to fundamentally address this issue has undermined efforts to promote inward

investments and ec onomic de velop ment.

High population: An estima ted 3.1 per c ent of the p op ula tion g row th rate which c ontinuesto add pressure on development plans and projections. It is estimated that over 70 perc ent live b elow po verty line (whic h is de sc ribed as an a bsenc e o f ba sic am enities).

A mono-cultural Economy: Apart from the oil and gas industry, the region has not beenable to d evelop a c om pleme ntary ec onomic b ase, despite ric h po tentials in areas such as

agriculture, solid minerals, tourism, etc. Dependence on the oil and gas industry weakensthe other sectors and narrows the region’s economic base. Also, the oil and gas industry

cannot provide all the jobs and opportunities needed for sustainable development andother neglec ted ec onomic ac tivities c an fill enormo us ga ps in the region.

Non-integrative oil sector: The loc a l c ontent in oil and ga s sec tor is extrem ely low andheightens tension and animosity. At a n averag e p rod uc tion c ost of US$4 per ba rrel, the

Loc a l Conte nt Participa tion Polic y c ould transla te to ove r US$3 b illion per annum, with vastmu ltiplier effec ts and substantial job c rea tion.

Untapped no n-oil resources: The Reg ion is endow ed with va rious non-Oil resource s of h igh

ec ono mic va lue. These inc lude agric ulture, solid minerals, tourism etc . Som e of the va streserves of renewable mineral resources such as barites, granite, marble, limestone,feldspar etc ., abound in the reg ion. The Nige r Delta a lso has a pote ntially vibrant to urismindustry, in places like Obudu, and the stretching beaches of Agge and Okpoama/Brass in

Bayelsa State.

Agriculture also presents a potential billion dollar industry waiting to be harnessed. It is,inde ed , an irony that the O go ni area used to b e c alled the food ba sket of the Nige r Delta.Throug h neg lec t, dw ind ling soil fertility and poo r farming metho ds, the reg ion can barely

produce food to feed itself. Rice and cassava cultivation, as well as food processingp resent imp ortant op tions, due to o f the te rra in. Indee d , the World Bank estimates tha t the

reg ion can p rod uc e enoug h rice for the entire c ount ry and for export. Billions of d olla rs a re,therefore, lost annua lly be c ause they rem a in la rge ly unexploited .

Exploitable Indigenous technology: The Niger Delta is b lessed with ind igenous

technologies that can be explored and utilized by industries in the Region. Withsta nd ard iza tion a nd qua lity c ontrol, exports a re a lso p ossible. This inc ludes c arpen try,pottery, burnt bric k ma king, weaving, etc .




Infrastructural Challenges

Epilep tic/ non-existent po wer supp ly: Power supply is very poor and remains a seriouschallenge within the region, despite existing generating power stations. For instance,

Bayelsa Sta te, a ma jor oil p rod uc er, is not fully integrated to the Nationa l Grid w hile m ost o fthe c oa sta l pa rts have no pow er supp ly at a ll. Even in ma jor townships where pow er supp ly

exists, it is so epileptic that most businesses depend on alternative and expensive sourcesof p ow er genera tion. This severely constrains business ac tivities and makes develop mentexpensive inde ed .

A Detached Coastal Belt: The reg ion’ s c oa sta l belt is deta c hed from the rest o f the

c ountry. There a re no c onne c ting roa ds, no e lec trifica tion, no w ater supp ly, nocommunications and very rustic economic activities that are basically self-preserving andsubsistent. Developing the coastal belt is very costly due to its challenging and rather

difficult terrain and needs good planning and a clear, long-term vision. Ironically, it offersg rea t p ossibilities for ec ono mic ga in.

Soc io-Politic al Cha llengesLingo -Cultural Dive rsity and d ivision: With over 40 ethnic g roups and o ver 250 d ialec ts,

poverty has made division acute and communities have tended to degenerate intoconflict in their separate pursuit of oil benefits.

Lack of Good Governance: This has a ffec ted servic e delive ry b y suc c essive Governme ntsin the Reg ion a t Sta te a nd Loc a l leve ls and is perhap s one of the ma jor c ha lleng es in the

reg ion. It ha s, the refore, translated into:

• Lac k of transparenc y and a c c ounta bility.

• Mistrust o f Go vernment’ s intent ions.

•

Imp atience with agenc ies of d evelop ment.• Governme nt business appea ring to be sec retive.• Exclusion of C ivil Soc iety, com munities and ord inary c itizens in the governanc e

proc ess (dec ision ma king and imp lementa tion).

Lack of Cooperation and Partnership: Due to long years of neglect, the challenge of

deve lop me nt is quite enormous. There a re so m any things tha t require urgent a ttention, yetfund ing is limited . As a result, many ma jor projec ts c annot b e und ertaken b y any one sta teor LGA without collaboration among stakeholders. Over the years, there has been

unnec essa ry wa stag e through d uplic ations and lac k of neede d c oope ration. This hasde pleted ava ilab le funds and ma de efforts at de velop ment inade qua te o ver the yea rs.

Poor Educational system: One of the sad realities of education in the region is that eventod ay, in 2007, there a re ma ny c hild ren who stud y und er trees and on floo rs. Infrastructurewhich is vital for qualitative education is grossly lacking. In public schools, it is even more

d ire. There a re few func tiona l sc hoo l build ings, poo r inad eq uate furniture, very limited andpoorly equipped science labs, no computer training and other aids. The net result: high

d rop -out ra tes, low skills or ca pac ity and unem ployment. The sc hoo ls, therefore, bec om efac tories and b reed ing g round s for restive youths.




Agitation and unrest: Agitation is a major challenge in the region. It is a well-known fact

that development can best occur in an environment of peace, harmony and security.Unfortunately, in some areas of the Niger Delta even development programmes havebeen disrup ted and p rojec t sites abandone d. This c rea tes d iverse ec ono mic , investment,

sec urity, politica l and c ultura l p rob lems for the reg ion, slow ing the p ac e o f servic e d eliveryand other va lues that it engende rs.

Sad ly, a lso the game has c hanged ! Tod ay, the m ilitants a re…

• Well Educ a ted• Armed with sop histic ate d weapo ns!

• Self Fund ing from huge p roc ee ds of o il bunkering• Have sop histic ate d intellige nc e o n oil c om pa nies and even sec urity ag enc ies• Rec ruiting ac ross the reg ion and running multip le c amp s

• Enjoy substantial co mm unity symp a thy, desp ite c ond em nations.• Containing them has be c ome mo re c hallenging.

Other p rob lems inc lude hea lth issues suc h as HIV/ AIDS, ma laria a nd poo r sanitary hab itsthat c ome from overc rowd ing a nd urban d rift.

Environm ental Cha llengesErosion: As stated earlier, the Niger Delta suffers from coastal erosion and rising sea level,

due mainly to a reduction in sediment loads caused by upstream dams. Rising sea leveldue to globa l warming also c auses flood ing in the c oa stal a rea s of the reg ion.

Oil and Gas Pollution: There is a lso pervasive pollution, due to the large-sc a le oil and gasac tivities in the reg ion. This manifests in the :

•

Air, through gas flaring ;• Wate r and farmland s, including g round water, through sp illage a nd d isposa l of toxic

ma teria ls used during o il & gas extrac tion.

Acid rain, resulting from gas flaring is also a major concern. Yet, in the face of all these,there are still very poor impact assessment procedures, widespread deforestation and

b iod iversity loss, as well as poo r c ontrol of refuse, sew age a nd munic ipa l solid wastes.

10.4 POLICY OPTIONS On 27th March 2007, the Niger Delta Regional Development Master Plan (NDRDMP) wasformally launched. It is a development initiative primarily designed to offer an integrated

roa dma p for sustainab le d eve lop me nt in the Nige r Delta Reg ion a nd provide s a p a thwa yfor building a rapidly growing economy which will eliminate prevailing extreme poverty

and foster prosperity in a n env ironm enta lly and soc ially susta inab le m anner throug hout theregion.




In summary,

• The Master Plan o ffers policies and guide lines for the p lans and ac tions of theFed era l Go vernment, Sta tes, LGAs, c om munities, the p rivate sec to r, NGOs andCBOs, etc .

• It provides a time-sequenced framework for development interventions over the

next 15 years and allows participation of multifarious stakeholders working in astruc tured ma nner to a c hieve synergy.

• Aims to address poverty and community needs, by developing human capacityalong with developing physical and social infrastructures, consistent with

environm enta l ca re a nd the tene ts of susta inab ility a nd susta inab le livelihoo ds.

• It has a 15-yea r horizon, to b e reviewe d and rolled forwa rd every 5 yea rs

• The fu ll imp lementa tion o f the M aster Plan w ould c ost over $50 Billion for the 15 yea rPlan p eriod .




The future of the Niger Delta region dep end s on the fa ithful imp lem enta tion of the Nige r

Delta Reg iona l Development Master Plan (NDRDMP). The rea sons a re simp le:

• It was developed with the active participation of all stakeholders of the region.

Sec tor consultants interviewe d the p eo p le in eve ry po litic a l wa rd in the Niger Deltaand their hopes, aspirations, expectations and goals have been distilled and

mo bilized into the doc ument.




•

It fo llow ed sc ientific p roc esses, em p loying internationa lly rec og nized p roc esses andtec hnologies to c ap ture b aseline d ata ac ross eve ry area in the region.

• An Implementation Guideline has also been developed with the active

partic ipa tion o f sta keho lders, at very high leve ls, unde r the Pa rtners for Susta inab leDevelop ment Forum. This Forum rec og nizes tha t no single sta keho lder c anundertake the development of the region and improve quality of life and has

established the platform for collaboration.




• Areas of immediate work have also been outlined in the Guideline and the NigerDelta Development Commission has already begun working with the Master Plan.Ce rta in Quic k Imp ac t Projec ts we re d esigned amo ngst others to a ddress som e ve ry

urge nt develop me nt ga ps in the follow ing a rea s:

• Education• HIV/ AIDS and ma laria• Sma ll business deve lopm ent initiative d eve lop me nt

• Soc ial and physica l infrastruc ture• Governance and sustainab le de velop ment

• Sports deve lopm ent• Agric ulture a nd a quac ulture• Reg iona l pow er supp ly (energy).

The Master Plan ap pea rs to p rovide the m ost honest, p rac tica l and c om prehe nsiveplatform for sustainable development. Consequently, it is imperative and realistic to

conclude that if the vital and needed political will is applied to the Master Plan, withadequate funding, what the region has at the moment can be called a Marshall Plan

(after the very successful initiative that transformed a devastated Europe after World WarII).

In g raphic terms: the Master Plan + Politica l Will + Ad eq uate Fund ing = Niger Delta Ma rshallPlan.

10.5 EXPECTED OUTCOMES

• Diversific ation o f the reg ion’ s ec onom y, by robustly eng ag ing and ac tivating sec torsc ritic a l for susta inab le deve lop me nt. These sec tors include : agric ulture, informationc om munic a tions tec hnolog y, tourism and industry/ industrialisa tion.

• Imp roveme nt in the living stand ards of the peop le.

• Imp rove d go vernanc e a t the c ritic a l g rassroo ts level, and a t a ll tiers.

• Improved infrastructure for economic growth and better business environmentwhic h will usher in ac c elerated o verall g row th.

•

Better collaboration among stakeholders.

• Op timum utilisa tion o f ava ilab le resources for grea ter imp ac t.

• Better environment and red uce d/ c ontained e nvironmenta l deg rad ation

Summarized below , a re som e o f the Niger Delta related issues as well as suggested

solutions. Most of these op tions have b ee n inc orpo ra ted into the Niger Delta Ma rsha l p lan.




Issue Sugge sted / Propo sed Solutions / Op tions

Resource Control

(increasing thede riva tion to

Niger DeltaStates)

A Fed eral Governme nt a nd Nationa l Issue.

Development ofthe Nige r Delta

NDRDMP, Presidential Initia tive fo r the Coasta l Sta tes, Deve lopmenta linitia tives by the Sta te a nd Loc a l Governme nts, Oil Comp anies

Comm unity Developm ent Projec ts and Developm enta l ide as from(something is missing)

Law & Orde r There is absenc e o f Law & Order and henc e p reva iling insec urity ac rossthe Niger Delta. The heighte ned insec urity ac ross the Niger Delta in recent

time, has led to a significa nt inc rea se in the number of Milita ry personne l(Army, Nava l & Military Polic e) d ep loyed to the Oil & Gas loca tions and

assets by the Fed era l Go vernment o f Nigeria . This approac h is notsusta inab le and simp ly has no t resolved the issue.

Prop osa l is:

• Set-up a spe c ially trained a nd d ed ic ate d Coast Guard unit simila r

to the c oa st gua rds tha t a re used in the USA. They will have both ac oa sta l pa trol responsibility as well as Pet roleum Industry prote c tionforce (with the ability to prevent oil theft and disruption of

op erations). These un its will be b ased strate g ica lly ac ross the c oa stand inner creeks, specially trained with the appropriate resources

(Logistics & Communication equipment and Logistic Bases inspecific locations across the Delta) to stem and eliminate thec riminality in the va rious loc a tions.

• Develop a professional and dedicated Niger Delta Community Polic e Division (foc used on the swa mp and land loc a tions, sort of a

new Ma rine Police d ivision). This police d ivision loc a ted in therespective communities across the Niger Delta will be highlytrained, as well as provided appropriate resources to efficiently

provide the law enforcement. A UN assisted model could bead op ted , as do ne in other area s whe re b rea kdow n in the sec urity

has be en e xpe rienc ed .• Sufficiently equip Law Courts ac ross the Nige r Delta to support the

other arms of law enforcem ent

Good

Governance

Building c ap ac ity at the Sta te a nd Loc a l Governme nt leve ls to translate

the significa nt resources ava ilab le for develop me nt into rea l tangib lebenefits.

• Tra in and deve lop the p ersonne l a t the Sta te a nd LGA leve ls• Introd uc e partic ipa tion of NGOs & Developm ent Agenc ies

Emp loym ent Un-Emp loym ent & Capa bility Building:The large un-emp loym ent o f the Niger Delta youths (and inhab itants) is

the sing le most imp ortant fac tor beh ind the c rimina lity, violenc e andinstab ility. Som e o f the ideas tha t have b een inc luded in the NDRDMP




include:

• Developing Capability Building Centers for youths and women to

learn new skills and c apab ilities.• Developing major Agro-related Industries/Co-operatives

(Agriculture & Fisheries) that will engage the men and women in

businesses whe re they c ould earn a de c ent living wa ge .• Developing Business Competencies that would strengthen the

individual community businessmen who may be working with Oil

Co mp anies. This involves setting up c o-op erative banking supportsystems to enab le these business persons survive and thrive .

Stemming the

Niger DeltaMilitancy

Niger Delta Militanc y must b e a ddressed urge ntly.

There is urge nt need to sep ara te genuine militanc y that is advoc a ting forthe c ause o f the Niger Delta from the c riminal elements who havehijac ked or using the c ause to bene fit them selves.

Suggested solution rests in the following steps;• Offer a de fined pe riod of c lem enc y, whe re m ilitants a re

enc ourage d to g ive up their arms for FGN pardon and o ffer ofassistanc e to reha b ilita te them .• Rehab ilitation p roposed in the NDRDMP envisages:

• Developm ent o f re-orienta tion c enters whe re the youthsc an lea rn new skills and sta rt the period of orienta tion ba c k

into soc iety• Crea tion of spec ific Job O pportunities tha t the youths wo uld

bene fit from suc h as: (i)Mic ro-Cred it fac ility to go in to trade

or sma ll sc a le business, (ii) Set ting up o f a Ma rine Logisticsc om pany in p artnership with an internationa lly rep utab le

c omp any that w ould emp loy Niger Delta youths• A mo re c onc erted effort to d ea l with criminality and c riminal

elements in the reg ion.

Low Literac y and

Poor Educationalfacilities

Currently the ed uc a tiona l system in the Niger Delta is poo r.

NNPC in collab oration w ith the Oil Comp anies should b e e nc ourage d to

fund the setting up of m od el Primary and Sec ond ary sc hoo ls. They shoulda lso p rovide mo re infrastruc tural and tec hnica l support to te rtiaryinstitutions existing the reg ion; and in the long run should a lso c onsider

esta b lishing world c lass institutions if the existing ones are not suitab le tobuild upon.

Creating an

Enabling

Environment

Nigeria c anno t boa st o f a w orld c lass oil city with first c lass infrastructure.

The NDRDMP env isages the transforma tion of Port-Ha rc ourt, Wa rri,

Yena go a a nd Eket into w orld c lass oil c ities c om parab le to ma jor oilc ente rs of the wo rld suc h a s: Houston , Abe rdeen, Stavangar, Musc a t, Mirietc

These City Ma ster Plans should be; a c o llabora tive effo rt invo lving :Fed eral & Sta te Governments, Oil Co mp anies, the Host Com munities,

de velop ment Agenc ies and ac ad emia/ universit ies



Documents

7Point Policy Nigeria