YNaija Analysis: Why the President’s proposed Economic Stabilization Bill makes sense

The President has put together a bill called the Emergency Economic Stabilisation Bill 2016, a bill that seeks powers from the National Assembly to abridge the procurement process, that is, the way by which government spending is done. This bill will be presented to the NASS when they return from recess on September 12 and the highlights of the bill are as follows:

  • Abridge the procurement process to support stimulus spending on critical sectors of the economy;
  • Make orders to favour local contractors/suppliers in contract awards;
  • Abridge the process of sale or lease of government assets to generate revenue;
  • Allow virement of budgetary allocation to projects that are urgent, without going back to the National Assembly.
  • Amend certain laws, such as the Universal Basic Education Commission (UBEC) Act, so that states that cannot access their cash trapped in the accounts of the commission because they cannot meet the counterpart funding, can do so; and
  • To embark on radical reforms in visa issuance at Nigeria’s consular offices and on arrival in the country and to compel some agencies of government like the Corporate Affairs Commission (CAC), the National Agency for Foods Administration and Control (NAFDAC) and others to improve on their turn around operation time for the benefit of business.

The proposals are useful for the following reasons:

  1. Currently, contracts cannot be awarded until 6 months after the decision has been made, and before that, a contract has to be advertised for 6 weeks in national newspapers. This is clearly problematic. Nigeria’s infrastructural deficit is large, and to wait 6 months to award a contract is to worsen that deficit. On top of this, contractors can only be mobilised with 15% of the contract sum, which is often inadequate to begin the work. The President wants the Public Procurement Act amended to increase that level to 50%.
  2. The key condition for states to access funds for education projects from the Universal Basic Education Commission, is that the states contribute 50%, while the government contributes 50%. Many states are currently insolvent, and an amendment is being sought to reduce the contribution of the states to 10%. There is the danger of wasteful spending by the states as always, but increased monitoring should reduce that. There is also the expectation that those projects will also create jobs as well.
  3. The first two major proposals concern expenditure, but the bill also has provision for revenue generation as well, through the sale or lease of government assets. The president has the power to order the sale or lease of any government asset to raise cash, but the proposed bill is meant to make that process simpler and quicker. One report says that 9 government assets can be sold or leased to generate $50 billion. It sounds pretty optimistic, but as always it depends on what the assets are, and who is doing the paying.
  4. Another good proposal is to fast track visa issuance at consular offices, as well as enable visa on arrival. The Corporate Affairs Commission and NAFDAC will also be compelled to do things quicker. These are major bottlenecks that have been lamented previously, especially with regard to the Corporate Affairs Commission, who have been identified as a major obstacle to doing business in Nigeria.
  5. Favouring local players for contract awards can be a good step, provided the contractors have the required capacity and the process is transparently done. Again, it is a fact that too often this has not been the case.

All told, the Economic Stabilisation Bill has the potential to do some useful things, but what needs to happen now is for the Presidency to fully engage with the electorate and explain the details of the bill, in order to build public support and take on board feedback. Three weeks remain till the National Assembly returns, and that process of engagement should begin as soon as possible so that the bill’s advantages can be communicated widely, and concerns addressed.

The major concerns expressed are of a power grab by an already powerful Presidency. The highlights released so far do not bear this out, but as always the devil will be in the detail. It is important for the Presidency to get ahead of this narrative or risk getting bogged down.

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