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Prepared by:

The National Economic Intelligence Committee
The Presidency
Federal Secretariat Complex
Shehu Shagari Way
P.M.B. 298 Garki
Abuja, Nigeria

September 1996



The National Economic Intelligence Commitee [NEIC] was established by
Federal Military Government by Decree No. 17 of 15th February 1994.

2.  The fourteen member Committee was set up to analyse the annual
of the Federal Government and extract from it all economic measures
requiring enforcemtn; work out details on the method of enforcing
implementation of the annual budget; analyse the monetary guidelines
issued by the Central Bank of Nigeria and monitor the implementation of
all the measures enumerated therein; monitor and identify factors
inhibiting the realisation of set revenue targets in the private and in
the public sectors of the economy; enforce the implementatoin of
tax legislation; assess the report on any project being carried out by
Federal Government and confirm that funds released for the Federal
Government projects are judiciously utilised; monitor and report to the
Federal Government the inflation rate, the consumer price index and such
other growth indices on output, liquidity and cost of funds,
transportation costs, fuel prices and other related tariffs; recommend
increase or decrease of price on manufactured goods; monitor the supply
and demand of foreign exchange, the use of foreign exchange and the
operations of the foreign exchange market; consider any issue
and relevant to the subject of revenue collection;  consider such other
matters as may be referred to it by the Head of State and
Commander-in-Chief of the Armed Forces and bring any economic defaulter
identified by the Committee in the process of performing its functions
before the Special Tribunal [Miscellaneous Offences] Decree, 1984.

3.  The Committee found, almost immediately after its establishment,
some of the key formulators and operators of the 1994 Budget were not
fully committed either to the provisions of the Recurrent Budget or to
Three-Year [1994-96] Rolling [Capital] Plan but were more enamored by
Three-Year IMF/World Bank Medium-Term Economic Adjustment Programme
which had dominated the budgetary and economic policy paradigm in
since 1986 and from which the 1994 Budget sought to depart
The Committee found to its surprise that it was involved in all uphill
battle throughout 1994 in its attempts to perform its functions.  The
opposition that the Committee faced came not only from within the Public
Sector but also from the segments of the private sector of the Nigerian
economy that had been benefitting from the provisions of the annual
budgets since 1986 when the Structural Adjustment Programme [SAP] was
introduced in Nigeria under the directives and conditionalities of the
IMF/World Bank.

4.  Even when the 1995 Budget sought to relax some of the regulatory
provisions in the 1994 Budget, in order to meet half-way the
of the IMF/World Bank economic adjustment programme, through the
of "guided deregulation" of the economy, NEIC found to its chagrin that
neither the IMF/World Bank nor its local apostles were satisfied.  It
in 1995, for instance, that the formulation of the 1995/98 Medium Term
Economic Adjustment Programme for Nigeria was begun between teh
Bank and the Federal MInistry of Finance, the Central Bank of Nigeria
the other Economic Ministries of the Federal Government.  NEIC found to
its surprise that the annual budgets of the Federal Government had to be
submitted after approval by the Government to the IMF/World Bank.  The
recurrent interferences of these outside but powerful agencies
considerably vitiated the effective execution of the annual budgets of
Federal Government and impeded the monitoring activities of the NEIC
because such interferences threw the financial parameters in the budgets
into constant state of flux.

5.  The members of the Committee were thus faced with either withdrawing
from accepting to monitor budget provisions which were unpredictable or
embarking upon the production of alternative financial scenario from
which the Government had pursued since 1986.  Happily, the Head of State
and Commander-in-Chief was always sympathetic with the observations,
reports and advice of the Committee, even when they were not fully
accepted for obvious reasons.  The Committee was more than encouraged
the Head of State did not object to the NEIC suggestion that it should
submit to Government a Medium Term Economic Recovery Programme as an
alternative to the Medium Term Economic Adjustment Programme [MTP] being
prepared by the IMF/World Bank in collaboration with the Federal
of Finance, the Central Bank and their public and private sector
counterparts that had been the main advocates and operators of the
Structural Adjustment Programme since 1986.

6.  Therefore, in Mid-1995, the National Economic Intelligence Committee
began the process of formulating a 1996-98 National Economic Recovery
Programme, an Alternative to the IMF/World Bank Medium Economic
Programme, 1996-98. The decision of the Committee to involve various
sectors of the economy in the preparation of the Programme prolonged its
completion which was slated for submission to the Head of State no later
than June 1996.  However, the involvement of experts from the
Universities, the private sector, the government ministries and
parastatals and of concerned Nigerians has enriched not only the
but also the knowledge of the members of the Committee on how the
of Nigerians viewed and have been affected by the economic and financial
policies of government in the past ten years and the direction that they
would wish that future policies of government proceed.

7.  The Committee wishes to place on record the sacrifices of time,
and resources which those who participated in the formulation of this
Programme willingly made.  The members of the Committee also wish to
acknowledge the confidence which the Head of State and
General Sani Abacha, had regularly had and continues to have in the
members of the Committee and for the resources which he had very
provided to enable the Committee, with its Liason Officers in all the 30
States of the Federation, face its difficult but rewarding assignments. 

It is the desire of the Committee that the Economic Recovery Programme
herein adumbrated will be discussed in depth alongside the IMF/World
Bank-sponsored Medium Term Economic Adjustment Programme in the best
interest of our country and its people.

National Economic Intelligence Committee The Presidency Federal
Secretariat Complex 7th Floor, PMB 298 Garki-Abuja


                              EXECUTIVE SUMMARY

                 ECONOMIC RECOVERY PROGRAMME, 1996-1998:

Need for An Alternative

1.  The Medium Term Programme of the World Bank [MTP] outlines
for promoting investment and production in the agricultural,
solid minerals, water resources and industrial sectors, as well as 'long
term' strategies in the areas of health, education, telecommunications,
transport, aviation, women development and the environment.  However,
there is no indication as to how these sector are interrelated, how one
project can support another and how all can be integrated into a
purposeful programme such that the Nigerian economy is elevated from its
present state to a preferred future state in a given time frame, using
specific targets, resources and programmes.

2.  This National Economic Intelligence Committee feels obliged to
articulate an alternative Economic Recovery Plan [ERP] to the World
Bank/IMF MTP.  The justification for this alternative plan rests on the
following grounds:

   [i] The World Bank/IMF MTP is intended to facilitate Nigeria's access
to the Enhanced Structural Adjustment Facility loan; at a time when
Nigeria's external loan amounts to $32.5 billion with a payment arrears
over $11.00 billion, less, not more, debt obligation should be

 [ii] Experience from SAP has shown that debt rescheduling imposes a
burden of its own.  Besides the bunching up of payments at a later date,
the previous reschedulement exercises attracted extra annual sum of $2.5
billion in interest payment.

[iii] The MTP gives forlorn hope to the gullible financial and monetary
managers of the Nigerian economy that compliance with the dictates of
World Bank/IMF would earn for the country substantial relief from the
existing burden of foreign debt.  This illusory debt-game with its
ever-changing conditionalities is in contradistinction to the stance of
Nigeria's Euro-American creditor countries in the Paris and London
which daily campaign for economic, political, social and military
sanctions against Nigeria.

 [iv] The MTP, in line with its tool of SAP, does not adequately address
the central issue of production in all the sectors of the Nigerian
economy. Its central focus is on monetary manipulations.  The MTP,
therefore, fails to address issues such as low naira exchange rate, low
productivity, supply shortages, very low production of capital goods,
human resource development and mass poverty.

  [v] The MTP does not address the need for an alternative development
paradigm that is human-centered for the satisfaction of basic needs and
the alleviation and elimination of mass poverty.

  [vi] The MTP does not address the urgent necessity to eliminate
structural distortions such as massive and increasing unemployment,
excessive inflation, continuous currency devaluation, rising bank
rates that discourage investment; low capacity utilisation in all
low and declining productivity; rising debt burden and decreasing
to earn foreign exchange;

  [vii] The MTP does not fully reflect the enormous human and material
resources and potentialities of this country, hence, its doctrinaire
recommendation to roll back government, privatise, or close down public
sector enterprises and utilities, retrench workers, reduce the number of
tertiary educational institutions and devalue the naira continuously.

 [viii] The MTP pays too much attention to the issue of economic
globalisation and the role of the market but fails to recognise the
different stages of development of countries and the differential
capacities of economies to compete effectively internationally.

  [ix] The further withdrawal of government subsidy especially on
petroleum and petroleum products will raise the pump price of fuel by
to N22.00 per litre or more and will initiate another round of
inflationary spiral, and high cost of production culminating in a
stangulation of growth and development and in further decline in the
general standard of living.

  [x] The MTP is oblivious of the threatening social and political
dislocation as reflected in the growing insecurity caused by rising
crimes, increased brain and manpower drain, rising mortality and
rates, increasing family dislocation, virtual elimination of the middle
class, alarming immiseration, growing social polarisation with
inequalities between the rich and the poor and between the rural and the
urban areas.

  [xi] Finally, the capacity of the private sector is over-exaggerated
its heavy dependence on the public sector is underplayed.  The Private
Sector's presumed superior efficiency over the public sector has been
gullibly accepted without reflection on the dismal performance of the
private sector as reflected in the large number of failed banks, company
closures, unreported bankruptcies and the reported annual diminishing
capacity performance by the managers of the private sector.  MTP
ignorance of the near wholesale reliance of the "private sector" on
inflated public sector contracts and other forms of unholy alliance
between the pubic and private sector operators in defrauding the

                              Objectives of ERP

3.  The "Three-Year Economic Recovery Programme, 1996-1998, An
to MTP" has the following as its objectives:

    [i] alleviatioin of poverty through the urgent resuscitation and
expansion of production and the generation of productive employment in
sectors of the economy.

  [ii] achievement of self-sufficiency in food, the satisfaction of
needs, and the promotion of a clear long-term food security for Nigeria;

  [iii] prioritisation and completion of industrial and infrastructural
projects which are essential for rapid economic reconstruction and
but which the World Bank/IMF want Nigerian to abandon.

   [iv] entrenchment of a people-oriented development in terms of
participation, good governance, employment generation and protection of
the environment;

  [v]  promotion of prudent and scientific management of the economy;

  [vi]  promotion and development of effective and relevant technology;

  [vii] provision of a stable and favourable environment for the growth
a vibrant, competitive and productive private sector and the need to
organise and develop the market rather than take its existence for

  [viii]  diversification fo the export base and sources of growth;

   [ix] adoption of a long-term programme, through a perspective plan,
ensure a new economic vision aimed at the total economic reconstruction
Nigeria within a specific time frame.

                       Macro-Economic Framework

4.  The Macro-Economic framework for the ERP is predicated on the
knowledge that:

  [a]  loopholes and leakages are a major cause of the inadequacy of
resources for investment in all sectors of the economy.  Examples of
loopholes include inflation of contract prices, payments for uncompleted
contracts, foreign exchange leakages from unjustifiable travels,
over-invoicing of imports, smuggling, non-repatriation of export
uncollected tax revenue and unproductive spending.  The total monetary
value of these leakages runs into billions of naira and dollars

  [b]  the expansion of production and improvement in productivity are
factors in the development process.

  [c]  sound and well-maintained physical and social infrastructures are
crucial to the urgent expansion of production and to increases in
productivity.  The ERP therefore addresses the problems of inadequate
supply of electricity, water, telecommunications services and the
and maintenance of roads and railways.

  [d]  increased protection of local industries will neither be
nor raise international competitiveness if adequate and urgent attention
is not paid to improved infrastructure and the control of smuggling.

   [e]  in order to substantially increase the foreign exchange earning
capacity of the economy, it is necessary to expand our oil refining
capacity, increase non-oil exports, ensure the repatriation of export
revenue, develop our solid minerals, promote export of manufactured
and plug the foreign exchange leakages in the economy.

   [f]  the ineffective and inefficient utilisation of human resources
the misallocation of human resources, with many round pegs in square
holes, especially in the public service, is a serious constraint on
development and remains a perennial problem in the economy.

   [g]  the large number of uncompleted and moribund projects constitute
a drain on the economy and a cog in the wheel of development.  These
uncompleted projects need to be prioritized with the vital and viable
completed during the ERP period.

   [h]  traditionally, development has been based on the dignity of
labour, but  a consumption ethics with easy money and permissiveness has
replaced work ethics in this country.

   [i]  while increased privatization could be a viable policy option in
some areas, this should not diminish the role and responsibilities of
government in the economy.  The ERP therefore adopts a pragmatic rather
than a doctrinair approach to maintaining appropriate balance between
public and the private sectors of the economy.

   [j]  The security situation in the country needs greater attention as
provides the first measure of the country's image and its state of
readinees to attract and promote private and foreign investment in the

------ Part One Ends here --------------------------------------

[Part Two Begins Here]

Fiscal policy

5.  Fiscal Policy under ERP aims at achieving an optimal balance between
government revenue and government expenditure and at complementing
monetary policy in the attainment of macro-economic stability.  Fiscal
incentives in support of the ERP are structured to promote growth in the
various sectors of the economy.

Revenue Mobilization

6.  In view of the growing demand for increased Government expenditure
the increasing difficulty of expanding the tax base or of increasing the
current rates, there is need to improve the efficiency in revenue
collection.  Therefore, the recently introduced incentives to revenue
collectors of the Nigeria Customs Service and of the Inland Revenue
Service need to be given full effect.  Efficiency in revenue collection
will require, among other things, the curbing of abuses by individuals,
companies and banks.  Revenue mobilisation must include measures aimed
tax reforms to revamp tax administration, especially tax collection,
[whose contrating out to private individuals should stop.]  It should
aim at the identification of new and feasible taxes, e.g. property tax,
inheritance or wealth tax and the further streamlining of import

Plugging Expenditure Loopholes

7.  Reducing avoidable government expenditures is a means of achieving
effective resource mobilisation for the Economic Recovery Programme:  In
this respect, government should consider the following:

  [a]  the suspension of financial aid to religious pilgrimages for the
       next three years.  This will make available, at least, $330
       million over the three-year period for the economic recovery
  [b]  reducing the estacode budget to no more than $12 m a year will
       free, at least, $72 million over the three-year period towards
       the economic recovery programme.  This reduction is possible
       throuhg more effective use of our foreign missions abroad;
  [c]  greater transparency in the use of about 100,000 barrels of
       crude oil per day, being the unrefined balance from the 300,000
       barrels ber day of crude oil allocated for domestic consumption
       but which are not normally refined for such use.  This unrefined
       balance, if exported at an average of $18 per barrel, will yield
       about $1.92 billion over the three-year period.
  [d]  withdrawal from the joint venture agreement with foreign oil
       companies will obviate the need for joint venture cash calls of
       $1.750 billion a year or a total of U.S. $3.500 billion over the
       recovery period.
  [e]  releases of recurrent expenditure based on the nominal employment
       roll rather than on the established positions in the public
       service and the introduction of "intacode" [daily travel
       similar to the estacode] will result in an estimated savings of
       N2.31 billion over the recovery period.
  [f]  the suspension of purchases of furniture, vehicles and office
       equipment during the recovery period is also expected to
       substantially reduce government expenditure.
  [g]  the write-off over a ten-year period of the debt owed to the CBN
       will yield a savings of N2.4 billion for the 3-year recovery

Economy in Public Expenditure

8.  Sight must also not be lost of the uncontrolled expenditure by
Government parastatals such as the CBN, the NNPC, the NPA, NEPA, the
NIGERDOCK, Shipping Lines, Airways and FAAN.  Some of these parastatals
generate revenue in foreign currencies and they assume that they have
autonomy to expend same as they deem fit, irrespective of the overall
intereste of the society and the foreign exchange needs of the

9.  Releases of funds to the various parastatals under each ministry
should be made to the parastatals directly with only notification to the
supervising Ministries.  The current practice of releasing funds to the
parastatls through the supervising Ministries has tended to encourage
profligate expenditure in both the supervising Ministries and in the

Debt Management

10.  The debt stock in December 1995 was U.S. 32.6 billion, excluding
unpair arrears of U.S. $11.3 billion.  In spite of these high debt
rations and in spite of the curtailment of new borrowing, the debt stock
contines to increase rather than decrease.  This continued increase in
debt stock is a reflection of the inherent weaknesses in the current
management strategy which has concentrated on debt rescheduling and debt

11.  The strategy for external debt management must rule out debt
forgiveness, abandon debt rescheduling, rely heavily on debt buy-back,
debt repayment and the possible utilisation of whatever proportion of
alleged estimated U.S. $ 98.8 billion stashed away by Nigerians in
banks, part of which can be borrowed or retrieved for the liquidation of
the excruciating external debt.

12.  Domestic debt is estimated at about N373 billion, 72.59 per cent of
which is owed to the CBN.  In the first ten months of 1995, the total
of servicing the domestic debt, including debt owed to contractors, was
N23.351 billion, as against the budgeted amount of N13.00 billion. 
is a critical need to review the practice of employing CBN Ways and
Advances as a mode of deficit financing by the Federal Government.
Current estimate is that N17.19 billion, or about 72.59 per cent of the
payments on domestic debt, was earned as income by the Central Banki in
the first nine months of 1995.  The earning tends to dissuade the
Bank from restraining Government from running fiscal deficits.  Since
bulk of Government's domestic debt is money owed to itself through the
CBM, this proportion of the domestic debt should be written off in
over the next ten years.

                             Monetary Policy

13.  The Economic Reconstruction Programme seeks to sustain the current
reforms in the Financial sector and to make it a viable partner in the
determined effort to increase production in all sectors of the economy.
Towards this end, appropriate financial measures and policies would be
devised, including:

   [i]  the complete restructuring and reorientation of the policies and
        programmes of the financial system [CBN, money and capital
        markets] in such a way as to integrate and domesticate them and
        make them promote the Development objectives of Nigeria;

  [ii] complete removal of retail functions from the Central Bank so
       it can concentrate on its primary functions.

 [iii] ensuring more favourable rates of interest to promote production
       the vital sectors of the economy;

  [iv] increasing the competence of Nigerians to participate in and
       negotiate more effectively with the International Financial
       Institutions to the benefit of the Nigerian economy in the
       resolution of its debt problems;
  [v]  taking appropriate measures for the training fo Nigerians in
       financial and monetary management at home and abroad;

 [vi]  monitoring more effectively the activities of the national and
       international financial institutions to the advantage of the
       Nigerian economy.

Interest Rate

14.  Of major concern is the mechanism for determining the rate of
interest.  The arg,ment that the interest rate should be determined
entirely by market forces ignores the fact that there is a complete
breakdown of the market mechanism as huge sums of money are hoarded by
financial system for purposes of speculation in the foreign exchange
market.  This situation is aggravated by the increasing gravity of
flight.  In the absence of an effective market mechanism, positive real
interest rate should be achieved by ensuring a relatively low rate of
inflation.  Since the ultimate objective of Government is growth and
development, the interest rate must be at such a level at which saving
investment are simultaneously encouraged.  In this regard,
interest rates for the prime-movers of the economy need be introduced as
is the case in most developed and developing countries.

Exchange rate

15.  The naira exchange rate had depreciated rapidly since the
introduction of the Structural Adjustment Programme [SAP] in 1986.  The
naira/US dollar exchange rate fell from about N1 = $1 in August 1986 to
N3.86 = $1 in September 1986 and to about N85 = $1 in March 1995. 
policy initiatives in the foreign exchange marked had failed to stem the
trend in the annual depreciation in the exchange rate of the naira. 
though the deregulation of the interest rate and of the exchange rate
consistently led to higher cost of production, the vast majority of
bankers and of the manufacturers, against all expectations, continued to
clamour for further deregulation of the rates.  The pressures from the
World Bank/IMF are even more telling and behind the scene are
political and economic stability.

16.  Since March 1995, an official naira exchange rate of N22 - $1 had
coexisted with the autonomous exchange rate of N85-$1.  The dual
rate regime should be maintained while taking measures to strengthen the
exchange rate of the naira ultimately to the level of the present
rate and much further lower than N22 = $1.  The current clamour for the
merger of the two at a high autonomous rate should be resisted.  The
consequences of a further depreciation of the naira are not in
with the overall objectives of an economic recovery programme.

17.  Though the use of over 72 per cent of foreign exchange by the
sector may reduce the proportion available to the productive sectors of
the economy, it should also be conceded that foreign exchange
by the private sector can hardly be described as productive as
and capital flight by this sector are known to have been enormous.
Efforts must, therefore, be aimed at reducing both the proportion of
foreign exchange earnings utilized by the public sector and the
proportion misused by the private sector.

Monetary Reforms

18.  The following are central to the effectivenes of exchange rate

   [a]  The CBN Board of Management should be drastically overhauled to
        ensure that the Governor of the CBN and his staff do not
        constitute a majority on the Board.  The CBM should adher
        to its mandate of being a bankers' bank, strictly performing its
        main duty of ensuring stability in the value of the naira and
        providing a sound and effective regulatory framework for the
        financial sector.

   [b]  Change of currency - new naira notes should replace the existing
        ones.  This is essential for the effective mopping up of the
        so-called excess liquidity in the economy, especially in view of
        the assertion by the CBN that at least 45 per cent of the money
        circulation is outside the banking system.

                                Investment Policy

19.  The main thrust of the investment policy during the recovery period
is the stimulation of production.  This is with a view to promoting
economic growth with the appropriate composition of investment mix that
will facilitate international competitiveness of the Nigerian economy.

20.  The critical role of public sector investment under the present
circumstance of economic decay and degeneration must be emphasized.
Unless and until Government demonstrates confidence in the economy
a well organised massive investment programme, private sector investment
cannot be rejuvenated.  This is because private sector investment
rather than leads development.  It is not by accident that private
investment, weak as it is today, is concentrated in Lagos, Enugu, Kano,
Kaduna and to some extent Ibadan where government investments are also

Foreign Investment

21.  Though foreign investment plays a critical role, it must be
as supplementary to domestic investment.  Nigerians must demonstrate the
willingness to invest in Nigeria before foreigners can follow.  As a
matter of policy, Government should discourage wholesale privatisation,
premature commercialisation and contract leasing of vital public assets
and factories, and the acquisition of foreign loans for non-productive
uses.  Our policies should ensure that economic sovereignty is not
sacrificed in the quest for foreign capital.

                         Employment and Incomes Policies


22.  One of the major manifestations of the gravity of the country's
economic depression is the increasing lack of capacity to create new
or sustain the existing ones.  The continued inability of the economy to
provide gainful employment, the existence of a large number of
skilled labour, and the attendant social and economic consequences has
made it imperative that job creatinon and sustenance be prime objectives
of the economic recovery programme.

23.  Over the economic recovery period, employment generation will
heavily from:

      - New investments in agriculture, industry, trade and public
      - expansion of activities in the existing production units;
      - trade, commerce and services, including utilities and

24.  Since new investments may not readily take place in the short run,
policy should be in the direction of encouraging re-investment and at
encouraging investment by Nigerian and non-Nigerians in the existing

Incomes Policy

25.  Incomes policy must go pari passu with employment policy.  In view
the fact that the economy is currently in a state  of stagflation, there
is persistent pressure to evolve measures aimed at harmonising wages and
prices with national employment objectives.  The existing economic
induced by the Structural Adjustment Programme and the proposed
Bank MTP have given rise to:

   [a]  continued decline in real wages, arising primariy from the
        depreciating naira;
   [b]  inability of legitimate income to meet basic needs;
   [c]  the inability of consumers to cope with the constantly rising
        prices of goods and services;
   [d]  the accumulation of inventory due to the fall in the purchasing
        power of consumers, and
   [e]  increase in unemployment, vagrancy and crime.

26.  The fall in real wage has resulted in severe decline in the quality
of life of most Nigerians.  This has lead to the adoption of various
devices [legitimate and illegitimate] to increase money income.
Consequently, income differentials within and between sectors are not
economically and socially defensible.

27.  The minimum wage should be in line with proposals currently made to
government by the Salaries and Wages Commission.  Starting from the end
the recovery period, salaries and wages should be indexed to the
rate to promote industrial peace and, at least, sustain a fair standard

28.  On the basis of the above situation, the 3-years Economic Recovery
Programme shall evolve a rational income relativities within and between
sectors of the economy, especially between the Civil Service and the
revenue earning parastatals on the one hand, and between the public
service and the private sector, on the other.


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