Pro-poor growth and employment promotion in Nigeria
Title: Pro-poor Growth and Employment Promotion in Nigeria (SEDIN)
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Lead executing agency: National Planning Commission
Overall term: 2011 to 2017
Nigeria is the largest economy in West Africa with a population of approximately 170 million, and has been enjoying solid economic growth of around seven per cent a year. However, although forecasts for the economy are good and the country’s banking sector has made a sustainable recovery after the banking crisis of 2011, Nigeria continues to suffer economically and socially from the effects of poverty and under-employment. According to the World Bank, 68 per cent of the population is living in poverty on average, and the unemployment rate among people aged 15 to 29 is over 60 per cent.
Many Nigerians work in the informal sector in micro, small and medium-sized enterprises (MSMEs). These businesses have a low rate of productivity and are only rarely integrated into longer and diversified value chains for the domestic or export markets. Small and medium-sized businesses have only limited access to the required credit facilities due to high interest rates (except for those in the dominant oil and gas industry), which then makes it difficult for them to achieve sustainable growth.
The framework conditions for MSMEs to engage in their business and investment activities is improved. In particular, they enjoy better access to markets and resources, and can contribute more to income and employment.
The programme, which is cofinanced by the European Union (EU), is being run both at a national level and in the federal states of Niger, Plateau and Ogun. It is working in four different areas:
- Developing the financial system. The programme is making it easier for MSMEs to gain access to effective and client-oriented financial services. Here, there is a particular focus on helping poorer parts of the population and attending to the needs of women.
- Improving the business and investment climate. Support is being provided to ensure that the reform measures for MSMEs at federal and national levels are more consistent and duly implemented. This is being achieved by initiating public-private dialogue mechanisms, setting up central contact points for private businesses, and simplifying procedures for registration, land acquisition, building approvals and taxation.
- Promoting value chains. The aim is to develop three agricultural value chains (including potatoes and cassava) and one non-agricultural value chain (housing construction).
- Facilitating trade. Support is being given to help eliminate administrative barriers to domestic and intra-regional trade
Consulting firms AFC and GOPA are supporting the programme in developing financial systems, improving the business and investment climate, and promoting value chains. AFC and GOPA are focusing on training selected actors in these three areas, especially at microfinance banks, business associations and agricultural producers and processing companies.
Developing the financial system. The programme is strengthening microfinance banks and helping the Nigerian central bank both to regulate these banks and to set up a framework for consumer protection in the finance sector. There is close cooperation with national insurance authorities, particularly in the area of customised microinsurance. Training courses are also offering basic financial education, and a film has been produced on this subject.
Improving the business and investment climate. The Ministry of Industry, Trade and Investment has been given support in drafting a policy for MSMEs and industry. One of the programme’s main tasks is to set up central contact points for businesses in authorities in the three federal states that are taking part. These states have also been given assistance in developing and implementing reforms of land acquisition and registration, building approvals and tax administration. Selected private-sector associations and interest groups specifically for MSMEs were strengthened, and municipalities were helped to encourage local business development.
Promoting agricultural value chains. More than 2,000 cassava growers and 1,200 potato growers have been organised into cooperative groups and given training on subjects such as planting techniques, pest control and fertilisation. Supply chains have been created between groups of cassava growers and processors, and between processers and wholesale buyers. Assistance in importing fresh potato seeds provided via the German Food Partnership initiative has led to an increase in yields of up to 300 per cent. The programme has also given training courses on improving quality for more than 2,000 women who produce shea butter, and created around 445 jobs for producers of basic materials and cosmetics.
Trade policy and facilitating trade. The programme helped the Ministry of Trade with its preparation for and follow-up to the WTO’s ministerial conference on Bali in December 2013. Staff at the trade ministry have been trained how to build models to analyse customs duties. As well as strengthening Nigeria’s customs authorities, business associations have been given assistance in disseminating information on regional trade. A prime example of cooperation is the development and piloting of an SMS-based system for reporting illegal checkpoints at border crossings.