At the same time, reflecting our resolve to alleviate the suffering of contractors who had been owed by preceding administrations, we took urgent and concrete steps to settle these debts. Total verified Federal Government debt amounted to N1.48 billion and this was retired through payments of N226 million in 1986, budgetary provisions of N700 million in 1987 and N500 million in1986. We were especially concerned about the plight of small contractors [those owed less than N20,000]. Accordingly, N100 million out of the N700 million was dedicated in the form of a special grant of N5 million each to the States and the Federal Capital Territory for assistance in specific payment to this class of contractors.
We resolved the twin issues of salaries and pensions arrears, which had bedeviled the system for several years, and became current on recurrent account.
In order to better mobilize our rural majority for sustained agricultural transformation, we set up a Directorate of Food, Roads and Rural Infrastructure [DFRRI] to help promote, in conjunction with state governments, a framework for the construction and rehabilitation of rural feeder roads. The first phase of the rural feeder roads scheme, targeting at constructing 30,000 km of rural feeder roads, took off in 1986.
Given the need to expand the resource base, generate more foreign exchange and improve the balance of payments position, we introduced a package of incentives to boost production for exports. These included refund of import duty as raw materials used for production of export items, refund of excise duty paid on export items, exemption of imported raw material from the 30 percent import levy, abolition of export prohibition and retention by exporters of 100 percent [up from the earlier 25 percent] of export proceeds. We continued to improve this incentives package in various ways including the added concept of the Export Free Zone.
To help tackle unemployment, particularly of young persons, we had earlier established the National Directorate of Employment (NDE) under the Ministry of Labor and Employment. The NDE was aimed at generating employment through a combination of strategies; use of direct labor in public construction projects with established labor coefficients, promotion of self-employment and cooperative production ventures, and encouragement of self-employment in agriculture.
As part of the financial system reform, we liberalized entry into the banking system, subject only to qualifying new banks meeting the stipulated conditions, especially the increased capital base. We also introduced new types of agents. Our objective was to promote equality of access by all our communities, rural and urban, to banking service as a vehicle for development. Whereas in 1986 there were 29 commercial banks with 1,367 branches, 12 merchant banks with 27 branches, and no community banks, by 1993 there was 66 commercial banks with 2,358 branches, 53 merchant banks with 124 branches and 879 community as well as some 679 specialized financial institutions, including the People’s Bank and the Urban Development Bank. The increased number and sophistication of agents in the financial system called for at least appropriate regulation and supervision of the system. Intimacy related to these financial system agents were the funding instrumentalities of the National Economic Reconstruction Fund (NERFUND), Export Stimulation Loan and NEXIM schemes which we established to assist the rise of small and medium – scale enterprise and export production.
Concurrently, to protect depositors against bank failures in the enlarged financial system, we established the Nigeria Deposit Insurance Corporation (NDIC). This was a joint venture between the Federal Government and the Central Bank, with all commercial and merchant banks paying to the NDIC annual premium based on their deposit liabilities. Relatedly, in order to enlarge the scope of the official market for foreign exchange transaction, in 1989 we approved the operation of bureauxde change by private entrepreneurs. This action legalized small dealership in foreign exchange, bringing “above board” much of the so-called “black market” [parallel market] and further democratizing access to foreign exchange by small buyers among other benefits.
The severe resources compression and virtual cut-off of imports had resulted in rapid deterioration of the transportation system. This brought untold hardship to our citizens, particularly our urban dwellers. In order to restore and improve capacity in this area, we established a Task Force on Urban Mass Transit to work closely with the State Governments, Local Authorities, municipal authorities, transport agencies, workers’ groups cooperatives, private fleet transport operations, local vehicle assembly plants, and domestic vehicle body fabrications to ensure attainment of the objective. Aside from normal budgetary allocations, we made special foreign exchange allocation [$30 million] to this objective, targeted specifically to assist private transport operators to secure vital spare parts. In time, we made special grants to (a) labour [the NLC] to enable it found the Labour Transport Service, (b) private operation to purchase buses at subsidized rates, and (c) permit university facility staff to refurbish their vehicles. Fiscal measures such as drastic lowering or elimination of customs tariff on imported vehicles [and medicaments] had the same objective in view.