• Says there are home-grown solutions to current challenges
• AfDB plans $62bn for Africa’s energy infrastructure in 5yrs
Kunle Aderinokun and Chika Amanze-Nwachuku in Washington DC, USA
Finance Minister, Kemi Adeosun, has said Nigeria has a home-grown solution to the challenges it is currently experiencing and would not need any foreign assistance to solve its domestic problem, particularly a loan from the International Monetary Fund (IMF).
Adeosun, who spoke at a panel discussion on “Sub-Saharan Africa: Just a Rough Patch?”, noted that the kind of support it sought and received was a budget support in form of loans from the World Bank and African Development Bank and not a bailout from the International Monetary Fund. According to her, the country’s economy is not sick and per adventure, it falls sick, the federal government has a ‘local remedy’ for the sickness.
“Nigeria is not sick and even if we are, we have our own local remedy,” she said with a wave of assurance.
Responding to a specific question posed to her by the moderator of the discussion, Nancy Birdsall, President, Center for Global Development, about a lot of borrowings coming from outside to buoy Nigeria’s economy in this challenging times, Adeosun said: “We are speaking to the World Bank and AfDB for budget support loans. We see the Nigerian opportunity as a policy opportunity and we feel the bank is the place to go to support our policy reforms. There is a lot of stigma and a lot of institutional memories in Nigeria around IMF that is not positive and we believe that this type would not be the right message for Nigeria at the moment.”
The statement of the finance minister aligns with the position of the IMF managing director, Christine Lagarde. Lagarde had during her visit to Nigeria in January said given the determination and resilience of President Muhammadu Buhari’s administration, Nigeria had no reason to seek IMF loan.
Lagarde, who responded to a question on whether the IMF was also out to attach conditions to loans Nigeria might seek from the organisation, stressed that she was not in the country to negotiate a loan with conditionality.
Adeosun at the panel discussion, noted that the Nigerian economy was vulnerable to shocks because of its over-dependence on crude oil, the single source of revenue but quickly added that, “We have resolved to build resilience into the country’s economy to hedge against future oil shocks.”
“This is because dependence on oil brings about vulnerability and laziness. So we are doing a combination of things to diversify our economy, with revenue mobilisation to enable sufficient investment in developing the non-oil sectors.
“We have a great opportunities to reset the Nigerian economy and ensure that as we go forward, growth will be in a sustainable manner so that we won’t be vulnerable to oil price fluctuations, and with a truly diversified economy we would have enabled opportunities for wealth creation that would trickle down to every Nigerian.
“The compelling business case in Nigeria is that the fundamentals remain very strong, a teeming, young growing population, rich in resources and with a government determined to finally get it right.
“The great thing is that long term investors recognize this and understand the difference between short term and long term issues and the case for Nigeria persuades one to plan for the longer term opportunities,” she explained.
Also, at another panel discussion on Global Infrastructure Forum 2016, President of the African Development Bank (AfDB), Akinwumi Adesina, said the continental development bank has earmarked $62 billion for energy infrastructure in Africa in the next five years.
He explained that the bank will provide $12 billion while it would leverage $50 billion from the private sector.
“For us at the bank, we are going to put in $12billion over the next five years into energy sector and we also looking to leverage foreign buy back of $50billion from the private sector. For this to happen, we have to pay attention; so many ministers have a host of infrastructure we are talking about,” he said.
He advised that the energy ministers should optimise the opportunities around them.
“I mean for us partial risk guarantees and also partial credit gurantees can help to leverage a lot of money. Now we have done something at the ADB, I’m speaking on behalf of my collegues here, which ADB Exposure Exchange, just to allow us to free up a lot of backlog for ourselves. For the bank itself, we have been able to free up about $10billion dollars that allows us to lend a lot more for infrastructure.
“Our core financial arrangement, we work with China, we work with Japan in terms of core financing arrangement and all of here, we do blended financing both in terms of concessionary and non concessionary finacing, but at the end of the day, the monies that are out there in the Capital Market, far exceed all the things we get put together,” he added.