- Says transparency has kept Nigeria afloat
- Osinbajo unveils FG’s stimulus for reviving ailing economy
Crusoe Osagie in Lagos and Tobi Soniyi in Abuja
President Muhammadu Buhari has admitted that the last one year has been difficult for Nigerians but says his administration’s commitment to transparency and accountability has kept the nation afloat despite severe shortage of resources in the country.
The president spoke friday at the State House, Abuja when he received the United Nations Population Fund (UNFPA) Executive Director and Under Secretary General of the United Nations, Prof Babatunde Osotimehin.
“It has been a very difficult year for Nigeria. Before we came to office, petroleum sold for about $100 per barrel. Then it crashed to $37, and now oscillates between $40 and $45 per barrel,” he said according to a statement by his Special Adviser on Media and Publicity, Femi Adesina, adding: “Suddenly, we’re a poor country, but commitment to transparency and accountability has shielded people from knowing that there is severe shortage.”
He pleaded with the UNFPA to bear with Nigeria in whichever area the country had not lived up to its responsibilities for the time being.
Buhari said Nigeria’s exploding population and diverse cultures provide a fertile ground for research for organisations like UNFPA.
The president thanked the UN agency for its commitment to saving lives in Nigeria, particularly women and children.
On food security, Buhari said reports from the North-east of the country were encouraging, as people were returning to their farmlands, with the guarantee of relative security.
Osotimehin, a former Minister of Health in Nigeria, said UNFPA was determined to promote health care facilities across the country, adding that a reduction in maternal mortality was attainable if the country paid more attention to access to health facilities, and human resources to run them.
He also encouraged Nigeria to commit to providing resources for health care, on a rollover basis, pledging that the UN would work with the country to provide humanitarian assistance not only in the North-East, “but even extended to the Lake Chad basin.”
With the presidential admission of hardship in the land, Vice-President Yemi Osinbajo gave hope for better days ahead as he yesterday unveiled the federal government’s stimulus plan for the Nigerian economy, just as he stated that a Presidential Economic Committee had been inaugurated for ease of doing business in the country.
Osinbajo said part of the plan to get the economy back on the path of growth would involve steps to immediately reduce the fiscal imbalances and foreign exchange volatility, as well as the lowering of interest rates and increased lending to the real sector.
He noted that the government expects that the new stimulus plan will jump start the economy and return it to rapid growth.
He explained that other tasks to be given immediate priority included boosting dollar liquidity, curbing inflation and increasing Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) by sustaining enabling policies aimed at boosting public private partnerships (PPPs).
According to him, another urgent step to be taken by government was structured collaborative engagement with the private sector to deepen the nation’s diversification efforts to create jobs directly and indirectly and alleviate poverty in the country.
The vice-president who spoke during a presidential dialogue organised by the Lagos Chamber of Commerce and Industry (LCCI), said: “These challenges are significant, but the opportunities to get it right are even more significant.
“For us, the focus is steadfastness and consistency to achieve economic growth. The government is committed to engaging the private sector in line with what is considered best practices.”
Highlighting the sharp decline of major macroeconomic indicators between 2015 and 2016, the vice-president said the nation’s Gross Domestic Product (GDP) growth rate dropped from 6.3 per cent in 2014 to 2.15 per cent in 2015, adding that by the first quarter of 2016, GDP growth had contracted to -0.36 per cent.
According to him, $395 million in FDI in the first quarter of 2015 declined to $175 million in the first quarter of 2016, adding further that the value of equities also declined.
He said FPI, which averaged $621 million in Q1 2015 declined to $90.3 million by Q1 2016.
“Inflation is at 16.5 per cent, earnings from oil declined in the past eight months due to vandalism of pipelines and export assets in the Niger Delta.
“Power output fell from 5,000MW in February to about 2,500MW recently on account of over 60 per cent loss in gas production due to pipeline vandalism,” he added.
Osinbajo said in order to tackle these challenges, the federal government has undertaken some specific interventions reflected in the 2016 budget, noting that to safeguard jobs and prevent a further rise in unemployment, the administration prioritised attention to assisting states and local governments in the payment of salaries of workers.
“Priority attention was given to assist the states and local governments pay the salaries of workers, which were several months in arrears. We have had three such interventions, including the latest loan of N90 billion as part of a fiscal responsibility plan for states.
“These interventions have helped to boost household spending, which were key steps to prevent the economy from falling into deep recession. We have pledged to keep capital spending in the budget at a minimum of 30%.
“Great effort has been made to improve non-oil revenues. This includes bringing an additional 700,000 companies into the tax net as compared to the targeted 500,000 set at the beginning of the year.
“FIRS has achieved 73.17 per cent of its target for the first half of the year. Similarly, milled rice capacity is being increased from three million tons annually to 10 million tons of paddy annually,” he said.
The vice-president added that the deregulation of the downstream petroleum sector was also an important policy decision, stressing that the immediate impact led to increased availability of petrol throughout the country, which he said was achieved at the price of N145 per litre as against the N200 per litre that was paid in most parts of the country prior to deregulation.
He stressed that deregulation also led to the reduction of daily demand for petrol from 1,600 trucks to 850 trucks per day, saving about N1.4 trillion on subsidy payments, thereby conserving budget resources and reducing demand for foreign exchange.
Osinbajo said apart from waiting for the Dangote refinery with a capacity of 650,000 barrels per day, the government is also working on fixing the existing refineries.
“Hopefully, we expect that by the end of 2017, most of the refineries will be functioning to some reasonable capacity,” he said.
He also commended the new flexible exchange rate policy of the Central Bank of Nigeria (CBN), expressing hope that the exchange rate of the naira will stabilise, confidence will be restored and there will be an increase in the FX inflow.
Osinbajo said the Buhari administration was determined to keep capital spending in the budget at a minimum of 30 per cent because capital spending would encourage FDIs.
“We have already made capital releases of N332 billion which are more than the entire amount of capital released last year with another N100 billion set to be released in the next few days,” he said.
He pointed out that the main sectors for which the funds have been released include power, works and housing, defence, transportation and agriculture.
He added that one of the areas the administration had brought change to was in public financial management, which he said had the consequential effect of saving jobs, stressing that the ongoing implementation of the Integrated Payroll Personal Information System (IPPIS) was bringing about a monthly savings of N8 billion, while the creation of the efficiency unit in the Ministry of Finance was projected to save N14 billion in the 2016 fiscal year alone.
He said the Presidential Economic Committee had been inaugurated by government to create the enabling environment for businesses to operate in the country, noting that the task ahead of the government was clear.
“It is to ensure security, fight corruption, improve the economy and business environment.
“Our immediate task is to reduce fiscal and foreign exchange imbalances, boost foreign exchange liquidity, curb inflation, lower interest rate, ensure lending to the real sector.
“These challenges are significant but the opportunity to get it right is even more significant. For us, focus, steadfastness and consistency are crucial,” Osibanjo said.
He said that the government was committed to engage the private sector and will institutionalise quarterly meetings with the sector to create the right environment for businesses to thrive.
Minister of Budget and National Planning, Udoma Udo Udoma, said the target of the presidential committee was to move the country 20 places up in the ease of doing business.
He said the government would remove bottlenecks to create an expansive and productive economy, adding that the government would leverage on agriculture, mining and manufacturing to transform the economy.
In his contribution, the President of Dangote Group, Aliko Dangote, admonished the three tiers of government to collaborate with the private sector to solve the country’s economic challenges.
He said Nigeria was still the largest economy in Africa with a vibrant private sector.
He urged the government to address the challenges that hinder the performance of the private sector for improved contribution to GDP.
Also speaking at the event, the County Director, African Development Bank (AfDB), Ousmane Dora, said Nigeria remained the biggest economy on the African continent despite experiencing daunting economic challenges.
According to him, Nigeria represents the hub to get Africa’s GDP growth rate to double digit, stressing that what was fundamental are the right policies to drive growth and development in the country.
He said AfDB had built a robust pipeline of projects exceeding over $2 billion, explaining that the continent needed more to be done to achieve economic growth.
He added that Africa must develop skills, increase competitiveness in infrastructure investment, integrate economies on the continent and take advantage of its unexploited natural resources to achieve industrialisation.
“We are targeting five priority areas for Africa, which include the light up power projects, Feed Africa programme, integration, industrialisation and improving the quality of lives of Africans.
“We are also planning to invest about $12.5 billion in the next five years aimed at Africa’s energy sector,” he said.
The president, LCCI, Nike Akande, in her comments, stated that the short-term outlook for the economy was not looking bright, observing the major trigger of the economic downturn was the collapse of oil prices.
She said the situation called for adjustments by all stakeholders in the economy, expressing confidence that Nigeria would get over the current recession soon.
She explained that the Nigerian economy had strong fundamentals, stating: “Resources are enormous, the domestic market is large and the people are resourceful and enterprising.
“Nigeria needs the right mix of policies to achieve the desired outcomes, and we acknowledge some policy choices the present administration has adopted to promote economic diversification, stabilise the foreign exchange market and ensure sustainable supply of petroleum products.”