“When you have two consecutive quarters of negative growth, you are technically in a recession, but that notwithstanding, our focus should be on the progress we are making,” Minister of Finance, Mrs. Kemi Adeosun said on Thursday.
Adeosun, who made the disclosure in her presentation to the Senate, assured that expenditure will focus is on infrastructure, adding “we are tackling infrastructure deficits. Our focus towards economic diversification is to bridge the infrastructural gaps.”
The Minister stressed the need to promote patronage for made in Nigeria products, saying Made in Nigeria must be promoted and prioritized across all sectors of Nigeria.
Adeosun on Thursday said the Federal Government has disbursed a sum of N247.98billon as capital release so far this year.
She explained that the disbursements were being made in line with strategic priorities to address infrastructure deficit and drive domestic growth.
The latest figure of N247.98bn, she noted, compares to a sum of N387bn capital spend for full year 2015.She stated that
- N 21.6bn released for agriculture in 2016 is 4.9x of N4.5bn spent in 2015.
- N118.0bn released so far to the power, works and housing in 2016 is4.0x amount spent for full year 2015 which was N29.3bn.
- N24.0bn was disbursed to Transport ministry so far and that this is 3.6x of N6.5bn spent for full year 2015.
- N9.5bn released in 2016 to Interior Ministry is 6.2xamountspent for full year 2015, which was N1.5bn.
- N32.7bn for Defence Ministry has been disbursed in 2016 and this is 1.3x ofN26.1bn total release for 2015.Adeosun, who noted that debt owed to contractors has slowed the pace of implementation, however explained that contractors and cash call arrears totalling N5bn Joint venture funding arrears are being addressed.
The Minister stated that in order to achieve the objectives of capital spending, the Ministry of Industry, Trade & Investment is also working on government’s soft infrastructure (N465.12m in capital spend released to date). She listed one of the objectives to include improvement in Ease of Doing Business ranking to 100thposition from current position of 169th.
The Minister said the current stability in oil price has raised hope for Nigeria, noting that Oil prices are up 75% per barrel since hitting a 12-year low of around$27barrel.
Adeosun, who stated that oil production volumes are expected to rebound in the near term, explained that ongoing fiscal reforms are bearing fruit.
She disclosed that for instance, the Federal Government is making a N8bn savings on payroll to date, while a N14bn in estimated savings on overhead is expected by yearend.
“While production volumes have increased, the damage to oil facilities is concentrated on onshore oil fields from which we get our greatest volumes and revenues.
“The gap in production volume is being plugged by production in off-shore fields (Production Sharing Contracts) from which we incur higher costs. This therefore, minimizes the effect of increasing production in revenue terms,” the Minister stated.
She stressed that Investment in critical infrastructure is key to unlocking economic growth, while Cost reductions being achieved through fiscal reforms create headroom for capital investment.
The Federal Government, she said is effectively managing debt overhang; forming strategic alliances with private sector to implement key projects with limited budgetary provision; restructuring of outstanding PPPs to address legacy issues and initiate New PPPs to ensure efficient delivery of infrastructure and value for money efficiency gains.
The Minister explained that current FAAC disbursements are low due to the three-month lag in sharing of oil revenues. “Crude oil proceeds in April are being shared in June and therefore, do not reflect recent increases in production volumes,” she stated. “Our revenues are looking well; FIRS and Customs are doing well in terms of this” Mrs. Adeosun also stated.
She stated that “Our spending is being targeted to stimulate the economy and achieve positive GDP Growth. There is a trade-off between growth and inflation. The objective is to target growth while keeping a close eye on inflation.” We will invest in key infrastructural upgrades to stimulate the economy.
In answering questions about ensuring that the agencies under the Ministry of Finance are properly scrutinized. The Minister acknowledged that work is on-going to ensure improved efficiency and fiscal discipline.
When asked about the state’s inability to pay staff salaries, the Minister stated that “Previous administration has been borrowing to pay salaries and the previous administrations have been playing a photo trick on Nigerians. This administration will state the fact as they are and be honest with Nigerians so that we can work collectively to fix all the problems rather than pretend there are no problems.”
In answering other questions raised, the Minister confirmed that Nigerian Customs will be reformed under this administration and steps are already in place to do so.
We also learned that a multi-agency committee to review of waivers, a new policy on waivers will be published shortly. Loop-holes and leakages will be closed and a clear strategic approach will be applied to import waivers. This policy will ensure that any waiver will be tied directly to economic growth and diversification.
She also stated that “The reality is that Nigeria must start to save, we cannot continue to spend all our earnings. We must start to save. It is our collective responsibility.”
The Senate president confirmed that the Senate is in the final stages of revision of the procurement laws to assist in expediency in the procurement processes..
The Minister attributed the current increase in prices of Agricultural products in Nigerian markets to payment delay to fertiliser producers in the past. This she noted, led to crop failures and subsequently a lower output of basic products for the markets. Naturally prices increased due to these shortages. The minister also said that plans are on the way for the poverty alleviation programmes most of which will be channelled through Agriculture.
These back due payments for the last two years have been cleared and we can expect a bumper harvest. What we must guard against is over supply and we will work with the farmers in this regard.
The Minister stated that, “Money has been pushed out in corn, rice and millet.” “We have widened the definition of Internally Generated Revenue of all states”. This will encourage each state to look inward and increase production especially in Agriculture.
“We are working on the recapitalization of the Bank of Agriculture and we will come up with a plan in the next 30 days”. “All agricultural machinery is allowed to be imported with Zero import duty”
Responding to the issue of the size of the nation’s economy, the Minister stated that “Nigerians should not panic. We are still the biggest economy in Africa and we will still get better.
“When you have two consecutive quarters of negative growth, you are technically in a recession, but that notwithstanding, our focus should be on the progress we are making.”
Expenditure focus is on infrastructure, we are tackling infrastructure deficits. Our focus towards economic diversification is to bridge the infrastructural gaps.”
The Minister stressed the need to promote patronage for made in Nigeria products, saying Made in Nigeria must be promoted and prioritised across all sectors of Nigeria.
When asked about implementation of budgeted constituency projects, the Minister stated that “Everything in the Budget needs to be implemented or else there is no sense in passing the budget.”
In all, most of the Senators acknowledged and appreciated for the work done thus far by the minister and her ministry on the reforms, initiatives and approach being applied, especially on fiscal discipline, blocking leakages and especially the initiative on Savings.
