NIGERIA - FG KEEN ON USING $3.7BN SWF, ECA FUNDS TO BUFFER DWINDLING ECONOMY

The Minister of Finance, Mrs. Kemi Adeosun, Thursday said in order to mitigate the harsh economic realities in the country, the Federal Government would, over the next six months, use the $3.7 billion foreign exchange reserves accrued through the Sovereign Wealth Fund (SWF) and Excess Crude Account (ECA).

According to her, the funds will ” provide an avenue for a long term buffer to volatile oil prices.”

The minister, who made the disclosure during the ongoing sectoral debates in the House of Representatives on how to diversify the economy also spoke on reforms being considered by the Federal Government towards fixing the economy via the non-oil sector.

According to her, strategies to be employed include targeted policy thrust meant to stimulate medium, small and micro enterprises (MSMEs) growth up to 50% of the GDP; tax harmonisation and incentives as well as inclusivity through increase in share of business awarded to MSMEs from government.

$4 billion to $5 billion, she said, is to be raised from multiple external sources including multilateral agencies and export credit agencies.

Her words: “Additional funds to be raised from international capital markets and balance of funds to be raised in domestic market. Use earnings from revenue-generating projects that are debt financed to service debt,”‘ she said.

According to her, in order to achieve fiscal sustainability, various reforms worth N3.5 trillion has been put in place to boost non-oil revenue and economic recovery.

The minister said some of the identified challenges impeding economic growth include: low return on investment, high cost of infrastructure, weak regulatory institutions and poor ease of doing business; decline in revenue and employment generation, investment risk as well as household per capita income over the past 24-36 months.

She said the present administration, through various reforms aimed at reducing the high recurrent expenditure, has  succeeded in enrolling 447 MDAs out of 726 MDAs on IPPIS, uncover and delist 43,122 ghost workers on fraudulent payroll entries to date with a savings worth N4.2 billion per month as well as recorded average savings of N23 billion overhead per year through the introduction of efficiency unit.

She added that N1.8 trillion borrowing would be structured to achieve cost of effectiveness and acceptable debt sustainability ratios.

She also told the lawmakers that the Federal Government is making great efforts to bring down the cost of lending in the agricultural sector through the Central Bank of Nigeria.

According to her, the Buhari administration was saddled with a huge debt of N60 billion owed by the previous administration to fertilizer suppliers which it’s trying to clear.

To allow states access funding from Universal Basic Education Commission, UBEC, government has reduced the counterpart funding to 10 percent against the previous 50 percent.

She disclosed that releases for MDAs’ projects in the 2016 budget would be prioritized as government could fund every single project.

“So what we are now doing is project first. Tell us what you are going to do with the money, give us your milestones. I can’t promise you that every single agency will receive every single Naira in the budget, that will be untrue and that will be a misleading impression.

“The budget is an estimate, the estimate is how much that will come as revenue, if the revenue falls short you cannot spend what you don’t have. So I would like some understanding.

“However, what I will assure is that there will be no favouritism, there will be no need for anybody to come and lobby in our office for the release of funds. Funds will be released first on priority of projects, MDAs must make request for the capital and we must measure how the capital s spent.”

Speaking on the issue of the contentious minimum wage, she said Nigerians should be looking at the reduction of the cost of living instead.

“Even if you increase the minimum wage to N100, 000 and the cost of living is N120,000 then you have done nothing,” she said.

She further states: “What we have to address is the cost of living and this government addresses cost of living because it is investing in the things that make cost of living very high for the people such as power cost, transport cost, people spending hours on bad roads, it is being addressed, that is a cost.

“People having to pay for young people in their families who should be working, graduates who should be working and collecting pocket money from their parents, that are a cost of living and this government is addressing. We will employ 500, 000 unemployed graduates to go into teaching, they will receive a stipend, they will relieve the families of those people, they will give those people a chance to develop their skills.”

Adeosun said Nigeria will target increased capital spending to drive long-term growth adding that it would lead to substantial increase in gross capital formation and also enable industrialization and increase business competitiveness.

This strategy, according to her would not only create jobs. Wealth and rise in household capital income, it would also accelerate GDP growth towards recent average of 6 percent, she said.

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