Nigerian economy, not in confusion – Finance Minister

The Minister of Finance, Kemi Adeosun, on Wednesday declared that the Nigerian economy is not in confusion.

Noting that the Nigeria economy has been heading to recession in the past six years, she however said that the economy is presently in the right hands.

She spoke with State House correspondents at the end of the Federal Executive Council (FEC) meeting presided by President Muhammadu Buhari.

Adeosun was accompanied to the briefing by the Ministers of Agriculture, Audu Ogbeh; Mines and Steel Development, Kayode Fayemi; Information, Lai Mohammed and Education, Adamu Adamu.

Responding to questions on the new economic statistics released by the National Bureau of Statistics (NBS), she said: “It’s the worst possible time for us. Are we confused? Absolutely not. How are we going to get ourselves out of this recession. One, we must make sure that we diversify our economy. There are too many of us to keep on relying on oil.

“We can see what happened at the output data of the oil and gas sector. What’s happening in the Niger delta has dragged down the GDP of the entire economy. We’re too dependent on oil whereas 87 percent of our GDP is oil. So let us drive those other areas

“We have to invest in capital projects. No, we are not confused, the time is confusing but we are not confused. We are extremely focused. We know that if we can just bare and get through this difficult period, Nigeria is going to be better for it.

“If we rely on oil and the price of oil remains low and the quantity of oil remains low, we can’t grow. We have to grow our non-oil economy. I think we that we have a long way to go.

“We’re not confused and we’re not deceiving ourselves that everything is rosy. It’s not. It’s a difficult time for Nigeria but I think Nigeria is in the right hands and if we can stick with our strategy. We still have some adjustments to make. I think we need to make some adjustments in monetary policy. It’s quite clear we do and we will do that. We’re working on that. We need to try and find a way to support the manufacturing sector better and we will do that.” She added

She pointed out that the high inflation rate in the country is cost-pushed.

“And when you have cost-push inflation, it is structural inflation. It is not going to respond to monetary policy tools such as increasing the rate of interest. We have to address the structural causes of the inflation,” she said

But, she however said that the high rate of inflation has slowed down, which is a good sign for the economy.

‎According to her, the FEC on Wednesday approved external three-year rolling borrowing plan.

The plan, she said, will be transmitted to the National Assembly for the approval.

She said: “Recall when we came in we said our external borrowings strategy will be focused on confessional debts, low cost loans particularly from the multi-lateral agencies‎.”

The conditions of the borrowing, she said, included concessional loans average interest rates‎ 1.25 per cent, four to seven year moratorium, and 20 years to pay.

According to her, the loans will come from agencies like the World Bank, African Development Bank, China Exim Bank, and other development agencies like Japanese International Cooperation Agency (JICA)

She added: “The sectors in particular that‎ these concessional loans will go to are the strategic sectors of the economy that will help to revive the economy. ‎There is Power. Significant amount of money are located to power projects particularly transmission. This is long term money that will enable us solve some of the problems in that sector.

“There are projects around polio. There are some money that have been allocated to us to help us do some massive immunization, in order to control this recent outbreak. This is being provided by the World Bank.

“There is provision for solid minerals and of course I’m very excited about the discovery of nickel. World Bank is supporting the project by the Ministry of Mines and Steel with $150 million to enable them strengthen their capacity in that area.

“The largest beneficiary of our borrowing is agriculture because its equally strategic and we have programmes by the minister some of which he inherited and is going to restructure and reform and some are new to the ministry.

“The balance will come from the Eurobond we had indicated.” She said.

According to her, the FEC sent a strong signal on the need to reach out to the National Assembly to get the borrowing plan approved as soon as possible.

“Because a lot of this money is for developmental projects. We need this money to be made available for us. Remember these are foreign exchange coming to our country that will help our economy.” She added

Fayemi disclosed that the Council approved a new roadmap for mining to boost the growth and development of the industry.‎‎

He said: “What the roadmap seeks to do is to grow the contribution of mining to the GDP on the back of the President’s vision to diversify the economy.  It is to build on the old roadmap of 2012.

“What distinguishes this roadmap is its determination to build a regulatory agency – an independent regulatory agency in the mining sector. Stakeholders have been insisting that the ministry should not also be the regulator of the industry. ‎

“We will now have Mining cadastral zonal offices which issue the licenses together with the mining inspecting directorate, mining environment compliance unit as well as the nautical mining units. These are directorate within the ministry but will form part of the independent regulatory agency.

“The second point that is very critical is the ‎partnership with states. One of the challenges in mining is the tension between the federal government and the states. ‎The Federal Government owns the minerals in the sole but the states government owns the land. ‎

He stressed that there won’t be any headway without a robust partnership between the two critical components of mining, adding that mining has not been thriving because of the tension between the Federal Government and states.‎‎

“In this regard, minning cadastrail and zonal offices will also be created in the states to work on this.” He added

He said that the roadmap is to also change the name of the Ministry from Ministry of Solid Minerals Development ‎to Ministry of Mines and Steel Development in line with glob‎al standard.

The roadmap, he said, will also
make it easier for foreign direct investment to come into the country by improving on Nigeria’s geo-sciences data.

“Mining is about science and if you don’t search you won’t find. Council recognizes that and agreed that a lot of money be put into exploration.

“The roadmap also focuses on financing the industry, the financial institutions don’t know much about mining and have not invested a lot in it‎.

“One of the ways the President wants to re-energise the sector is to ensure it gives access to the Natural Resource Fund of the Federation Account which is really meant for agriculture, mining and water resources. But mining has never benefited from the fund. This is similar to ecological fund 1.8 per cent of federation.

“Another focus is to ensure that value‎ addition is gradually being invested to and reduce the manner in which raw minerals are exported from Nigeria. It is to emphasize beneficiation and processing, so that what we produce is also improved upon before we embark on exportation.

“We also want to ensure it is utilize here, we have granite, Marbel, bitumen yet we import the bulk of those products into Nigeria because processing does not take place here

Above all, it focuses ‎to increase the contribution of mining to the GDP of the country. Mining has gradually declined from 4.5 per cent of the GDP at independence to 0.33 per cent of the GDP as at today.

“Given the new focus we can begin to scale that up again. Within the next decade, it’s readily expected that it will begin to climb up to about five per cent of the nation’s GDP.‎

‎”The roadmap gives a sense to how the country is paying attention to mining development which is more of an employment generator and wealth creator unlike oil, which recruits fewer people.

“We want to upscale it and improve the skills of the people, making access to finance available and making technology available to them,” he stated

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