Yesterday, the managers of the nation’s economy, Senator Udoma Udo Udoma, Minister of Budget and Planning; Mrs Kemi Adeosun, Minister for Finance and the Governor of Central Bank of Nigeria, CBN, Mr. Godwin Emefiele, alongside Minister of Information, Alhaji Lai Mohammed assured Nigerians that the country was on the path of recovery. Concerning the recession, Emefiele specifically said the worst was over. We continue our yesterday lead story today. 3-year MTEF approved —Udoma Udoma continued: “The Federal Executive Council, FEC, has considered and approved the Medium Term Expenditure Framework (2017-2019) which sets out the economic programme and spending plans of the Federal Government in the next three years and which forms the basis of the 2017 Budget. Work has commenced on the 2017 Budget, which will be specifically targeted at resuscitating the economy and bringing it back to the path of growth. “The basic strategy is to reflate the economy through fiscal stimulus and strategic implementation of annual budgets. What this means is that government is geared to strategically spend its way out of recession. “Government will continue to spend largely on priorities that will stimulate activities in the economy. Unlike in the past, government is spending strategically and has developed a strong monitoring and evaluation framework, as future spending will be based on performance. Udoma-Adeosun-Emefiele Udoma-Adeosun-Emefiele “To support the fiscal stimulus, the Economic Management Team, EMT, meets every Monday, and is currently working on a plan to immediately inject large funds into the economy through asset sales, advance payment for licence renewals, infrastructure concessioning and recovering of funds to reduce the funding gap. These are to be fast-tracked through Presidential directives and legislation. “These have great potentials for massive employment generation, enhancement of export activities and broad-based foreign exchange earnings. “The goal is to unlock the economic potentials of the non-oil and high employment sectors so as to achieve sustainable inclusive growth that will ensure massive employment and poverty reduction.” Our efforts are bearing fruits—Adeosun Minister of Finance, Mrs Kemi Adeosun continues: “There is a lot that has been done, that are beginning to bear fruits. The Police force for example, is at the final stages of recruiting about 10,000 Nigerians into the service and this will go a long way to reduce unemployment and put money into some families. It is the savings that we have made from cleaning up the ghost workers that is enabling us to create additional jobs. “More opportunities are coming for Nigerians in the Nigerian Railway Corporation, the Federal Inland Revenue Service, FIRS, and other places as a result of the savings we have made from the elimination of ghost workers from the civil service and cleaning up the payment system.” Adeosun, like her Budget and National Planning counterpart, Udo-Udoma, admitted that times were tough but assured that Buhari’s administration was doing everything possible to bail the nation out of the woods. “The issues around our infrastructure are the biggest problems we have. The biggest problem we have is the cost of living. It is not wages. It is not how much money you have. It is what it costs you to live. And the problem we have is that many of the things that people are spending money on are things that government should by doing- roads, power, etc and we have to address these things. “The cost of living is so high; so when you address infrastructure, you address the cost of living. That is what this government is determined to do. We are working on housing, we are working on Public Private Partnership on roads, but let me just assure everyone that this government has a very credible plan. “This is the best plan we have for Nigeria. It is going to be an economy that is not dependent on oil and not subject to boom and bust – when oil is up, we are happy and when oil prices fall we are sad. We can’t continue to live like that anymore.” Truncating cumbersome bidding process to save time and cost Describing the times as unusual, which also require unusual measures to assist people live well, Adeosun announced that Buhari’s government was in a hurry to spring up in all parts of the country. To be able to achieve that goal, Adeosun disclosed that the government was considering urgent measures to reduce the time frame for the process of bidding and awarding contracts in the country. Her words: “Truncating the bidding process and achieving open procurement is what we want. What we need is speed and openness. That is why we need the National Assembly to help us truncate the law. We don’t have such powers. These are unusual times that require unusual measures. “We are already talking to members of the National Assembly and explaining to them why this is necessary. We need the law to ensure that as soon as we release money for projects, it goes straight to work for Nigerians instead of sitting in the TSA for too long as a result of trying to meet the bidding processes. We are almost coming out of recession: According to the minister, the nation is already coming out of recession. She said: “Problems begin to end when you begin to deploy the solution. So for me, I think we are already coming out of it because I can see clearly that there is a difference in the way government is operating. “There is a difference in the way people are spending government money. There is a difference I see in our monthly salary bill. So the problem has begun to end.” She said she was confident the palliatives already put down by the government would have some positive impact on the economy and the people. Lai Mohammed continues Minister for Information, Alhaji Lai Mohammed said: “Fortunately, most of the things recommended to us are some of the things we have already considered for implementation. One of them is an Economic Stabilisation Bill before the National Assembly to give the president some emergency powers to take some economic actions to bail out the economy from recession. “Such laws will give the president the power to take certain actions and abridge the time in doing such things to save Nigeria better.” Power generation raised The minister said that through the commitment and determination of the Buhari administration to provide an enabling environment for business to thrive, it had been able to raise power generation to over 4000 megawatts, despite the challenges associated with oil and gas production in the Niger Delta. Mohammed said: “To us, more important is the fact that we are working harder to ensure ease of doing business in Nigeria to help the economy grow and promote made-in-Nigeria goods. We are working on incentives for industries to grow so as to generate more jobs for Nigerians and reduce the pressure on government. This effort will be complemented by our investments in the agricultural sector to promote agribusiness and give more money to farmers and ensure food security.” CBN Governor continues: Speaking confidently on the flexible exchange rate, Emefiele said: “Let me say this, I must confess that I was not that optimistic that the flows were going to come initially but what we have seen in three months, close to a billion dollars, I feel confident that if we steer the course, the way we are going by managing the foreign exchange market so as to encourage foreign investors and also those who have foreign currencies to bring them in to support our economy, I am very sure there will be more flows of foreign exchange into the system and more and more people will have foreign exchange available for industry to improve their capacities. “The exchange rate may look high now but there is the possibility that as we see more inflow, the rate will come down. “I am optimistic this will happen. In the short run, what other things are we doing? I have talked about foreign exchange inflow, I have talked about the fiscal authority’s effort to stimulate the economy, stimulate consumption demand/expenditure. “What you find is that when consumption is stimulated, the demand for food, demand for goods will go up and if demand goes up and is matched by improvement in industrial capacity and productivity, then you will see the activity. “That is why I am confident that the situation will change and the economy will turn around the corner very soon. Naturally, we need more revenue, we need more naira, more dollars and you will recall that in April 2014, before this government came on board, I had taken an interview with Financial Times of London. Conducting a study “During that interview, I opined that there was need for government to consider the sell down of some of its investments in oil and gas and the NLNG, and at that time, around May, price of crude was around $50-55 and we actually commissioned some consultants that conducted a study and at the end of that study, they said, if we sold between 15 to 20 per cent of our holding in oil and gas sector, Nigeria could realise between $30 and $50 billion. “Unfortunately, the market has softened and if we still want to do that, I am optimistic that we could still get between $15 and $20 billion. If we had that kind of liquidity, it will make it easier for Nigeria to stimulate spending and also turn the economy around. “That proposal, I am sure is still on the table, because I have also heard, after I made the recommendation, a couple of colleagues in the cabinet have also talked about it. I am sure that if we take that option, we will realise the inflow of foreign currencies that we can really use to kick start and stimulate the economy. “Do not forget that even in the US, in 2009 when the mortgage crisis started, in one blow, the US government stimulated the economy with $900 billion, subsequently, during the period of quantitative easing, $85 billion was being injected into the economy on a monthly basis, the same thing is happening today in Japan and in Europe.” ‘’The difference between those situations and Nigeria is that those other countries have low rate of inflation. In fact, they have negative interest rate, they have very low inflation rate. Stimulating such an economy, even if it pushes inflation up, it will not be too bad to the point where it will begin to adversely affect prices. ‘’That is why we are in such a delicate position of pushing growth to see how to get out of recession and at the same time trying to tame inflation so that it does not go too high to a point where it becomes injurious to Nigerians” Explaining further the action being taken to get the economy out of recession, the CBN governor said: “TSA, as far as I am concerned, is a programme that several governments in the past had attempted to implement but did not. I use the word unfortunately because the will to implement it was not there. Is it fair that government allows its ministry or its agencies to release its money to the banks and those banks do not pay anything as interest to government or at best if they pay, they pay about one or two per cent? ‘’At the same time, when government wants to borrow money, by selling treasury bills, government still goes back to these banks and the same liquidity that the federal government gave to them through the ministries, these banks pass it back to government at 12 or 13 per cent. “That is a colossal waste of resources on the part of government, so when people say oh, because TSA is sitting in the CBN that it is what has caused the cash crunch, it is not true. When government was going to withdraw the TSA, the CBN monetary policy committee also looked for its own way to release some money into the system, through the cash reserve ratio CRR that was held, I do not agree that the TSA is a major issue. “Secondly, delay in taking action on the structural adjustment; again it is unfair to blame this government for not taking decision on structural adjustment. I will tell you this, normally, when you have an adjustment in currency, world wide, and these adjustments must be followed by structural reforms. ‘’Just as you heard the President talked about that in 1984, the currency was one to three, after that we went into SAP, it was meant to go with a lot of structural adjustment, or reforms, but when the crude oil price started to improve, every body stopped structural reforms, that was why we could not effectively diversify the economy. “There was a government that came at that time and said Green Revolution, there was another that said every body go to the farm but immediately crude prices went up, everybody abandoned green revolution and the call to go back to the farm. ‘’That is what we are seeing now, yes an adjustment is going on, adjustment in currency has happened, there is also need for us to ensure we follow through the structural reforms that would lead to diversifying the economy. ‘’Nigeria is now lucky to have somebody who has decided to invest in refinery with capacity to refine 650,000 barrels per day, It is lucky the same person has decided to invest in petrochemical, and the same person has invested in fertilizer. “These three projects are gulping nothing less than $11billion and these three products, petroleum products, petrochemical and fertiliser, gulp nothing less than 35 to 40 per cent of our import bills. What happens between 2017 and 2018 when Nigeria stopped the importation of these products? ‘’Nigeria will be able to conserve its reserves because the demand for these products importation will reduce. Really, what does it take to produce these items. To produce fertiliser, you need only gas, to produce polypoprotane granules what you need is gas, to produce petrol all you need is crude oil. What is needed to go into these lines of productions is to import the plants. ‘’As the plants start operating, you have no other cost except local cost for these items. What I am saying here is that the current structural adjustment will work. ‘’The federal government is pushing aggressively that Nigeria must diversify the economy, that it must begin to see to it that items that we can produce within the country, that are currently being imported, are produced in Nigeria and that is why this government has continued to support the restriction on foreign exchange on 41 items, items such as rice, fish, tomatoes or toothpick. I have spoken on the successes we have achieved. “Really to be honest, for the first time in my life, I have just seen a toothpick that is produced in Nigeria. I was given a pack of it by the Vice President on Wednesday. It is produced in Sango Ota and what does it take to produce toothpick? Bamboo. ‘’The machine you need to produce took pick is less than $15,000 to buy. The machine requires small space, a room. That is what we are saying, Nigeria must embrace structural reforms, to the extent that every Nigerian must tell himself that you have learnt a lesson by the fact that there was a recession, there was a global crisis where revenue dropped.’’

Source:http://alafasytech..com.ng/2016/09/recession-worst-is-over-cbn-gov-2.html

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