By Linus Aleke, Abuja
As the media war between the skeptics’ of President Goodluck Jonathan’s administration and the optimist of the regime on the state of the nation’s economy continues to range following what the skeptics’ described as a disconnect between the double digit growth of Gross Domestic Product and the reality on ground and government insist-ant that the records speaks for itself, Linus Aleke writes on the duel.
Despite divided opinion among economic pundits and experts on the state of the nation’s economy under President Goodluck Jonathan’s transformation agenda, there are strong indications that Nigeria economy is in perfect shape.
Some detractors who are determine to run down Mr. President’s giant stride in moving the nation’s economy forward by their perpetual criticism of government’s genuine effort to transform the sector had not recorded success as the minister of finance and the coordinating minister of the economy Dr. Ngozi Okonjo Iweala had continued her transformation mission without noises in the pages of newspaper, magazines and the air waves in the electronic medium as the former had continued to do.
She had refused to be dragged into media war which was orchestrated by some politicians who wish to cash on the media duel to score cheap popularity by whipping up unnecessary sentiment as well as misinform their unlettered followership.
While some of them argued that the rapid growth being witnessed under this administration is only on paper the records are there to convince even the doubting Thomas that the country’s economic fortune since inception of this administration is better imagined that expressed.
In the global stage, the new world order spelt it out clearly that ‘economic tool has become a superior object of international dominance’ a paradigm shift from unholy military confrontations and arms race inherent in the old world order hence the need by all and sundry to support the transformation agenda of Mr. president.
Government on its part had put several measures in place to transform the sector and militate against any factor that could devastate the economy of the nation. In his monthly press conference to acquaint Nigerian with the current development in all sectors of the nation’s economy, the minister of Information Mr. Labaran Maku listed some areas that government had made appreciable progress in the last one month to include among other things; reduction in the cost of governance, structural reforms, tariff policy and waiver, increment in the external reserve, excess crude account, sovereign wealth fund, credit rating etc.
According to him, “The federal government has adopted a policy to reduce recurrent expenditure and complete unfinished capital projects; recurrent expenditure has dropped from 74.4% of total budget in 2011 to 68.7% in 2013. Envelop system developed to enable Ministers prioritize uncompleted capital projects was also launched. Government is focusing on sectoral waivers rather than individual. For example, agricultural products, power, aircraft spare parts, and solid minerals are at zero duty. Imports are down (textiles, plastic & rubber, paper & paper making material), and exports are up (plastic & rubber, vegetable products, prepared food stuff and beverages) also non-oil exports have increased from 9% of total exports in 2008 to 31% in 2012; Oil exports are now 69% of total exports, compared to 91% in 2008.”
On the issue of exchange rate, the minister noted that the exchange rate of US dollar has been between ₦155 and ₦160 within the period under review, stressing that inflation has also dropped from 12.4% in May 2011 to 8% in September, 2013.
Maku further explained that the nation’s external reserve increased from $32.08 billion in May 2011 to $48.4 billion as at May 2013, the excess crude account rose from about $4 Billion in May 2011 to about $6 billion in May 2013 while the US$1 billion from sovereign wealth fund (SWF) earmarked for investment in the 3 arms i.e. stability fund, infrastructure fund and future generation fund, noting the Board of the Nigeria Sovereign Investment Authority which was inaugurated on 9th October, 2012 and has commenced core investing activities.
“Over the last week, two global credit ratings agencies – Fitch and Standard and Poor’s, have both affirmed Nigeria’s sovereign credit ratings at BB minus, with a stable outlook. A Sovereign Credit Rating is an evaluation of the creditworthiness of a sovereign state or nation, and is a key determinant of the interest rate at which such a country (and its private sector) can borrow on international financial markets. It also indicates the level of risk of investing in a country and, is therefore monitored closely by foreign investors.
So in spite of a challenging global economic environment, in which several countries have seen their creditworthiness downgraded, that of Nigeria remains steady and unchanged. The rating agencies are citing the solid macroeconomic performance – including low fiscal and external debt positions, lower inflation, ample foreign reserves, and strong non-oil GDP growth, as major contributory factors to this recent rating, while also recognizing challenges like oil theft and infrastructure shortfalls.
What this ratings affirmation implies for Nigeria, is that the private sector can continue to raise finance at cheap rates on international credit markets. More specifically, Nigerian banks can borrow money at cheaper rates abroad in order to “unlend” to local private enterprises. In addition, the ratings should uphold Nigeria’s attractiveness for foreign investment, especially since the country has been the number one investment destination in Africa over the last two years.”
To this end, a number of Nigerian banks had seized the opportunity presented by the above feet recorded by government to expand their financial base by going to raise funds abroad through the instrumentality of Euro Bond. The banks that made use of the above are listed below; Access Bank ($350 million Euro Bond), GTB ($350 million Euro Bond), Fidelity Bank ($300 million Euro Bond).
It is also heart warming to discover that International Investors are now more interested in Nigeria as about $7 Billion had already been invested in Nigeria by foreign investors between 2011 and 2012. He explained.
According to him, “Domestic bonds included in JP Morgan and Barclays emerging market Index. Government’s efforts at diversifying the economy and creating jobs continue to pay off. In the agricultural sector, over 2.7 million jobs have been created across 9 crop value chains, including rice and cassava. Housing sector reforms are also at an advanced stage with the establishment of the Nigerian Mortgage Refinance Corporation (NMRC), which will help unleash the sector and provide affordable mortgages to Nigerians, starting from the first quarter of 2014. The Job creation interventions are also doing well. About 19,000 jobs have so far been created by the 1,200 beneficiaries of the first phase of the YouWin program; 120,000 jobs have also been created on the Community Services Scheme (CSS), while the Graduate Internship Scheme has so far deployed over 2,000 graduates across the nation.”
On structural reforms, the image maker of government said that federal government is commitment to improve service delivery to every class of customers in the Nigerian electricity sector. He noted that the administration has successfully sold the 15 successor generation and distribution companies and has realized a total of $2.07 billion. An initial payment of 25% was made earlier in the year and the balance of 75% will be completed during the third quarter of 2013. The formal handover of share certificates and licenses to the purchasers was held on September 30, 2013, while the Physical handover of the assets is slated for December 2013 on the completion of labour payments. He revealed.
The supervising minister of Defence also stated steps taken by government to increase non-oil revenue to include recovery of tax arrears in the sum on ₦704.8 million; tax investigation and enforcement activities which led to the recovery of over ₦10.65 billion, commenced implementation of the integrated tax administration system (ITAS) project, registration of 227,140 new taxpayers in 2012, and implementation of full taxpayer segmentation. Others are full restructuring of Tax offices nationwide, Roll-out of nationwide tax identification number;
Integration of customs operation (Platform) through a portal named Nigeria Integrated Customs Information Systems (NICIS) thus eliminating multiple submission of cargo and goods documentation to several stakeholders.
He also said that the on-line real-time processing of Custom’s documents/manifest by shipping/airlines, simplification and harmonization of Customs clearance procedures, in line with international best practice had been entrenched, adding that electronic tracking and auditing of Customs operations and transaction has also been instituted.
Maku explained that other areas government had made appreciable progress in the its transformation drives includes, “Increased efficiency in public financing; integrated payroll and personnel information system (IPPIS), enhances efficient personnel cost planning and budgeting as personnel cost will be based on actual verified numbers and not estimates. 215 MDAs (153,019 staff) are on IPPIS as at Jan 2013; Savings on Payroll cost to date is ₦118.9 billion, Work is ongoing to bring in other 321 MDAs not yet on IPPIS, about 46,821 ghost workers was also identified during this period of reform.
Government also introduced integrated financial management and information System (GIFMIS) in April 2012. This system is aimed at improving the acquisition, allocation, utilization and conservation of public financial resources using automated and integrated, effective, efficient and economic information systems. 58% of the budgets are now executed through GIFMIS and it is expected rise to 79% by end of third quarter of 2013. A unified structure of government bank accounts that gives a consolidated view of the cash position was also introduced to monitor cash flow as well as block areas of linkages. So far 93 MDAs are currently on TSA, while government’s overdrawn position has dropped from ₦102 billion in 2011 to ₦19 billion in 2012
A New Petroleum Subsidy Payment Regime is now in Place to help stem leakages.”
The minister who became emotional at this point told reporters that after the audit of N1 trillion subsidy fund, it was discovered that N232 billion out of the N1trillion was questionable. A situation that led to the recovery of N14 billion, noting that such revelation led to the tightening of the subsidy payment processes.
He also noted that PPPRA in line with the transformation agenda has reduced the number of oil marketers from 143 to 32 even as he further gave a breakdown of Sure-p expenditure and budget implementation.
“Sure-p expenditure of the federal government is ₦180 billion as budgeted for in the 2012 budget out of which ₦86.5 billion was spent. The remaining balance of ₦93.5 billion was carried over into the 2013 SURE-P budget bringing its sum to about ₦273.5 billion in projected expenditure. Classification of projects under sure-p social safety nets are maternal & child health, mass transit, community services, graduate internship scheme. Others include the Niger-Delta Augmentation for East-West road. In the ministry of Works, roads & bridges, such as Abuja-Lokoja Road, Kano-Maiduguri, Oweto Bridge. While the transport sector was not left out as rail system can now move from Lagos-Kano, Port-Harcourt – Maiduguri etc.”
The minister stressed that the pivotal role of the banking sector in the growing of the nation’s economy was also considered hence the capitalization process which strengthened the financial sector, adding that the 22 banks in Nigerian market are now fully stable and capitalized.
He added that non-performing loans have fallen to about 5%; but however noted that enough lending is going on at affordable interest rates so the government is restructuring existing DFIs to get in private sector capital as well as creating a new wholesale DFI for 10-15 year money at affordable rates.
According to him, “The capital market has now rebounded while stock market index has risen by 71% since May 2012; Stock market capitalization (value of listed companies) has increase by 66.2% since May 2012 to ₦11.8 trillion. State of the Nigerian Economy: Robust average GDP growth of 7.01% was recorded in 2011 and 2012; Despite the continued slowdown in the global economy, Market capitalization rose to 8.98 trillion in 2012 from N6.55 trillion in 2011 (37.3% increase). It Stood at N12.07 trillion as at end May 2013.
At this juncture, it is pertinent to reiterate the views of those who had in the past made positive comments on the transformation agenda of President Jonathan particularly as it regards the nation’s economy. Their opinions are justifiable owing to the above enumeration of intimidating achievement half way into his first term.
An economist and public affair commentator Dr, John Nnaemeka appeal to all Nigerians to support the good work Mr. president is doing while also calling on President Jonathan to seek reelection with the view to continuing the noble transformation that is currently ongoing.
In conclusion, it is incumbent at this point to borrow a clause from President Jonathan when he said this administration’s achievements as articulated in the midterm report are verifiable and therefore urged Nigerians and critics of his regime to mark the progress of this administration with their own marking scheme. “I challenge you to fault any part of my midterm report” he challenged his critics. In similar vein, the above facts and figures that chronicle the economic advancement and development of other sectors are also enough to convince the doubting Thomas that this administration is on the right track.