Friday, January 17, 2014

Okonjo-Iweala serves up Reps with Academic Response on State of the Economy

They asked for comprehensive answers to fifty ‘knotty’ questions on the Nigerian economy. But the members of Nigeria’s House of Representatives Committee on Finance, have probably gotten more than they expected: a 102 page response from the Coordinating Minister for the Economy, Dr Ngozi Okonjo-Iweala. Released Wednesday night by Paul C Nwabuikwu, her Special Adviser, her responses were spiced with tables and graphs and provided almost doctoral dissertation to the committee’s well publicized questions.

Her responses also in a way offered justifications for her 30 month helmsmanship of Nigeria’s economy.
Despite the doubts cast by the House Committee on the health of the Nigerian economy, Okonjo acknowledged the challenges but insisted the economy is showing real and measurable progress in many areas and that it is not stagnant, contrary to popular perception.
She insisted capital expenditure is consuming more money than when she assumed the role of co-ordinating minister; more jobs are being created, quoting the National Bureau of statistics that reported 1.6million new jobs in 2013.

She insisted roads, rail and other infrastructure are being improved and that the country is saving for the future and planning better for the present.
She said the Jonathan administration, contrary to the impression given by some critics, is making impact in the areas that, according to credible opinion polls, Nigerians are most passionate about.
According to her, the Jonathan administration is making a headway in job creation, a central focus of the administration as a total of 1.6 million jobs were created last year, according to the National Bureau of Statistics (NBS).

Of the 1.6 million jobs, 250,000 were seasonal and were created in the dry season farming in 10 northern states. In manufacturing, the Onne Oil and Gas Free zone created an estimated 30,000 direct and indirect jobs. The government special intervention programme YouWin supported young entrepreneurs, creating over 18,000 jobs. The SURE-P Community Services prgramme has also created 120,000 job opportunities, she said.
Key Nigerian highways which witnessed significant progress include Kano-Maiduguri road, the Abuja-Lokoja road, the Apapa-Oshodi road, the Onitsha-Enugu-Port-Harcourt road and the Benin-Ore-Shagamu road. Preliminary work has commenced on Lagos-Ibadan road and the Second Niger Bridge, she added.
The Railway Modernization Programme involving the construction of standard gauge lines is underway. The 1,124 km Western line linking Lagos and Kano is now functional while work on the Eastern line linking Port Harcourt to Maiduguri is about 36% complete. The Abuja-Kaduna Standard Gauge line has attained 68% completion, and the Itakpe-Ajaokuta-Warri Line which is presently 77% completed, will be completed next year. The annual passenger traffic on our railways has increased steadily: rising from 1 million in 2011 to 5 million in 2013.

She refuted the charge that Nigeria is racking up debts under her watch as Finance Minister. On the contrary, she said, the opposite is true.
But some of her responses also offered sobering insights into the Nigerian economy.
She disclosed how the escalating theft of crude oil in Niger Delta, is affecting foreign exchange inflow and the depletion of Foreign reserve and the Excess Crude Account. An average of 300,000-400,000 barrels of crude was stolen daily in 2013, she said, which is about 15 per cent of Nigeria’s daily production.
She also explained additional reason the Foreign Reserve fell from $48 billion at the end of 2012 to $42 billion at the end of 2013: the Central Bank in a bid to avoid a wide depreciation of the Naira, sold more foreign exchange. $10.8 billion was sold between the fourth quarter of 2012 and the third quarter of 2013. In contrast, the CBN sold $4.3 billion in the remaining part of 2012.

She also blamed oil theft and volatile oil prices for the depletion of the Excess Crude Account, plunging precipitously from $8.6bn in 2012 to $2.2 billion in 2013. AMCON she said has a total debt exposure of N4.67 trillion, out of which it had paid N1 trillion. It is due to pay another N868billion this year.
To the House Committee’s question on the financial implications of import waivers and exemptions to the Nigerian treasury, Okonjo-Iweala provided three tables, which however showed that Nigeria forfeited N26 billion last year on waivers, in contrast to the N8.5billion forfeited in 2012. In all, 2013 proved to be the most reckless in terms of granting waivers and exemption: N59.41billion was the cost to the national treasury. In 2011, the figure was N55.3bn and in 2012 it was N55.96bn.

What may be worrisome to watchers of Nigeria’s economy lies in Okonjo-Iweala’s disclosure about key government agencies, such as the NNPC and the Nigeria Customs Service not meeting their targets, consecutively the last three years. The NNPC proposed to generate N7.7trillion last year, But a month to the end of the year, it was able to generate N5.78trillion. The NCS planned to bring N914billion. But by the end of November, it had not even met half of the target as it generated just N433 billion. Only the Federal Inland Revenue Service has overshot revenue target, the past three years. In 2011, its target was N697 billion, but it raised N828billion. In 2012, its target was 715.4 billion. But it raked in N846 billion. Last year, the FIRS raised its target to N982 billion. But it exceeded the target by N3.4 billion at the end of November.

Source: PMNEWS

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