No Quick Fix To Nigeria’s Economy Woes- Finance Minister Kemi Adeosun

Finance Minister, Mrs Kemi Adeosun, said, yesterday, that there were no quick solutions to the nation’s problems. This came on a day Minister of Solid Minerals, Dr. Kayode Fayemi, said the federal government was set to revive the steel and mining sector and provide intervention fund.

Similarly, Minister of Trade and Investment, Mr Okechukwu Enalama, said Nigerians should expect industrial revolution to effect a change in the economy. Adeosun, who spoke on Channels Television programme, Sunrise, in Lagos, was reacting to assertions of former Education Minister, Oby Ezekwesili, that President Muhammadu Buhari’s economic policies were archaic. Ezekwesili had, as guest on Platform, a programme organised by The Covenant Christian Centre last Monday, advised the President to review his policies, saying they were not benefitting the masses. But speaking on the television programme, Adeosun dismissed Ezekwesili’s position, maintaining that the federal government had plans to revitalise the economy, noting, however, that there were no quick solutions to the nation’s current economic woes. Accusing previous administrations of failing to save when the country had massive revenue from high crude oil prices, the minister said things were currently difficult because the federal government inherited an empty treasury and a high debt profile. She said: “I disagree with Mrs Ezekwesili…. The present government does not operate a command-and-control economic system as alleged by the former minister. “What we are now trying to do is reset the economy so that we never end up in this situation again; and how do we do that? We have to have a more diversified economy, a more diversified revenue base. “If you look at oil, its only 13% of our GDP but it represents 70% of government’s revenue, which means if anything happens to oil, it affects everybody. “The question we are trying to now resolve is: The remaining 87% of GDP, why is it contributing so little to government’s revenue? If we are able to have those other revenues, which are much more stable, predictable and less volatile, then if the oil price goes down, we’ll be able to maintain some level of stability. “We have looked at what government has been spending money on; only 10% was spent on capital, while 90% was spent on recurrent items as  salaries, travelling, training and so on and those things don’t grow the economy; capital (expenditure) is what grows your economy. “This budget that is being finalized has a 30% commitment to capital and we have said we want to maintain that commitment. “There are no quick solutions to the current economic woes. We are going to pump N350 billion into the economy until we see growth. The job will be done painstakingly, and we will come out of it better.” Speaking at a separate interface with the Newspapers Proprietors Association of Nigeria, NPAN, Adeosun said the N165 billion monthly salaries to federal civil servants was over-bloated and could no longer be sustained by government. She said the N165 billion being paid to federal civil servants monthly represented 40 per cent of the total spending of government. The minister said the figure was too high and government was pursuing aggressive measures to detect and prosecute ghost workers and other saboteurs in the system. “We spend 165 billion every month on salaries and when I came in there was no checking.  Now, we have created a unit assigned with the sole responsibility of checking the salaries and catching those behind the over bloated salaries,” she said. Adeosun said that the Integrated Payroll and Personnel Information System, IPPIS, introduced by the previous administration were faulty and sabotaged by the element benefitting from the salary fraud. She said that many Federal Government establishments including the Police were yet to be captured in the system. According to her, it is shocking that the Nigerian Railway Corporation which was not fully functioning still had 10,000 workers in its payroll serviced by government. The minister assured that government would correct the anomalies in the payroll system and weed out all ghost workers in the service. Adeosun said that the fiscal focus of the administration was to ensure an economic growth that would be measured on job creation and productive sectors. “The economy is not measured by how many private jet we have but how many jobs we create “People must be productive for the economy to grow. “We have been a consumer economy, but we want to be productive and stop buying everything from abroad. “We have been borrowing to pay salaries for years and that has to stop because it is not sustainable. “Last year, we spent N64 billion on travelling and only N90 billion on roads. Travelling does not grow the economy and this must also stop,” she said.

The minister said that the compound GDP of the country had been growing negatively in the last 10 years and the administration was working to correct the trend. She assured that the administration would be the most discipline government the country has ever had in terms of fiscal accountability and responsibility. Also speaking at the meeting, the Minister of Agriculture, Audu Ogbeh said government would reposition the agricultural sector to become the mainstay of the economy. “The ministry will give policy direction and coordination to make farming attractive and for people to practice it as business. “Government will put policy in place to recover the 22 billion dollars which is floating out of the country’s resources to sustain farms in other countries back to our villages. “Government will also ensure that bank review the two digits interest rate on loan to farmers and other productive sector. “The change promised may appear to be slow, but it is actually taking place. In this year, we have harvested million tons of rice,” he said. The Minister of Environment, Amina Mohammed said government would complete the clean-up of the Ogoni land in the next one year and ensure the degraded land was revived for productive purposes. She said the Great Green Wall project of planting trees to control desert encroachment would also be given priority by the administration. Adeosun also said the Federal Government was targeting increased capital spending in a bid to boost long-term economic growth,. She disclosed that the government planned to increase its spending on infrastructure to 30 percent of total expenditure, up from 10 percent in 2015. According to her, the government will be investing N1.8 trillion on transport, roads, housing, power and health, with selective use of private capital through public-private partnership, PPP, programmes. Adeosun also stated that new procurement and capture rules for federal revenues being adopted, were a key to reducing the ease of corruption, noting that the TSA account had yielded strong results. Also yesterday, the Minister of Solid Minerals, Dr. Kayode Fayemi, said the federal government was set to revive steel and mining sector and provide intervention fund. Fayemi, who disclosed this  at a breakfast Business Session meeting with operators organised by Stanbic IBTC Plc in Lagos,  said government would not sell Ajaokuta Steel but concession it to private investors. He said government was committed to create 2000 jobs annually as the sector would help absorb such talent over the coming decade, adding that mining coudld be an important part of the solution sector when the intervention fund kicks off as a way of assisting operators to make the business viable and profitable. He further disclosed that the Ministry of Steel has begun to revalidate licences issued in the past years that had not been put to use. He said:   “There have been people with mineral title without being utilised, so we will revoke such licences when those people are not serious to doing the business and give to those who are committed to invest in the sector. “Our government came into office at a time when many people had abandoned the country’s manufacturing, agricultural and mining sectors. We are doing our utmost best to encourage diversification into these sectors which can employ a lot of people.” Speaking on the need for intervention fund , the Minister said:  “We would provide intervention fund in order to develop the sector. Already, I  have discussed with the Bankers Committee and the Central Bank of Nigeria, CBN, to determine how we can develop the fund. ‘’I have advised banks to set up Steel and Mining Desk and it is our hope that this fund will help the private sector to develop the sector. “Steel is the world’s most important engineering material and it is crucial to any country’s industrialisation objectives. In Nigeria most steel operations are focused on using imported scrap metal, and hot/cold rolled steel and wire coils to produce finished products such as steel roofing sheets, nails, pipes and reinforced steel bars.


Nigeria imports an estimated $3.3 billion of processed steel and associated derivatives, representing 80% of the $4.2 billion total metal products imported per year (25MT/annum). Despite the country’s relatively robust iron ore reserves, there are only 30 steel rolling mills in the country, with combined installed capacity of  6.5MT/annum; only 18 are operational, producing about 2.8 MT/annum using 100% scrap metal.” In his presentation at the meeting, Standard Bank’s representative, Mr. Anders Alfredson, said:  “It is critical to have a strong local industrial player as lead investor . ‘’Standard Bank, through its local subsidiary-Stanbic IBTC, is open to work with its existing clients in the country. Our partnering with an international mining company or steel producer can bring critical sector expertise as well as additional capital.’’ Meanwhile, the Minister of Trade and Investment, Mr Okechukwu Enalama, yesterday said Nigerians should expect industrial revolution to effect a change in the economy. Enelama, who stated this at the sectoral debates of the House of Representatives, said:  “The huge fall in oil prices is an opportunity for us to create something new to develop a diversified export base, a strong base of domestic manufacturing to magnify some of the current diversification efforts. “Our plan to continue to encourage and foster diversification of the economy is predicated on four pillars, which are to create an enabling environment for industry trade and investment in Nigeria. ‘’We are working to reposition the ministry as a facilitator and enabler of business and investment in the country. “We want Nigerians and the entire world to regard the ministry as an enabler of investments. “Also   an enabling environment which is progressively easier to do business, policies are predictable and consistent, the government acts as a partner to business   not a competitor or adverse regulator and there is increasing micro economic stability. “Then, we have started collaborating with state governments on measures to improve the industrial climate and operating environment for business. ‘’In the weeks ahead, we will be unveiling some important initiatives on how to address Nigeria’s core performance on various global competitiveness and ways of doing business indices. .”These core initiatives will focus on removing the many obstacles that stand in the way of business and business innovation in Nigeria. “In our estimation, the single enabler of doing business   in any country and, will be good for Nigeria as well, is a whole array of infrastructure “By infrastructure, we mean not only the hardware   infrastructure like transport networks and reliable power supply but also some infrastructure like transparent regulation, policy consistency, rule of law, a culture of efficient collaboration and synergy among various government agencies. “The second pillar of diversification strategy is to implement the Nigeria industrial revolution plan.  This plan will help us move from the exporter of commodities and raw materials to being an industrial economy. “Manufacturing contributes only 10 per cent to our GDP, much lower than it does in other emerging market economies.  Our industrialization ambition is hinged on Nigeria’s industrial revolution plan which was launched in 2014. “We are focused on identifying how supportive a select number of sectors in which Nigeria   has a comparative advantage.  We have seen success in industrialization policies in the cement industry and sugar is trying to replicate such success. “In automotive, cotton, textile and garment industry, we are continuing to engage players and stakeholders to see how we can better implement industrial policy that creates jobs, provide inclusive growths and share prosperity. “The third is   to champion Nigeria’s micro small and medium enterprises as a means of creating jobs and achieving inclusive growth. “SMEs are the unsung heroes of our economy, currently contributing over half of our GDP and possessing the potentialities to be more productive, given the right incentives. “Working through agencies like SMEDAN, Bank of Industry,   NEPC, and other agencies, we will be rolling out programmes and initiatives focused on supporting SMEs with financing, infrastructure, technical support   and training, as part of the N500billion social investment programme in the 2016 budget


Over two million traders, farmers and artisans will receive micro credit through a fund to be managed by BOI. “The 4th pillar is to proactively attract one term local and foreign investment.  How do we increase the level of domestic and foreign investment and savings in Nigeria, especially for the purpose of closing our massive infrastructure down? “ This challenging time we find ourselves call for the deployment of innovative financing solutions, targeted at a working capital wherever we can find it. We are going to see positive momentum in this front.’’


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