Nigeria’s economy has turned the corner and is now firmly on the path of growth, Budget and National Planning Minister, Senator Udoma Udo Udoma said in Uyo, Akwa Ibom State, on Wednesday.
Pointing to the recently released 4th quarter numbers by the National Bureau of Statistics, the Minister told a gathering of media practitioners at the Nigeria Union of Journalists Press Centre, that the report shows the strongest performance since the economy emerged from recession.
“It shows that 39 out of 46 economic activities are now growing. Agriculture is growing; Manufacturing is growing, and Services has recorded its best performance in 11 Quarters. Particularly notable is the fact that the growth is driven by the non-oil sector which has recorded its strongest growth since the fourth quarter of 2015. In short, we have turned the corner and are now firmly on the path of growth, he said”
Senator Udoma said the current real GDP growth performance is most encouraging and shows a movement in a very positive direction, especially with regard to the non-oil sector performance; and assured that with the Buhari Administration’s continuing commitment to the implementation of the ERGP, the economy is expected to further strengthen in 2019, and over the medium term.
He explained that at inception the administration faced real crisis in the economy which included a sharp drop in oil revenues with consequent fiscal challenges as the Federal Government had to struggle to meet its commitments while many States were unable to pay salaries on a regular basis. Investors and businessmen complained about the difficulties they encountered in doing business in Nigeria; Foreign reserves had dropped from $37.33 billion in June 2014 to $23.81 billion in September 2016 and inflation had risen from 9.2% in June 2015 and peaked at 18.5% in December 2016 coupled with exchange rate instability as the Naira lost value in the parallel market, ultimately falling to as low as N520/US$.
These, he further explained, led to the economy dipping into recession by the second quarter of 2016 registering GDP contraction of -1.49% from where it dipped further to -2.34% by the third quarter. Government had to take immediate steps to stop the economic drift and reverse the collapse, he added.
He enumerated the steps to include the introduction of an expansionary budget in 2016 christened the Budget of Change, because once an economy begins to decline and goes into recession, the private sector is usually reluctant to invest. Government must intervene to boost the economy and restore confidence and putting in place a comprehensive Medium Term Plan – the Economic Recovery and Growth Plan (ERGP), 2017-2020 with the broad of objectives of restoring growth, investing in the people and building a globally competitive economy.
The Minister also explained measures introduced under the ERGP include:
· Establishment of Investors’ and Exporters’ FX window by the Central Bank of Nigeria to deepen the market, boost liquidity and accommodate all FX requirements;
· Setting up the Presidential Enabling Business Environment Council (PEBEC), which initiated and completed a 60-Day National Action Plan across many reform areas to improve the country’s Ease of Doing Business Ranking. This was complemented by Issuance of Executive Order EO1;
· Establishment of Nigeria Industrial Policy and Competitiveness Advisory Council as a vehicle for partnering with the private sector on the industrialization agenda;
· Partnering with the private sector on infrastructure development through various models such as Road Trust Fund Scheme, Concessions arrangements; Public, Private Partnerships (PPPs), etc.;
· Introduction of Social Investment Programme to take care of the poor and the venerable, build skills, and support small business enterprises with N500 billion allocation in annual budgets every year;
· Support for agriculture with over N120.6 billion disbursed to more than 800,000 farmers under the Anchor Borrower’s scheme, including the revitalization of 11 fertilizer blending plants, setting up of special Presidential Committee on key commodities such as Rice and Tomato;
· Improving domestic revenue mobilization by positive engagement with communities in the Niger Delta so as to reduce disruptions to oil production. Other initiatives directed at increasing revenue mobilisation include the Voluntary Assets and Income Declaration Scheme (VAIDS), Executive Order on remittances of GOEs Operating Surplus, etc.;
· Initiatives to enhance public efficiency include the establishment of an Efficiency Unit within the Ministry of Finance to cut costs and block leakages. Other initiatives include the implementation of the Treasury Single Account, Whistle Blowing Policy, Presidential Initiative on Continuous Audit, and implementation of Integrated Payroll Personnel System (IPPIS) across MDAs to enhance efficiency and eliminate unjustified payroll entries;
· Adoption of 22-point Fiscal Sustainability Plan with the States to encourage discipline in the management of State finances;
· Increased budgetary allocations to capital expenditure – from 16.1% in 2015 to 30.2% in 2016, 31.7% in 2017 and 31.5% in 2018 – with priority given to the key execution priorities of the ERGP, as well as human capital and security, which are amongst the key objectives of the ERGP; and,
· Improved capital expenditure releases, in spite of revenue constraints – N1.2 trillion from 2016 Budget, N1.58 trillion in 2017 Budget and N1.23 trillion from the 2018 Budget as at 10th January, 2019.
He was delighted that the implementation of the ERGP is yielding positive results. “We have improved oil production to take advantage of the slight recovery in oil prices. The economy is now on a positive growth path after exiting recession in Q2 2017, and other macroeconomic indicators have also witnessed significant improvements.”
The improvements he listed include:
· Real GDP growth has improved from -2.34% in Q3 2016 to 1.17% in Q3 2017 and to 1.81% in Q3 2018. The recent report by the National Bureau of Statistics (NBS) on GDP shows that Real GDP grew further by 2.38% in Q4 2018 - stronger than 2.35% growth inherited by the administration in Q2 2015. For the full year 2018, real GDP stood at 1.93% higher than 0.82% in 2017.
· The performance of Real GDP has continued to be driven by the non-oil sector which grew by 2.70% in Q4 2018 up from 2.32% in Q3 2018, 2.05% in Q2 2018 and 0.76 in Q1 2018. This also compares favourably with -0.33% in Q4 2016 and 1.45% in the corresponding quarter in 2017. The growth of the non-oil sector in Q4 2018 represents the strongest growth in the sector since Q4 2015.
· Key sectors like Manufacturing, Agriculture, Quarrying and other minerals and Services are witnessing steady growth. While the Manufacturing sector grew by 2.35% in Q4 2018 compared to 1.92% in Q3 2018, Agricultural sector rose from 1.91% in Q3 2018 to 2.46% in Q4 2018. Services recorded its best performance in 11 quarters, growing by 2.90% in Q4 2018 compared to 2.64% in the previous quarter. In addition, Quarrying and other minerals grew by 20.95% in Q4 2018 as against 17.03% in Q3 2018.
· Inflation Rate has been trending downwards from 18.55% as at December 2016 to 15.37% in December 2017 and further to 11.44% in December 2018. This is below the ERGP target of 12.42% for 2018.
· Stability has been restored in the Exchange Rate Market bringing near convergence between the interbank rate (NIFEX) and the autonomous rate (NAFEX) over the past 12 months.
· There is sustained accretion to External Reserves from $23.81 billion in September, 2016 to $43.042 billion as at 4th February, 2019.
· Capital inflows have improved by 56.7% from $1.82 billion in Q3 2016 to $2.86 billion in Q3 2018.
· The economy has witnessed sustained positive trade balance since Q4 2016, as the value of Nigeria’s export continue to exceed imports. As at Q3 2018, Nigeria’s trade balance stood at N681.27 million as against a deficit of N135.96 million in the corresponding quarter of 2016.
· Manufacturing Purchasing Managers’ Index (PMI) in the month of January 2019 stood at 58.5 index points indicating expansion in the manufacturing sector for the 22nd consecutive month.
· Nigeria’s rank in the World Bank’s Ease of Doing Business Index improved from 170th in 2015 to 146th in 2018. This shows a movement by 24 places reflecting the impact of the reforms in the business environment.
Also, the Minister said Government is making significant progress on the implementation of the various components of the National Social Intervention Programme (N-SIP), stating that as at December 2018 the following had been achieved:
· 1,646,395 loans have been successfully disbursed under the Government Enterprise & Empowerment Programme (GEEP), with 1,302,793 of the loans given under the TraderMoni scheme;
· Over 9.3 million school children are currently being fed each day in 49,837 schools across 24 states under the Home-Grown School Feeding Programme. This programme has also provided direct jobs to 96,972 catering staff engaged under the scheme;
· 297,973 poor Nigerians in 217 Local Government Areas (LGAs) across 20 States, have benefited from the N5,000 Conditional Cash Transfer Scheme and 2,530 community facilitators have been trained;
· 500,000 graduates are benefiting from the N-Power programme while 20,000 non-graduates in the N-Build category are either currently in training or serving as interns
He also pointed out that one of the key initiatives to facilitate the implementation of the ERGP, particularly to unlock private investments and create jobs, was the conduct of Focus Labs in key selected areas of the economy, which has led to a number of quick wins for the country including the establishment of Nigeria’s first Gold Refinery in Ogun State.
Government, he stressed, is committed to an increase in the Minimum Wage as part of efforts toward improving the standard of living of Nigerian workers, noting that some provision has been made for this in the 2019 Budget while a high-powered Technical Committee has been set up to advise on ways to ensure that the attendant wage adjustments can be funded without increasing the level of borrowing, as well as on how to implement these consequential adjustments in such a manner as to minimize their inflationary impact.
The Minister also noted that even with the improved budgetary allocations to infrastructure, government spending is not sufficient to address the large infrastructure deficit which is why government is encouraging Public Private Partnerships pointing particularly to the Tax incentives on Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme which seeks to leverage private sector capital for the development and refurbishment of road networks in industrial clusters and key economic areas in the country.
This, he said, entitles private investors to full recovery of the cost incurred on road projects in the form of a Road Infrastructure Tax Credit which can be utilized against participants’ future Company Income Tax (CIT) payable to the Federal Government.
Special Adviser (Media) to the Hon. Minister
· Real GDP grew by 2.38% in Q4 2018
· Non-oil sector drives economic growth
· Services sector records best performance in 11 quarters
· 39 out of 46 economic activities record growth in Q4
Minister of Budget and National Planning, Senator Udoma Udo Udoma, has expressed delight at the 4th Quarter 2018 numbers just released by the National Bureau of Statistics (NBS). The report shows that the real Gross Domestic Product (GDP) grew by 2.38%, indicating the strongest quarter growth since the economy slipped into recession in 2016.
The full year 2018 real GDP stood at 1.93%, higher than the 0.82% growth rate recorded in 2017.
The Minister was particularly encouraged by the fact that the growth was largely driven by the non-oil sector which grew by 2.70% in the quarter, posting a growth of 2.0% for full year 2018, representing the strongest growth in non-oil GDP since the fourth quarter of 2015.
Senator Udoma who was reacting from Uyo, Akwa Ibom State, on Tuesday, said the results show a clear indication of recovery as the Nigerian economy continues to post signs of improvement.
These results, he added, reflect the Buhari administration’s continued implementation of targeted policies, programmes and projects across various MDAs and other sectors of the economy as set out in the ERGP. “Adherence to the ERGP has resulted in the economy coming out of recession and heading towards sustainable economic growth,” he said.
At the Dialogue Session on Nigeria’s Economy organized by Deloitte in Lagos penultimate Thursday, the Minister had indicated that with the policy actions of the Buhari Administration in the last three years and the sustained implementation of the ERGP, the Nigerian economy will continue to maintain its recovery and increase its growth trajectory in 2019.
He had told the participants at the dialogue that though the growth performance is still not where we would like it to be, the direction of growth indicates a positive momentum, especially with regard to the non-oil sector. "Our aim is to take all measures necessary to ensure that we increase the growth rate whilst maintaining fiscal sustainability”, he had stated.
The 2018 fourth quarter GDP result reinforces the Minister’s position as it shows a 0.57% increase over the 1.81% real GDP figure posted in the third quarter of the year and indicates a stronger growth level than the 2.35% which the Buhari administration inherited in the second quarter of 2015. These numbers, released in accordance with the NBS Release Calendar, are the final quarter and 2018 full year figures.
According to the NBS report, real GDP grew by 2.38% in Q4 2018 compared to 1.81% in Q3 2018 and 1.17% in Q3 2017. For the full year 2018, real GDP growth stood at 1.93%, higher than the 0.82% achieved in 2017.
The report further shows that the growth was driven by the non-oil sector in Q4 2018, up from 2.32% in Q3 2018; 2.05% in Q2 2018 and 0.76 in Q1 2018. This also compares favourably with -0.33% in Q4 2016 and 1.45% in the corresponding quarter in 2017. For the full year 2018, it indicates that the non-oil sector stood at 2.0% as against 0.47% in 2017.
A further breakdown of the non-oil sector shows that the Q4 growth was driven by Transportation which grew by 9.48% (13.91% for 2018), the Construction sector by 2.05% (2.33% for 2018) and Electricity by 0.95% (7.30% for 2018). These three sectors form major parts of the infrastructure component of the ERGP, which has been one of the priority areas of the Buhari administration.
Other non-oil sectors that drove growth in Q4 2018 include Telecommunications (16.67%), Agriculture (2.46%) and Quarrying and other minerals (20.9%). There was also strong growth recorded in the Manufacturing sector which grew by 2.35% compared to 1.92% in Q3 2018 and 0.14% in Q4 2017.”
While the non-oil sector drove GDP growth in Q4 2018, the oil sector slowed down with Crude oil and Gas GDP contracting by -1.62%, compared to -2.91%in Q3 2018. Industry performed better as it grew by 0.95% compared to -0.11% in Q3 2018.
The report also indicated that Services GDP growth recorded its best performance in 11 quarters, growing by 2.90% in Q4 2018 compared to 2.64% in Q3 2018. While growth in the economy was moderated by the contraction in the oil sector, 39 out of 46 economic activities recorded positive growth in Q4 2018.
The Minister while reviewing the growth performance observed that the encouraging result in GDP growth is also consistent with improvements in other indicators including inflation, foreign reserves, exchange rates, trade balance and capital inflows, amongst others.
The Minister was therefore happy and most encouraged as these indices show an economy that is on the mend and on the path of recovery to sustained growth. “It is a clear indication that our programmes and policies are on the right track,” he added.
Special adviser to the Hon. Minister
12th February, 2019
Senator Udoma Udo Udoma, Honourable Minister for Budget and National Planning and, Dr. Okechukwu Enyinna Enelamah, Honourable Minister for Industry, Trade and Investment, both led the Nigerian Delegation to the 2019 edition of the World Economic Forum (WEF), in Davos, Switzerland.
In Davos, they aggressively pushed the economic priorities of Nigeria, within the development policy framework of the Economic Recovery and Growth Plan (ERGP). The Ministers engaged with government representatives from other regions, business leaders and, multinational economic operators, representing sectors that are principal drivers of economic growth. The engagements were within the framework of the government for economic, trade and investment reform priorities to enhance trade flows and attract FDI for economic modernization, growth and job creation.
Minister of Budget and National Panning, Senator Udoma Udo Udoma participated at the session on Shaping a New Architecture on the Global Economy. He also participated at the African Ministers of Finance and Economic Development on Africa’s Growth Agenda, during which Ministers took stock of economic issues and explored ways of deepening intra-African growth. Minister Udoma held a number of bilateral meetings, including the meeting with Mr Ivo Menzinger, the MD of Swiss Re Management Limited. In meetings, Honourable Minister Senator Udoma reiterated that, “Nigeria remains Africa’s number one economy and the FGN, in partnership with the private sector, shall continue to take all necessary measures to improve this position”.
Dr. Enelamah participated at a number of meetings with counterpart Ministers responsible for International Trade. These included the Ministerial Meeting on Electronic Commerce; the Annual Meeting of Trade Ministers; a bilateral meeting with H.E. Mr. Ignazio Cassis, the Swiss Foreign Minister; and, meetings with investors, including representatives of Heineken and Citibank.
At the Ministerial Meeting on Electronic Commerce, participating Ministers confirmed their intention to commence negotiations on trade-related aspects of ecommerce. At this meeting, 76 Ministers, including Nigeria, representing the leading economies in the global economy, accounting for 90% of world trade, adopted a Joint Statement on e-Commerce. HM Enelamah noted that, “the global economy is undergoing a fast-paced technological revolution, characterized by complex challenges and significant opportunities. All shall be affected. Therefore, ecommerce negotiations must be constructive, pragmatic and provide benefits for developing countries like Nigeria. Nigeria must be at the table to ensure beneficial outcomes. Rules shall not be made for Nigeria by others in Nigeria’s absence”. At the Annual Meeting of WTO Ministers, Minister Enelamah underscored the urgent necessity for WTO reform to ensure its relevance for the 21st Century and for development to be more sharply mainstreamed into its work.
Ministers Udoma and Enelamah, in their various coordinated engagements, assured global leaders and representatives of industry that the upcoming elections in Nigeria would be transparent, fair, open to Observers and respectful of the rule of law. Notwithstanding the electoral process, President Muhammadu Buhari remained focused on the three priorities of government for improved security, the fight against corruption and economic growth for job creation. A central and repeated message in their meetings with investors was: “Give us your bold plans to scale-up your business and job creation and the FGN shall provide you with support and incentives”.
Other Members of the Delegation were Ambassador Chiedu Osakwe, Nigeria’s Chief Trade Negotiator/DG Nigerian Office for Trade Negotiations; Mr. Ben Akabueze, Director-General Budget Office; Mr. Tunde Lawal, Director Macro-economic Analysis, Budget and National Planning; Mr. Akpandem James, Special Adviser (Media and Communication) and Dr Usenobong Akpan, Technical Assistant to the Hon. Minister for Budget and National Planning.
Monday, January 28, 2019
Nigeria and India have a lot to benefit from each other through development cooperation, the Budget and National Planning Minister, Senator Udoma Udo Udoma, told the Indian High Commissioner to Nigeria, Mr AbhayThakur, who visited him in Abuja on Thursday.
The Minister said that there are lots of potentials in Nigeria that India could tap while Nigeria has a lot to learn from India’s successes in the areas of technology, particularly rail and power, as well as human capital development.
He explained that the Buhari Administration is focused on bridging the infrastructure gap in the country, particularly transportation and power infrastructure; and is very desirous of creating avenues to lift majority of Nigerians out of poverty through agriculture and other empowerment programmes.
President Buhari, he said, has a vision and dream of connecting every city and town in Nigeria with standard gauge rail lines; and Nigeria would stand to benefit from India’s experience as well as assistance in achieving the goal in the rail sector. “This is an area we will like to collaborate with you to see how we can tap from India’s experience,” he said.
Like India, Nigeria has been working hard to bring down its poverty levels, which is why government is putting a lot of resources in the area of empowering poor and vulnerable persons and lifting them out of poverty. N500 billion is annually provided for in the national budget for social intervention programmes which are targeted at empowering the people so that they can be useful to themselves and the society. He emphasised that under the Social Intervention Programme (SIP), “we are not just giving the people fish, we are also teaching people how to fish.|”
Senator Udoma said although India is one of Nigeria’s largest trading partners, especially in crude oil, he would want the Asian country to buy more of Nigeria’s oil and also develop interest in the country’s gas sector.
He assured the High Commissioner that the tempo of economic activities in the country will not slow down due to the forthcoming general elections as “the President is not looking at the next election, but looking at the next generation with the purpose of taking Nigeria to the next level”.
The High Commissioner, Mr Thakur, who resumed work in Nigeria last month said India was willing to strengthen its development cooperation with Nigeria and would be glad if Nigeria can take advantage of some of the assistance programmes the Indian Government has made available to the African continent.
He pointed out that although the leaders of the two countries had some dreams about development cooperation in some critical areas, some of those dreams are yet to be transformed into real projects on the ground.
Mr Thakur said India would like to collaborate further with Nigeria in the rail and power sectors as well as any other areas of interest to Nigeria.
Special Adviser (Media & Communication) to the Hon Minister
The Minister of Budget and National Planning, Senator Udoma Udo Udoma is optimistic that the Nigerian economy will continue to maintain its recovery in 2019 as the real GDP growth is expected to increase from 0.8% in 2017 to 2.1% in 2018 and 3.01% in 2019, with the sustained implementation of the ERGP.
Senator Udoma who was speaking at the Deloitte Dialogue on Nigeria'’s Economic Outlook for 2019, in Lagos on Thursday, said the proposed 2019 Budget is intended to further reposition the economy on the path of faster, inclusive, diversified and sustainable growth, and to continue to lift significant numbers of our citizens out of poverty.
The Minister explained that with the improved coordination of fiscal and monetary policies, exchange rate stability, improved oil export earnings and capital inflows, as well as the continuation of the current prudent management of foreign exchange reserves by the CBN, inflation is expected to trend downwards to single digit of 9.98% in 2019 from 11.44% as at December 2018.
"Government is committed to growing the economy, and accordingly the 2019 Budget Proposal has been designed to continue to provide the stimulus and support required to spur growth in the economy.” he stated.
While indicating that the 2019 Budget is another step in the country's journey to ensure diversified, inclusive, sustainable growth, creating jobs for the teeming population and prosperity of Nigerians, Senator Udoma said government expects more diversified and inclusive growth in 2019 and over the medium term.
He said though the current real GDP growth performance is still a little sluggish, which is expected as we are just recovering from recession, it however indicates a positive momentum, especially with regard to the growth of the non-oil sector. "Our aim is to take all measures necessary to ensure that we increase the growth rate whilst maintaining fiscal sustainability."
Explaining the basis for the oil price projections in the budget, the Minister said oil prices depend on the interaction between supply and demand for oil in international markets. It is however the supply-side factors that have been mainly responsible for the price increase in 2018 and the recent decline, he added.
Although Crude oil price soared in the second half of 2018, rising as high as US$81.20/b on September 24, 2018 – a four year high - it declined towards the end of 2018, falling below the 2019 budget benchmark of US$60/b. Whilst the Government is obviously concerned about this recent trend, most analysts believe the price will recover in the course of 2019, and so the Federal Government has not seen any need to adjust its benchmark price of US$60. However, he assured the gathering that if, at any time prior to the passage into law of the 2019 Budget by the National Assembly, there is strong reason to believe that this benchmark price of US$60 is unlikely to be realised then the Executive will, of course, engage with the National Assembly to agree a lower benchmark price.
On oil production levels, the Minister said that President Buhari has directed the NNPC to work hard to achieve the 2.3mbpd budget target. "The ERGP Oil production target for 2019 is 2.4mbpd, NNPC production submission is 2.45mbpd. We have revised the ERGP target and NNPC forecast downwards to 2.3mbpd for the 2019 Budget proposal," he pointed out.
He explained that the 2019 proposed budget size is smaller than the 2018 Budget because of the need to contain the size of the deficit so as to keep our borrowing within prudent limits. The Minister pointed out that the proposed deficit of N1.859 trillion in 2019 is about 1.33% of GDP, which is within the 3% threshold stipulated in the Fiscal Responsibility Act (FRA) 2007.
The Minister indicated that even though Government has been increasing allocation to infrastructure government spending alone will be insufficient to address the infrastructure needs of the country. This, he explained, is why Government is encouraging PPPs. Tax incentives are being provided to encourage private sector investment in infrastructure. Hence the Executive Order 007 on Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme which was signed by the President on January 25, 2019.
"The Scheme seeks to leverage private sector capital for the development and refurbishment of road networks in industrial clusters and key economic areas in the country. It entitles private investors to full recovery of the cost incurred on the road project(s) in the form of a Road Infrastructure Tax Credit which can be utilized against participants’ future CIT payable to the Federal Government", he explained.
The Minister said that Government will continue to provide improved access to funding and supporting infrastructure to encourage small businesses, in particular. Government will also continue with the current emphasis on power, roads and rail. "We shall continue to expand generation, transmission and distribution of power from the national grid while developing innovative off grid solutions for schools, hospitals and markets.
"Efforts to improve hard infrastructure will be complemented by expanding reforms in the ease of doing business. We will continue to remove obstacles, reduce costs and ensure timely delivery of services so as to improve the environment for the private sector," he explained.
On the issue of the minimum wage, the Minister assured that Government is committed to an increase in the minimum wage, and that, accordingly, some provision has been made for this in the 2019 Budget proposal. In addition, a high-powered Technical Committee has been inaugurated by President Buhari to identify additional sources of revenue to ensure that the rise in the Government’s wage bill does not crowd out the other responsibilities of government. The Committee is also to advise on ways to implement any consequential wage adjustments in such a manner as to minimize its inflationary impact.
The Minister of Finance, Mrs Zainab Ahmed, also spoke on "Revenue Growth and Economic Development: Expectations for 2019".
The event featured panel discussions with sector experts including the Kaduna State Governor, Mallam El Rufai (who was represented); Statistician General of the National Bureau of Statistics, Dr Yemi Kale; and the Senior Special Assistant to the President on Industry, Trade and Investment, Dr Jumoke Oduwole, among others. The event was chaired by the Chairman of Zenith Bank, Mr Jim Ovia.
Special Adviser (Media) to the Hon. Minister