Kemi Adeosun spoke at a recent town hall meeting organised by the National Association of the National Institute of Policy and Strategic Studies, in collaboration with the Federal Ministry of Information and Culture in Abuja, the Minister of Finance spoke on the current economic challenges the country is going through.
She talks about diversifying the economy and the need to cut down on recurrence and increasing capital expenditure.
Here is the full speech;
The current challenges that we face in the economy would have happened anywhere. If you look at the statistics this economy has been heading in that direction consistently for the last seven to eight years. Our GDP growth was robust in nominal terms, was masking some very serious vulnerabilities, i.e it was the GDP growth that was not inclusive, and it was a GDP growth that basically consisted of a very high oil price, increasing debt levels.
Indeed, all the debt that was forgiven in 2005 has been gradually built again in what is largely an unproductive economy. Only 10 per cent of what we are spending was going on capital. It is a capital engrossed economy, no economy has ever grown or developed doing what we have been doing, which is spending 90 per cent, 90 naira of every 100 on recurrent and only 10 per cent on capital.
That capital, that’s the fiscal living that allows the economies to truly grow and if not addressed, we will only mask the problem but the problem will eventually vest and that’s what we really came in to inherit.
So, what did we decide to do? We had to attack the problem of recurrent expenditure. Currently, when we came in, N165bn every month went on salaries, as we speak now, we’ve reduced it to N159bn and every month, I am signing memos to remove people from the pay roll who have rather died, resigned or does not exist.
If you spend N165bn on salaries, there is very little left for capital,and that has been our problem. Just for context, N165bn per month on salaries. last year for the whole of the federation, we spent 19bn on roads, that is why we are where we are. We spent 4.1bn on transport, so the problems we are facing today have been builing up for some time.
This mantra of change is a fundamental change in the direction of the economy and how we manage the economy. And as we all know, change can really be extremely painful and change can be extremely difficult to do but we must change because the direction which we have been heading is not sustainable.
I want to however assure everybody that if ever there was a chance to get Nigeria’s economy right, it is now. We have the right leadership, if you look at all the economies that have grown, they have grew out of adversity. The Americans rebuilt their economy after the second world war, so did the British, so did the Germans, so did the Japanese.
Ethiopia, with a huge GDP growth has 60 per cent of their budget went to capital. It was built out of the adversity of them not being able to feed themselves. Now, everybody is hosting Rwanda, Rwanda is building because they had a genocide. Nigeria is rebuilding now out of one of the worst periods of economy that we’ve ever been through. And what we need is the co-operation of everybody with understanding of the real issues of why we are where we are and the fortitude to go through the fundamental changes that must happen to build an economy that Nigerians will be able to give a future to the next generation.
The diversification agenda is erectoric, the diversification agenda is an economic objective that we have achieved with what we are doing with the budget, with our implementation and with how we are managing our finances.
Some years we are borrowing, we need to borrow because we cannot wait for the oil price to recover. We have to borrow to invest in this large infrastructure project that are needed to unlock the competitiveness in our economy and create jobs for our people. That’s the objective of this government and that’s what we are working towards.
We are most extremely confident that we will get there. I know people are concerned about recession, recession is a word, we can come out of the recession, we can come out of a recession, we can make it as short as possible by speaking to the prescription which is, we must be disciplined in our expenditure, we must invest in our capital and we must diversify our economy.
As I close, I would like to remind us all that not only I’m I the minister for finance in terms of implementing the Federal Government budget but we are also responsible for the states and local governments. We have put together fiscal sustainable plans, encouraging the state governments to equally begin to impose those disciplines because there is no point in fixing the Federal and leaving the state and local governments because every Nigerian live in the state and local government, in other words, there are no Federal Nigerian.
This programme must go all the way down, everywhere there is government, there must be accountability, we must stop revenue leakages, we must fight the corruption and there must be value for money on what we spend. And that must go all the way down to the bottom, that is what will reposition this economy and that is what will unlock the growth opportunity of Nigeria.
As I close I’d like to say that when we started this journey nine months ago, every single foreign investor that was coming in was coming to complain, now they’re coming in to ask about transactions, that’s an extremely good sign for Nigeria. We have people coming in to ask us whether they can buy airlines from AMCON, we have people who want to establish fish farms, and we are pushing them to various opportunities across the country because there is a confidence in Nigeria that with this discipline and laydown where people are sure that money is no longer missing, we will finall deliver on the promises of Nigeria.
Via: Oak TV