The presidency Tuesday allayed fears over the state of the economy following falling revenue from oil, Nigeria’s major source of foreign exchange earnings, caused by the drop in production and falling prices in the international market, which has negatively affected the revenue accruing to the Federation Account.
Besides, the production target for crude oil has fallen below the 2.528 million barrels per day (mbpd).
Earnings from oil sales contribute a major percentage of the nation’s foreign exchange earnings.
Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, had in April said that the government would resort to withdrawals from the Excess Crude Account (ECA) as an interim measure to ward off any threat to the economy.
Nigeria had a balance of $7 billion in ECA at the time, but this had dropped to $5.27billion in May.
The minister, who gave an overview on the economy, had explained that Nigeria was losing a total of about 300,000 barrels per day, blaming the losses on the activities of oil thieves and pipeline vandals.
The losses, she added, translated to a drop of $1 billion in revenue per month.
Despite the drop in revenue, the Senior Special Assistant to the President on Public Affairs, Dr. Doyin Okupe, told reporters in Abuja that there was no cause for worry as the economy was in safe hands.
He also said the federal government had no plan to renew the pipeline surveillance contract given to a former militant, Mr. Government Ekpemukpolo alias Tompolo, explaining that the initial contract was awarded by the late President Umaru Musa Yar’Adua.
Okupe spoke against the backdrop of fears over the discovery of shale gas by the United States and its likely effect on crude oil prices, as well as a reaction to the statement by the Action Congress of Nigeria (ACN) asking the federal government to be honest with Nigerians on the state of the nation’s economy.
ACN had said that all indications showed that things were not as rosy as the government was trying to make Nigerians believe.
But Okupe said various fiscal policies, reforms and programmes adopted by the Jonathan administration would keep the economy in good shape.
“The truth is that contrary to this thinking, Nigeria’s total national crude oil production is 2.06 million barrels per day. Europe has become a major destination for Nigerian crude oil cargoes, with the volume of Nigerian crude oil grades going to Europe increasing from 28 per cent in 2011 to about 38 per cent in 2012.
The presidential aide added that the federal government was adopting appropriate strategies to effectively mitigate the impact of decline in the US markets.
“While the Nigerian economy, like other oil dependent ones globally, often suffer from drop in sales and fluctuation in international pricing, the Jonathan administration has implemented key reforms to reduce dependence on oil and these reforms have resulted in the agricultural sector alone contributing over 40 per cent to the Gross Domestic Product in two years. Oil exports are now 69 per cent of our total exports as against 91 per cent in 2008”.
Okupe explained that the federal government is also currently implementing measures to reduce incidence of crude oil theft in the last two years.
For instance, he said the navy and maritime agencies had been equipped with modern tools to patrol the waterways as part of efforts to stem oil thefts.
President Goodluck Jonathan, he added, has also solicited the co-operation of the United Kingdom, United States and other countries in tracking and apprehending oil thieves.
Okupe also explained that the Jonathan administration has been working assiduously to reduce the cost of governance, which has resulted in recurrent expenditure dropping from 74 per cent in 2011 to 68 per cent in 2013, adding that it is expected to further go down next fiscal year.
“Just three weeks ago, government began the implementation of reforms suggested by the Oronsaye committee to further reduce recurrent expenditure by about N1 trillion in the next three years through the rationalisation of agencies and departments of government with similar functions.
“Domestic government borrowing declined from N852 billion in 2011 to N588 billion in 2013. Our national debt is 21% of our GDP compared to South Africa (42.7%) Sub Saharan Africa (34.2%) USA (106%) Japan (225%) United Kingdom (90%). Our foreign reserves have climbed up to almost $50 billion while the exchange rate has been steady,” he added.
He also said the federal government was not relenting in infrastructure as major roads such as the Kano-Maiduguri, Benin-Ore, Abuja-Lokoja, Owerri-Onitsha, Katsina-Daura, East-West road and many others were being rehabilitated or reconstructed.
Besides, the second Niger Bridge has been concessioned and work is in steady progress while the contract for the rehabilitation of the Lagos-Ibadan Expressway has been awarded at a total cost of N160.7 billion to Julius Berger construction company and the RCC.
Meanwhile, a survey conducted by the CLEEN Foundation, a Nigerian Non Governmental Organisation in collaboration with the Afrobarometer Network, a Pan- African network of survey researchers and analysts and the Centre for Democratic Development, CDD-Ghana has said that the Nigerian economy has further nose-dived under the President Goodluck Jonathan and PDP-led federal government than any other time during the country’s current democratic dispensation, Presenting the report to newsmen yesterday in Abuja, Vice Chairman, CLEEN Foundation, Prof Etannibi Alemika disclosed that the current survey is the fifth round in a series of surveys conducted from 1999 when the country regained her democracy.
On high food imports, Okupe said the Jonathan administration had achieved a reduction in the quantity of importation of rice, a major staple food and dominant import item which drains huge foreign exchange.
“Rice imports have therefore fallen from 5.2 metric tonnes to about 2 million metric tonnes in two years with the ultimate goal of attaining 100 per cent sufficiency by 2015.
“Besides, wheat imports have reduced from 4.1 million metric tonnes to 3.7 million metric tonnes within the same period while sugar imports are also on the decline.
Fielding questions on why the federal government awarded the pipeline surveillance contract to Tompolo, Okupe said the contract was awarded by the Yar’Adua administration but that Jonathan would not renew it.
“In total, all the above measures have saved Nigeria N857 billion which would have been spent on food imports. In recognition of these and other measures, the Food and Agriculture Organisation FAO recently presented an award to Nigeria and other countries for combating hunger and attaining the first goal of the Millennium Development Goals, three years ahead of the 2015 target date.
“The inviolable truth is that the Nigerian economy, like the economy of other nations, has its challenges which the Jonathan administration has courageously and innovatively been tackling with measurable, obvious and clearly tangible positive results in the last two years.
“With these considerations therefore, It is unfair and incorrect for anyone to suggest an impending collapse of the economy on the basis of a drop in crude oil sales, which is not within the control of any single nation, without taking into account current efforts by government to diversify the economy as well as fiscal measures which have resulted in inflow of over $14 billion new investments in the non-oil sector of the economy as well as other favourable ratings of the Nigerian economy by international ratings agencies,” he said.
Chuks Okocha and Yemi Akinsuyi