Massive investment in infrastructure is the surest way to get the country economy out of recession, the Minister of Budget and National Planning, Senator Udoma Udo Udoma, on Tuesday told laureates of the Nigerian National Order of Merit. Addressing the annual forum of the laureates in Abuja during their 9th Award Winners Lecture, Senator Udoma said government therefore is looking at various strategic ways of restoring revenue and getting the economy back on the path of sustainable growth.
He pointed out that in spite of the revenue shortfalls experienced during the 2016 budget year, N753.6 billion has so far been released for capital expenditure, targeted principally at the Ministry of Power, Works and Housing, as well as the Ministry of Transportation.
This, in fact, exceeds the aggregate capital expenditure budget for 2015. He added. Justifying the priority given to infrastructure the Minister said there is no doubt that government led investment in public infrastructure is one of the fastest ways to get an economy out of recession. He told the gathering that government has been having difficulties funding the Budget because of the disruptions of oil production in the Niger Delta; but noted that notwithstanding current challenges, government must find ways to increase the level of its spending.
At one time, almost half of our production was shut because of pipeline vandalism. This compounded our economic situation and pushed us into the current recession we are experiencing in the country. We are looking at ways to restore our revenues and get the economy out of recession and back on the path of sustainable growth. He explained that the resultant epileptic income stream also affected exchange rate stability, another issue which has to be addressed if the country is to succeed in its development drive. According to him, exchange rate stability has been a major issue which the Federal Government has been grappling with as a result of the reduction in foreign exchange earnings caused by the fall in crude oil exports.
Therefore, he said, the Federal Government will welcome every genuine idea from experts on how to address these economic challenges; and is looking forward to receiving the various papers and recommendations from the lecture, some of which might be directly integrated into the National Recovery and Growth Plan which is currently being tidied up. The Minister was delighted that the forum which had the theme Mono-economy, Diversification, Exchange Rate stability and the Development of the Nigerian Nation, was organized to provide a platform for the laureates to deliberate and exchange ideas on salient issues of national interest thereby contributing to national development.
The key words of the theme, he noted touches directly on issues that are very reflective of the challenges the nation is currently facing. As you are aware, this Administration came in to meet an economy that was suffering from declining revenues and GDP growth, rising inflation, weakening balance of payments, declining foreign reserves, rising public debt and recurrent expenditure, a weak capital market, as well as rising unemployment. We designed the 2016 Budget specifically to address these issues.
He pointed out however, that with the implementation of some of the reforms of government, results are beginning to show in some strategic sectors like agriculture which recorded a 4.5 percent and solid minerals which showed a 7 percent growth in the third quarter of 2016. We said we would take action to improve Nigeria business environment; and now the President has set up a Presidential Council on Enabling Business Environment. This is designed to achieve the target set by the Strategic Implementation Plan (SIP), of moving Nigeria at least twenty places up the World Bank Ease of Doing Business Index within one year so as to attract more domestic and foreign investments.
He emphasized that government goal is to have an economy with low inflation, stable exchange rates, and diversified and inclusive growth. I am optimistic that many of the presentations made at this Forum will contribute ideas and initiatives that Government will find useful in developing and implementing the Economic Recovery and Growth Plan, particularly initiatives addressing our poor competitiveness, initiatives on how to improve our business environment, and, most importantly, initiatives which can help us in attracting investment in infrastructure, especially power, roads, rail and ports.
The Keynote speaker, a development economist and one-time Deputy Governor of the Central Bank of Nigeria, Dr Obodiah Mailafia, in his paper titled Diversifying the economy and re-engineering growth in an age of diminished expectations, traced the root of the current economic situation largely to dependence on a mono-cultural economy, fiscal indiscipline and delay in implementing enabling policies.
Dr Mailafia explained that the reckless fiscal indiscipline subsequently resulted in massive dollarization of the economy which eventually snowballed into recession. As far as he is concerned, what we call recession is just dollar scarcity; print dollars today and recession will go, he stated. He stated that when President Buhari took over the helm of affairs in May 2015 he expressed shock at the grim spectre of a virtually empty treasury.
Apparently, the erstwhile PDP government had been secretly borrowing heavily just to pay salaries to remain afloat. Security alone had walloped a quarter of the budget even as Boko Haram terrorists were having a field day in the North East. At the same time, we were losing more than $1 billion a month for years under connivance of people in government, the armed forces and reptilian types from as far afield as Lebanon, and Ukraine.
Meanwhile, the new electoral-political cycle between the last quarter of 2014 and the first quarter of this year found us in another spending spree. It was dollar galore. The end result was the fueling of inflation as well as massive dollarization of the economy. The combined forces of rent-seeking, political financing, geopolitical crisis and insurgency, falling oil prices, inflation, political uncertainty and massive dollarization of the economy was to put heavy pressure on the exchange rate, leading to the devaluation of the naira. For a heavily import-dependent rentier economy, devaluation puts additional pressures on all sectors of the economy, leading to recession, layoff and a deepening crisis of unemployment and widespread misery, he pointed out.