The Federal Government has projected rise in the country’s Gross Domestic Product, GDP, growth to 4.2 percent by 2017.
Minister of Finance, Mrs. Kemi Adeosun, made this projection when she addressed Chief Financial Officers, CFOs, at the just concluded KPMG Professional Services CFO Forum and Survey Launch in Lagos.
In her presentation on the theme; Outlook of the Nigerian Economy, she noted that the country’s GDP for 2015 was the lowest in the last 15 years, at an average of 4 percent.
“Nigeria GDP, growth from 2005 to 2010 was at an average of 9 percent, and everybody was trying to announce about Nigeria saying, how fantastically we have been doing with great money in the economy.
“But we are actually mastering some vulnerability because if you look at the drop from 2010 to 2011, it was an average of 5 percent while oil price was still high.
“There was vulnerability building up in the economy, and this situation has been breeding for quite a while, and then we have the drop in crude price at 2015 and our GDP drop to an average of 4 percent.”
“My administration plan basically is to stimulate the economy to achieve a real GDP growth rate of 4.2 percent by 2017, then reduce the cost of governance, extract efficiencies in the public service and enhance collection of internally generated revenues.
“Also, we want to increase government expenditure on infrastructure, and then we are going to try and fund this budget deficit in the most efficient manner possible.
“There was vulnerability building up in the economy, and this situation has been breeding for quite a while, and then we have the drop in crude price at 2015 and our GDP drop to an average of 4 percent.”
The Minister further lamented that, “the GDP growth, is consumption led, and basically what we are doing is pumping the oil out of the ground and then spending it on import. There is no good gross capital formation in the economy, and without gross capital formation we can’t build our system.
“If the economy is growing because we are buying mobile phone or private jet, it’s actually not good growth, its growth, but it’s not a sustainable growth for the country.”
We are carrying out expansionary on fiscal budget, what do we do, we have come up to 6 trillion, we did that for the following reason, we have two option, as you can see, where we are, we would slide into recession no doubt, if we continue with the size of budget we have.
Also speaking, Partner and Head of Audit, KPMG Professional Services, Mr. Tola Adeyemi added that, the objective of CFOs, “is to provide a platform for them to network and share leading practices, create an additional channel to interact with regulators and senior government officials.”
In attaining the ideal finance function, he stated that “there is need for increasing involvement beyond the traditional roles of measurement and reporting, clear requirements for evolving skills, finance function needs to “earn the respect” of the business and need for additional assurance in a number of areas.
“Also, on creating a sustainable cost advantage, only 6 percent of cost saving initiatives achieves their target and 44 percent achieve less than 50 percent of target savings,” he added.
He lamented that the biggest barriers are usually, inadequate processes to drive cost reduction, resistance from employees and insufficient incentives to reward prudent cost management responsibility for cost management is not always clear.
