Recession: Senate Tables 14-Point Roadmap to Turn Around Economy

In a bid to find quick solutions to the economic recession in the country, the Senate yesterday commenced debate on the issue, with Senate President Bukola Saraki presenting a 14-point plan to the federal government on how to make the crisis the shortest ever in history.

The Senate’s roadmap out of the recession was contained in Saraki’s speech to welcome his colleagues back from their annual vacation.

Going by the importance attached to finding urgent solutions to the recession, the Senate plenary commenced at 10.10 a.m. after the presiding and principal officers of the Senate filed into the chamber.

• Consider tweaking the pension funds policy within international best practice safeguards to accommodate investment in infrastructure and mortgages.

• The federal government and Central Bank of Nigeria (CBN) must agree on a policy of monetary easing to stimulate the economy and harmonise monetary and fiscal policies until economic recovery is attained.

• Re-tool its export promotion policy scheme with incentives such as the resumption of the Export Expansion Grant (EEG), and introduce export-financing initiatives.
• Engage in meaningful dialogue with those aggrieved in the Niger Delta and avoid an escalation of the conflict in the region.

• Consider the immediate release of funds to ensure the implementation of the budget for the near short term to inject money into the economy.
• Similarly, the agricultural sector and agro-allied businesses should be directly supported to boost value addition and jobs creation.

• While government works on the medium to long-term plans, immediate strategies must be devised that would ease the suffering of the ordinary people across the country.

• The legislature and executive must co-operate to ensure the passage of the Petroleum Industry Bill (PIB) into law as soon as possible to stimulate new investment and boost oil revenue.

Saraki added that while the executive is working on the recommendations enumerated above, the National Assembly should support it with the necessary legislations and oversight activities such as:

• Accelerate bills aimed at reforming the mortgage sub-sector for growth and accessibility in a manner that deepens people’s access to housing, jobs and economic activities.

• Work on the National Development Bank of Nigeria (Establishment) Bill 2015 which will provide long term cheaper source of funds to the private sector.

• Quickly commence work on the amendment of the Nigerian Ports and Harbours Authority Act (Amendment) Bill 2016; National Road Fund (Establishment, etc); National Transport Commission Act 2001; Warehouse Receipts Act Bill 2016; Review of the Companies and Allied Matters Act (CAMA), Investment and Securities Act (ISA) and Customs and Excise Management Act; Federal Competition Bill 2016; and the National Road Authority. These bills and some of the other economic reform bills will be considered in the coming days.

• Explore the possibility of backing certain key government policies with legislations that have time limitations. This will help give confidence to investors to go into certain areas of the economy and invest without the fear that such policies will suffer reversals and loss of investment.

Elaborating on the proposals from the Senate, Saraki lamented the current economic recession, recalling the contraction of the gross domestic product (GDP) growth rate in the second quarter of 2016 to 2.06 per cent following a decline to -0.36 per cent in the first quarter.

He pointed out that with the current trend, “the Nigerian economy has had two consecutive quarters of economic contraction”.

Saraki advised the government of President Muhammadu Buhari to immediately put the machinery in place to raise capital from the sale of assets and other sources with a view to raising foreign reserves, encouraging investors and discouraging currency speculation.

He said the federal government, in its search for economic recovery, should sell some of its assets including its holdings in the Nigeria Liquefied and Natural Gas (NLNG) Company; reduce government shares in upstream joint venture operations; sell government stakes in financial institutions; and concession and privatise major airports and refineries.

Saraki also suggested the need to situate pension funds within the international best practices to boost infrastructure investment, adding that both the federal government and the CBN must evolve uniform policies to stimulate the economy and ensure that local borrowing does not overshadow credit for the private sector.

“The executive must raise capital from asset sales and other sources to shore up foreign reserves. This will calm investors, discourage currency speculation and stabilise the economy. The measures should include part sale of NLNG holdings; reduction of government share in upstream oil joint venture operations; sale of government stake in financial institutions e.g. Africa Finance Corporation; and the privatisation and concession of major/regional refineries and airports.

However, Saraki talked tough, warning all who choose to introduce politics into the Senate’s roadmap to assist the government in salvaging the system by accusing it of disloyalty to steer clear, pointing out that the Senate would not be cowed by such insinuations to jettison its constitutional responsibilities.

He insisted that the Senate would take tough decisions capable of repositioning the economy irrespective of whose ox is gored.

He said: “Distinguished colleagues, let me also state clearly that we shall not hide under the cloak of partisan solidarity to abdicate our constitutional responsibility under the principles of checks and balances.

“We shall make critical interventions whenever they become necessary and undertake emergency actions whenever they are required, within the confines of the constitution.

“The task at hand requires us to take tough decisions and do all that is necessary to dig our economy out of this recession. This imperative must take precedence over partisan loyalty. This is what the people expect of us and it is the only way we can continue to justify our presence here.

“As I had mentioned earlier, on our part, we will do the following: Go immediately to debate the state of the economy and come up with economic measures that we will submit to the executive. This, we will do, along with passing the necessary legislation we have identified.”

He urged his colleagues to put behind them ethnic, religious and political sentiments and confront the current challenges in the spirit of unity and oneness, pointing out that even though he is the most persecuted functionary by Buhari’s government, he would yet not be swayed by that to be indifferent to the current economic crisis.
In this regard, he encouraged his colleagues to imbibe the same spirit in the handling of the situation.

“I do not think anybody in this chamber has gone through more political persecution than myself since the inception of this government, but I will be the last to fold my arms and say that the current economic problem is not my problem. No, it is,” he said.

While further tasking his colleagues to brace up for the current challenges, Saraki said this was not the time to engage in a blame game or political horse-trading but rather the time to be deeply committed to ending the economic crisis, bearing in mind that Nigerians are desperate for solutions and so “don’t care about our politics; they don’t care about our political affiliations; they don’t care if we are APC or PDP, north or south, Christians or Muslims”.

“What they want is for us to lead the way out of this crisis and deliver on the promises that we made to them,” he stressed.

He added: “We will work in concert, not at cross-purposes. Our goal is clear; to work together with the executive to get our economy out of this recession.

“We will proffer our solutions on policy issues, and where necessary enact the necessary legislation to ensure that investors’ confidence returns to the market.”

He also said the National Assembly would back the executive with the necessary laws to boost investor confidence and restated the commitment of the Senate to hasten the passage of the necessary bills such as the Petroleum Industry Bill (PIB), submitting that the passage of the PIB would stimulate fresh investments and boost oil revenue.
“The impasse of not passing the bill is doing great harm to the industry and the Nigerian economy as a whole,” he observed.

However, the Senate’s plan to dissolve into an executive session for a briefing by an expert on the true state of the recession was stalled by the need to observe the National Assembly’s tradition to adjourn plenary in honour of a late colleague.

Hence, yesterday’s plenary was adjourned after Saraki’s speech in honour of a member of the House of Representatives who represented Ifako-Ijaye federal constituency in Lagos State, Hon. Adewale Oluwatayo. Oluwatayo passed on in July while the National Assembly was on recess.

The executive session will now hold today.

Also speaking after yesterday’s plenary, Senate Leader, Ali Ndume, said the current recession was not peculiar to only Nigeria but had also hit a number of other countries such as Venezuela whose mainstay is oil.

He described it as a blessing in disguise, saying it would provide the platform for the nation to explore other sources of revenue such as the solid minerals’ sector.

RMAFC Opposes Sale of NLNG Shares

However, as the Senate joined the clamour for the federal government to divest of some of its interest in the NLNG in order to augment the revenue shortfall and boost foreign exchange reserves, the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has kicked against the recommendation.

The CBN Governor, Godwin Emefiele, and Africa’s richest man, Aliko Dangote, had advised the government to consider the partial sale of its oil assets as the recession bites harder.

But in a statement signed by the RMAFC’s acting Chairman, Shettima Umar Abba Gana, the commission argued that it would be unwise for the federal government to dispose of its crown jewels that generate revenue and keep the Federation Account healthy over the long term.

Citing the NEITI 2013 audit and financial report of Nigeria’s oil and gas industry, RMAFC disclosed that the sum of $12.9 billion was received by the Nigerian National Petroleum Corporation (NNPC) from the NLNG over an eight-year period which the corporation did not remit to the Federation Account.

The audit, according to the commission, also revealed that NLNG paid $1.289 billion as dividends in 2013.

“It is the considered view of the commission that Nigeria’s assets like NLNG and other strategic national resources should not be sold to meet short-term financial obligation,” it said.

RMAFC recalled that the CBN governor indicated that the sum of $10 billion could be realised from the sale of oil and gas sector assets held by the federal government.

It said: “The commission is of the strong opinion that the same amount could be borrowed from the IMF and the revenue from these assets could be used to amortise the loans over an agreed period.

“It should be noted that after the amortisation of the loans, those assets would still be owned by the federation in addition to their regular dividends and revenue.”

RMAFC said instead of selling off such vital assets, which generate funds for the federation, wealthy Nigerians should be encouraged to set up their own LNG projects, since Nigeria is ranked seventh in the world and first in Africa with natural gas reserves base totalling 188 trillion cubic feet (Tcf) as at May 1, 2015.

In addition, Nigeria’s natural gas is regarded as one of the best in the world as it has low hydrogen sulphide (H2S) or carbon dioxide (CO2) impurity levels, the commission added.