- FG Spent N750bn on Infrastructure in Five Months
The Minister of Finance, Mrs. Kemi Adeosun, has said that the Federal Government is determined to invest massively in infrastructure, sort out issues around the ease of doing business and encourage patronage of made-in-Nigeria goods in a bid to reflate the economy.
She said these were part of broad measures being taken to create jobs, promote entrepreneurship and businesses, pull the country out of recession and grow the economy sustainably.
Adeosun stated these while speaking at the Wealth Creation Platform 2016, a programme organised by the Kingsway International Christian Centre in Lagos on Saturday.
Her lecture was entitled, ‘Where we are, why we are here and the future.’
The Finance minister said that the current administration had realised some mistakes made by past administrations and was working hard to ensure that they did not reoccur.
She noted that over the years, Nigeria had merely been spending about 90 per cent of her budget on recurrent expenditure, while infrastructure investment was near zero.
“It is unfortunate we are where we are today. But we had been heading in this direction for long. The high oil price had just been the anesthesia,” Adeosun said.
Adeosun said that the country needed about $25bn annually to meet her infrastructure deficit.
She said this explained why the President Muhammadu Buhari-led administration was prioritising infrastructure investment while also encouraging state governments to align with the government at the centre.
“Our economy is not growing because we are not spending on infrastructure. The average Nigerian does not have an enabling environment to thrive and succeed because infrastructure investment has not been our priority. And lack of infrastructure hampers growth, entrepreneurship and businesses,” Adeosun said.
She explained that this was why government was trying to reflate the economy through massive investment in capital projects, stressing that N750bn had so far been released for capital projects across the country in the last five months.
“Very soon, before the end of this year, government will release another tranche of funds for infrastructure development. The strategy is to inject funds into the economy, particularly into capital projects — roads, bridges and power. We believe it will create jobs in the short-term, but more importantly they will unlock the productivity of the Nigerian economy,” she said.
Adeosun stressed the need for Nigerians to begin to change their mindsets and patronise locally made products as much as possible.
She said that remained the only way to encourage the manufacturers to get better, conserve scarce foreign exchange and grow the economy.
“We must protect our own; everyone must join the campaign,” she added
She also disclosed that government was focused on investing massively in agriculture and the Micro, Small and Medium-scale Enterprises to create jobs for Nigerians, adding that the government had earmarked about $1.3bn to be pumped into the MSME sector in 2017 through the Nigerian Development Bank.
Adeosun lauded the Senior Pastor of the KICC, Matthew Ashimolowo, for initiating the Wealth Creation Platform programme, noting that when “you start talking about wealth at a difficult time like this, it shows that people have faith in the vision of a great Nigeria.”
Meanwhile, Africa’s richest woman and Executive Vice Chairman, Famfa Oil Limited, Mrs. Folorunsho Alakija, who also spoke at the programme, advised Nigerians not to allow the prevailing economic situation to kill their dreams.
She listed time-tested principles that could be adopted to make money to include seeking out simple but continuous streams of income, having the ability to turn challenges into opportunities and having resolute faith in one’s abilities.
Oil Prices Drop on Stronger U.S Dollar
The strong U.S Dollar pressured global crude oil prices on Thursday despite the big drop in U.S crude oil inventories.
The Brent crude oil, against which Nigerian oil is priced, dropped by 74 cents or 1 percent to settle at $73.65 a barrel at 4.03 am Nigerian time on Thursday.
The U.S West Texas Intermediate crude oil depreciated by 69 cents or 1 percent to $71.46 a barrel after reaching its highest since October 2018 on Wednesday.
“Energy markets became so fixated over a robust summer travel season and Iran nuclear deal talks that they somewhat got blindsided by the Fed’s hawkish surprise,” said Edward Moya, senior market analyst at OANDA.
“The Fed was expected to be on hold and punt this meeting, but they sent a clear message they are ready to start talking about tapering and that means the dollar is ripe for a rebound which should be a headwind for all commodities.”
The U.S. dollar boasted its strongest single day gain in 15 months after the Federal Reserve signaled it might raise interest rates at a much faster pace than assumed.
A firmer greenback makes oil priced in dollars more expensive in other currencies, potentially weighing on demand.
Still, oil price losses were limited as data from the Energy Information Administration showed that U.S. crude oil stockpiles dropped sharply last week as refineries boosted operations to their highest since January 2020, signaling continued improvement in demand.
Also boosting prices, refinery throughput in China, the world’s second largest oil consumer, rose 4.4% in May from the same month a year ago to a record high.
“This pullback in oil prices should be temporary as the fundamentals on both the supply and demand side should easily be able to compensate for a rebounding dollar,” Moya said.
Oil Rises as Threat of Immediate Iran Supply Recedes
Oil prices rose on Tuesday, with Brent gaining for a fourth consecutive session, as the prospect of extra supply coming to the market soon from Iran faded with talks dragging on over the United States rejoining a nuclear agreement with Tehran.
Indirect discussions between the United States and Iran, along with other parties to the 2015 deal on Tehran’s nuclear program, resumed on Saturday in Vienna and were described as “intense” by the European Union.
A U.S. return to the deal would pave the way for the lifting of sanctions on Iran that would allow the OPEC member to resume exports of crude.
It is “looking increasingly unlikely that we will see the U.S. rejoin the Iranian nuclear deal before the Iranian Presidential Elections later this week,” ING Economics said in a note.
Other members of the Organization of Petroleum Exporting Countries (OPEC) along with major producers including Russia — a group known as OPEC+ — have been withholding output to support prices amid the pandemic.
“Additional supply from OPEC+ will be needed over the second half of this year, with demand expected to continue its recovery,” ING said.
To meet rising demand, U.S. drillers are also increasing output.
U.S. crude production from seven major shale formations is forecast to rise by about 38,000 barrels per day (bpd) in July to around 7.8 million bpd, the highest since November, the U.S. Energy Information Administration said in its monthly outlook.
Oil Prices Rise as Demand Improves, Supplies Tighten
Oil prices rose on Monday, hitting their highest levels in more than two years supported by economic recovery and the prospect of fuel demand growth as vaccination campaigns in developed countries accelerate.
Brent was up 53 cents, or 0.7%, at $73.22 a barrel by 1050 GMT, its highest since May 2019.
U.S. West Texas Intermediate gained 44 cents, or 0.6%, to $71.35 a barrel, its highest since October 2018.
“The two leading crude markers are trading at (almost) two-and-a-half-year highs amid a potent bullish cocktail of demand optimism and OPEC+ supply cuts,” said Stephen Brennock of oil broker PVM.
“This backdrop of strengthening oil fundamentals have helped underpin heightened levels of trading activity.”
Motor vehicle traffic is returning to pre-pandemic levels in North America and much of Europe, and more planes are in the air as anti-coronavirus lockdowns and other restrictions are being eased, driving three weeks of increases for the oil benchmarks.
The mood was also buoyed by the G7 summit where the world’s wealthiest Western countries sought to project an image of cooperation on key issues such as recovery from the COVID-19 pandemic and the donation of 1 billion vaccine doses to poor nations.
“If the inoculation of the global population accelerates further, that could mean an even faster return of the demand that is still missing to meet pre-Covid levels,” said Rystad Energy analyst Louise Dickson.
The International Energy Agency (IEA) said on Friday that it expected global demand to return to pre-pandemic levels at the end of 2022, more quickly than previously anticipated.
IEA urged the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, to increase output to meet the rising demand.
The OPEC+ group has been restraining production to support prices after the pandemic wiped out demand in 2020, maintaining strong compliance with agreed targets in May.
On the supply side, heavy maintenance seasons in Canada and the North Sea also helped prices stay high, Dickson said.
U.S. oil rigs in operation rose by six to 365, the highest since April 2020, energy services company Baker Hughes Co said in its weekly report.
It was the biggest weekly increase of oil rigs in a month, as drilling companies sought to benefit from rising demand.
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