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Why Nigerians Are Not Feeling Impact of Economic Growth — DG Budget

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  • Why Nigerians Are Not Feeling Impact of Economic Growth — DG Budget

The Director-General, Budget Office of the Federation, Mr Ben Akabueze, on Wednesday explained why Nigerians were not feeling the real impact of the positive economic growth rate on their lives.

He gave the explanation while making a presentation at a roundtable on the 2019 budget.

The event which was organised by the Abuja Chamber of Commerce and Industry was attended by top officials of the chamber led by its President, Adetokunbo Kayode.

Akabueze said that for Nigerians to effectively feel the impact of economy growth, the rate of Gross Domestic Product growth must be higher than the population growth.

He said while the rate of growth in the country’s population was about three per cent, it was currently higher than the GDP growth rate of the country.

The DG budget said the Federal Government understood the challenge, noting that was why the outlook for economic growth was put at about three per cent in the 2019 budget.

He said while the economy might have been out of recession, the government was implementing various measures to accelerate the trajectory for growth.

He said, “We are projecting a 3.01 per cent growth (in GDP). Often times, I hear Nigerians asking whether we can meet this growth.

“This is the minimum level of growth we should be aiming, going by the rate which our population was growing.

“If we are growing at anything below the rate the population is growing, it will not be felt and that is why a lot of people do not feel the economy is growing.

“It is not surprising that you don’t feel it, because last quarter, the economy grew by 1.8 per cent and population was growing significantly higher than that.

“So until we restore growth to seven per cent or preferably double digit, the vast majority of Nigerians are not going to feel any growth. So that’s the debate we should be having.”

Speaking on the 2019 budget which was presented to the National Assembly by President Muhammadu Buhari, he said that the budget was based on oil production of 2.3 million barrels per day, an oil benchmark price of $60 per barrel and exchange rate of N305 to a dollar.

He said other key economic parameters underlining the budget were the plan to bring down inflation to 9.98 per cent, nominal consumption of N119.28tn, nominal Gross Domestic Product of N139.65tn and a GDP growth rate of 3.01 per cent.

There had been concerns that the $60 per barrel benchmark price might be too ambitious following the recent fluctuation in the international oil market.

The price of crude oil had dropped to below the $60 per barrel budget benchmark.

Based on a production volume of 2.3 million barrels per day and with a budget benchmark of $60 per day, the Federal Government is targeting to earn about N3.68tn revenue from oil next year.

But reacting to the development, the DG Budget said that the drop in oil price might not reflect the outlook for 2019.

He said that the Federal Government was monitoring developments in the global oil market and would not hesitate to make adjustments when there was need for such.

When asked what impact was the level of corruption and Public Procurement Act having on budget implementation, the DG budget said there was a need to amend the procurement law.

He said the 15 per cent contract cost provision which the Act stipulated to be used in mobilising contractor was too small.

He said with the apathy of banks in providing loans to contractors to execute government projects, there was the need for increase in mobilisation cost.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Electricity Consumers Get 611,231 Meters Under MAP Scheme

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Electricity Consumers Get 611,231 Meters Under MAP Scheme

A total of 611,231 meters have been deployed as at January 31, 2021 under the Meter Asset Provider initiative since its full operation despite the COVID-19 pandemic and other extraneous factors, the Nigerian Electricity Regulatory Commission has said.

NERC disclosed this in a consultation paper on the review of the MAP Regulations.

The proposed review of the MAP scheme is coming nearly four months after the Federal Government launched a new initiative called National Mass Metering Programme aimed at distributing six million meters to consumers free of charge.

“The existence of a huge metering gap and the need to ensure successful implementation of the MYTO 2020 Service-Based Tariff resulted in the approval of the NMMP, a policy of the Federal Government anchored on the provision of long-term low interest financing to the Discos,” NERC said.

The commission had in March 2018 approved the MAP Regulations with the aim of fast-tracking the closure of the metering gap in the sector through the engagement of third-party investors (called meter asset providers) for the financing, procurement, supply, installation and maintenance of meters.

It set a target of providing meters to all customers within three years, and directed the Discos and the approved MAPs to commence the rollout of meters not later than May 1, 2019.

But in February 2020, NERC said several constraints, including changes in fiscal policy and the limited availability of long-term funding, had led to limited success in meter rollout.

NERC, in the consultation paper, highlighted three proposed options for metering implementation going forward.

The first option is to allow the implementation of both the NMMP and MAP metering frameworks to run concurrently; the second is to continue with the current MAP framework with meters procured under the NMMP supplied only through MAPs (by being off-takers from the local manufacturers/assemblers).

The third option is to wind down the MAP framework and allow the Discos to procure meters directly from local manufacturers/assemblers (or as procured by the World Bank), and enter into new contracts for the installation and maintenance of such meters.

“Customers who choose not to wait to receive meters based on the deployment schedule of the NMMP shall continue to have the option of making upfront payments for meters which will be installed within a maximum period of 10 working days,” NERC said.

The regulator said such customers would be refunded by the Discos through energy credits, adding that there would be no option for meter acquisition through the payment of a monthly meter service charge.

“Where meters have already been deployed under the meter service charge option, Discos shall make one-off repayment to affected customers and associated MAPs. Such meters shall be recognised in the rate base of the Discos,” it added.

NERC urged stakeholders to provide comments, objections, and representations on the proposed amendments within 21 days of the publication of the consultation paper.

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Nigeria’s Economy Moving in Right Direction but Slow – Amina Mohammed

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Nigeria’s Economy Moving in Right Direction but Slow – Amina Mohammed

Nigeria is moving in the right direction economically but its movement is not fast, the United Nations stated on Thursday.

Deputy Secretary-General of the United Nations, Amina Mohammed, said this during a meeting at the headquarters of the Federal Ministry of Industry, Trade and Investment in Abuja.

She said the challenges in Nigeria were huge, its population large but described the country’s economy as great with lots of opportunities.

The UN scribe stated that after traveling by train and through various roads in the Northern parts of Nigeria, she discovered that the roads were motorable, although there were ongoing repairs on some of them.

Mohammed said, “This is a country that is diverse in nature, ethnicity, religious backgrounds and opportunities. But these are its strengths, not weaknesses.

“And I think the narrative for Nigeria has to change to one that is very much the reality.”

Speaking on her trips across parts of Nigeria, she said, “What I saw along the way is really a country that is growing, that is moving in the right direction economically. Is it fast enough? No. Is it in the right direction? Yes it is.

“And the challenges still remain with security, our social cohesion and social contract between government and the people. But I know that people are working on these issues.”

She said the UN recognised the reforms in Nigeria and other nations, adding that the common global agenda was the Sustainable Development Goals.

Mohammad commended Nigeria’s quick response to the COVID-19 pandemic, as she expressed hope that the arrival of vaccines would be the beginning of the end of COVID-19.

On his part, the Minister of Industry, Trade and Investment, Adeniyi Adebayo, told his guest that the Federal Government was working hard to make Nigeria the entrepreneurial hub of Africa.

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N10.7tn Spent on Fuel Subsidy in 10 Years – MOMAN

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N10.7tn Spent on Fuel Subsidy in 10 Years – MOMAN

Nigeria spent a total of N10.7tn on fuel subsidy in the last 10 years, the Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, has said.

Oyebanji, who was the guest speaker at the 18th Aret Adams Lecture on Thursday, said N750bn was spent on subsidy in 2019.

He highlighted the need for a transition to a market-driven environment through policy-backed legislative and commercial frameworks, enabling the sustainability of the downstream petroleum sector.

“Total deregulation is more than just the removal of price subsidies; it is aimed at improving business operations, increasing the investments in the oil and gas sector value chain, resulting in the growth in the nation’s downstream petroleum sector as a whole,” he said.

The managing director of 11 Plc (formerly Mobil Oil Nigeria Plc) said steps had been taken, “but larger and faster leaps are now required.”

According to him, deregulation requires the creation of a competitive market environment, and will guarantee the supply of products at commercial and market prices.

“It requires unrestricted and profitable investments in infrastructure, earning reasonable returns to investors. It requires a strong regulator to enable transparency and fair competition among players, and not to regulate prices,” Oyebanji said.

He noted that MOMAN had recently called for a national debate by stakeholders to share pragmatic and realistic initiatives to ease the impact of the subsidy removal on society – especially on the most vulnerable.

He said, “A shift from crude oil production to crude oil full value realisation through deliberate investment in domestic refining and refined products distribution, creates the opportunity to transform the dynamics of the downstream sector from one of ‘net importer’ to one of ‘net exporter’, spurring the growth of the Nigerian economy.

“Effective reforms and regulations are key drivers for the growth within the refining sector. Non-functional refineries cost Nigeria over $13bn in 2019. If the NNPC refineries were operating at optimal capacity, Nigeria would have imported only 40 per cent of what it consumed in 2019.”

Full deregulation of the downstream sector remains the most glaring boost to potential investors in this space, according to Oyebanji.

He said, “As crude oil prices will fluctuate depending on the prevailing exchange rates, it will be astute to trade in naira to avoid inevitable price swings.

“There needs to be a balance between ensuring the sustainable growth of the crude oil value chain (upstream through downstream) and providing value for the Nigerian consumer and the Nigerian economy.”

He said the philosophy should be for the government to put the legislative and commercial framework in place and let the market develop by itself.

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