The economy is in recession, the government admitted yesterday.
Budget and National Planning Minister Udoma Udo Udoma said two negative quarters growth “technically” amount to recession.
He was aware of only the negative growth in the first quarter, but he suspected the yet to be received second quarter report would also be negative.
Udoma said while the government had expected the low price of oil in the international market, it did not envisage the destruction of oil pipelines in the Niger Delta, which has reduced output.
But Udoma was confident that the economy will pick up in the third quarter, noting that Nigeria will end the year well.
Briefing State House correspondents at the end of the National Economic Council (NEC) meeting chaired by Vice President Yemi Osinbajo, the minister said there was already an increase in non-oil revenues.
With him at the briefing were Niger State Governor Abubakar Sani Bello and Taraba State Governor Darius Ishaku.
He said: “Recession is basically when you have two quarters of negative growth. We had a first quarter of negative growth and we are still waiting to get all the figures for the second quarter, which has just ended in June.
“The National Bureau of Statistics (NBS) will be giving us all the figures but if as we suspect the second quarter is also negative, then of course technically you could say that we are in recession – if those figures turned out to be so. But even if we are not, the situation in the economy right now is one that, of course, we are addressing.
“Some of it was expected, some of it was not. We did expect the low oil price but we did not expect the level of disruption that we got in the Niger Delta, such that oil production went down and we are not likely to achieve the 2.2 million barrels per day because it went down to 1.2 million barrels per day, a little over about 1.3 million barrels per day.
“So you can imagine the impact of that. Measures are being taken to address those issues. We expect that by the third quarter we will start to pick up and we expect to finish the year in positive territory. That is what we are expecting. We expect to be marginally positive by the end of this year.”
“But by next year we will now start to pick up and we will have much more growth next year,” he added.
He noted that the year 2016 has been a difficult year.
The Minister stressed that the disruptions in the Niger Delta, which led to the reduction in oil production also affected power supply due to low gas supply.
On the expected growth in the economy from the third quarter, he said: “We are focusing on non-oil, we are focusing on agriculture, solid mineral and manufacturing. So, basically we see what we are going through as an opportunity in some ways to finally move away from total dependence on the single commodity, crude oil.
“We believe that Nigerians have the capacity to turn this thing around. It is the private sector that is going to do it. Our role as a government is to provide the enabling environment. For that to happen, we are confident that that will happen.”
On fears that the Federal Government will not be able to pay workers’ salaries from October, he said that there was no situation that will make it become a reality.
He said: “We have paid all salaries, the Federal Government has always been paying its salaries, and there is no risk whatsoever that there is going to be a situation where the Federal Government will not pay salaries.”
Udoma said: “There is actually an increase in the amount that is going to be available in FAAC. I will let the Minister of Finance talk about the exact amount. There is an increase because of FIRS, our tax collection is going up.
“When I appeared before the Senate last week, I did inform Nigerians that indeed we are beginning to move up; our revenue situation is actually improving on the month already. Our tax collection is already improving; there is no doubt that we are actually going through a difficult time but things are improving.”
He said he presented the Medium Term Fiscal Framework for 2017 to 2019 to NEC as part of consultation with governors and other stakeholders.
The framework, Udoma said, will be forwarded to the National Assembly after all consultations.
Bello said Agriculture Minister Audu Ogbeh briefed the NEC on self-sufficiency in food production.
He said: “The presentation noted that economic diversification must be taken with all commitment in view of current harsh economic situation. He emphasized that agriculture needs to be more seriously embarked upon by all governments and citizens with renewed vigour.
“Federal Government is pursuing self-sufficiency in food production with all seriousness. Federal Government to launch ‘The Green Alternative’ as a road map following FEC’s endorsement.”
The two main thrusts of the roadmap include operating in partnership with state governments to meet national production targets and producing of export commodities.
Bello said NEC was briefed on the CBN’s Anchor Borrowers Programme to support millions of small-holders in rice production and raise rice milling capacity to 10 million paddy rice annually.
There are efforts to conclude a China-Exim Bank Credit to support 40,000 – 100,000 tons per day rice mills for Nigeria.
The government intends to meet target of 2018 in rice self-sufficiency, Bello said, adding that the role of states in food self-sufficiency includes processing and preservation, to put in place quality control measures and intensify advocacy.
Other roles for states, he said, include to “provide extension services and intensify seed development and supply fertiliser; states should encourage more youths to get involved in agriculture and replace ageing farmer population now averaging 63 – 65 in age; land preparation for effective mechanisation by states to encourage old hands and encourage new comers to gain access;
“Intervene/support include; earth dams because of climatic uncertainties, machinery, such as tractors, rural roads to improve access to support evacuation from farmlands and also appropriate fertiliser to nourish soil accordingly. States were also asked to identify their specific intentions areas and targets regarding agriculture diversification so as to measure progress.”
Ishaku said Minister of State for Petroleum Resources Ibe Kachikwu proposed a new self-funded JVC Cash Calls i.e. Incorporated JVCs or IJVC to NEC.
Some benefits of the self-funded JV i.e. IJVC, he said, include improving accountability within the governing structure of the JVs, a self-funding entity outside otherwise cumbersome government budget process, less political interference, given that operational control rests with joint teams and ultimately IJVC entities when formed
He said: “It also focuses on commercial decision making. Council heard that a decision on the proposal would be taken once negotiations for the new IJVC are concluded
He said that the Minister of Finance, Kemi Adeosun, reported to the Council that the balance in the Excess Crude Account (ECA) as at July 20, 2016 stood at $3.93 billion.
According to him, the Minister also gave an update on Budget Support Facility (BSF) for states.
He said 35 states applied for the BSF; 28 met the requirements and seven sent their required documentations late, which are being processed.
Central Bank Governor Godwin Emefiele, he said, informed the Council that all bank customers operating Domiciliary Accounts are permitted to lodge dollar cash into their non-export accounts subject to the provisions of the Money Laundering Act.
