Diversification of The Nigerian Economy: How Serious Is Buhari’s Administration? | Independent Newspapers Limited
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Diversification of The Nigerian Economy: How Serious Is Buhari’s Administration?

Common Investor, FRC, Economy, MDAs
Posted: Aug 26, 2016 at 3:55 am   /   by   /   comments (0)

I’m not for or against Buhari’s administration; I only want Nigeria to be better for all of us. It has been identified that diversification of the nation’s economy is the way to go. This administration has told Nigerians in several press releases that diversification of the economy tops their change agenda. As a concerned citizen, I pray daily for this to come true and for other sectors to contribute significantly to the federation account.

Many politically enlightened citizens were pleased yesterday when Federal Government (FG), in line with the Fiscal Responsibility Act (FRA) of 2007, ?approved the Medium Term Expenditure Framework (MTEF) for 2017, 2018 and 2019.

The Minister for Budget and National Planning, Udo Udoma, who disclosed this on Wednesday in Abuja after the Federal Executive Committee (FEC) meeting presided over by President Muhammadu Buhari, said the economy was projected to grow by 3 per cent in 2017, 4.26 per cent in 2018 and 4.04 per cent in 2019.

The minister said that government has set $42.50 as a reference price in 2017 for oil and projected it would rise to $45 in 2018 and $50 in 2019.

In terms of oil production, he said government would retain this year’s estimate of 2.2 million barrels per day for 2017 despite the fact that militancy in the Niger Delta has forced oil production to below one million barrels per day.

For 2018, government remained ambitious, and expected production to rise to 2.3 million barrels per day while in 2019, it hoped it would increase to 2.4 million barrels per day.

The minister said: “The Federal Executive Council meeting approved the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (SFP) for 2017 to 2019.

In the 2017-2019 MTEF, the government intends to intensify efforts in pursuing manpower driven economy. So FG intends to intensify effort to diversify the economy and go on with the implementation of ongoing reforms in public finance; FG also intends to enhance the environment for ease of doing business so as to generate private sector investments. FG intends to continue to pursue gender sensitive, pro-poor and inclusive social intervention schemes similar to what this administration did in 2016, our social intervention programmes is going to be sustained.

And that FG intends to devote even more resources to critical infrastructure projects like what happened this year. So FG will continue to spend more on roads, rails, transport infrastructure, ports and so on. It also intends to focus on governance and security and to maintain the zero-based budgetary approach.

“Oil price benchmark: FG intends to use $42.50 as a reference price in 2017. FG projects $45 in 2018 and $50 in 2019.

“In terms of oil production, FG will keep to the same level of this year for 2017 and that is 2.2 million barrels per day. For 2018 2.3 million barrels per day, for 2019 2.4 million barrels per day.

“In terms of growth rate, FG will target in 2017 a three per cent growth rate, 2018 a 4.26 per cent growth rate and 2019 a 4.04 per cent. The reason 2019 is slightly lower than 2018 is because that is an election year and usually in an election year because of the uncertainties and provision has been made for that.”

Many politically enlightened people that were consulted before this piece on whether the MTEF truly reflects Government desire to diversify the economy were disappointed because the MTEF still focused mainly on oil as predetermined commodity reference. Nigerians also know that the reason why 2016 budget will not be executed fully was because of the uncertainty surrounding oil price and oil exploration globally and in Nigeria in particular.

The areas FG needs to address in the Fiscal Strategy Paper are Policies on taxations, non-debt and recurrent expenditure. Though, FG approved N400billion for capital project and Minister of Finance set up a committee to review the National Tax Policy recently, it needs to emphasis other predetermined commodities reference and tax revenue projection apart from oil. A mixed predetermined commodity references is key to achieving diversification.

The Minister of Finance needs to come up with FG plan on diversification which must be reflected in the MTEF. This will make the citizens to believe that this administration is serious on diversifying the nation’s economy.

Onatoye writes from Lagos.