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PMB: We have resources to survive recession

President Muhammadu Buhari has assured that the country has in abundance both human and material resources to survive its current economic recession. Buhari’s assurance is coming as the African Development Bank (AfDB) has offered to support Nigeria with the sum of $1 billion to help it address it’s N2.2 trillion deficit in the 2016 budget at the rate of 1.2 per cent.

The deficit in the N6.06 trillion budget characterised by expansive fiscal spending aimed at reflating the economy is about 2.41 per cent of the Gross Domestic (GDP) and is within the three per cent threshold prescribed by the Fiscal Responsibility Act, 2007. Buhari, in a statement made available to newsmen by his Special Adviser on media and publicity, Femi Adesina after a closed door meeting with the President of the African Development Bank (AfDB) at the Presidential Villa yesterday said: “God has given us people and resources. It will take hard work on our part, but we will make it. We will get out of our problems. We are determined to produce what we eat, and stop importation. We will also chase those who stole, and get them to refund.”

The President said the country appreciated helping hands being lent by the ADB, assuring Nigerian-born Adesina, who was the immediate past Minister of Agriculture, that “we will not let you down. Your country won’t disappoint you.” Adesina appreciated President Buhari for the support the country gave when he ran for ADB presidency, thus making him the first Nigerian to occupy such position since the bank was established in 1964.

He also lauded the Nigerian President for successes recorded in securing the country, particularly in the North East, noting that “there can be no development without adequate security.” The ADB boss described recent economic decisions taken in the country as “bold, tough, uncomfortable, but right,” adding that Nigeria would reap the dividends in the short and long run.

“You can count on the ADB as a true friend of Nigeria. You should support massive investment in infrastructure, and we are here to also support. Closing the infrastructure deficit will enable growth, and create employment. Nigeria is too big to fail,” Adesina said.

The ADB President unfolded the packages his institution has for Nigeria, which include; $1 billion of budget support, $300 million to create jobs for 185,000 youths, $250 million towards North East infrastructure development, $1 million grant to deal with challenges of Internally Displaced Persons (IDPs), $300 million for infrastructure development around Abuja, $200 million for Transmission Company of Nigeria (TCN) to deepen facilities, among others.

ALSO READ: Buhari to AfDB: We’ll overcome our problems

Dr Adesina expressed delight with what he called “President Buhari’s push on anti-corruption, and stance on governance,” adding that building institutions was critical. To that end, he said ADB would give a total of $4.8 million as grant for institutional support, with the Economic and Financial Crimes Commission (EFCC) getting $2 million, and $1million to Independent Corrupt Practices and Other Related Offences Commission (ICPC). “You can always count on my support, and that of the ADB,” he concluded.

AfDB intervention

Meanwhile, AfDB President, Akinwunmi Adesina disclosed this to State House correspondents after meeting with Vice President, Yemi Osinbajo and the Economic Management Team (EMT), on Tuesday at the State House, Abuja.

This is Adesina’s first official visit to the country since he became president of the bank last year.

He said the the bank was going to provide the total sum of $4.1 billion between 2016 and 2017 to Nigeria to fund power, infrastructure, agriculture and the private sector the Small and Medium size Enterprises financing and lending. Adesina said the bank’s lending portfolio in Nigeria will grow to a total of $10 billion by 2019. The AfDB president also clarified that Nigeria is not in debt crisis but only experiencing liquidity challenges.

According to him, the bank, recognising that power is the most important challenge that is driving inflation in the country, would invest in a total of 1.400 megawatt of projects this year and 1,387 megawatt of project by 2017 to revamp the energy sector. Adesina said, “We have a very strong delegation team to meet Vice President and the economic management team, because the bank’s (ADB) largest shareholder is Nigeria.

“It is very important for me to be here and to talk to the Nigerian government about the challenges and opportunities that are in Nigeria. I think the times are difficult there is no doubt about that, but I want to commend the government for being bold in taking the right decisions. I think that the fact that the price of crude oil has gone down is a big challenge because you have 98 per cent external forex revenue coming from the sector. So it has created calibrations, I’m not going to go into the details of all the problems but what is important is that what we going to do about it.

“I’m not here to lecture the Nigerian government I’m here to support very strongly. We have said that we are going to support the Nigerian government with the budget support to be able to deal with some of fiscal imbalance that they have.

“We are looking to consider for an award $1 billion to help to deal with that particular deficit. In addition to that, there are other challenges that the economy has which is in terms of diversifying and deepening the level of diversification in critical sectors, so agriculture, solid minerals, manufacturing as well as industrial sector is very important. So the bank is going to provide in total between 2016 and 2017 $4.1 billion to Nigeria in various of power, infrastructure to agriculture and for the private sector, the SMEs financing and lending.

“I expect that our portfolio in Nigeria will not decrease it will actually grow, we expect to invest in Nigeria by 2019 a total of $10 billion.

“So let me just say that the issues that we think are important is the need to further deepen the diversification of the rest of the economy, also to make sure that the macro-economic stability as well as fiscal stability in the country. We have asked for the need for better synergies between the macro policy side and monetary policy side and also the fiscal policy side of the economy.

“And of course, we also recognize that power is perhaps the most important challenge that is driving inflation in the country. So we expect in our portfolio this year to invest a total of 1.400 megawatts of projects to focus on the energy sector and by 2017 we plan to invest in 1,387 megawatt of project for the sector.

“We discussed with Vice President and minister of finance about how to invest in areas of women and youths employment in the country as well as to look for opportunities to support access to finance by supporting the Development Bank of Nigeria (DBN) with $500 million which will help to provide cheap financing for the real sector that the country wants to grow. We are also providing $100 million to the Bank of Industry (BoI) to be able to lend to small and medium size enterprises. We also want to finance the Bank of Agriculture to reform itself to be able to get more financing.

“So all in all, I want to say that we are not fair weather friends of Nigeria, we are here to provide strong support to the Nigerian government.

“Let me just say that Nigeria is in tough times but Nigeria is not falling apart and when people talk about debt crisis, Nigeria is not in debt crisis. If you look at the fiscal deficit of this country with regard to the GDP, is about three or 3.5 per cent, is still way below the five per cent for the Fiscal Responsibility Act. If you look in terms of the debt to the GDP ratio for Nigeria is 15 per cent.

“So there is no debt crisis in Nigeria, what you have is liquidity problem and we are trying for the country to be able to drive down inflation and to be able to make sure we are working with the government to be able to provide incentives to the private sector. Because to come out of recession you need more than government, you need the private sector. So incentives are very important. The finance minister talked about whole lot of incentives that they are going to give and we think that is the right way to go.

“Nigeria will come out of this as a better more diversified economy than it went into the recession”.

The Minister of Finance, Kemi Adeosun, said the loan is concessioned at 1.2 per cent interest rate and will be used on the critical sector.

She said, “What has been great relief to us in the economic management team is the synergy between what we are trying to do and what the AfDB repositioning under Dr. Adesina is trying to focus on. And most of the sectors, the specific programmes that the bank has are the very areas that we want to focus on the economy.

“And as Dr. Adesina said, we are looking unto them with $1 billion budget support but beyond that there are lot of loans and initiatives around agriculture, job creation for the youths, solid minerals, women empowerment and women’s access to finance, access to finance to the SMEs”.

On the interest rate on the loan she said, “Is concession is way below two per cent, is about 1.2 per cent. We are not over borrowing what we are trying to do is to ensure that this money we are borrowing we use it on the key infrastructure that will drive the economy”.

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