Nigeria

Country's Non-Oil Revenue Growing, Says IMF

Nigeria's democratic experiment is paying off as information made available to THISDAY indicates that growth in the non-oil sector averaged 8.3 per cent in the last three years as opposed to 3.3 per cent in the 1990s.

But the new Finance Minister, Dr. Shamsudeen Usman, has said the six percent economic growth rate achieved by the immediate past administration is still insignificant.

In an interview with THISDAY in Washington DC, the International Monetary Fund (IMF) Chief Mission for Nigeria, David Nellor, said this growth reflects "stronger economic policies and good agriculture weather."

According to Nellor, recent government policies have impacted positively on the economy and increased savings have led to huge spending on priority areas.

For instance, Nigeria has spent $1 billion per year since 2006 to pursue the Millennium Development Goals (MDGs), he said. He explained that the money spent was from savings from debt relief, that is, money that would have been spent on meeting the country's debt obligation.

In 2003, the level of spending was equivalent to 6.3 per cent of non-oil GDP, in 2006 it was 10.5 per cent of non-oil GDP. This year, it is projected to be at 12.1 per cent of the non-oil GDP.

Nellor said that it was important that increased revenue is channelled to tackling the myriad of infrastructural problems in the country, since spending in the past did not benefit the Nigerian people.

"Spending from oil-related income or savings should be done in a manner that preserves growth, ensures that inflation remains moderate, and guarantees that Nigeria actually gets what it strives for from spending i.e. it gets value for money," he advised.

Noting that Nigeria's international reserve has increased from just $7.5 billion in 2003 to $42.6 billion in March this year, he explained that the increase in international reserves in recent years "is a signal of increased economic and financial stability that can provide the foundation for sustainable growth, low inflation and poverty reduction."

The IMF completed the third review under a Policy Support Instrument (PSI) for Nigeria last month. This is aimed at helping the country achieve macroeconomic stability and to pursue on-going reforms. The PSI is designed for low income countries that may not need IMF financial assistance but seek co-operation in preparation and endorsement of their policy framework.

The programme supports countries based on their own poverty reduction strategy and their performance is reviewed semi-annually.

In Abuja yesterday, Usman said the six percent growth rate achieved by the immediate past administration was still insignificant. only a two-digit growth rate, he said, would make the impact of the economic reforms embarked upon by the immediate past government to be felt.

Usman, who briefed the Senior Management staff of the ministry on assumption of office, however acknowledged that the previous administration had laid a good economic foundation to build upon.

He said he was committed to and would abide by the President Umaru Musa Yar'Adua's seven-point agenda.

Usman considered accelerated execution of the reform agenda by the Finance Ministry as "very critical and of paramount importance."

According to him, the areas of the reform programme concerning the Fiscal Responsibility Act, Federal Inland Revenue Service and the implementation of the 2007 budget were of urgent importance and steps need be adopted for a change in style concerning budgeting.

Speaking on behalf of the agencies and parastatals under the ministry, the Comptroller-General of Nigeria Customs Service (NCS), Mr. Jacob Gyang Buba, pledged the support and commitment of the agencies and parastatals towards making the ministers succeed.

The Director (ERPM) Mrs. J. Nwoko, on behalf of the directors/staff in the ministry, also assured the ministers that staff were committed to ensuring that they succeeded.