By Omoh Gabriel, Business Editor
Nigeria‚Äôs excess crude account has dropped from $20 billion at the beginning of the year to $11.2 billion in June 2009. This implies that in the last six months the various tier of government in the federation have shared a total of $9 billion from that account.
This use of the fund was to beef up revenue allocation to the three tiers of government following the dwindling revenue accruing to the federation account as a result of the global economic recession that has resulted in the fall of prices of crude oil the major revenue source of the country.
Disclosing the state of the account at the weekend in Sussex, London, Minister of state for Finance Mr. Remi Babalola said that ‚Äúthe global economic meltdown impacted on Nigeria’s excess crude savings and the external reserves, as both declined from their levels of US$20.44 billion and US$50.11 billion in January 2009 to US$11.2 billion and US$43.46 billion, respectively, as at end of June‚Äù.
He reiterated the determination of the government to diversify the economy from oil and gas to other sectors, particularly agriculture.
According to him “We are addressing the issue of funding through revenue diversification. Our plan is to diversify from oil & gas based economy to other untapped areas such as agriculture and natural resources. Agriculture, however, remains very high on our list as it currently employs 68 per cent of labour force, contributes 40 per cent of GDP and provides 88 per cent of non oil earnings.
The Minister said that the nation requires $100 billion investment in the next 10 years if the country‚Äôs Gross Domestic Product is to hit government target of $300bn by 20-2020 meaning an annual investment of US$10 billion was needed over the next 10 years by Nigeria to fully tackle infrastructure and attain the top 20 economies by the year 2020.
He also stated that the government was determined to rapidly grow the economy from US$200 billion to US$300 billion in a short space of time. The minister stated this at the Wilton Park Conference tagged “Managing Risk in Africa: Responding to Political, Social and Economic Challenges” organised by the British Foreign and Commonwealth Office and the British High Commission in Nigeria.
Babalola, who presented a paper titled “Maximising Nigeria’s Economic Potentials”, stressed the need for African countries to encourage public private partnership as an appropriate form of getting the best out of their dwindling resources.
“A move away from government-owned and government-run institutions remains vital. Africa must liberalise its failing institutions. Weak infrastructure is the single most important binding constraint in Nigeria’s quest for enhanced firm level competitiveness.
“The huge resource gap of government shows there is an urgent need for alternative funding source for infrastructure. We believe strongly that Public Private Partnership (PPP) will deliver real value for money if properly managed under the Infrastructure Concessioning Regulatory Commission,” he said.
He explained that the current administration was focusing on addressing all the key areas of development, including power, security, Niger Delta, transport and land reforms, with 11 years remaining to meet the target of top 20 economies in the year 2020.
He noted that 55 road projects were ongoing in the country in addition to the involvement of the private sector in Public Private Partnerships for road projects as well as multilateral road projects including Lagos-Ibadan, Shagamu-Benin, Lagos-Badagry, Abuja-Kaduna-Kano, Abakaliki-Ogoja.
On the performance of the economy, the minister said Nigeria recorded a gross domestic product growth of 4.85 per cent in the first quarter of 2009, compared with the projected growth of 5.75 per cent for the entire year.
The lower growth, he explained, reflected the lower fiscal spending, private credit growth, lower remittances, and lower production levels, amongst others.
“Our long term agricultural strategy is to become a major supplier of food products to Africa earning 50 per cent of our foreign exchange earnings from that sector through improved production, expansion to large scale production, storage and processing, mechanised farming. “We have taken a bold and substantial move to make provision of USD$2 billion for the sector led credit through the Central Bank of Nigeria as well as committing over US$2.2 billion to farmland expansion, seedlings, fertilizer, silos and warehousing, farm settlement amongst others,” the minister explained.