Minister of Finance, Mrs Kemi Adeosun
The Minister of Finance, Mrs. Kemi Adeosun, has said that she
cannot predict when the nation will get out of the current economic recession.
She, however, said that some of the
efforts of the government to reflate the economy had started yielding results.
The minister, who spoke in an
interview in Abuja, stated, “I don’t want to predict when we will get out of
recession. Let me tell you that we will get into growth and that’s how you get
out of recession, because of the stimulus that we are providing.
“And it may take longer than we would like, but we will definitely get out of
it. We are already seeing...
some positive signs in agriculture and solid
minerals;and with what we are trying to do with other sectors, I am very sure
we will get out of it soon.”
The Governor of Central Bank of
Nigeria, Mr. Godwin Emefiele, had last week stated that the country would start
getting out of recession by the fourth quarter of the year.
He had said, “We are already in the valley,
the only direction is to go up the hill and the government is doing everything
possible to ensure that we move up the hill. I am optimistic that based on the
actions being taken by the monetary and fiscal authorities, the fourth quarter
results will show evidence that we have started to move out of recession.
“The worst is over. The Nigerian
economy is on the path of recovery and growth. So, please if you are a
bystander or sideliner, you are losing; join the train now before it leaves the
station.”
To facilitate the recovery of the
economy from recession, Adeosun said about N770bn had been channelled into the
economy for various capital projects this year, adding that the monitoring team
in the Ministry of Budget and Planning was putting contractors on their toes to
ensure that they delivered the projects.
Investors interested in Nigeria
The minister explained that despite
the recession, lots of foreign investors were still interested in coming to
invest in Nigeria.
As a demonstration of their interest
in the country, she said the $1bn Eurobond being floated by the country had
received a lot of commitments from investors, adding that the funds would start
coming in before the end of the year.
Adeosun added that the report of the
committee set up last month to review the national tax policy would be ready
this week
No final decision on asset sales
She also said that the Federal
Government had yet to take a final decision on which of the country’s national
assets it would dispose of to finance the 2016 budget.
The position of the minister is
against the widely held belief that the government has concluded plans to
dispose of some important national assets such as the Nigerian Liquefied
Natural Gas, the Nigerian National Petroleum Corporation and the refineries.
The planned sale of the assets is
being opposed by the organised labour, civil society organisations, industry
stakeholders, professional bodies and financial analysts.
But Adeosun said while the government
was mindful of the feelings of Nigerians, it was currently faced with serious
financial challenge, which had made it imperative to raise funds from other
sources.
She said the government recognised
the fact that funding could be raised through borrowing, but lamented that this
was not the best option now owing to the huge infrastructural deficit in the
country.
The minister added that the type of
financial resources needed to fund critical projects that would unlock the
economic potential of the country could not be raised from borrowing, hence the
need to dispose of what she described as underutilised national assets.
She said, “I think there are a number
of assets that are being considered and I don’t think we have said this one or
that one. There are some unused assets that are just lying idle, which people
have come and suggested that ‘these things you are not using, can we lease them
from you for money?’
“Hence, when they lease them from us,
the taxes are still going to come to us. So, there are some things the
government is sitting on, we don’t have money to do it, it makes sense for me
to unlock those things. So,they bring money into the economy at these difficult
times so that we can move forward.
“We have not got to the stage of
saying it’s this asset, or that. But it’s more of the conversation around
should we just keep on borrowing or shall we know that things are a lot more
difficult than we envisaged and turn on to an alternative strategy, which is
looking at some of the underutilised assets and releasing them.”
She added, “We think that the
infrastructure challenges that we face are so serious and the kind of money
that we need, we can’t borrow. When you have an accumulated deficit, you need
to look for the money that will sustain what you are doing for the next three
to four years.
“That is what we are doing, having
more of a strategic approach so that over time, we will borrow less, and which
of course is good.”
When asked what type of sale
arrangement the government was considering for the national assets, the
minister said this depended on the asset classes.
She said, “It depends on which one.
There are some assets which you can lease and others you may need to divest
from. The investor will also have to look at the risks and the pricing. Some
assets just make sense to just leave them and there are some, which you may
just sell but still hold on to the majority stake.
“So, it makes sense and you can sell
to the Nigerian people and list on the Nigerian Stock Exchange. So, there are
different kinds of sales.”
Lending rate reduction
When asked if she was disappointed
that the Monetary Policy Committee of the Central Bank of Nigeria did not
reduce the benchmark lending rate to make domestic borrowing attractive as
suggested by her,the minister said the government would explore other cheaper
sources of funds, particularly from international institutions.
She said, “We are looking at a range
of options and one of the biggest issues for us was the cost of borrowing. Of
course, the government is the biggest borrower. So, what we have said from the
beginning was that we will look for cheaper funds to bring down our cost of
borrowing.
“Currently, it is cheaper to borrow
internationally than to borrow locally.So, we are working with the Debt
Management Office to try and refinance some of the existing local debts into
external to get lower interest rates and to structure them over the medium
term.
“That will reduce our cost of debt
servicing and increase the amount of money available for capital projects,
which is really our focus.”
N500bn new housing fund
In a bid to stimulate activities and
return the economy to the path of growth, Adeosun said a mass housing scheme
that would make Nigerians become homeowners under a mortgage arrangement would
commence in the next three to four weeks.
She said under the initiative known
as the ‘Family Home Fund’, the sum of N500bn had been earmarked to create
mortgages for affordable houses for Nigerians, starting with the construction
of 100,000 houses annually from next year.
According to her, the housing fund is
expected to increase from N500bn to N1tn to make it possible for the government,
through the private sector, to deliver about 400,000 houses annually through
mortgages.
The mortgage, according to her, will
be created at a single digit interest rate of 9.99 per cent payable in 20
years, with homeowners making an initial deposit of 10 per cent.
She said the low and middle-income
earners would benefit more from the scheme as about 70 per cent of the houses
would be given out for between N2.5m and N4.5m depending on the type.
Adeosun said, “We have done a lot of
work around how we can bring down the cost. The tag is N2.5m and it is a house
you can move into. So, we are bringing down the cost.
“These are affordable houses for
Nigerians;the scheme is going to be linked with the BVN. One house per person;
so, you cannot buy the house and rent it to somebody else.”
Source: PUNCH | 
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