Our Capital investment Plans Will Trigger Economic Turnaround, Says Adeosun

Finance Minister, Kemi Adeosun
Finance Minister, Kemi Adeosun
MINISTER of Finance, Mrs. Kemi Adeosun, yesterday said the planned N1.8 trillion capital investment this year by the Federal Government was key to driving economic growth.
Speaking on the administration’s plans to reposition the economy, Adeosun told participants at the KPMG-Nigeria’s CFO Forum and Survey Launch in Lagos that to reflate the economy and avoid recession, a spending stimulus was needed.
The minister, in her keynote address, told the participating chief financial officers that Nigeria’s Gross Domestic Product (GDP) last year was the lowest in the last 15 years, pointing out that even whilst oil prices were high, GDP had been falling.
According to a statement issued by her Special Adviser on Media Matters, Mr. Festus Akanbi, the minister recalled that a similar stimulus had actually been provided in the global downturn in 2008, adding, however, that the stimulus now needed would be strategically targeted at investments that would support a diversified economic growth.
She said this year’s budget would finance investments in key infrastructure, particularly in transport, power, health, housing and education, stressing: “These investments would create jobs with the various contractors that would execute the projects.”
She explained that public investment would attract further investment from the private sector and that investments in power and transport would increase the competitive position of Nigerian businesses.
Adeosun cited the case of Ethiopia, now seen as a model for African economy, which has diversified from a single product- coffee- to multi-product, with exports of flowers providing $3.5billion of earnings, as well as leather goods and other products.
The minister stated: “No economy has ever grown by underinvesting in infrastructure,” saying ongoing “fiscal housekeeping,” which included sanitising the payroll and creation of efficiency unit was a key strategy in managing recurrent expenditure.
She added that the focus on improving non-oil revenue collections was an important strategic objective in ensuring that the planned borrowings were channelled to capital projects, rather than being spent on recurrent items.
On the planned borrowing, the minister explained that government was seeking the lowest cost funds and therefore, consulting with the multilateral agencies, which offered concessional rates of interest as low as 1.5 per cent before looking at the commercial Eurobond Market.
She said the financing strategy was to restructure much of the existing debts, which has short maturity and align them with the investment plans of the government in line with its medium-term expenditure framework.
She assured that projects to be undertaken would create direct and indirect revenues that would be used to repay the obligations.
Adeosun said for the medium term, the outlook for the economy was strong and if the planned investments in capital were undertaken, the GDP growth projections showed that Nigeria would become a leading global economy.
She said government would work to ensure that consumption from the country’s huge population would drive internal growth across a number of key sectors.
The minister told the audience that if discipline implementation of the plans were attained, Nigeria would finally be able to diversify and bring an end to the situation where the entire country is focussed on the oil.

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