Udoma: Stimulus Plan Not Meant to Sell Off All Critical National Assets

As Saraki seeks executive, legislative collaboration to tackle recession Stakeholders, Clark panel to work for N’Delta Peace

Ndubuisi Francis in Abuja andOlawale Olaleye in Lagos

Minister of Budget and National Planning, Senator Udoma Udo Udoma, has said that the primary objective of federal government’s fiscal stimulus plan was not to sell off all major critical national assets but to source immediate funds to reflate the economy and implement capital projects in the 2016 budget.

The minister said Federal Government was exploring several angles in the asset sale proposal, including repurchase option, which will make provision for buy-back of those assets when the nation’s economic situation improves.
Also at the weekend, Senate President Bukola Saraki called for executive/legislative collaboration to steer the nation out of the current recession.

Meanwhile, following the wave of militancy in the Niger Delta region, where the nation’s oil wealth is located, a cross-section of stakeholders, under the aegis of the Initiative for Peace, Governance and Development, yesterday, met at the Transcorp Hilton, Abuja and resolved to work with Chief E. K. Clark’s committee on how to achieve lasting peace through constructive engagement of the various tendencies in the region.

The National Economic Council (NEC) had last week approved the sale of some national assets as part of overall measures to take the economy out of recession, a move that has been opposed by many.

A statement issued by the Special Adviser on Media to the Budget and National Planning minister, Mr. Akpandem James, on Saturday, said Udoma gave the explanation on the proposed assets sale in Lagos while briefing newsmen on the forthcoming Nigeria Economic Summit (NES).
The intention of government, according to Udoma, is just to get enough money to fund the 2016 budget and get the economy back on the path of recovery.

Government, he stated, needed to inject a large dose of funds into the system to get the economy back on track and to faithfully implement those provisions in the capital budget tailored at reflating the economy and aiding the diversification process.
Udoma explained that the country had lost almost half its expected revenue and would need to urgently source the shortfall to enable government faithfully implement the budget.

This unfortunate scenario, he explained, prompted the Economic Management Team to urgently work out a fiscal stimulus plan to generate immediate large injection of funds into the economy through asset sales, advance payment for license rounds, infrastructure concessioning, use of recovered funds, among others, to reduce the funding gap.

The other option, according to the minister, would have been to source for additional loans, beyond the level of borrowing already projected for in the 2016 Budget. He said this would not be a wise option as it would raise the level of debt service to an unsustainable level.

Udoma insisted that the country’s economy may not have gone into recession but for the drastic fall in oil production levels due to disruptions caused by militant activities. At worst, he pointed out, it would have been a flat performance that would have sign-posted a new curve in the economy trajectory that would subsequently put it on the path to recovery and sustainable growth.
He added that the government appreciated that the downturn in the economy had brought hardship to the people, but he assured that government was committed to redressing the situation.

“Our goal is to unlock the economic potentials of the non-oil and high-employment sectors, so as to achieve a sustainable inclusive growth that will ensure that the majority of Nigerians become more productive, thereby reducing poverty.
“Thus, we are deliberately working towards diversifying the Nigerian economy by ensuring that the non-oil sector drives the economy because this is the sector that contributes the most to GDP; and, has more capacity to employ.”

The basic strategy, he pointed out, is to reflate the economy through fiscal stimulus and strategic implementation of annual budgets.
“What this means is that we are geared to strategically spend our way out of recession. Unfortunately, we have not met all our planned expenditures for 2016 due to low revenue outturns. However, we have ensured that the resources that we release are targeted at priorities that will stimulate activities in the economy. We are also developing a more robust monitoring and evaluation framework to track performance”, he explained.

Udoma said bad as it is, the current situation provides the country with an opportunity to revamp the economy and put it on the path to sustainable growth; but in doing so, Nigerians must reduce their demand for foreign products, focus attention on refining petroleum products locally, return to agriculture, develop the solid minerals’ sector and stay the course even if the price of oil goes up again.

Calling for collaboration between the executive and the legislature to steer the nation out of the current recession, Senate President Saraki at the weekend said he was impressed with the patriotism demonstrated by senators during the debate on the state of the economy last week irrespective of political party affiliations,

Saraki said, “all the Senators really contributed on the issue of solutions in their opinion, in their own analysis, from their own research and they came up with what we believe is the best way to help the country get out of recession, as regards solutions that we in the National Assembly need to do and as regards what the executive needs to do.”
He said the Senate, when its reconvenes Tuesday, would work on the report of the ad hoc committee mandated to harmonise the various contributions of senators on the issue.
“We set up an ad hoc committee to put together all the recommendations that were put forward by different senators. Our plan is that on Tuesday, we will now take them and be able to pass resolutions on some of those issues and communicate those resolutions to the executive.,” he said.

Saraki explained the precarious situation in which the nation had found itself adding that there was need to think out of the box in order to get out of the recession.
“The problem is that we are in a situation where the forex inflow, and the forex inflow comes from different sources, it comes from government’s sale of crude oil, it comes from export proceeds, it comes from foreigners and Nigerians investing in companies in Nigeria, it comes from hedge funds that believe in the market, that invest in our bonds, treasury bills, and stock market. It even comes from Nigerians that have money abroad, that bring money in. I think I have counted five. Out of these five, only one is functioning today – that is government money. All these other four have dried up.

“So your FX inflow has gone down, your reserve is low, your demand is still up there, there is no confidence in the economy that will encourage these four sectors to bring money in, either because they believe the naira has not yet found its bottom, so if I bring in my FX, I am going to lose straight away, so for as long that that continues, you are not going to see any inflow.”

Buttressing his point, Saraki said: “Then you have the Niger Delta problem on top of that. So generally, your FX inflow is low, your reserve is depleted because in the period when you should have saved, we didn’t. If for example, the reserve had been like $60billion, even if oil went down to $40 as it has gone down now, we would not have gone into recession as we have gone now, that is the blunt truth. But at the same time, even if oil went to $40, we shouldn’t have gone into recession if we had the confidence of those four sectors, if they continued to believe in the Nigerian economy and they were putting money in.

“Now, so the naira started coming down, now the Naira is about 436 and it is going down further because anybody who is looking at it can predict. I look at your balance sheet, I see you only have 20 billion there, I see your demand, I see money is not coming in, so first of all, there are speculators who believe that by next month, it is going to go to about 500 so everybody is demanding. But there is only one way it is going to go to. The complicated part of that is that because it is a complicated situation, CBN is facing two things,

“First, it is trying to save the naira, that is preventing excess liquidity going to chase the dollar, so because of that CBN through its monetary policy, is mopping up, that is why government did not reduce the interest rate, because they are concerned that if they do that the other problem they are going to have is that all that liquidity is going to chase the dollar. Which means that at the end of the day too, you cannot bring interest rate down.

“It is my own humble opinion that if you can build your foreign reserves, and that was why government thought that they were going to borrow externally, that has not worked. No dime has come in, promises are coming but they are not coming. Even if you do that, maybe the best government can raise is $5, $6billion, that cannot really, in my view may be it can help government fund projects, it is not enough to give that confidence.

Looking at asset sale as a veritable option, Saraki said, “My take is that if you can build your foreign reserves, say about $15, $20billion you now have a reserve of about $45 billion. The guy sitting outside with his portfolio now knows that you are strong. If you decide to defend your currency, you have the capacity and the wherewithal to defend it. It will likely stimulate them and they will now begin to say, ok, let’s go to Nigeria. Currently, everybody has just put an amber on Nigeria and that is why we’ve not got the value for devalue. We devalued but nothing happened because some of these policies did not go with it. People still believe that Naira is still going to go further down. If they believe that you have the capacity to say that Naira is going to stay at 400 and you have to capacity stay at 400, then I can project as an hedge fund manager that I want to go and invest in Nigeria.”

The meeting, which had in attendance, governors, ministers, political leaders, opinion moulders and youth agitators, amongst others was believed to have been at the instance of the Minister of Transportation and former Rivers State Governor, Hon. Rotimi Amaechi.
A communiqué issued at the end of the meeting stated that the meeting had become imperative in view of the recent events in the region, to discuss pressing issues relating to peace and sustainable development in the region as well as to collectively fashion out pragmatic strategies to chart a way forward.

The communiqué signed by all those present at the meeting, reads: “After very frank discussions and extensive deliberations, the meeting agreed to focus on coordinating as well as deepening efforts to restore peace and ensure sustainable development in the region.
“The meeting reiterated the fact that insecurity still remains the biggest challenge to development in the region and that concerted efforts must be made to restore security and peace in the region, while recognising the constitutional responsibility of the federal government as the ultimate guarantor of peace and security anywhere across the nation.”

In view of this, the meeting resolved “To resume a robust and comprehensive engagement strategy with all levels of government and service providers in the Niger Delta region in pursuit of projects and programmes that will promote the aforementioned objectives.
“To engage citizens, traditional institutions, non-governmental and other relevant organisations to foster relationships and partnerships to promote crisis resolution and guarantee peace in the short to medium term as a means to sustainable development and to identify relevant sub-themes and form clusters for action (C4A) to advance solutions to the challenges in the region.

“To inaugurate a Technical Committee to engage with all stakeholders, especially the aggrieved and agitating youths, to ensure sustainable peace, security and development of the region. The meeting acknowledged and commended the contributions and efforts of the Chief E. K Clarke’s Committee in pursuit of dialogue and peace in the region and urged the Technical Committee to work with the Clarke’s committee for the actualization of this objective.

“That it be, and was indeed, set up a 3-man committee to examine the issues relating to the proposed Maritime University in Okerenkoko and advice the meeting and the Ministry of Transportation for the purpose of engaging the Presidency on a way forward and to reconvene every other month to evaluate progress and respond to any emerging issues.”

Apart from the initial resolution, the meeting also resolved “That the Statutory contributions due to the Niger Delta Development Commission (NDDC) from the federal government and all stakeholders should be paid.
“That the Niger Delta Development Commission should rebrand, reform and refocus to become the Regional Development Commission that it was envisaged to be rather than the contract awarding body that is now appears to be.”

Some of those who attended the meeting were the Minister of Transportation, Rotimi Amaechi, who was also said to be the convener; Governor of Cross River State, Professor Ben Ayade; Senator Victor Ndoma-Egba, Mr. Donald Duke, Sen. Bassey Otu, Sen. Florence Ita-Giwa, King (Dr) Edmund Dakoru, King Ebitimi Banigo, HRM Frank Okorakpo, King W. S. Joshua Igbugburu, Navy Capt Walter Feehabo-Amain, Adm. Poberni (Rtd), Prof. T. Turner Isoun, Sen Inatimi R. Spiff, Chief Timi Alaibe, Sen. E. W. T. Diffa, Olorogun Frank Kokori, Barr. Justin Rewane, Dr. Ogaga Ifowodo and Hon E. T. Agbonayima

Others were Obong Victor Attah, Rt. Hon. Emah Bassey, Rt. Hon. Bernard Udo, Rt. Hon. Ignatius Edet, Obong Bassey Inuaeyen, Prof. Okon Eminue, Chief Don Etiebet, Obong Umana O. Umana, Dr. Akpan Micah Umoh,. Nsima Ekere, Mrs Ibim Semenitari, Prof. Nimi Briggs, Prof. B.B Fakae, Barr. Boma Obuoforibo, Dr. I. N. Iragunima, Prince Tonye Princewill , Chief Andrew Uchendu, Sen. Magnus Abe, Chief Tony Uranta, Hon Betty Apiafi, and Hon. Mene L. Derek, among others.