FG Resumes Payment into Excess Crude Account with $87m

Obinna Chima

The Minister of Finance, Mrs. Kemi Adeosun, said on Monday that the federal government has commenced payment into the Excess Crude Account (ECA), in line with efforts to rebuild fiscal buffers.
Adeosun said for the first time since the administration took over, the federal government last month paid $87 million into the ECA.

“Even though things are difficult, we are saving. As you know, when we came in, we gave the Sovereign Wealth Fund (SWF) an extra $500 million and we are still going to do more. We cannot afford to waste because we don’t have money to waste,” Adeosun said while speaking at The Platform, a programme organised by Covenant Christian Centre in Lagos on Monday.

She said a lot of foreign investors were interested in investing in the country.
Adeosun told her audience: “When I leave here (The Platform), I am going to meet a group of investors that came in from America. Long-term investors are now looking at Nigeria and saying it is time to come in. On Thursday, we had a group of Japanese.

“We are not talking about people that are bringing in sachets of things to come and sell here, we are talking about people that want to set up factories to manufacture transformers. We are talking about industrialists. They are coming back into Nigeria because Nigeria is showing that it is serious.
“We have taken the pains. Often, the medicine that does it the best is the bitterest medicine and we have had very bitter medicine in the last one year. But now, we would have the long-term benefits in terms of growth and jobs.”

According to Adeosun, in terms of entrepreneurship, the federal government recently revived the Development Bank of Nigeria, saying it was a development finance institution project that started under the previous government, adding that the bank would have $1.3 billion of capital that would be lent to microfinance and banks, specifically for on-lending to SMEs.

“Actually, our economy is 50 per cent driven by SMEs and only 10 per cent of them have access to loans. So, if you begin to improve their access to capital, you can rapidly grow jobs and businesses,” she said.
Furthermore, the minister said the policy direction of the federal government would help lay the foundation for a sustainable economy.

She said: “We are going to build an economy that really doesn’t care about what the price of crude oil is. There are 180 million of us in the country and we have two million barrels of oil per day.
“Kuwait has 3.9 million people and three million barrels of oil per day. So, we can’t afford to continue to behave like an oil economy. An oil economy simply pumps the oil out, then use the dollars to buy everything they need.

“That is the economic model that Nigeria has largely been following. We export crude oil and then we buy everything. We don’t add value, we don’t get any of the by-products and that means that Nigeria has become a very unproductive economy. That is not the intention of the Nigerian dream.”

The minister reiterated that a recent study showed that only 214 individuals pay tax in excess of N20 million, saying that the government would take measures to broaden the tax base.
“Oil has made us extremely lazy. The truth is that what we spent monies on in the past were all on wrong things. We are now suffering the effects of the things that were done three years ago.

“When we started the whistle-blowing policy, people were saying why should we pay somebody five per cent? But our argument was that, what about the person who stole 100 per cent? Why fixated on the person that is getting five per cent to bring the money back.”
Adeosun justified the federal government’s increased borrowing, citing the case of the renovation of the runway of the Abuja airport.

“If you spend money on the right thing, you get the right results. We do have to borrow because if we have to wait for oil price to recover, we would be in recession for a very long-term and use the money to develop capital projects.
“One of the things we have been trying to do is to improve our revenue so that we can’t continue to depend heavily on crude oil sales,” she added.