Amid an unabating economic downturn, the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, has announced that Nigeria’s economy is showing signs of growth, with a Gross Domestic Product (GDP) growth rate of 2.98% in the first quarter of 2024.
This announcement was made during the presentation of his ministry’s performance, one year into President Bola Tinubu’s administration in Abuja on Tuesday.
Edun highlighted the marginal growth in the agricultural sector, which is critical to the economy.
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“This growth in agriculture provides the monetary authority with the leverage needed to stabilize foreign exchange (FX) rates,” he said.
“By continuing on this path and intensifying our efforts, we are on track to lift many Nigerians out of poverty.”
He added that the progress in agriculture is expected to play a significant role in combating inflation, particularly through a favorable wet season harvest that should stabilize food prices.
Debt Servicing and Financial Health
The finance minister also emphasized that the government now has enough resources to service its debt without resorting to borrowing through Ways and Means, particularly for international debt service.
“What that means is that the government can now pay its way. The government is paying its debt service without resulting in Ways and Means, particularly international debt service,” Edun stated.
He acknowledged that while the government is not in the most comfortable financial situation, it has implemented a process to ensure that funds previously held by parastatals and agencies are now being brought into the national coffers. This has enabled the government to meet its domestic and international obligations.
Investment in the Oil and Gas Sector
According to the minister, the oil and gas sector has received approximately $7 billion in investment pledges due to new incentive frameworks introduced by Tinubu’s administration. These investments had been dormant for years, awaiting appropriate economic conditions for inflow.
“We expect $7 billion worth of investment that have been sitting on the sideline to now come in. Similarly in other sectors,” he said.
Edun noted that Tinubu’s initiatives in the energy sector have mobilized these investments, emphasizing that the policies are fostering prosperity and generating jobs. He highlighted the CNG-fueled conversion programs as part of the administration’s policy framework to drive growth.
“The pivot to CNG is a government policy not just for vehicles but for generators. They have to be either CNG-fueled, solar-based, or electric vehicles. That is the new incentive structure,” Edun explained.
However, economic realities in Nigeria have largely belied the minister’s assertions. Earlier in March, President Bola Tinubu signed new executive orders aimed at enhancing the investment environment and establishing Nigeria as the top choice for investments in the oil and gas industry across Africa.
This policy directive followed extensive engagements with major stakeholders in the sector and focused on optimizing the contracting process to decrease the cycle time to six months.
Despite these reforms, Nigeria’s oil and gas industry, like other sectors, has suffered from insufficient capital investments due to factors such as insecurity, oil theft, and policy inconsistency. For instance, the CEO of TotalEnergies, Patrick Pouyanne, stated that the company decided to invest $6 billion in energy projects in Angola over Nigeria. Pouyanne noted that TotalEnergies had not conducted oil exploration in the oil-rich Niger Delta region for 12 years.
Additionally, Shell Petroleum Development Company of Nigeria Limited (SPDC) and other International Oil Companies (IOC) are reshaping their portfolios, as producing oil in the Niger Delta does not align with their health, security, and environmental policies.
Economic Outlook
However, Edun expressed confidence that continuing on the current policy path would result in an expanding economy and enhanced living standards for Nigerians.
He stated, “We have room to feel that continuing on these paths, redoubling our efforts, following Mr President’s agenda, at the state level and federal level, will lead us to a growing economy that takes us out of poverty and produces a better life for Nigerians.”
Criticism and Public Sentiment
Despite attempts to project an optimistic future, the Nigerian government has faced criticism from various quarters. Many Nigerians have expressed concerns that the government is not adequately addressing more pressing issues such as poverty, unemployment, and insecurity. Critics argue that while policy reforms and investments are crucial, there is a need for immediate and tangible improvements in the living conditions of ordinary Nigerians.
Many believe that the finance minister’s presentation while highlighting the positive strides made, belies the nation’s current challenges.