The Minister of Finance, Dr. Ngozi Okonjo-Iweala, on Thursday said the country would this month begin to feel the impact of the falling global oil prices, which started in June.
Consequently, she said the country needed to brace for tougher times ahead by reviewing its expenditures and building economic buffers through budgets that would be based on modest oil prices.
According to her, sound macroeconomic management is crucial to Nigeria at this time, while also emphasising the need to plug all revenue leakages.
The minister spoke in Lagos at the Africa Financial Summit organised by the Institute of International Finance and Access Bank Plc.
“We have not seen the impact of the falling oil prices in Nigeria; it will start this month. We have to drive the non-oil revenue base to be able to weather the storm that is coming,” Okonjo-Iweala said.
She, however, said Nigeria was not alone in the coming economic storm, pointing out that a large number of African countries that relied on commodity export as the mainstay of their economies would also be affected by the global fall in the prices of such commodities.
The minister said the global fall in the prices of export commodities such as gold, iron ore and agricultural produce such as cocoa, cotton and coffee was bound to affect most African economies, which relied on commodity export as the major source of revenue.
Quoting from the United Nations Conference on Trade and Development, Okonjo-Iweala said the ratio of export commodity to total merchandise was very high in a large number of African countries.
According to her, it is 60 per cent in South Africa; 89 per cent in Zambia and Ghana; 96 per cent in the Democratic Republic of Congo; and 83 per cent in Nigeria.
She said based on the 2013 data, 70 per cent of sub-Saharan Africa’s merchandise exports went to regions that were currently facing slowdown.
Ten per cent of commodity exports from the sub-Saharan Africa go to the US; 26.5 per cent to Europe; three per cent to Japan; 21 per cent to China; and three per cent to Brazil, according to the minister.
Consequently, Okonjo-Iweala said there was an urgent need for Nigeria and other African countries to explore other means of shoring up their revenues in the face of the falling prices of export commodities.
She said borrowing to fund annual budgets would not be a better option for most African countries.
“I strongly urge other African countries to look into other directions. We need to build our economic buffers. Of course, there will be pressure to borrow in the face of falling commodity prices, but we cannot afford to borrow. There is a need to drive domestic resource mobilisation,” the minister added. Click to signup for FREE news updates, latest information and hottest gists everyday
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Okonj-Iweala, why treatning Nigerians with this hard statement that "Tougher time ahead because drop in oil price." Ask an average Nigerian recount progress nd better benefitred from oil, it's as if oil discovery in this country brought untold hardship 2 citizens than freedom nd blessgs. One thg I'm sure of is; we trust in God's provision nd surely his storage's always running over his children because God will always make ways where there seem to be no way
ReplyDeleteYou now make noise aloud when quoted oil prices are falling down as against the expected budgeted rate.. Can someone ask the Honorable Minister do they sensitize the public with same awareness when oil prices rise as against the oil budgeted price or rate in the past.
ReplyDeletePlease, Honorable Minister.. Kindly act and act well because that is the reason why u are there in the first place. Stop insulting common man intelligence with your worries but simply ask Mr President to look into the spending on Government Protocols at all level with associated running cost including the National Assembly. Thanks. T.T. Nigerian.
This is good news. Low price of crude oil = low cost of imported fuel = zero government expenditure on fuel subsidy = good life to all Nigerians
ReplyDeleteAnonymous 3:19pM, I support u, at least when oil price went up, government was so happy, they had breakfast party, lunch patty, and dinner party, congratulating themselves, and for Nigerians then, our share of the parties in Abuja was increase in pump price. Now the reverse is the case, we are waiting for reduction in pump price o. Obasanjo that greeted Nigerians happy new year with increase in pump prices should advise government now to reduce pump price. Thank God he is still alive. He (Obasanjo) visited Nigerians with increament of pump price 3 times within a year, that brought more pain more than joy to us. Now we need a reverse.
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