Kemi Adeosun, Minister of Finance, has explained that for Nigeria to get out of the current economic downturn it needs to tap from the immense opportunity created by the glut in the global capital market.
In an interview on Nigerian Television Authority (NTA 1) monitored in Lagos on Monday, Adeosun said this development would not translate to a change in government’s priorities.
“There is no change in priorities because we really want to borrow for our infrastructure. What we are looking is how can we take the advantage of the fact that the international capital market is awash with money?
“Nigeria has a very decent credit rating. We have spent some time with rating agencies. So, how can we leverage Nigerian balance sheet to get money that we need for infrastructure? What are the instruments that we can use?
“I earlier explained to you that we got some help from some Canadians. So they were able to create a public private partnership platform (PPP) that will be able to invest in roads, airports and ports to help develop the economy,” she said.
Speaking on the funding arrangement being put in place, the minister maintained that though government must lead in the area of infrastructure provision it must not be the sole provider.
“The government must lead and I think that is very important. But government must not be the sole provider of infrastructure,” she noted.
On the status of the PPP arrangement being sought for, Adeosun stated: “We need to get to a point where PPP is working effectively and that is the area which, as I said, we are getting some technical help from some of the other governments which succeeded in developing a very strong PPP platform.
“What must be done is to allow the pension fund money to be invested in infrastructural assets on a policy basis. It is partial government money and partial private sector money and we are working very closely with the ministers of power and transport to identify some of the pilot projects that we will do under that.
“What that will do is to make our budget seem bigger because we won’t be spending only budget money but we will also be able to crowd in private money to add to that and accelerate the rate of infrastructure roll out which of course is what will get us growing again.”
She also spoke on the $500 million World Bank social safety facility for rebuilding the North East devastated by insurgent activities.
She said the executive was working with the legislature so that the fund can be accessed without delay.
According to the minister, “That again, is part of the borrowing plan that was approved by the Federal Executive Council about four weeks ago. We now have to engage very quickly with the National Assembly for approval so that we can draw down that money. The idea is to start disbursing so that we can rebuild family life in the North East, which of course, has been devastated. We thank God for the progress that has been made, but we need to rebuild and that region needs a lot of money to rebuild. The World Bank and indeed other development financial institutions are very keen to spur growth in the region.”
She said the legislature is being carried along in order to actualise the commitments secured at the IMF/World Bank meetings.
Adeosun disclosed that representatives of the National Assembly were part of the Nigerian delegation to the meeting, noting that “the chairman of the Senate Committee on Finance and chairman on House Committee on Finance were on the delegation, which is usual because there was a session for legislature. We all must align here.”
She explained that she would brief the National Economic Management Team and the Federal Executive Council on the outcomes of the meeting, saying the outcome would reflect in the 2017 budget.
“Today is the Economic Management meeting, so one thing on the agenda is the briefing. We will go back and brief the Economic Management Team on what the outcomes of the IMF/World Bank meetings are.
“We have said that as far as borrowing was concerned, we will always want to go for the cheapest. This is why when people are broke they always ask their friends before they go to the banks. The World Bank is our friend. We are a member of the World Bank, we have been contributing over the years and so we must take the advantage,” she explained.
Citing the case of China, the minister said there is nothing wrong in borrowing as long as it is efficiently utilised.
“When I asked them, which country draws down the most from World Bank, I was shocked to discover that it was China. This is the same China that comes here and offers us loans. It actually drew down huge amount from the World Bank but they are very efficient with it as they have templates. 40% of them are actually poor even though China seems to be a rich country, 40 percent of the world poor are in China so they qualify for these concessional facility and they take advantage of it. If China can have the highest disbursement rate, what will Nigeria’s excuse be for lagging behind?”
Speaking on the takeaways from the global event, the minister disclosed that from the Nigerian perspective, what made the 2016 meeting of the multilateral institutions different from previous ones was the fact that Nigeria was able to get commitments on specific areas of the nation’s economy in line with the economic agenda of the current administration.
According to her, apart from the commitment of the two Bretton Woods Institutions, the Nigerian delegation was able to secure the cooperation of representatives of other developed countries who were ready to share economic intelligence on how certain challenges in the Nigerian economy could be tackled.
The minister said, “We took our infrastructure needs to them. Not only did they agree to support us, some of them were ready to share their experience and expertise with us. For instance, a Canadian representative said, oh, we have solved that problem, we will help you to scale up and be able to take advantage of our expertise.”
On what the last delegation did differently to get the ears of the investment community during the meeting, Adeosun stated, “I believe it is the approach you take to the meetings that will determine what you get from the IMF/World Bank meetings. We had gone to the World Bank meeting with a long drawn list of what we would do. We went there with specific projects.
“We took our housing projects to the meeting; they showed commitment to invest; we took some of our power projects to them, again, they said, look, we will support you”.