Economy: Tinubu’s reforms yielding results — Edun

The Minister of Finance and Coordinating Minister for the Economy, Wale Edun, on Thursday, said the bold reforms implemented by President Bola Tinubu are yielding results for the economy.

He added that the nation’s economy is on the right trajectory for growth, and it is set to succeed.

Edun explained that plans are in the offing by the Federal Government to create a dashboard for the public to monitor interventions in social investments.

He said the Federal Government has diligently serviced its debt obligations without further recourse to ways and means as the sum of N7.3 trillion has so far been paid out of the total sum borrowed from the Central Bank of Nigeria (CBN).

Edun stated this on Thursday in Abuja during a media briefing on the 2024 half-year review of the nation’s economy tagged, ‘Economic Recovery and growth, progress and prospects’.

He said, “A dashboard of transfers is being done for the social investment programme. We are reconfiguring the social investment programme, in particular, the direct payments to beneficiaries so that ex-post, we can identify whom the funds have gone when they went to them and how much went to them, and within the constraints of the privacy laws they can be made available to the public.”

The Minister of Finance pointed out that the administration of President Bola Tinubu is doing everything possible to bring down the prices of food items in the market.

“However, what is uppermost and of major concern to Mr. President and his entire administration is getting food prices down. If they went up, the commitment that is there, wouldn’t be the urgency. There’s an acceptance,” Edun stated.

He gave the cheering news about the economy’s growth, amidst the excruciating poverty and hardships presently facing the majority of the people, and his assertion is coming barely six days before the planned protest by Nigerians over the economic hardships they are passing through.

Nigeria is battling inflation which was at 33.25 per cent in June, while food inflation also rose to an all-time high of 40.8 percent in June.

Inflation moved up following economic reforms by Tinubu’s government leading to the partial removal of petrol subsidies and managed float of the naira; since the introduction of the ‘Willing buyer, willing seller’ FX model last year, experts say the currency has depreciated by more than 100 per cent.

Speaking on the impact of the reforms, the Minister said that Nigeria now stands in a grid position globally to attract massive investments as a result of the efforts of the government.

Edun said, “I think we already can see macro-economic stability. We have a stable exchange rate. The budget deficits as I will show are reducing, the trade balance that measures how we are doing internationally is positive, and the investment flows are positive. And there has been a root and branch reconfiguration of the finances of the federal government to achieve increased revenue across the board.”

Speaking on the performance of the economy, Edun said, “The economy in Nigeria grew faster in the first quarter of 2024 Compared to 2023. And we must all be encouraged by the fact that even with the ongoing reforms, where the cost comes first, you take the medicine first and then you get the benefit after the benefits have already started to be seen.

“Economic activity in the first quarter of 2424, was not only faster than in Q1 2023 but it’s the second fastest first-quarter growth in the last six years. And it was broad-based. The growth is broad-based. Agriculture, industries, services, and agricultural growth has been dragged from negative in the first quarter of 2023, to a modest growth in the first quarter of 2024. And the key is that having turned around to be faced in the right direction, the the emphasis is on that contribution of agriculture to overall economic growth.”

He acknowledged the impact of inflation on the economy but noted that “As far as industry is concerned, the figures show that the sector grew seven times faster than in Q1 2023. So in terms of inflation, the all-important topic of the price level, we are still experiencing inflation in Nigeria. But I think as you can see from the rate of change on that chart, the pace of annual growth of inflation is slowing.

“There was a slight uptick in June may be due to the Eleya festival seasonal event. However, the slowing is clearly a first step towards ultimately achieving the goal of reducing inflation.

“So we are pleased that the well-coordinated fiscal and monetary policies are beginning to yield fruits. Several government initiatives and interventions are being implemented to increase the supply of food in particular. As we know the consumer price index effect was 50 percent food. So when you achieve a reduction in food prices, you achieve a huge reduction in the overall inflation rate.

“To this end, there’s a strategic import programme in the short term, and that programme involves bringing in agricultural raw materials for millers for food processes.

“Whether we miss even brown rice which can be milled by the millers, and there is intense focus on this at local government level and state level from providing to producing more food across the country, notwithstanding the insecurity in some places which is affecting the ability to farm.

“Likewise, in terms of interventions, moving the dial of inflation downwards, that is the intervention in terms of the people seeing energy, fuel for vehicles, particularly mass transit vehicles, buses, and other forms of mass transit. As we know, what that does is that CNG-fueled vehicles are able to provide pricing that is 1/3 the cost of PMS. So there is a critical emphasis on pivoting towards that direction. Not only does it give you cleaner air, it helps the government to start to work towards or contribute to achieving its climate action goals. It is fundamentally cheaper, as well.”

The Finance Minister spoke on other aspects of the economy; “On the monetary side monetary policy has been tightened. CBN has been proactive in adjusting the monetary policy rate to address inflation head-on which is in line with his legal mandate. And this is beginning to have the desired effect as we said earlier, inflation is slowing.

“We are optimistic that inflation, despite it being sticky at the moment, will moderate soon due to some of the commitments and some of the actions that I earlier described.

“Likewise in terms of what is happening with interest rates, the gap between inflation and interest rates is narrowing. And what that does is, it makes the Naira more viable as a store of value and reduces the incentive to switch to non-naira investments. I would call them investment products.

“As a result of this, there is growing confidence as the foreign exchange rate converges and stabilizes the transition by CBN to a willing buyer willing seller model has reduced the exchange rate volatility and improved volumes of foreign exchange trading therefore is improved liquidity and the availability of foreign exchange in the Nigerian economy. And of course, the NAFEX rate and a parallel market rate have converged. We now have effectively one exchange rate give or take.

“Importantly, the investment climate has improved and this has helped to bring in investment. And let us remember that the ultimate aim of Mr President’s macro-economic measures is to stabilize the economy. So we can encourage investment, domestic investment, and foreign investment because we need investment. You get increased productivity that leads to growth that leads to the creation of jobs that leads to reduction of poverty because of the overall aim and trajectory of Mr President’s policies.

“Foreign direct investment is inching up; portfolio investment has risen substantially compared to the same period last year; internal reforms are positively impacting external accounts.

“The trading position is improving both the balance of trade and current account balance have moved positively. As you can see from the charts when you compare Q1 2023 to Q1 2024 figures and essentially the overall reforms have put the economy in a more favorable position globally.

“And these are the building blocks to the all-important achievement and attracting of investment, particularly foreign investment.

“Likewise, the financial markets are moving in the same direction. So the evidence and the data are all showing positivity. The positive trends reflected in the financial markets, as I say, are in line with what we have just said about the international sector, so the domestic aftermarket has been on an upswing. Over the last five months, foreign portfolio investment has poured into the market. The yields have improved and made it for savers a good return on investment. And as I say, this is beginning to pay off. We are achieving macroeconomic stability. Let me turn to the fiscal side: government revenue, government expenditure, government borrowing and government revenues are growing. This administration recognizes the need to drive up revenues historically, and compared to our levels.

“Our tax to GDP ratio at around 10 per cent is low. The target is to almost double government revenue to GDP and therefore government expenditure to GDP is low compared to our neighbours around 14-15 percent. And the target is to increase that to around 25 per cent.

“So the critical nature of a revenue effort cannot be overestimated. We are pleased that the efforts so far are gaining traction. Aggregate Federal Government revenue in the first half of 2024 was more than double that of the current corresponding period in 2023 It’s a sign of the reconfiguration and improvement that has been achieved by applying technology, reconfiguring the processes of government finances, internally generated revenue.

“A very robust system has been put in place to make sure that what belongs to Nigerians is collected into the federal purse rather than going elsewhere. All revenue as a percentage of gross revenue is higher at 30 per cent versus 11 per cent in the first half of 2023. It’s an evidence-based data-driven conversation to indicate where in objective terms this economy is going. Non-oil revenue in the first half of 2024 outperformed revenue in the first half of 2023. And not only that, it was 30 per cent above the budget. Revenue surpassed that of the same period in the first half of last year, but it is 30 per cent above the 2024 budget. And this is key in terms of diversifying revenue, particularly away from dependence on oil revenue and revenue based on tax reforms.”

Edun stated that the Federal Government will soon float $500 million Euro bond that will encourage Nigerians in the diaspora to invest in the country, and reduce foreign borrowing from the multilateral development agencies.

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