Minister of Finance, Dr Olusegun Aganga who disclosed this however acknowledged that the said growth has not impacted positively on the lives of the citizenry because it has not translated to job creation.
Aganga spoke at a public hearing organised by the House of Representatives Joint Committee on Finance, Aids and Loans and Debt Management to enable the Federal and State governments as well as their agencies to justify their request for fresh loans under the 2010 External Borrowing Plan. At the hearing were the Chief Whip of the House, Honourable Emeka Ihedioha; Chairman, House Committee on Finance, Honourable John Enoh, Chairman, House Committee on Donor Agencies, Honourable Nnenna Ukeje and Chairman House committee on Aids and loans, Honourable Abdulazeez Yari all of who made brief presentations to set the tone for the discussion.
“Our economy as of now, regardless of what any one says, is doing well. We are in the top ten in the world in terms of growth. But the problem we have which the economic management team is addressing is that our level of unemployment is high.
“Yes, the numbers say we are doing well; Gross Domestic Product (GDP) growth is high; our level of borrowing is low compared to any other country; we are introducing strong fiscal framework, but our level of unemployment is high.
“So we have growth without job creation and employment; therefore the impact is not felt well enough in the life of the average Nigerian. This is why our focus now is on measuring our success by measuring the jobs we create. I am hoping that this budget (2011) is going to be a budget that also addresses job creation so that we can have an all inclusive growth,” he said.
He said plans were already on to slash the recurrent expenditure in the 2011 Appropriation Bill and set in motion machineries, programmes and projects that will enhance job creation in the economy.
He disclosed that besides the problem of unemployment, the economy had suffered so much in the past because of the lopsided nature of the annual budgets in favour of recurrent expenditure.
According to Aganga, the recurrent expenditure in successive national budgets have been too large and have made the government unable to invest enough on capital projects. He said personnel cost has increased from N985 billion in 2009 to N1.5 trillion in the current year, a situation he said, needed to be changed and will change soon.
“The other area where we did not so well in the past is the quality and efficiency of spending. In other words you may spend N1.7 trillion in your capital projects but what did it produce? What is the outcome? What has Nigerians gained? What is the benefit of doing that? You may borrow so much from any where but if you don’t use it the right way and on the right project, it is a waste of time and waste of money.
“One of the things we are trying to do from next year is to introduce the attributes of performance based budget. This is to make sure that if I give Federal Ministry of Works or Federal Ministry of Education a certain amount it will be tied to a performance level that Nigerians can see at the end of the day. I will monitor that and I will have a more robust project management programme. If you do not deliver, it goes to Mr President and that will affect what you will get the following year. So we have introduced measures to tighten those areas,” he said.
On the request by the federal Government and some 17 states to secure fresh external loans, Aganga said that while it was not morally desirable to borrow, governments across the world do borrow to supplement their legitimate revenue and enhance their capacity to deliver on development goals.
He disclosed that contrary to the belief in some circles, Nigeria ’s external debt has not really been on the rise since the post 2005 debts pardon and subsequent exit from the London and Paris Clubs of creditors. He said that rather than worry about the current external debt portfolio of $4.8 billion, Nigerians should be more concerned about the domestic debt which currently stood at $28 billion.
He admitted that given the countries past experiences in the hands of foreign creditors, Nigerians should be concerned about borrowing. Aganga however noted that what was expected of the citizenry was not to merely complain but to demand accountability from the leaders.
He also said that it behoves on every Nigerian including those in government to ensure that every penny borrowed was properly spent and that government accounts for the loans in the right way. He also said that government has a responsibility to reassure the citizenry of the reasons the loans will be taken. Aganga said that when the right controls are taken and communicated effectively it will become clear to the average Nigerian why government is borrowing in his name and what that borrowed fund will be used for.
On long term solutions, Aganga said that the Federal Government has already deployed N5billion from the Excess Crude Account (ECA) into the National Integrated Power Programme to boost electricity supply. Also the Sovereign Wealth Fund (SWF) will soon be established to ensure that Nigeria saved some of her current earnings from crude oil for the future. The SWF, he said, will be in three components namely, future investment fund, stabilisation fund and infrastructure fund.
Aganga explained that given the fact that the country’s oil and gas reserves will be depleted one day, Nigeria needed to save for the future generations, set aside some funds to supplement its budget in times of low oil prices as well as dedicate a chunk of the Sovereign Wealth Funds to building basic infrastructure that will in turn attract investments to the economy and create jobs.
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