- From Blog Archive
AfDB's President announced new Nigeria spend countering recession - CPI Financial
Adesina's 27 September visit heralded a new series of AfDB programmes that will bring the Bank's portfolio in Nigeria, its largest state shareholder, from the current $4.6 billion to $10 billion by 2019. Of this, the private sector is expected to receive $6.9 billion, while the public sector will get $2.1 billion, excluding a budget support of $1 billion planned for 2016.
During his visit, Adesina pushed authorities to enact incentives to boost private investment and revive growth. Nigeria's economy shrank by 2.6 per cent in Q2 2016, its second consecutive contraction officially putting it in recession. The current account and fiscal deficits have also worsened, and inflation exceeds 17 per cent. The country's credit ratings have been downgraded by all the three major international credit rating agencies.
"What is needed is not only to spend your way out of the recession, but to also incentivise your way out of the recession," Adesina told a news conference following his meetings with President Muhammadu Buhari and his Economic Management Team.
Adesina noted that oil exports represent 98 per cent of the Government foreign exchange earnings, but account for only 10 per cent of the GDP. "Diversification is not the problem," he said, going on to say that the rest of the economy is not able to generate enough revenues for the Government and foreign exchange earnings.
Adesina said "dividends of the Naira devaluation" could be reaped if Nigerian authorities put in place incentives for foreign direct investment (FDI) to go into the critical sectors, especially agriculture, agro-industrial sectors and solid minerals; and to small and medium enterprises (SMEs), an important job creator. He also called for incentivising the manufacturing and industrial sectors to do import substitution.
"With the right incentives, the country will come out of the recession, structurally better balanced," he said. The revenue base will be more diversified. The Government will get more resources from better performing manufacturing and industrial sectors and SMEs. And, most importantly, unemployment will decline substantially.
Adesina also commended authorities, saying that the removal of the fuel subsidies and the devaluation of the Naira were "bold decisions," he said.
The AfDB is finalising a $1 billion budget support operation that is expected to go for Board approval in October. It will also provide $300 million for youth employment in agribusiness, through the ENABLE Youth programme, and provide a further $250 million for the North East Integrated Infrastructure Development Program, an effort to stabilise the North in the wake of Boko Haram.
In the agricultural sector, the Bank will provide $200 million to the Agricultural Transformation Agenda Support Program, the second phase of the project; it will also provide $300 million for the Abuja Infrastructure Project for integrated infrastructure (water, sanitation, roads, and electricity) for four satellite towns in capital region.