Okonjo-Iweala Opens Up, Says Nigeria Economy Is In Danger

On Monday, June 10, at the third
round of the 2013 ministerial
platform in Abuja, Coordinating
Minister for the Economy and
Minister of Finance, Ngozi Okonjo-
Iweala, spoke glowingly about the
Nigerian economy, saying the
fundamentals were strong and that
the economy was buoyant beyond
danger.
But a few hours later, on Tuesday,
when all the doors were closed, the
minister sang a different tune. She
told her colleagues in government
point blank that the Nigerian
economy is shaky despite the official
fundamentals and that drastic steps
are needed to save it from collapse.
Mrs Okonjo-Iweala spoke at the 50th
meeting of the 15-member Federal
Government Economic
Implementation Team held behind
closed-doors at the presidential villa.
The implementation team is headed
by the minister, and meets every
week. It was established by President
Goodluck Jonathan to oversee the
effective implementation of decisions
of the Economic Management Team
chaired by the president.
Other members of the committee
are the Ministers of Petroleum
Resources, Power, Agriculture, Trade
& Investment, Works and Health as
well as the Ministers of State for
Finance and Health, the Chief
Economic Adviser to the President,
the Special Adviser to the President
(Monitoring & Evaluation), the
Director-General of the Budget
Office, the Director General of the
Bureau of Public Enterprise and a
Deputy Governor of the Central Bank
of Nigeria.
At Tuesday's meeting, a presidency
source said, the minister painted a
gloomy picture of the economy and
hinted that there was an urgent need
for "stringent budgetary measures"
to arrest the downward slide.
Although the meeting was convened
to review the government's plan to
create 3.5 million jobs in the
agriculture sector and consider the
report of a subcommittee on the
automotive industry, Mrs. Okonjo-
Iweala could not hold back on the
disturbing prospect of the economy.
The minister explained that crude oil
production now hovers around a
disturbing 1.3 million barrels per
day, a figure far lower than that seen
during the height of the protracted
militancy in the Niger Delta.
The Nigeria National Petroleum
Corporation, NNPC, had on April 18
reported a drop in crude oil
production in the first quarter of
2013, January to March, which cost
Nigeria a loss of crude oil revenue to
the tune of $1.23 billion (N190
billion). That loss is now set to
continue and the country might not
be able to meet its obligation to its
customers.
Mrs Okonjo-Iweala also informed the
meeting that crude oil theft had
continued unabated and was at its
highest level ever despite the best
effort by government to stem the
tide.
Nigeria is estimated to lose about $6
billion annually to crude theft and
the development, the minister
lamented, is now severely hurting
the economy.
The administration has paid several
billions of naira to former Niger Delta
militants to guard oil installations and
block oil theft. But if anything, the
situation has worsened.
At the meeting, the minister also
predicted a further dip in national
revenue following the increase in
shale gas production around the
world, a situation she said would
definitely have serious adverse effect
on oil prices and sales.
Shale gas, according to Wikipedia, is
natural gas found trapped within
shale formations and has become
an increasingly important source of
natural gas in the United States and
the rest of the world.
Shale gas now provides over 20
percent of U.S. natural gas need and
that figure is set to rise to 46 percent
by 2035, according to the U.S.
government's Energy Information
Administration.
Mrs Okonjo-Iweala hinted that as
more and more countries depend
on shale gas, the demand for
Nigeria's oil and gas would drop,
with a corresponding dramatic drop
in revenue.
The minister also lamented that the
situation with the economy was not
helped by the lack of accountability at
the Nigerian National Petroleum
Corporation, NNPC, saying the
corporation had refused to render
returns for its share of crude oil for
local refining.
She thereafter informed her
colleagues that beginning with the
2014 budget, there would be
stringent budgetary measures and a
lot of belt tightening within the
government, our sources say.
She did not provide details of what
the drastic measures would be, said
one of our sources.
Mrs. Okonjo-Iweala has never been
this frank in the open about the
economy and its gloomy prospects.
She has said on several occasions
that the economy was buoyant and
strong, with its outlook remaining
great, despite the current global
economic uncertainty.
On Monday, she spoke along that
line, asking Nigerians to ignore critics
who have continued to insist that
despite government claims, the
economy was not in good shape.