Repositioning the Nigerian economy and what the numbers are saying, by Temitope Ajayi

*Olawale Edun, Minister for Finance and Coordinating Minister for the Economy, highlights what President Bola Ahmed Tinubu’s administration has done over the past one year to address some of the structural imbalances in the Nigerian economy, working with the fiscal and monetary authorities

Temitope Ajayi

Mr. Olawale Edun, Honourable Minister for Finance and Coordinating Minister for the Economy, Thursday, July 25, 2024, in Abuja, FCT, addressed a press conference and gave a mid-year report on the Nigerian economy.

Edun told the press what President Bola Ahmed Tinubu’s administration had done in the last year to address some of the structural imbalances in the economy, working with the fiscal and monetary authorities.

The Minister, who will now address a quarterly media briefing on the state of the economy, highlighted that the economy grew faster in the first quarter (Q1) of 2024 than in the first quarter of 2023.

According to him, economic activity in the first quarter of 2024 was not only faster than the first quarter of 2023, but it was also the second fastest first-quarter growth in the last six years.

He also noted that the economic growth was broad-based across several sectors, including agriculture, industries, and services.

The Minister specifically, mentioned that the agricultural sector recovered from a negative position in the first quarter of 2023 to a modest growth in the first quarter of 2024.

As Edun pointed out, the industrial sector also grew seven times faster in the first quarter of 2024 than it did in the first quarter of 2023.

He equally linked the positive economic performance and upswing to the government’s well-coordinated fiscal and monetary policies.

On the revenue side, the Coordinating Minister of the Economy explained that aggregate federal government revenue in the first half of 2024 was more than double of the corresponding period in 2023.

According to him, the growth in government revenue was due to the reconfiguration and improvement in government finances, with oil revenue as a percentage of gross revenue increasing from 11 percent in the first half of 2023 to 30 percent in the first half of 2024.

Here are the numbers as presented by the Minister:

Non-Oil Revenue: The Nigerian Government’s determination to mobilise non-oil revenue has consistently delivered impressive results.

For the half-year 2024, non-oil revenue not only surpassed the revenue in the first half of 2023, but was also 30 percent above the 2024 budget target without any increases in taxes.

National Debt Burden: The Tinubu administration in the words of the Minister has been working to manage and reduce the national debt to create better fiscal headroom for economic management.

In dollar term, Mr. Edun pointed out that Nigeria’s debt burden has reduced, and the government’s fiscal deficit has improved.

“Our debt has fallen in dollar terms from $108 billion to $91 billion. Additionally, the government has diligently serviced all its loans and obligations with no recourse to ways and means of financing. The government has met all its obligations,” Edun said.

Ways and Means: In the last year, the administration has exited the Ways and Means debt trap due to better management of the fiscal space, as the Federal Government, under the leadership of the President, has not relied on borrowing from the CBN Ways and Means to fund its obligations.

Edun pointed out that part of the inflationary pressure the country is currently experiencing was a result of the past abuse of Ways and Means. The Federal Government has paid back the previous N7.3 trillion obligation within a year of President Bola Tinubu’s administration.

Debt Service to Revenue: In meeting its debt obligations to avert any form of default, the Federal Government of Nigeria, for decades, has been spending more than half of its revenue on debt servicing.

By the end of June 2023, the Federal Government was spending 97 percent of total revenue to service debt.

However, in the first year of President Tinubu’s administration, the country has recorded a positive trend in the debt service-to-revenue ratio.

Currently, the debt service-to-revenue ratio has declined from 97 percent in the first half of 2023 to 68 percent in 2024, indicating the government’s strong position in managing its debt obligations.

Budget Deficit: It has been a major priority for the economic managers to reduce the budget deficit.

To achieve this, the Federal Government, in the first year of the Tinubu administration, improved government revenue collection and blocked a lot of leakages.

Edun again, at the media briefing in Abuja, noted that the 2024 budget deficit has moved in the right direction, with a target of 4.1 percent of GDP, an improvement from the 6.1 percent deficit recorded in 2023.

“On an annualised basis, we are at 4.4 per cent, so you can see we are effectively very, very close to the budgetary target,” the Minister said.

Foreign Inflows: The government’s efforts at attracting more foreign inflows into the economy continue to yield good outcomes.

The Minister for Finance said the government would continue the reforms and improve the business environment to engender confidence further.

Edun further underscored the government’s efforts at attracting foreign inflows, including implementing the national single window project, which he said would generate $2.7 billion annually in economic benefits.

The Minister added that the government’s accelerated stabilisation and advancement plan has already attracted $500 million in investment in the gas sector, with $7 billion more on the sidelines waiting to come in.

Inflation and High Cost of Living: To address the current high cost of living and bring more relief to the masses, the Minister as well pointed out that the government has implemented several initiatives and interventions, including a strategic input programme to increase the supply of food, a pivot to Compressed Natural Gas (CNG) fuel for mass transit vehicles, and providing lower-cost financing for the manufacturing industry and production.

Edun, who also sympathised with Nigerians for the current hardship, which he also noted would soon blow away, expressed optimism that inflation, despite being “quite sticky at the moment”, would decelerate due to the government’s commitments and actions.

He said: “Clearly, as part of the reform programme on the monetary side, the 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 its legal mandate.”

*Ajayi is the Senior Special Assistant to the President on Media and Publicity.

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