Nigeria—Act with Resolve, Build Resilience, and Exercise Restraint
By Christine Lagarde, Managing Director, International Monetary Fund,
Speech to the Nigerian National Assembly
Abuja, January 6, 2016


Introduction
Honorable Speaker of the House, Honorable Members of Parliament, Honorable Members of the Government, Ladies and Gentlemen,
Good morning—and—Happy New Year!
I would like to thank you for the gracious introduction, and Members of Parliament and the people of Nigeria for their incredible hospitality.
I have been looking forward to starting my new year here in Nigeria—and I am grateful for the special privilege to speak before this parliament.

My first visit to Africa as IMF Managing Director was in late 2011, and the first country on my itinerary was Nigeria. At that time, Nigeria was emerging from the 2008-09 commodity price collapse and the banking crisis that followed.
Since that visit, Nigeria has been acknowledged as the largest economy in Africa—with a maturing political system. We saw a peaceful general election last year in which, for the first time in Nigeria’s history, there was a democratic transition between two civilian governments. It was a strong sign of Nigeria’s commitment to democracy, to a new Nigeria.
At the same time, the external environment has changed. Oil prices have fallen sharply; global financial conditions have tightened; growth in emerging and developing economies has slowed; and geopolitical tensions have increased.
All this has come at a time when Nigeria is facing an urgent need to address a massive infrastructure deficit and high levels of poverty and inequality.
So, Nigeria faces some tough choices going forward. Nigerians, however, are well known for their resilience and strong belief in their ability to improve their nation and lead others by example. I firmly believe that Nigeria will rise to the challenge and make the decisions that will propel the country to greater prosperity.
As the great Nigerian novelist Chinua Achebe once said: “If you don’t like someone’s story, write your own.” This is exactly what you are doing right now.
And let me assure you that, as you go forward, as you develop your story, the IMF will support your efforts.
Today, I would like to offer my perspective—on your story and punctuate it with three R’s: resolve, resilience, and restraint.
• I will first identify the global economic transitions that are affecting Nigeria and the region.
• I will then turn to the importance of managing the near-term vulnerabilities facing Nigeria’s economy.
• And, finally, share my thoughts on what might help to achieve more inclusive and sustainable growth.
1. Global economic transitions and implications for Nigeria and the region
So let me start with the big picture. For more than a decade, growth in Sub-Saharan Africa was driven by an extraordinary combination of improved policies, stronger institutions, high commodity prices, and high capital inflows.
The region has now entered a different phase, where commodity prices and capital flows are far less supportive. We are in the process of updating our forecasts, but broadly the IMF staff estimates that regional economic growth dropped from 5 percent in 2014 to about 3.8 percent last year, with only a modest recovery expected in 2016.
There is a similar picture at the global level—modest growth last year, with only a slight acceleration expected in 2016. Emerging markets, which propelled global growth after the 2008 global financial crisis, have slowed; advanced economies are still recovering from the impact of that crisis; and financial markets remain volatile.
In fact, both at the regional and global level, growth is affected by three major economic transitions. They include China’s move to a new growth model, the prospect of commodity prices remaining lower for longer, and the increasing divergence in monetary policy in major economies, especially since the recent rise in U.S. interest rates.
Understandably, policymakers in this region are concerned—because these transitions can create spillovers through trade, exchange rates, asset markets, and capital flows.

For example, spillovers are now affecting oil-exporting countries, which generate about half of this region’s GDP. These economies, including Nigeria, are facing massive pressures and challenging prospects.
Over the medium term, oil prices are likely to remain much lower than the 2010-13 average of more than $100 a barrel. Why? Because of the huge oversupply in global oil markets. Think of the shale oil boom in the United States, and some historically large producers such as Iraq and Iran coming back to the market. Other factors include OPEC’s strategic behavior and the drop in global demand for oil, especially in emerging economies.

Already, lower oil prices have sharply reduced Nigeria’s export earnings and government revenues. Both are likely to remain at depressed levels, reducing the space for policy interventions to address Nigeria’s social and infrastructure needs.
Private sector investment will also be affected. Investor confidence about the outlook has remained weak, and financing is likely to become more difficult and more costly for everyone. With U.S. interest rates expected to continue to rise, albeit slowly, the likelihood of capital outflows will increase, and exchange rate pressures could mount as investors re-assess their appetite for risk.
More broadly, Sub-Saharan Africa is also facing spillovers from geopolitical factors, including the fight against Boko Haram. The threat of terrorism is very real and never far from our minds. Having been in Paris during the November attacks, I know firsthand the sorrow that so many Nigerians carry in their hearts.
In this region, terrorism not only takes a human toll but it also makes public finances more fragile. How? By widening budget deficits. Revenues are lower, including from lower growth, and spending needs higher, including for security and for supporting those impacted by the violence. One immediate downside is higher financing needs that can crowd out other essential public spending.
This brings me to my second topic—how can policymakers manage these near-term vulnerabilities?
2. Managing near-term vulnerabilities

Let me start by underscoring the progress made in recent years. Nigerians have created a large and diversified economy that has grown by about 7 per cent a year over the last decade. This has been a remarkable achievement, a testament to Nigeria’s immense potential.
The outlook, however, has weakened. Growth in 2015 is estimated at about 3.2 percent—its slowest pace since 1999—and only a modest recovery is expected in 2016.
For a country with a rapidly increasing population, this means almost no real economic growth in per capita terms.
On top of the slowdown, vulnerabilities have increased. The ability to manage shocks is restricted by low fiscal savings and reserves. And the weakening oil sector could stress balance sheets and put pressure on the banking system.
Reduced confidence and lower capital spending also impact the non-oil corporate sector. Unfortunately, this sector looks less resilient today than during the downturn of 2008-09. Companies that have increased their leverage and US-dollar debt in recent years may now come under pressure as they face rising interest rates and a stronger dollar.
Nigeria also has a large regional footprint, and its fortunes affect that of its neighbors, especially through trade. For example, it is estimated that a one percent reduction in Nigeria’s growth causes a 0.3 percent reduction in Benin’s growth.
So what can policymakers do?
I see an immediate priority—a fundamental change in the way government operates. What do I mean by that? The new reality of low oil prices and low oil revenues means that the fiscal challenge facing government is no longer about how to divide the proceeds of Nigeria’s oil wealth, but what needs to be done so that Nigeria can deliver to its people the public services they deserve—be it in education, health or infrastructure.
This means that hard decisions will need to be taken on revenue, expenditure, debt, and investment going forward. My policy refrain is this:

Act with resolve—by stepping up revenue mobilization. The first step is to broaden the tax base and reduce leakages by improving compliance and enhancing collection efficiency. At the same time, public finances can be bolstered further to meet the huge expenditure needs. For example, the current VAT rate is among the lowest in the world and well below the rates in other ECOWAS members—so some increase should be considered.

Build resilience—by making careful decisions on borrowing. Nigeria’s debt is relatively low at about 12 percent of GDP. But it weighs heavily on the public purse. Already, about 35 kobo of every naira collected by the federal government is used to service outstanding public debt.

Exercise restraint—by focusing on the quality and efficiency of every naira spent. This is critically important. As more people pay taxes there will, rightly, be increasing pressure to demonstrate that those tax payments are producing improvements in public service delivery.

Let me give you examples of what I mean:
On capital expenditure, the focus must be on high-impact and high value-added projects. This is why the government is focusing on power, integrated transport (roads, rail, air, and ports), and housing. These can help connect centers of activity across the country and drive growth prospects.

On recurrent expenditure, efforts should be made to streamline the cost of government and improve efficiency of public service delivery across the federal and sub-national governments. Transfers and tax expenditures should also be addressed. For example, continuing the move already begun by the government in the 2016 budget to eliminate resources allocated to fuel subsidies would allow more targeted spending, including on innovative social programs for the most needy.
Indeed, fuel subsidies are hard to defend. Not only do they harm the planet, but they rarely help the poor. IMF research shows that more than 40 per cent of fuel price subsidies in developing countries accrue to the richest 20 per cent of households, while only 7 per cent of the benefits go to the poorest 20 per cent.
Moreover, the experience here in Nigeria of administering fuel subsidies suggests that it is time for a change—think of the regular accusations of corruption, and think of the many Nigerians who spend hours in queues trying to get gas so that they can go about their everyday business.
At the same time, we should not forget the huge challenges facing Nigeria’s state and local governments. These sub-national governments—which account for the bulk of social spending—have only limited tools to manage the impact of declining oil revenues. My message here is to manage better the smaller purse, while building capacity to increase internally generated revenue.

The IMF can help in that regard by providing technical assistance on public financial management. We did so for the Kaduna State Government. We can explore how to support states’ efforts to undertake budget reform.
I see another immediate policy priority—strengthen Nigeria’s external position. The essential fact is that, given the structure of the economy, the massive fall in oil prices—which is expected to continue—has changed the medium term foundations for economic resilience. To be clear, the goal of achieving external competitiveness requires a package of policies including business-friendly monetary, flexible exchange rate and disciplined fiscal policies, as well as implementing structural reforms. Additional exchange rate flexibility—both up or down—can help soften the impact of external shocks, make output and employment less volatile, and help build external reserves. It can also help avoid the need for costly foreign exchange restrictions - which should, in any case, remain temporary. And going forward, improved competitiveness from improved exchange rate flexibility and other reforms will facilitate the needed diversification of the exports base and, ultimately, growth.
This brings me to my final topic—how can policymakers achieve more inclusive and sustainable growth?
3. Achieving inclusive and sustainable growth
The good news is that Nigeria is already, in many ways, a 21st-century economy.
• Think of the boom in mobile communications in a country where more than 140 million cell phones are in use, nearly one for each Nigerian.
• Think of the vibrant, home-grown film industry that has become the world’s second-largest by output. Nollywood employs about one million people who create films that are winning audiences across the continent and beyond.
• Think of the growing number of innovative startups—from fashion to software development—that are promoting Brand Nigeria. Indeed, the growth in services to about half of Nigeria’s output is a testament to the transformation that has begun, and which needs to continue.
But we all know that huge structural challenges remain, despite the many initiatives that are ongoing. Let me highlight the conditional cash transfer scheme in Kano, where poor households receive financial assistance linked to girls’ enrolment in schools. Overall, however, poverty and inequality still remain high, especially in some parts of the country.
Women account for about 42 percent of the total labor force—which is comparatively low—and their literacy rates are well below that of men. Maternal mortality is relatively high because of limited access to health care. Many women and children are dying every day simply because they cannot get to medical facilities fast enough.
With that in mind, what are the key policy priorities? Invest in quality infrastructure, make the banks work, and improve governance. Let me take each in turn:
The first—act with resolve to significantly improve transportation networks and power delivery [i.e., generation, transmission, and distribution]. For example, Nigeria could be exporting tomato paste—a staple of Nigerian cuisine—on a large scale, but it imports about half of what it needs. This is why Nigeria needs to build more roads and better rail networks, so that more farmers can bring their crops to market.
Likewise, more investment is needed in energy infrastructure in a country where too many businesses and households regard their backup generators as their main power source.
The second priority—build resilience by fostering a sound banking system. This will help channel more savings into productive investments, especially in quality infrastructure.
To be sure, Nigeria’s banks are generally well-capitalized and more resilient than during the downturn of 2008-09. But they are beginning to feel the impact of the growing vulnerabilities in the corporate sector. This means rising non-performing loans, which will need to be carefully monitored and managed.
The third priority—act with resolve in fighting against corruption. In his first public speech after the election, President Buhari singled out corruption as a “form of evil that is even worse than terrorism.”
Corruption not only corrodes public trust, but it also destroys confidence and diminishes the potential for strong economic growth.
At the global level, it is estimated that the cost of corruption is equivalent to more than 5 percent of world GDP1, with over US$ 1 trillion paid in bribes each year2.
Here in Nigeria, important initiatives to discourage graft are underway and should be applauded. Let me highlight the publication of monthly data on the finances and operations of the Nigerian National Petroleum Corporation. This provides information on a key sector, building confidence in transparency, and improving accountability of oil revenues, for the benefit of all Nigerians.
Much more can—and needs to be—done. Fighting corruption is a multi-year, multi-generational struggle that must be won.

Conclusion
So let me conclude: today your nation has embarked on a new journey. Nigeria is looking ahead, while drawing strength from its assets—the richness and diversity of its culture, the ingenuity of its people, and the belief in a better future.
Today policymakers have the opportunity to address near-term vulnerabilities and medium-term challenges—with resolve, resilience, and restraint. Today the “Giant of Africa” is walking with a spring in her step—inspiring others in the region and across the world.
As the great Nigerian poet Ben Okri once said: “Our future is greater than our past”.
Thank you.

Hi nairalanders ,

I saw this article today and want to share it.

[b]by ade otu [adeotubusin@yahoo.co.uk]

GOD IS TIRED OF US: In the typical Nigerian brand of pentecostalism, I have seen a few postings on some friends' walls asking Nigerians to 'look up to God and pray for a solution to this fuel price hike'. One interesting post read ' I am living in Goshen and my supply comes from above not from GEJ'. Before you brand me anti-God, let me put my cards on the table- I am a Pentecostal Christian but one of the greatest ills associated with this unique Nigerian brand of Pentecostalism is the inability of adherents to maximise the use of their brains. Is petrol made or used in heaven? And before you think it is only petrol, wait for this: price of rice will go up because the duty will be increased, price of wheat (and hence bread) will go up because the duty will be increased in spite of the fact that there are no viable alternatives!

It is very unfortunate that Nigerians don't know that GOD IS TIRED OF US. How can the Almighty waste His precious time on idiots ruled by fools? Why will God answer the empty prayers of those who know the right thing to do and simply refuse to do it? Some think God is a casino. They think they can dictate to God which prayers to answer and how to answer. My Friends, I can tell you authoritatively that God has moved on because He is tired of us.

God has moved on and left us to our foolishness and idiocy. He has moved on to saner nations like Ghana. Oh Charlie, you need to see what Ghana has become! I was at Ohene Djan Accra Sports Stadium for the CrossOver Service led by Dr Mensa Otabil and you need to see him challenging Ghanaians not to give or take bribes. He declared this year as the YEAR OF PURITY. He told them God will only bless them if they have CLEAN HEARTS, CLEAN THOUGHTS AND CLEAN HANDS. He even gave out cards with a PURITY PLEDGE for all Ghanaians to sign and commit to. Our Nigerian Bishops will declare 2012 as the YEAR OF BREAKTHROUGH or THE YEAR OF DOUBLE DOUBLE. And you said God is never tired of us? We sleep in churches but wickedness is our running mate. We are a nation of bribe-takers and bribe-givers. And yet we cry to God for deliverance! God is tired of us. The same rulers who have looted us blind come to our places of worship to do 'thanksgiving' and you think God is still interested in the sacrifice of fools? God is tired of us. Picture GEJ kneeling down and hands were laid on him. Dear God, did YOU lay YOUR HANDS on him? I am not asking about the human hands but YOUR OWN hands. I sincerely doubt it because YOU ARE TIRED OF US. This same man has started eating breakfast daily at an average rate of N800,000! And he deceives us that he is eating cassava bread! Does cassava bread cost this much?

But has it always been this way? There was a time when GOD was really interested in us. He saw the potential and HE sent messengers to us. We killed one in 1966, killed another in 1975, rejected your messenger in 1979 and 1983 while asking for Barnabas, forced out another messenger in 1985, killed another dream on June 12 1993, voted for GEJ and not PDP in 2011. How many more chances can a nation have? You have been more than fair to Nigeria but now you are tired of us. Who won't be?

Just about an hour ago, I heard a Ghanaian playing a Nigerian prayer tape at Osu market in Accra. The woman dictating the prayer requests said ' God, save my husband from witches and wizards. Save my wife from witches and wizards. Save Nigeria from witches and wizards'. I stopped in my tracks and I noted that the real witches and wizards Nigeria needs to be saved from are not the ones flying by night. Those ones can be conquered with the right knowledge. The real witches and wizards are the ones who fly by day, led by convoys and seated in jeeps, sequestered within the four walls of Aso Villa, fed fat by the tax payers money, fedora hats well-placed upon their thick-set heads and their women expensively dressed in the latest George fabric.

In a real country, the main fight against this ignoble hike would have been led by the clergy, the General Overseers, the Lord Bishops and the Sheiks. The sacrifice of people like Archbishop Desmond Tutu of South Africa can never be forgotten anytime the history of the fall of aprtheid is written. But in my beloved Nigeria, our Bishops will call for prayer meetings and tell us 'to cry to God for deliverance' even when they know in their hearts that GOD IS TIRED OF US. I am sure some of them were jolted when the churches in Abuja and Lagos were empty on New Year's Eve because of security threats. A bigger threat is here and it is the security of our pockets. How will people get to church when transport fare will be increased by over 100%? How will I increase my offering? Requests for benevolence will increase. It remains to be seen how our Lord Bishops will respond. Just imagine if all Bishops and GOs were to lead their members on a demonstration? That will signal our own brand of 'Arab Spring'. Sirs, when the cookie crumbles, all of us will be affected.

My facebook friends and activists, our activism must go beyond venting our anger on social media. We need to map out strategies, dig out trenches and move to the streets. We have to leave behind our i-pads and smart phones and plan to out-smart this wicked government. We need to be ready for the long haul. Can we sustain a demonstration for 3 months? To the major Opposition party in Nigeria, the Action Congress, this is a major test for you. Bola Tinubu, Bisi Akande, Lai Mohammed, Lam Adesina, Ogbeni Aregbe, Abiola Ajimobi, Kayode Fayemi and Raji Fashola, you canvassed populist and welfarist ideas. Where do you stand and what will you do?

But I have a fair idea of how this whole thing will pan out. Labour will organize a few half-hearted strikes, they will 'negotiate' with government, filling stations will hoard fuel, there will be long queues, visits will be made by CAN to GEJ and then our listening President will reduce the price to N100 which is the main target. And then life goes on. And you say God is not yet tired of us?

Human Rights Watch slams EFCC in new report

By Segun Balogun


August 26, 2011 05:10PM


The biggest problem facing the fight against corruption in Nigeria is its political system, which inherently rewards corruption, says a report of the Human Rights Watch, released in Lagos yesterday.




"Too often, corruption is a prerequisite for success in Nigeria's warped political process," says the report titled, ‘Corruption on Trial? The Record of Nigeria's Economic and Financial Crimes Commission.'

In writing the report, HRW analysed EFCC's records since inception, examined court record in major corruption cases, interviewed EFCC's current and former leaders, other anticorruption agency officials, members of the National Assembly and judiciary, Central Bank officials, prosecutors and defense lawyers, foreign diplomats and donor agency officials, and civil society leaders.

The report's cover page picture - that of Olabode George, former Chairman of Nigerian Ports Authority and Southwest chairman of the People's Democratic Party, while celebrating during the heroic welcome he got after being released from prison - presents a strong picture of how the country's political establishment is all too ready to embrace convicted criminals.

Another critical example cited in the report was that of President Jonathan and late President Yar'Adua campaigning openly in May 2008 alongside former Bayelsa State governor, Diepreye Alamieyeseigha, just ten months after being convicted of corruption charges.

"These images of senior government officials embracing convicted criminals only served to reinforce the broader trend of impunity that these convictions were meant to push back against," says the report.

In a press release accompanying the report, HRW cautioned President Jonathan to "refrain from political interference in Nigeria's key anticorruption agencies' work."

The press statement quoted Daniel Bekele, HRW's Africa Director as saying that "there were high hopes for the Economic and Financial Crimes Commission (EFCC) as Nigeria's most promising effort to tackle corruption since the end of military rule. But its efforts have fallen short because of political interference, institutional weakness, and inefficiency in the judiciary that cannot be ignored."


A troubled agency


The analyses show much of the cases instituted by the EFCC "have generated more headlines than convictions, and neither Ribadu nor Waziri can claim more than a handful of concrete successes."

"According to Waziri, since inception in 2003, the agency has recovered over $11bn - of which some $6.5bn has been recovered since Waziri took office in June 2008, most of which was recovered in the Central Bank's overhaul of the banking sector," the report says.

The records of prosecution done by EFCC reveal that Ribadu made public prosecution, especially that of prominent public officials, his thrust while Waziri, looks away from public prosecution, focusing instead on the private sector.

HRW argues that "the most important measure of Nigeria's anticorruption record is its success or failure in prosecuting corrupt nationally prominent political figures.

"EFCC's public challenge to the impunity enjoyed by abusive members of Nigeria's political elite has been its most important accomplishment in the fight against corruption.

"Only by holding prominent officials to account for corruption can Nigeria's government show that corruption would not be tolerated, and discourage officials at all levels from stealing public funds the country needs to provide for basic needs," it says in the report.

However, prosecution of notable public figures has been on the decline since Waziri took over at EFCC. The report said much of the investigation and other legwork for some of Waziri's initial prosecutions were done before she took the helm.

"There has been a significant drop in the number of new cases after those initial prosecutions," it says.

The report also noted that EFCC's funding has tripled since 2007 - its annual budget grew from approximately $23m in 2007 to $60m in 2010, without a commensurate increase in the rate of new prosecutions.

HRW recommends that "President Jonathan should break from the bad practices of past administrations, publicly signal he will not perpetrate or tolerate interference in corruption cases, and grant the chairperson security of tenure by amending the legislation that created the commission."

Source:www.234next.com

CBN is now assuming a role of catalyst for economic development in Nigeria. Oil money has bin malevolence.Agriculture shuld return Nigeria 2 d glorious days.Good work,Governor Sanusi Lamido.

Time & Posterity wil give a true picture of Lamido Sanusi's banking reform .Soludo was here,we know d story now.

HI,

PLS IS THERE ANY CIS STUDENT MEMBER IN THE HOUSE.

THANKS.

Hi Nlders,

I got an IV for the second screening by FITC. Can we share ideas on wat 2 expect at this stage. Yabatech is the battle ground.

Have u tried all you stated on obtaining loan and if it worked 4 u.Share the 411 with us.

Regards

Hi Banah, your opinion is fairly incisive ,perhaps,you may have to simplify it for the uninitiated to understand better.

Regards.

for God saake ,i need serius answers as it's really happening to me.please someone provide a good answer

what do you do when you discover that ur girl friend is about to take ur name to a spiritualist and the only delay she had ,isthat she does not knoww ur mother's name.also ,u discovered that she sucessfully did the same to her EX-boyfriend

thank u ,Fabiyi for your insightful discourse ,i believe it will benefit some under-informed HND-HOLDERS who truly want to reform their mindset about the dichotomy.

once upon a time ,there is a young man who currently runs two relationships simultaneosusly.the first girl has a distinction in sexology and is very generous but proud however the second girl appears naive ,wellbrought up and also very generous.the man appeared to have made up his mind to stick with the latter girl.how does he discard the first one who has refused to to let go despite all the young man's withdrawal strategies. please advise the young man

Do you know the brainbox behind the success of Guaranty Trust Bank is an HND holder to date. For your information ,his name is FOLA ADEOLA.It is in your mind that you stay limited,free yourself of the thought of Discrimination and you will be surprised at the result.my advise is that you acquire more relevant skills and make impact thru the numerous professional bodies. If our society gives us (HND HOLDERS) no opportunity to show what we can deliver,then we must make them yearn for our services by being relevant in todays career world.

what is the situation now .have u been fired eventually

thank u for the enlightenment,zheroes

oga abeg ,where is the test coming up and what time