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 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.