Speaking at the Institute for International Finance’s 2014 Africa Financial Summit in Lagos, hosted by Access Bank Plc, Dr. Ngozi Okonjo-Iweala, Minister of Finance and Coordinating Minister of the Economy disclosed that event unfolding over the last couple of weeks have cast a shadow over the global economy, especially Nigeria and other African countries.
She reiterated the fact that commodity prices are declining globally in the last couple of days, with the Bonny Light, Nigeria’s reference crude, trading at about $83 per barrel.
This, she said, is assuming a disturbing dimension, especially as crude oil export accounts for about 83 per cent of Nigeria’s total export, as well as the fact that the country has to grapple with falling quantity.
She said, “Without a doubt, this slowdown in global economic activity, coupled with the end in the quantitative easing in the United States of America, will affect sub-Saharan Africa’s economy, in addition to other regions specific challenges we face at the moment.
“As we all know, many countries on the continent depend on commodity exports as the main source of revenue.
“Nigeria and other countries in the African continent must step back and learn the lessons of the ongoing economic transformation in the country. The Federal Government has put in place strong stabilization policy, but the most important thing is that we must be able to sustain it.”
She stated that Nigeria, as well as other countries must be prepared to adjust and manage the economic headwinds looming in the horizon.
To adjust, according to her, Nigeria must adopt belt-tightening measures, plug leakages, focus on increasing revenue generation, identify and support sectors that have the potential to create jobs.
Continuing, she ruled out plans to borrow funds, saying that Nigeria cannot afford to go a borrowing to plug its deficit, but will, instead, adopt belt-tightening measures.
She said, “As external pressures mount in the face of falling commodity prices, the pressure to ‘go a-borrowing’ to maintain fiscal expansion will also increase. But we cannot afford to do this. We need to make necessary adjustments with tighter fiscal and monetary policy, and we need to build up economic buffers beyond the mere 5.4 months of imports the region is estimated to have.”
“Still on improving macroeconomic performance, countries in the region must aggressively look for alternative sources of revenues and stem leakages. It is now imperative to drive up domestic resource mobilization especially taxes.