Okonjo-Iweala cautions Nigeria, Others on crude oil price drop

Stories from Ngozi Onyeakusi, Lagos

In a bid to cushion the effects of the dwindling prices of crude oil on their economies Nigeria and other countries on the continent must adopt belt-tightening measures said Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala.

The minister, delivering a keynote address at the third annual International Institute for Finance (IIF), African Financial Summit 2014, hosted by Access Bank Plc in Lagos, she emphasised the need to plug leakages, increase the drive for revenue as well as develop the non-oil sectors in the continent.

Dwelling on topic ‘Positioning Africa in the Context of an Uncertain Global Environment,’ Okonjo-Iweala. urged policy makers in the continent to strive to ensure that economies in the continent continue to prosper, adding that with the right policies, Nigeria and other nations in the continent would be able to sustain their growth path despite the economic headwinds.

“The central focus of these thoughts is that Africa must truly diversify its economic base to create jobs for young people and become more self-reliant and better integrated to position itself better in an uncertain global environment.

“First, I believe that whatever it is that Africa was doing right to get to this point, we must continue to do. And in this spirit, I believe we must continue with sound macroeconomic management.”

According to her, Africa’s debt-to- Gross Domestic Product (GDP) ratio of about 30 per cent, fiscal deficit of about 3.3 per cent and inflation projected at 7.3 percent for the year 2014 are at reasonably low levels, saying that as a result of these, many countries in the region have been able to access the international credit markets at low interest rates.

However, she noted that external pressures mount, in the face of falling commodity prices, “the pressure to “go a-borrowing” to maintain fiscal expansion will also increase.”

She added: “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.

“However, these adjustments need not stifle growth. For instance, fiscal consolidation must be done in such a way that government expenditure will be refocused on quality items that will unlock growth and job creation in the continent. Such quality investment should focus largely on infrastructure and human capital development- the two strongest binding constraints on the continents progress.

“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 mobilisation especially taxes.