Nigeria’s Minister of Budget and National Planning, Atiku Bagudu, has openly acknowledged that the country is grappling with a severe financial crisis.
He stated that the government is presently just managing to pay salaries while dealing with a slow economic growth rate, a rapidly increasing population, surging unemployment, and high inflation.
Minister Bagudu expressed his concerns at the 30th Annual Development Forum organized by the Live Above Poverty Organization (LAPO) in Abuja. Represented by Dr. Sampson Ebimaro, the Director of Bilateral Economic Cooperation in the Ministry, Bagudu urged non-governmental organizations (NGOs) to assist the government in bridging the gaps it faces.
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He disclosed the current financial predicament by stating, “Government faces enormous challenges, especially now; the government is facing a revenue deficit. There is no money anywhere in the country; the government is just managing to pay salaries. The growth rate is very slow, and the population growth is rapidly increasing. Unemployment is surging amid high inflation.”
Bagudu’s call to NGOs was to support the government in enhancing performance in critical areas and to facilitate the delivery of quality services to civil and public servants.
In response to the financial crisis, discussions with the World Bank are reportedly underway to secure a $1.5 billion concessionary loan to bolster budgetary provisions. This financial struggle coincides with a significant forex crisis in Nigeria, leading to the depreciation of the Naira to N1,200/$1 in the parallel market, and inflation surging to 26.72% in September.
The nation’s financial challenges are further exacerbated by the ongoing crisis in the oil sector, which has significantly impacted oil output. As a result, Nigeria heavily depends on external lenders.
In the first quarter of 2023, Nigeria’s net earnings from crude oil and gas stood at N486 billion, while net earnings from solid minerals amounted to N1.99 billion. In contrast, personnel cost reached N978 billion during the same period.
Economic experts have warned that the situation could worsen if the government does not take swift action to address the issues hindering economic growth. The need for comprehensive economic reforms and measures to boost forex earnings, particularly from the export of crude oil, is becoming increasingly urgent to tackle the nation’s financial crisis.
Besides boosting oil output, Olusegun Aganga, a former Minister of Finance, emphasized that Nigeria must reduce its dependence on imports and prioritize local production to bolster the strength of the naira. Speaking at the 3rd Adeola Odutola lecture during the 51st Annual General Meeting of the Manufacturers Association of Nigeria, Aganga underscored the critical role that local production and exports play in fortifying the country’s currency.
Aganga’s remarks came as part of a broader discussion on the economic challenges facing Nigeria and the steps needed to address them. He highlighted the adverse effects of a weak naira on the nation’s economy, which includes increased inflation and currency depreciation, among other issues.
The former finance minister emphasized that a strong naira is contingent on Nigeria’s ability to produce goods for both domestic consumption and export. He argued that the country’s reliance on imports perpetuates the naira’s vulnerability and exacerbates economic challenges. To address these issues, Aganga suggested a concerted effort to boost local production across various industries.
“Unlike the trillions spent on subsidies, bailouts, the Agric Anchor Borrowers Programme, the refineries, I can assure you that every naira, no matter how large, that is well spent on the strategic industrial sectors can be easily recovered and will deliver tremendous benefits to the economy and the nation,” he said.