The current economic recession in the country was caused by the militancy in the Niger Delta region, Vice President Yemi Osinbajo said in Abuja on Monday.
He said the destruction of oil and gas facilities in the restive region had impacted negatively on the 2016 budget and the economy more than the decline in the global oil price had done.
Osinbajo said while the oil price fall was anticipated; the sharp drop in the oil production which was triggered by the attacks on installations was not envisaged.
The vice president regretted that the country was producing less than 1.1 million barrels daily as a result of destruction of oil facilities by the militants.
“Perhaps, it is important for us to understand the nature of this recession in which we have found ourselves. In discussing this issue of recession, there is tendency for people to generalise. A lot depends on what sort of recession and how we got here.
“If we did not have vandalisation in the Niger Delta as we are currently suffering, we will not have this recession today. Moreover, in looking at the solutions, we should try to focus on the type of problem we have and what instigated it, then we can begin to come up with better solutions,” he stated.
According to the vice president, rather than analyse the root cause of the problem, some Nigerians are blaming the Federal Government.
Osinbajo, who stressed that it would require a “revolution” to adequately improve power supply nationwide, said:
“We’re doing a whole lot by interfacing with the private sector because we realize their role in the economy. If the Dangote refinery comes on stream, it would help us overcome some of those challenges, like the Sub-sea gas pipelines, it would take care of vandalism. I think the more important thing is how to clean up the mess in the power sector, especially infrastructure. In the short term, we’ll try to bring up power to an appreciable level to help the manufacturing sector.”
In his presentation, Budget and National Planning Minister Udoma Udo Udoma blamed the recession on the negative growth of the Gross Domestic Product in the 2nd quarter of 2016.
Udoma, who said inflation stood at 17.1 percent as of July 2016, put food inflation at 15.8 percent, adding that core inflation reached 16.9 percent in the same month.
“Oil sector contributes less than 9 percent of GDP but about 80 percent of government revenue and 95 percent of forex. Collapse of crude oil prices from over $110 per barrel in 2014 to less than $30 per barrel in the 1st quarter(Q1) of 2016, market expectations are that it’ll be lower for longer. Foreign reserves declined from $37.3bn in Q2,2014 to $25.4bn by August 2016 with reduced confidence leading to declining equity and foreign investment capital inflows from $9.7bn by the end of Q2, 2014 to $0.64bn at the end of Q2, 2016,” he said.
Finance Minister Kemi Adeosun noted that the GDP had declined over the years with increasing levels of unproductive debt.
The president of the Manufacturers Association of Nigeria (MAN), Frank Udemba, said releasing a lot of money into infrastructure “is a quick way to reflate the economy.”
The president of the Lagos Chamber of Commerce, Micheal Cole, urged the federal government to be consistent in its policies in order to reflate the economy.
