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IMPLEMENTING NIGERIA’S TRANSFORMATION AGENDA - Achievements so far……..

IMPLEMENTING NIGERIA’S TRANSFORMATION AGENDA - Achievements so far……. DR. NGOZI OKONJO-IWEALA COORDINATING MINISTER FOR THE ECONOMY & HON. MINISTER OF FINANCE Investor’s Summit, London July 30, 2012. A) From Expansionary Budget to Fiscal Consolidation……. Fiscal Consolidation (contd)

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IMPLEMENTING NIGERIA’S TRANSFORMATION AGENDA - Achievements so far……..

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  1. IMPLEMENTING NIGERIA’STRANSFORMATION AGENDA- Achievements so far…….. DR. NGOZI OKONJO-IWEALA COORDINATING MINISTER FOR THE ECONOMY & HON. MINISTER OF FINANCE Investor’s Summit, London July 30, 2012

  2. A) From Expansionary Budget to Fiscal Consolidation……

  3. Fiscal Consolidation (contd) • Stem Leakages in Oil Revenues: - a) Aig-Imokhuede Task Force on 2011 Subsidy verification. – b) Presidential Maritime Committee on Crude Oil theft. • Improving Revenues: - Measures introduced to improve tax collection: - Take off of the Debt Enforcement and Special Prosecution Unit in the FIRS; • Cumulative tax collection (January to May 2012) increased to N1.9 trillion – an increase of N384.4 billion (or about 20.4% increase)over the same period in 2011. • Developing a program for comprehensive review of taxes and improved collection. 3

  4. Fuel Subsidy Rollback…… B) Reining-in Government Borrowing….. • 2013 Budget: Retirement Bonds, Sinking Fund.

  5. C) Other indicators..….. D) Growth in an Uncertain Global Economy….. +

  6. E) Sovereign Credit Ratings Upgraded……. • BB- Stable (FITCH), • B+ Positive (S&P) – Upgraded in Dec. 2011, from B+ F) Nigeria’s Eurobond is performing better now ……. - Bond price (July 27) is $109.02 against $103.49 at the beginning of 2012. - Bond yield is (July 27) 5.41% from 6.23% at the beginning of 2011.

  7. G. Building Economic Buffers……. • Nigerian economy remains vulnerable, and buffers need to be built up • Foreign Reserves have risen slightly…… from $32.9 billion at the end of 2011 to $37.7 billion (June 2012) but have declined recently on the back of global developments. Now at $36.4 billion. Target is $50 billion by the end of the year. • Excess Crude Account (ECA) balances have improved ……

  8. Building Economic Buffers….(contd.) - Sovereign Wealth Fund Implementation • $1 Billion earmarked for investment in the 3-arms of the NSIA. • Established the Executive Nominations Committee to assist with the selection of Members of the Board (In accordance with Section 16 of the NSIA Act) • In conjunction with the Executive Sourcing Consultant (Messrs KPMG), the ENC: - Advertised the 3 executive positions; Chief Executive Officer, Chief Risk Officer and Chief Investment Officer in Local & International Media. - Shortlisted 16 candidates using a selection criteria based on professional competencies, out of the 730 applicants. - Conducted interviews back in February, and now conducting due diligence on potential candidates and also on the 6 non-executive members of the board. - Hope to announce board members in August.

  9. 2) Financial Sector cleanup • Banking Sector • Crisis resolved – all 24 banks fully capitalized, with AMCON playing a key role in the capitalization of the 8 intervened banks. • Financial soundness indicators: • Industry Capital Adequacy Ratio (CAR) now above 18 percent • Non-Performing Loans now about 5 percent • Implementation of New Banking Model is progressing well. • Capital Markets. • Yet to rebound. • Government working on reviving the market through: • Forbearance package to market operators; • Review of taxes, stamp duties, and other charges. • Increasing number of listed companies; • Increasing pension fund investment. • Committee of Market Operators, Ministry of Finance, SEC, CBN, & AMCON to actualize recommendations

  10. Removing Impediments & Investing in Priority Sectors……. 3) Ports Reform Achievements: • Reduced the number of agencies operating in the ports from 14 to 7. • Ports now operate a 24-hour regime for the first-time since 1970. • Disbanded NCS task force that harass cargo on the highway. • Reduced paperwork (i.e. number of forms) to align with reduction of agencies. • Cargo Tracking Note abolished • 2080 TEU overtime containers transferred to Ikorodu Lighter Terminal. • Work ongoing on an effective container management strategy. • Contract awarded and work ongoing on the rehabilitation of some of the internal roads. • Proposed Rehabilitation of Expressway: Decongestion of the Mile 2 – Apapa Express Way. Impact: Clearing time reduced from 39 days to 7 days for trouble-free cargo, but target is 48 hours

  11. 4) Power Achievements: a) Launch of the Power Sector RoadmapReformby Mr. President in August 2012. b) Creation of the Nigerian Bulk Electricity Trading Plc, in August 2011 c) Ongoing privatisation of all FGN-Owned Thermal Generation stations and Power Distribution Companies to be completed by October 2012. d) Signing of MOU with worldwide leaders in the power sector(GE, Siemens, Daewoo Engineering and Construction of Korea and Eletrobas of Brazil). e) Completion of new units at our thermal power stationsto increase generation. • Olorunshogo - 563MW, Sapele - 225MW, Omotosho - 112.5MW

  12. 4) Power (contd…) f) Rehabilitation of existing power infrastructurehas yielded up to 1000MW of electricity. g) Attained a new peak in generation of 4,322MW in December 2011. h) Fast-tracked NIPP projects: 3 power plants (Ihovbor, Geregu Phase 2, and Alaoji) nearing completion to add an additional 1,055MW by end of 2012. i) Implementation of a Cost-reflective Tariff (1st June 2012). j) Government is putting together a power financing package, including : • Government Guarantees • Infrastructure Bond: $600million to $1 billion • External Funding: e.g. $150 million from ADB.

  13. 5) Agriculture Achievements: a) Implemented the Growth Enhancement Support Program (GES) • Shifting input supply (fertilizers & seeds) from government to private sector. • Leveraged government balance sheet: up to N30 billion in guarantees for input supply • 4.5 million farmers registered in 3 months b) Implementing NIRSAL, in partnership with CBN to unlock $3 Billion in financing C) Introduced incentives to support rice and cassava value chains, including; • Zero duty on machinery and equipment to process high-quality cassava flour; • Corporate tax rebate of 12%, for bakeries attaining 40% substitution of wheat for cassava; • Effective duty of 50% (to be raised to 100% by December 2012) on imported polished rice to encourage domestic production • 100 percent duty on wheat flour from July 1, 2012. • 20% Cassava bread is commercially available from UTC and others at 60% of the cost of wheat bread • Secured contract to export 1.1 million MT of cassava chips per annum to China: Nigeria will earn US$136 million annually.

  14. 6) Job Creation & Social Safety Nets i) YOUWIN! PROGRAM • In October 2011, President Jonathan launched the YouWiN! program, a business plan competition open to aspiring and existing entrepreneurs under the age of 40. • Program to run in 3 cycles over 3 years, with 1,200 winners emerging in each cycle. • Between 80,000 and 110,000 jobs expected to be created. • Each winner will receive: -funding of between N1 million and N10 million; -training in small business management (UK School for Start-ups); - mentoring from well-established entrepreneurs; -business registration and incorporation; - state of the art websites and other benefits. • 1200 winners identified in the first cycle. First tranche of the business financing grants is currently being disbursed.

  15. ii) SURE-P COMMUNITY SERVICES, WOMEN, & YOUTH EMPLOYMENT PROGRAM • Implementation structured along 3 components: - a) Community Services Scheme – to engage 320,000 youth (women – 30%, other vulnerable groups – 20%) in labour intensive works such as construction and rehabilitation of social and economic infrastructure. - Already launched in two states – Niger and Adamawa. Delta on July 26 - b) Graduate Internship Scheme – to attach 50,000 graduates to interested competent firms to enhance skills development towards employability. - So far, 499 firms have expressed interest, and verification in process - c) Vocational Skills Development – to build capacity of skilled and unskilled youth, through use of existing vocational training centers. 15

  16. iii) SURE-P SAFETY NETS PROGRAM • Budget of N180 billion (FG Share) for the program in the 2012 budget to be allocated to the various components: • Social Safety Net Programs - Maternal & Child Health - Mass Transit - Vocational Training Centers - Infrastructure Development – Roads and Bridges

  17. 7. Current Challenges • Global economic slowdown - Oil prices volatility. • Building Buffers • Security • Corruption • Infrastructure Development: implementing PPPs • Unemployment, especially among the youth.

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