Nigeria's Revenue declining

[Richard Akindele]

Restiveness in the Niger Delta area has started having its negative toll on the revenue generation capacity of the country, a member of the Revenue Mobilisation, Allocation and Fiscal Commission in Abuja says.

Speaking at the weekend in a personality interview programme of the Correspondents' Chapel, Revenue Mobilisation, Allocation and Fiscal Commission's (RMAFC's) Deji Ariyibi pointed out that the restiveness in the area has affected the production of oil which is the main stay of the nation's economy.

He noted that the crisis in the Niger Delta and oil pipelines vandalisation have forced down the production of oil by about 50% and this has greatly affected the oil revenue accruing to the federal government.

He said: "The happenings in the last three months have started having negative effects on the country through revenue accruable to the country. It has forced down oil production to about 50% and if things continues this way, all parts of the country would feel it and this would not augur well for the country."

While stressing the need for the nation to diversify her economy from oil, Ariyibi cautioned that it was high time the three tiers of government strove harder in shifting attention from the oil sector to other non-oil sectors.

He also cautioned all tiers of government against over reliance on statutory allocations from the federation account. He said all tiers of government must start looking inward by mobilising all available resources internally for the self-sustainability of such tiers of government.

He said government’s continued dependence on oil revenue has continued to have adverse effect on governance and democracy adding that this attitude must change to bring a new lease of life to the people at the grassroots level.

"The backbone of any government should be its Internally Generated Revenue (IGR), and any government that is not self sustained by its environmental resources can collapse any time," he stressed.

Speaking further, he said: "Government should be sustained by the economic strength of its environment through internally generated revenue and such level of government must evolved strategies to enhance the IGR so as to boost the revenue base of any government."

Source: Daily Independent

[Richard Akindele]

CAPE TOWN (Reuters) - Nigeria's gross domestic product (GDP) could be "significantly" affected by disrupted oil supply unless the country can resume pumping crude to catch up, the central bank governor Charles Soludo said on Friday.

Soludo has forecast a growth of 10 percent in sub-Saharan Africa's biggest oil producer in 2006.

"It depends on whether we are able to recover fully after the (oil) crisis. If we are not able to fully recover, then that would have a very significant impact in terms of growth," Soludo told Reuters at an economic summit in Cape Town.

Nigeria has cut production by about 500,000 barrels per day since February after militants attacked facilities.

Soludo could not give an estimate on how much impact the lost output had so far had on the economy.

Soludo also said the government of the west African state had not yet dipped into the excess crude account even though its oil output had been disrupted.

He spoke on the sidelines of the World Economic Forum on Africa, which is being held in Cape Town and ends on Friday.

Nigeria Oil Minister Edmund Daukoru said on Wednesday oil production could return in stages in the next couple of weeks.

On inflation, Soludo reiterated that inflation would fall to "single digit" in 2006, and said 2005 inflation had been at 11.6 percent, above the 10 percent target, due mainly to food prices.

"We have a target of 10 percent but we want to do better than that, and head into single-digit," Soludo said.

"I believe more than ever we are getting to that target by this year, and we will deliver on single-digit growth," he said.

He forecast a reversal in food prices which had lifted inflation in the past year.

Soludo also said Nigeria expected to start talks on its London Club debt as "soon as possible".

Some investment banks had expressed an interest in helping the country restructure the debt, he said, but gave no details.

"Depending on how the discussions with them go, we might either write-down of write-off the debt," he said.

In a landmark deal, Nigeria paid off its Paris Club debt in April, helped by record petroleum prices after clinching a debt relief deal with the group of public lenders last year.

It is now targeting debt held by the London Club group of creditors, an ad hoc group of private banks formed at the initiative of the debtor country to reschedule debt.

Nigeria reached an agreement with the Paris Club last year to forgive $18 billion in debt, and then used windfall oil earnings to pay off $12.4 billion in arrears and debts.

Its debts to the London Club, under a 1992 rescheduling which ties payments to oil prices, are smaller. Nigeria held around $2 billion in debt with private creditors as of November.



Source: Reuters