The Federal Government on Tuesday explained why it did not bow to pressure to sack workers during the last recession despite the drop in its revenue.
It said sacking workers at a time of economic downturn would have made it difficult for the country to come out of recession.
The Minister of Finance, Mrs. Kemi Adeosun, who disclosed this on Tuesday, explained that the country’s economic outlook for the 2018 fiscal period and beyond was positive.
She stated this at the fourth Ogun State Investors’ Forum attended by Vice President Yemi Osinbajo; Ogun State Governor, Senator Ibikunle Amosun; former President of Mexico, Mr. Felipe Calderon; and eminent persons as well as captains of industries.
Recalling the actions taken by the administration of President Muhammadu Buhari on assumption of office in May 2015, the minister said the government had two options.
The first one was either to rebalance its books by cutting down on expenses through massive sacking of workers, or to invest massively in infrastructure and the economy.
She stated, “If we had gone for the first option of cutting down on our costs, it means we would have laid off workers. But we chose to stimulate the economy with massive investments in roads, power, rails and other infrastructure as part of deliberate efforts to grow the economy.
“We have invested over N2.5tn in infrastructure, especially capital projects, between 2015 and 2017. If you move round the country, you will see ongoing works in roads, power, bridges, rails and other projects. These are important building blocks for the Nigerian economy.”
According to the minister, the Federal Government is targeting to raise Nigeria’s Gross Domestic Product growth rate to seven per cent in the next three years.
Adeosun explained that the country’s economic outlook for the 2018 fiscal period and beyond was positive.
She stated that the country was now resilient after exiting recession as it had the potential to achieve a seven per cent growth in the next two to three years.
The economy had returned to growth in the second quarter of 2017 after five consecutive quarters of negative growth.
The country exited recession with a growth of 0.72 per cent in the second quarter, which was further consolidated with growth of 1.40 per cent and 1.92 per cent in the third and fourth quarters of last year, respectively.
Adeosun said the current administration had succeeded in building macroeconomic resilience for the country.
She explained that the Federal Government had been able to revise the funding mix, rebuild fiscal buffers, enhance foreign exchange reserves and implement import substitution strategies to diversify the economy.
The minister said, “President Muhammadu Buhari has laid the foundation for the repositioning of the economy with a series of reforms, which are being sequenced to ensure maximum impact and benefits to Nigeria and the citizens.
“These include massive investments in infrastructure and social welfare across the country, improved revenue mobilisation, rebuilding of foreign reserves and stabilisation of the exchange rate.”
She explained that the quick reversal of the recession meant that “less damage” was done to the economy and provided an opportunity for faster positive growth.
As revenue improves and the country continues to experience positive growth, Adeosun said the government would increase the fiscal space for infrastructure spending.
According to her, revenue mobilisation is potentially the master key to unlocking Nigeria’s huge growth potential and funding the infrastructure programmes.
She added, “The Federal Government will continue to create more fiscal space for reforms to enhance productivity and opportunity in the non-oil sector.
“Greater focus will also be placed on cost efficiency, blocking revenue leakages and continued support to the states.”
Osinbajo called on the Ogun and Lagos State governments to work together for economic growth and prosperity of both states.
Osinbajo, who noted that the two states must take advantage of their proximity to each other and explore their areas of economic competitive advantage for mutual benefits, added that both states could also reach out to the government of the Republic of Benin for economic partnership.
He said, “There is no reason why Ogun and Lagos should not work together for economic integration. Ogun enjoys proximity to Lagos and the Republic of Benin. Ogun must move from being an industrial hub and become a business district of choice.
“There should be economic cooperation between the two states, just like the meeting I attended recently on economic cooperation between Lagos and Kano. Again, Ogun and Lagos could take it further by extending such economic cooperation to the Republic of Benin.”
He stated that the Federal Government had released a total sum of N1.91tn as support to various states governments to cover such areas as the Anchor Borrowers’ Programme, social investment and budget support.
Osinbajo said the Federal Government remained irrevocably committed to addressing the nation’s infrastructural deficit and fighting graft.
Calderon, who was the keynote speaker at the event, noted that for any country to experience economic growth and development, it must invest in people and infrastructure.
He also advocated respect for the rule of law and elimination of graft in leadership positions.
The former Mexico leader advised Nigerian leaders to go back to the drawing board to stimulate manufacturing and exportation of products instead of importing everything.
Amosun, on his part, noted that the essence of the forum was to reassure investors in the state that despite the fact that his administration was winding down, a solid foundation had been built for their companies to continue to thrive.