President Muhammadu Buhari has ordered that only made in Nigeria goods and products must be patronized henceforth to save the nation’s foreign exchange and also help grow the economy.
This follows the impact of the coronavirus (COVID-19) on the economy which has affected the 2020 budgetary provisions.
The Minister of Finance, Zainab Ahmed made this disclosure while responding to a question at the end of the virtual Federal Executive Council (FEC) meeting presided over by President Buhari.
She said: “On prioritization of made in Nigeria products, as you know the president has set up an economic stimulus committee chaired by the Vice President. The work of the committee is to develop 12 months economic stimulus plan and we are at the final stage of that work.
“We have prioritize spending in that plan to use and consume made in Nigeria. For example some of the public works projects that will employ a lot of our youths is to be done using strictly our raw materials, so we don’t have to import bitumen for example to build our roads.”
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On council’s approval of contracts to Globe Motors Holding Nigeria Limited in the sum of N683, 613 million for purchase of 19 operational vehicles (Toyota products) for Nigeria Ports Authority (NPA), she said it has been in the works for months before COVID-19 pandemic.
According to Ahmed, “Some of the council memos that were taken given today have been in council waiting in the queue for a couple of months now. The one for transport is not new, it didn’t just come today and council felt it should go because it’s been there for a long time.
But we have got approval from Mr. president that spending as much as possible should be made in Nigeria on goods and products that are produced in Nigeria, so that it saves our foreign exchange and also helps to grow the economy.
The Minister of Transportation, Rotimi Amaechi had earlier said, it’s the first time in four years that NPA was buying any vehicle hence the decision by the council consider and approve it and said fine.
The finance minister said the council approved the amendments of the Medium Term Expenditure Framework for 2020-2022 as well as amendment to the 2020 budget.
According to her: “The council has approved our recommendations and the approval has these key parameters;
“The crude oil price is approved at $25 per barrel, crude oil production is at 1.94 million barrels per day and then an exchange rate of N360 to $1. The revised budget is now in the total sum of N10.523 trillion, a difference of just about N71.5 billion when compared to the approved budget.
This is because, as we cut down the size of the budget, we also have to bring in new expenditure previously not budgeted, to enable us adequately respond to the COVID-19 pandemic.
“The federal government in this budget will have direct revenue of funding the budget of N5.158 billion. The deficit to this budget is N5.365 trillion and this will be financed by both domestic as well as foreign borrowing.
The foreign borrowing we are doing for 2020 are all concessionary loans from the IMF which has already been approved and has crystallized, from the World Bank, Islamic Development as well as Afro EXZIM bank.
“There will also be some drawdown of previously committed loans for major ongoing projects that we will be drawing from both exiting facilities as well as some special accounts with the approval of Mr. President and the National Assembly.
And also revenue that we are expecting to realize from privatization. So the borrowing, the multilateral loans draw down coming from special accounts and coming from the privatization will fund the fiscal deficit of N5.365 trillion that we have in the proposed amendment of the 2020 budget.”
Ahmed said the council also approved $80 million from the Islamic development bank, for the construction of Abakilike ring road project.
She said: “In addition to the loans that the minister of agriculture has mentioned, we requested on behalf of Ebonyi state government for a loan of $80 million from the Islamic development bank, for the construction of Abakilike ring road project.
While the federal government is the one borrowing from the bank, federal government will be on-lending this loan to Ebonyi State government. We have done our debts sustainability analysis that proves that Ebonyi state has the capacity to repay this loan which is provided on a basis of Libel plus and also long tenure for repayment.
“This Ebonyi ring roads connects 13 local governments in the states as well as the neigbouring Cameroon Republic. It is a major road that will provide access to the citizens in the state, to farmers, markets and will enhance economic activities in the state and the neigbouring states will also benefit from this project.”
The finance minister said council also approved for the Nigeria Customs Service to purchase boats which are manufactured in Nigeria for its surveillance and anti-corruption activities on the maritime waters.
Meanwhile, cabinet also approved N47 billion for the provision of additional 40 megawatts of electricity to the national grid.
Minister of Power, Saleh Mamman, said the 40 megawatts would be evacuated from Kashimbilla Dam in Taraba State, where it is currently being generated.
He said: “The Council approved the Ministry’s memo for the revised estimated total cost for the augmentation of the subsisting contract in the sum of N47, 235, 303, 821.90, to provide additional critical power grid infrastructure for the full evacuation delivery and utilization of 40 megawatt, currently being generated form Kashimbilla, via Takum, Wukari, and Yandev, to the national grid.”
The Power Minister noted that the additional 40 megawatts will boost power supply in Taraba and Benue States as well as the entire North-East region of the country.
He also said if the generated power is not evacuated from its source, Nigeria will loose about 120 gigawatts of power, equivalent to $9 million dollars in a year.
Minister of Agriculture and Rural Development, Sabo Nanono, on his part said, council approved a loan facility of about €950,000 (euros) translated to about $1.2 billion.
The loan is for the purposes of agricultural mechanization in the country that will cover about 632 local governments plus 140 processing plants.
According to Nanono: “This is going to be a major revolution in the agricultural sector like we have never seen before. I think the executive council has done the right thing and has approved this.
“The key to mechanization is the establishment of 632 tractor serving centers across the country. These serving centres will constitute tractor hiring skill, IT and admin office and a chemical workshop and store for storing inputs for agriculture and even output arising from agricultural sector.
“The key to the tractor hiring skill is that every tractor will have a tracking system so that wherever it is working in this country, you will know at your finger tips where it is working and which area it has covered and how much revenue it’s getting. And these serving centres are going to be privately owned by the indigenes of those local governments.
“So it is imperative for everybody now to key into this programme. It is going to be a competitive bid that will involve selection in terms of your experience in agriculture, your finance position, your investment of between N10 to N70 million.
Because you maybe probably be handed an asset of over N150 million, so we will not take that chance. So it’s going to be a wholly privately owned affair. The loan will be generated by these service centres and will also be in charge of repayment of these loans.
“We have made our calculation and we have come to the conclusion that if your tractor works for between N65,000 to N75,000 per day, if you have operational cost of about N30,000 to N35,000 you will have a net profit of about N40,000.
Our calculation is that between the period of three to four years, you will pay off the loan completely. And then you will have this assets worth over N150 million.
“You have to understand that this country in terms of agricultural mechanization is at lowest level. We have only about seven tractors per 100 square kilometers, Kenya has 27 tractors 100 square kilometers.
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In fact the standard is 127 tractor 100 square kilometers in most developed countries is about 1000 tractors 100 square kilometers. If we are going to move agriculture forward in this country, which we must have to do it because if oil does not become water, it is absolutely necessary for us to mechanise.
“We have estimated 84 to 92 million hectares of land, we are only cultivating about 34 hectares even that is not done at optimum level, because of lack of mechanization. But we trying to change that narrative to a more productive and sustainable and where it will affect every part of this country.
“We anticipate direct job from this in the region of seven million, indirect will be in the region of 20 million or so. So that is the essence of this.
“There will be 140 agro processing plants attached to these service centres across the 36 states of the federation.
For example, Kaduna, Kano Jigawa axis that is the processing centre for rice, Nassarawa, Benue is cassava processing and so on and so forth, depending on the commodities available to that axis.”
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