Presidential Research & Communications Unit

The National Economic Council (NEC) has endorsed the salary cuts proposed by President Umaru musa Yar’Adua acknowledging that the move was aimed at ameliorating the effects of the current economic crisis on the country.

The Governor of Gombe State, Danjuma Goje, made the disclosure while briefing the media in company of the Benue State, Governor Gabriel Suswam, the Governor of Central Bank of Nigeria, Chukwuma Soludo, and the Finance Minister, Mansur Muhtar on the outcome of the Council meeting chaired by Vice-President Jonathan on February 10 at the State House in Abuja.

According to Goje, “As part of our contribution in view of the economic meltdown, after deliberation at the Council, we have wholly endorsed the directive of Mr. President and are calling on the Commission to review downwards the salaries of all political office holders. And we hope this will go a long way in reducing public expenditure in view of the dwindling resources available to government.”

Speaking on the sharing of excess crude, Suswam disclosed that the sum of $4 billion was declared by the Ministry of Finance as money available for sharing by the three tiers of government. While noting that the money was nominally distributed by the ministry and that the decision as to share the money or not, would be taken by the Council in its next meeting slated for March 10, 2009.

He also disclosed that Council directed the Presidential Steering Committee on National Integrated Power Project (NIPP), to make a comprehensive report to NEC before making its findings public.

Expressing Council’s displeasure over the economic growth rate in 2008, Muhtar noted that the Council had agreed to take drastic measures to ensure that the 2009 budget achieves significant results.

He stated that the Council reviewed the performance of the economy and the prospect of going forward and agreed that the macro economic performance in 2008 has been mixed with overall growth falling below expectations noting that there had been emerging challenges relating to inflation, exchange rate and interest rate management as well as the capital market sector and by extension the banking sector.

According to him, the prospect of going forward given that the global environment does not appear to present a very bright picture one will therefore agree that there is a need to see how the likely risk that might arise especially from fallen oil revenues can be mitigated.

He stated further that the other challenge that was highlighted is that the cost of doing business which is considered very high both because of the infrastructure constraints, power and transport as well as soft infrastructure such as port congestion. To this he said council agreed with some of the issues that need to be done particularly restoring the culture of proper planning, ensuring that there is effective coordination with the states both horizontally and vertically within government agencies and with the state, enhancing revenue mobilization and effective budget execution.

“Looking at the cost of doing business, the port congestion thing attracted a lot of debate. There is growing concerns of what has been happening in the ports in the last couple of months, the acute port congestion which is impacting on our ability to trade effectively and also on revenue collection as well as the manufacturing sector has been a major source of concern.” He said.

He disclosed that he briefed the council on what the Federal Government joint inter-ministerial task force headed by minister of transport and with minister of finance as member has been working on. He added that he gave the update, but the understanding is that the Council would be briefed at the next meeting about the progress that has been made and if need be any corrective measures.

The Council he noted is looking at the structural issues that need to be addressed in the long, medium and short-terms so as to address the problems being confronted.

In his comment, Soludo stated that though the council noted that non-oil sector, especially the agricultural sector, led the economy in 2008 with a 6.4 per cent growth, the body lamented that the sector barely enjoyed a three-per cent credit from the banking sector and disclosed that in the next one month, the government would put together a significant financial package that would benefit the sector.

He disclosed that the review of the macro-economic developments showed particularly that the latest revised estimates by the National Bureau of Statistics are that the economic growth was about 6.4 per cent last year and this was led essentially by the non-oil sector, especially agriculture. And since agriculture is the dominant sector of the Nigerian economy today, it is the sector that holds the key for both employments, inflation, for inflation to come down you need agriculture to do very well and to increase productivity. It is the largest employer of labour and in terms of output it also contributes the highest to national economy.

He stated further that this has been so over several years and will probably hold the key for Nigeria to navigate through the current economic global and financial crisis. So consequently, Council deliberated very seriously on the challenges facing the sector and especially giving credit to that sector by the commercial banks seems to be the least, it contributes about 40 per cent to our GDP but the share of the aggregate credit is barely not more than three per cent.

Deriving there from according to Soludo, Council discussed the possibility that within the next one month, she will be working together with the Central Bank, the Ministries of Finance and Agriculture to put together a plan to be able to raise a significant dedicated fund that will go to agriculture. This he said is of essence so that farmers and with the farming season approaching, will have this money available to them, to encourage employment and lower inflation this year.

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