The state of emergency declared in Adamawa, Borno and Yobe States, may not last for the six months stipulated in the 1999 Constitution, as amended, before it is lifted, the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, hinted Monday.
The minister, who was fielding questions from 112 analysts from across the world during a conference call in her office in Abuja, also assured the international community of the safety of their investment notwithstanding the emergency rule in the three states.
According to her, with the emergency rule, the security forces have been given the latitude to flush out the insurgents by attacking their operational bases, adding that although the constitution provides for a period of six months, the government is envisaging a shorter time for military operations to last.
She however described the emergency rule as not the best option needed to restore economic and social activities in the affected states as well as sustain the positive economic fundamentals the country has recorded in recent years.
The minister said the emergency rule, which has received positive endorsement in Nigeria, was aimed at restoring order in the affected states with a view to integrating them into national development agenda.
The conference call, which was organised by StanChart and anchored by Razia Khan, witnessed analysts asking questions ranging from what emergency rule is all about, the duration, whether the federal government was considering a supplementary budget, effect on the economy, Nigeria’s oil revenue, and sundry issues.
Okonjo-Iweala stated that by the declaration of emergency rule, government’s intention was to restore security in the states where socio-economic activities had been disrupted to the extent that children and teachers were no longer allowed to go to school just as agriculture, the main economic activity of the North-east was threatened.
According to her, with emergency rule, the security forces have been given the latitude to flush out the insurgents by attacking their operational bases, adding that although the Nigerian constitution provides for a period of six months, the government is envisaging a shorter time for military operations to last.
She said the government was adopting a multi-pronged approach in tackling the security problem posed by Boko Haram, including political dialogue, which is already ongoing; counter-terrorism; state of emergency, and economic inclusion.
Okonjo-Iweala explained that emergency rule is a short term action underpinned by long term strategy of economic inclusion—a long term approach, which includes developing the agricultural potential of the zone, creating jobs for the youths and the unskilled, among others, through the Youth Enterprise with Innovation (YoUWin) and Graduate Internship Scheme.
On whether the government is considering a supplementary budget to take care of the military operations foisted by emergency rule, the minister said it was not anticipated for now, stating that such issues fall under the president’s contingency vote, already captured in the 2013 budget.
The contingency vote, according to her, is transparently managed and is already being drawn to tackle the current challenge in the North-east.
On oil revenue, the minister said although oil prices had fallen, the country was not yet affected by price shocks as prices had not fallen below the benchmark price, adding that the only shock being experienced was that of quantity, arising from oil theft.
She explained that the quantity shock was to the effect that while the budget was based on oil production of 2.53 million barrels per day, the production is currently at between 2.1 and 2.2 million barrels per day.
The minister said it was, however refreshing that the foresight in creating the Excess Crude Account (ECA) was paying off as the federal government had drawn $1 billion on two occasions to provide the necessary buffers against the quantity shock.
Okonjo-Iweala also disclosed that the government would build the buffers again as efforts were being made to curb oil theft through security agencies.
While explaining that much as oil is the nation’s mainstay, the ultimate buffer for the economy is diversification, which is being vigorously pursued through agriculture.
She said to underscore the seriousness attached to agriculture, President Goodluck Jonathan had removed agriculture from being a development project to a commercial business.
This, she added, had led to an innovative and effective fertiliser distribution system to farmers, gradual but effective reduction in the importation of staple food such as rice, among other measures.
On budget benchmark, which has been a perennial source of friction between the executive and legislature, the minister said the Chile model was being explored, adding that if adopted, it would see an independent body fixing the benchmark price devoid of influences.
The minister also disclosed that an internationally reputed consulting firm, McKinsey was being engaged by the government to boost revenue from tax.
She said with the consultants, the government was projecting a tax revenue of $500 million, adding that the underlining approach would be to find the most suitable way of maximising tax revenue.
Meanwhile, the Board of the Nigeria Sovereign Investment Authority (NSIA) has approved an investment allocation formula into the three distinct funds under the Sovereign Wealth Fund (SWF), in what it considers as initial portfolio investments.
The three ring-fenced funds are Stabilisation Fund, Infrastructure Fund, and The Future Generation Fund.
NSIA Managing Director, Dr. Uche Orji, in his maiden press briefing in Abuja yesterday, said the Stabilisation Fund would have an initial investment of $200 million, the Future Generation Fund $250 million, while The Infrastructure Fund would attract $325 million.
Orji noted that each of the funds are ring-fenced, which means that once money is allocated to them, it cannot be reallocated from there to any other component.
According to him, with the initial $1 billion seed capital, the NSIA board has approved an investment allocation formula in the ratio of 32.5 per cent each for The Future Generation and Nigerian Infrastructure Funds while the Stabilisation Fund gets 20 per cent, leaving about $150 million funds unallocated.
The allocation formula, Orji said, would be revisited by the board periodically, adding that the process would be transparent and publicised.
"Investment in the Stabilisation Fund will start early June. The Future Generation Fund has the same timeline but will continue until end 2013 because it is a more diversified portfolio with a more complicated process. For the Infrastructure Fund, a very detailed and thorough review of possible investment areas and projects is ongoing. The investments being considered are in healthcare, transportation, water resources, power, housing etc. Our focus is investments that are both relevant to the current needs of Nigerians and profitable and sustainable at the same time," he said.
Orji said much work had gone into getting the NSIA operation, which according to him, is quite fast compared to those of the nation's peers across the world.
On how the funds would be managed, Orji explained that the management of the Stabilisation Fund would initially be outsourced and would later being taken over by in-house experts.
He explained that the reason it was being outsourced was because it would take some time to do the infrastructure to trade domestically.