Senate has stated that unless Nigeria returns fully to agriculture, the country will end up over-dependent on oil and unable to cope with the sharp drop in crude prices.
Relatedly, the Senate said in a report that the capital releases for the first quarter commenced by the second week in March with the sum of N340 billion being released to critical sectors of the economy.
The sectors are transport, agriculture, works and housing, health, and other social and real sectors.
Also, the Senate has disclosed that the effects of the sharp drop in the crude oil price will be felt with the effect from May, June, and July.
This was contained in a report of the joint Senate committee on Finance, Appropriations, National Planning and Economic affairs and petroleum resources, on the sharp drop in oil prices and other economic issues occasioned by the outbreak of coronavirus.
The report was presented in plenary by the chairman of the joint committee, Adeola Solomon Olamilekan (APC, Lagos West).
Specifically, the Senate noted that the nation’s dependence on oil as its major source of income was due to the shallow policy in agriculture.
Consequently, to boost the nation’s economy and enhance ease of doing business, the Senate has insisted that the government should as a matter necessity, “show more commitment in returning the country as a major leader in agricultural produce both within and outside the African Continent.”
It pointed out that Nigeria was the leading producer of cocoa but due to lack of commitment has overtaken by Ivory Coast as number one producer, since the advent of crude oil.
Adeola, while presenting the report, explained that the joint committee sought expert ideas on the need to prioritise both the Social and real sectors of the economy, looking at their importance to the overall benefit of Nigeria; loss of revenue as a result of Gas flaring which runs into several billions of dollars; devaluation of naira; removal of oil subsidy among others.
However, the report said, to overcome the economic challenges facing the country, the short-term solution was to address the sharp drop in the crude oil price which is creating difficulties in funding the 2020 budget as passed by the National Assembly, while it said the long-term solution was the need to consider and pass the Petroleum Industry Bill (PIB).
The report stated: “As part of the fact-finding mission of the Joint Committee on the effect of the Corona Virus / COVID-19 and the sharp drop of crude oil price, we sought and received different views from experts in finance and economy on the state of the economy and other wide range of issues as it affects the economy.
“Devaluation of naira: while the Federal Government has come out to tell Nigerians that devaluation of Naira is not on its agenda as the recent drop in the price of oil necessitated the recent drop in the value of Naira and rise in the value of Dollar, which experts believe will be over as soon as a solution is found to COVID – 19 and the price war between OPEC members i.e Saudi Arabia and Russia is over.
“Also, fund from internal loans and bonds sourced from the Capital Market should be mobilised to fund infrastructural development, a model exemplified by India with population of 1.1 billion people, as this will be much cheaper for us as a nation.
“Allowing fund taken out of the country to be returned back into the economy without destroying the anti-corruption war of the President by providing the legal instrument to ensure the return of this fund.
“It is time Nigeria should start to look beyond oil as a major source of revenue to the Government and ensuring proper diversification of the economy.
“Our shallow policy in Agriculture is responsible for our dependency on oil as our major source of income. The Government should show more commitment to returning the country as a major leader in agricultural produce, both within and outside the African Continent. For instance, Nigeria was the leading producer of cocoa but as over taken over by Ivory Coast as number one producer, since the advent of crude oil,” part of the report read.
Some of the recommendations of the Senate report include: “downsizing of the Appropriation Act 2020 as passed by the National Assembly.
“That the revenue-generating agencies must be alive to their responsibility in line with the Fiscal Responsibility Act passed by the National Assembly and other relevant laws of the National Assembly;
“That other issues affecting the oil sector such as the cost of production of a barrel of Crude oil and any other matter taken care off in PIB;
“That the Joint Committee will invite other relevant Stakeholders to an interactive session. The Stakeholders are: Central Bank of Nigeria, Nigerian National Petroleum Corporation, Ministry of Finance, Budget and National Planning; and also engage relevant Stakeholders in the Business community for their own inputs and suggestions on the way forward of the present economic realities,” it stated.
