Indications emerged Thursday that government would soon get a budget support fund of N1.2 trillion to be generated through a Special Purpose Vehicle (SPV), to help cushion the disruptive effects of the Coronavirus on the funding of the 2020 budget.
This is as President Muhammadu Buhari has assured that his administration remains steadfast in seeking to promote growth of the Nigerian economy through cooperation with the organised private sector.
He sees diversification of the Nigerian economy and improving Nigeria’s level of self-sufficiency in food production as key measures that would help support faster economic growth and create employment opportunities for our teeming youths, and reduce imports.
Nigeria’s N10.50 trillion 2020 budget is facing huge deficit funding challenges following poor revenue from crude oil sales on the international market as a result of the Coronavirus.
The fund will be a great relief for the capital component of the budget of N2,465,418,006,955. The 2020 budget is made up of N560,470,827,235 for statutory transfer; N2,725,498,930,000 for debt servicing, and recurrent expenditure of N4,842,974,600,640.
Godwin Emefiele, governor, Central Bank of Nigeria (CBN), announced this as part of the resolutions from the roundtable meeting held in Abuja on Wednesday.
Speaking at the “Going For Growth 2:0” dinner session, hosted by President Muhammadu Buhari in Abuja, Emefiele said, “Participants at the financial sector agreed to create a SPV working with the Federal Government, and key development finance agencies.
“The well-structured SPV will be used to mobilise close to N1.2 trillion in funds from banks, pension funds and other financial institutions, to fund road, power, and port infrastructure.
“The money is targeted specifically to support funding for six key road projects and three seaport projects to be identified through a framework currently being worked out under the SPV, and will be ready for implementation by October 2020.
“When implemented the SPV will help to reduce the burden of government financing of infrastructure projects and enable the government focus on funding other priority areas.
“The SPV will also reduce the cost of transporting goods across the country for farmers, SMEs and manufacturers. More importantly, it will help improve our ability to attain double digit growth rates”.
The annual event had made recommendations last year that were useful in assisting the CBN design policy measures and which enabled the apex bank to generate about N1.9 trillion in credit to the real sector at low interest rates, between May and December 2019.
Other key recommendations at the 2020 event include the need to ensure Nigeria’s self-sufficiency in the production of key goods and services, going forward; how the country can improve broadband penetration considered critical in enabling Nigerians access the benefits that come with greater utilisation of technological applications, as well as the need to improve agriculture and manufacturing productivity.
The participants noted the need for innovative financing schemes that will require minimal collateral from farmers and SMEs.
They also called for more emphasis on improving processing of 6 key commodities such as palm oil, dairy, cassava, wheat, aquaculture and sugar, adding that “increased processing of these commodities could lead to the creation of over 1 million jobs over the next two years.”
One area highlighted for improving broadband penetration was the need to “create a one stop shop that investors could interface with in order to reduce multiple taxation”.
