Minister of Finance, Budget and National Planning, Zainab Ahmed, says the 5.01 percent GDP growth recorded in the second quarter of 2021 will regress if the Federal Government does not borrow to invest in critical infrastructure.
Speaking in Abuja during a joint press conference with the Minister of Information and Culture, Lai Mohammed, and other government officials, Ahmed said the government was “happy economic and business activities are fully returning to pre-COVID-19 period.”
According to her, the citizens may not start to feel the positive impact of the economic growth until it is higher than the population growth.
Ahmed said the government was borrowing “sensibly” to cater for the country’s infrastructure needs.
‘The borrowing levels for Nigeria today is still 23 per cent of the GDP. I have said it several times that the problem we have in Nigeria is that of revenue. If we look at countries that are within the peer group of Nigeria, there are some that had 50 percent growth and now at about 70 growth.
“We at 23 despite the escalated borrowing we had to do in 2020 and 2021 to have a good grip on the economic situation that was occasioned by the COVID-19 pandemic and due to the cut in crude oil price.
“So, we are borrowing sensibly and also borrowing to invest in critical infrastructure like power, water, roads and rail which are investments that are required to enhance business productivity in the country.
“These businesses will grow and will not only pay taxes, but also employ people. If we do not do this investment now, we will regress from where we are today. So, it is a necessary investment and we are borrowing responsibly, making sure that what we are borrowing is applied to major infrastructure that will return revenue in the very near future.”
She added: “We’re happy inflation is moving downward. Growth in Q2 2021 would have been much stronger had it not been for agriculture recording slower growth at 1.30% due to several bottlenecks currently negatively affecting the sector and due to the industrial sector contracting by 4.23% largely due to the over 12% contraction in crude oil and Natural Gas Production.
“The 2021 Q2 growth rate reflects much better economic performance compared to the same period last year, which recorded -6.10% growth rate. Nevertheless, the non-oil sector was a major driver of growth during the quarter, recording a growth rate of nearly 7% which represents the fastest growth in the non-oil sector since Q3 2014.”
The minister said the N2.4 trillion capital allocation in the 2020 budget was fully released: while N1.4 trillion had so far been released for the 2021 budget.