The effect of the falling global oil prices, which started in June will begin to have impact on the Nigerian economy this month, Ngozi Okonjo-Iweala said on Thursday.
Consequently, she said the country needed to brace for tougher times ahead by reviewing its expenditures and building economic buffers through budgets that would be based on modest oil prices.
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According to her, sound macroeconomic management is crucial to Nigeria at this time, while also emphasising the need to plug all revenue leakages.
The minister spoke in Lagos at the Africa Financial Summit organised by the Institute of International Finance and Access Bank Plc.
“We have not seen the impact of the falling oil prices in Nigeria; it will start this month. We have to drive the non-oil revenue base to be able to weather the storm that is coming,” Okonjo-Iweala said.
She, however, said Nigeria was not alone in the coming economic storm, pointing out that a large number of African countries that relied on commodity export as the mainstay of their economies would also be affected by the global fall in the prices of such commodities.
The minister said the global fall in the prices of export commodities such as gold, iron ore and agricultural produce such as cocoa, cotton and coffee was bound to affect most African economies, which relied on commodity export as the major source of revenue.
Quoting from the United Nations Conference on Trade and Development, Okonjo-Iweala said the ratio of export commodity to total merchandise was very high in a large number of African countries.
According to her, it is 60 per cent in South Africa; 89 per cent in Zambia and Ghana; 96 per cent in the Democratic Republic of Congo; and 83 per cent in Nigeria.
She said based on the 2013 data, 70 per cent of sub-Saharan Africa’s merchandise exports went to regions that were currently facing slowdown.
Ten per cent of commodity exports from the sub-Saharan Africa go to the US; 26.5 per cent to Europe; three per cent to Japan; 21 per cent to China; and three per cent to Brazil, according to the minister.
Consequently, Okonjo-Iweala said there was an urgent need for Nigeria and other African countries to explore other means of shoring up their revenues in the face of the falling prices of export commodities.
She said borrowing to fund annual budgets would not be a better option for most African countries.
“I strongly urge other African countries to look into other directions. We need to build our economic buffers. Of course, there will be pressure to borrow in the face of falling commodity prices, but we cannot afford to borrow. There is a need to drive domestic resource mobilisation,” the minister added.