Nigeria needs to diversify away from a reliance on oil, reduce public spending, boost job creation and finish failing infrastructure projects, the country's top new economic overseer said on Wednesday.
Co-ordinator of the Economy and Finance Minister Ngozi Okonjo-Iweala said Nigeria should try to reduce recurrent expenditure by at least 1 per cent a year in the remainder of the administration, which would bring it down to 70 per cent of the budget by 2014.
Ms. Okonjo-Iweala, a former World Bank managing director, also said fuel subsidies would be ended on a timescale yet to be decided and pledged to keep sub-Saharan Africa's second-largest economy within a 3 per cent fiscal deficit target.
"We need to work harder. We need to maintain macro-economic stability. We need to manage our fiscal system in a more prudent manner. We can start with recurrent expenditure," she told reporters in the capital Abuja.
Ms. Okonjo-Iweala, who was sworn into her new role last week, said Nigeria's cumbersome budget process had to be changed. But she said fiscal and budgetary changes would take a long time.
Government offices often spend months without knowing how much money they have for the year. Political wrangling meant President Goodluck Jonathan only signed the 2011 budget into law at the end of May.
"We need to change the budget process in this country. We can't bring a budget and then have reservations that go back and forth. The executive has its responsibility and I hope the lawmakers will also take responsibility. By 2013 we will have a much saner budget process," Ms. Okonjo-Iweala said.
Nigeria's reliance on oil exports meant fiscal prudence was even more important given the volatility of global oil prices in recent months during the crisis in North Africa, the minister said.
Ms. Okonjo-Iweala, who has been given broad powers over the economy, was this week made the head of an economic implementation team.
She said the president was also keen to diversify the economy with security, entertainment and agriculture sectors that should be targeted for growth.
"When one considers the non-oil revenue collection ratio as a share of GDP, Nigeria lags well behind other peer economies," said Razia Khan, head of Africa research at Standard Chartered.
"Any effort to address this might yield faster fiscal consolidation, but it is also clear that spending pressures – with the state at the centre of so much of the reform effort, especially when it comes to infrastructure – will remain intense," Ms. Khan added.
There are over 150 Nigerian firms outside the oil sector planning to invest 1.5-trillion nigerian naira ($9.6-billion U.S.) in the next 12-months, Trade and Investment Minister Olusegun Aganga said in Lagos this week.
Former Finance Minister Aganga said investment included 900-billion naira from the conglomerate Dangote Group , 45-billion from Nigerian Bottling Company and 225-million from Guinness Nigeria.
In order to help these businesses grow the economy and boost job creation, the state needs to improve infrastructure and remove barriers for investors, Ms. Okonjo-Iweala said.
"We need to look at infrastructure as an enabler for the economy. Power, roads, things that will help business, which will drive economic growth. We need to focus on current incomplete projects, not starting too many new ones."
The woeful power supply situation in Africa's most populous nation is one of the most pressing issues for most Nigerians and is holding back economic growth.
Nigeria has the world's seventh-largest natural gas reserves, yet is blighted by persistent electricity outages which force businesses and individuals who can afford them to rely on diesel generators.
Its focus on making short-term gains on crude exports means that despite being the world's fifth-largest oil exporter last year, Nigeria has to import most of its fuel needs due to a lack of investment in refining infrastructure.
The increased costs associated with fuel importation and corruption within the industry means the government pays costly subsidies to temper the price for Nigerians, but these will be removed, Ms. Okonjo-Iweala said.
Most Nigerians live on $2 a day and ending fuel subsidies is a contentious issue as many believe it is the only benefit they receive from living in an oil-rich country.
"There has been a lot of debate on fuel subsidies and we have all resolved that (removing it) is a good direction to go on. You have to leave it to us to decide when it is prudent to do so," she told reporters.