Resetting the Nigerian Economy: One Year After

By Festus Akanbi

For Nigerians, who voted en-mass for President Muhammadu Buhari in the

2015 general elections, it is key to reflect on the realities of the economy and focus on the policies and initiatives this administration is implementing to reset the economy whilst investing to stimulate growth and diversification of the economy.

In a year of Fiscal Housekeeping with a robust plan for revenue generation and in an environment where people are used to a culture of celebration, no epoch will go unnoticed.

In the usual practice on the occasion of an anniversary, it is not out of order if Nigerians choose to roll out the drums and begin to count their blessings one year after the new administration was inaugurated; as it ushers in critical changes to fiscal discipline within all federal government ministries, departments and agencies (MDAs).

However, Nigeria has been hit by a combination of very low oil prices, decreasing export volumes of crude oil and the effects of a lack of critical investments in infrastructure over many years of neglect.

Unfortunately, the change in government has come at a period when there is the will to forge ahead without commensurate money to invest and as the Honourable Minister of Finance, Mrs Kemi Adeosun, put it, we are in a period when the safety blanket of oil has been ripped away, laying the poverty of Nigeria’s institutions bare. Today, the current administration is faced with the stark reality of the volatility in the global oil market and the attendant erosion of revenue accruable to the country.

That notwithstanding, this administration has taken a positive approach of critical borrowing and targeted investment in infrastructure to ensure that we start to build the required infrastructure to stimulate growth in all sectors of the economy.

Nigerians, in their support for the new administration would not accept any excuse for failure. There is the need to refine how we collectively work towards ushering in a new era in Nigeria.

Framework for the Future

With a resolve to leave a good legacy, the administration came up with a framework for the future of the country. It is tackling the inherited problems of governance through three critical and inter-dependent aims; fiscal discipline; targeted investment and economic diversification.

According to the Finance Minister, “This administration is committed to disciplined expansion to catalyse economic reform. “We are implementing fiscal policies designed to achieve Nigeria’s growth and development objectives while extracting efficiencies to ensure long-term viability of public finances.”

Fiscal Discipline

As we endure a period of serious threats to the nation’s finances, it is necessary for this administration to vigorously pursue a policy of fiscal discipline (plugging the leakages) by waging war on corruption, inefficiency and negligence. It is therefore not a coincidence that this administration has a strong focus on transparency. In the last one year, the Buhari administration has declared its commitment to guard against wastage and leakages within the system, strengthen institutions weakened over the years through corruption, inefficiency and negligence.

The Minister of Finance promised that along with transformative capital investment being undertaken, government will concurrently develop much needed systems and controls for monitoring, tracking and ultimately, optimising investments it intends to make.

Giving account of her stewardship in the office, Mrs Adeosun disclosed that “As part of fiscal housekeeping, we have introduced programmes designed to audit and rationalise personnel related expenditure, which accounts for over 40 per cent of total government expenditure, reduce overheads, increase expenditure efficiency, and consolidate extra-budgetary revenues.” Indeed, the Federal Ministry of Finance, in the period under review, embarked on a tailored MDA Revenue Strategy, which entails a detailed identification and strategic mapping of revenue sources being undertaken by all agencies. The Minister explained that independent revenue generation of N1.5trillion in 2016 is being targeted, while incentive measures (e.g. cost of collection) are to be implemented where appropriate.

Stemming the Tide of Corruption

The administration’s message on war against corruption is not lip service. In the last one year, government has been consistent in its offensive against the cancer of corruption.

Recoveries

For the first time in Nigeria’s recent history, the authorities have shown tremendous determination in pursuing those who are thought to have misappropriated public funds. This time, a pragmatic approach is being taken from an economic perspective, the primary objective being to fully recover looted funds to be directed towards productive use to benefit the economy. In addition to cash being recovered, real estate and other physical assets are in custody.

Improving Tax Collection

At a period when there is a 70 per cent drop in revenue (as a result of a combination of falling oil prices and disruptions to production) it makes sense that the administration has continued to focus on improving the efficiency of tax collections and broadening the tax base. President

Muhammadu Buhari has sent a strong message to the Nigerian people with the appointment of a new FIRS Chairman,who has a remarkable track record as the CEO of the Lagos State Board of Internal Revenue. The Finance Ministry is also deploying appropriate technology to enhance collection. Such technology has enhanced our capacity to link up databases from diverse government agencies; thereby increasing efficiency.

Also in place, are the systems for auto debits of VAT from corporate entities and government contractors and the rollout of Biometric Verification Number (BVN) across all bank account holders.

Results to date include 363,000 new taxpayers being added to the FIRS database, while FIRS staff has continued to receive increased incentive pay for delivery on targets.

Nigeria Customs Service

In the course of the year, the campaign for enhanced revenue generation has also been applicable to the Nigerian Customs Service. The Minister explained that in order to increase revenue generation capacity of the Customs Service, the Federal Government is investing over NGN 20 billion in equipment upgrades and capacity enhancement across Customs services.

This will boost the transparency and efficiency of customs collections.

The Federal Government is also implementing a performance based staff incentive scheme, in line with what is in place within the FIRS.

In addition to these, an electronic platform has been developed to improve service delivery, efficiency of ports clearance and collection of customs duties.

Payroll Reforms

Another area of focus is the government’s payroll reforms. The Integrated

Personnel and Payroll Information System (IPPIS) is a centralised payment and payroll system. So far, enrolment of civil servants onto IPPIS has been accelerated with the use of the Bank Verification Number scheme. At last count, 447 MDAs with a total staff count of 309,472 are on the system, while full enrolment of remaining staff is to be completed in 2016. In the course of the exercise in recent months, 43,122 fraudulent entries have been identified, representing an average of NGN4.2 billion.

–Akanbi is the Special Adviser on Media to the Minister of Finance