The Minister of Finance, Budget and National Planning, Dr Zainab Shamsuna Ahmed, has said that like most economies across the world, the Nigerian economy is challenged on many fronts.
But, she was quick to explain that the country is “not broke”, an indication that the Nigerian’s economy is healthy.
While presenting the Ministerial Scorecard of the Federal Ministry of Finance, Budget and National Planning, yesterday in Abuja, Dr Ahmed, also said that the federal government has continued to generate revenues to meet its obligations.
“As of September 2022, the Federal Government of Nigeria (FGN) revenue was N4.19 trillion, 67.8% of the target. The FGN share of oil revenues to fund the budget was N535.5 billion representing 32.6% performance), while non-oil tax revenues totalled N1.71 trillion an outturn of 100.7% compared to the budget projection.
“Non-oil revenues continue to outperform oil revenues with Company Income Tax (CIT) and Value Added Tax (VAT) as the top performers recording 131.2% and 99.8% of their respective targets”, the minister explained.
The minister attributed the factors impacting the current economic situation to an interplay of external and internal causes, which she said are manifesting in several ways, including narrowed fiscal space due to lower than anticipated oil revenues and continued subsidy on petrol.
Other factors she identified include, rising inflation due to higher fuel prices, rising food import prices and impact on transportation costs amongst other factors; negative impact of insecurity on the domestic economy; increased likelihood of climate change events such as the recent flooding across the country and implications for lives, livelihoods and economic activity and others.
Amidst these economy challenges, the minister stated that the federal government has also gone over and above its statutory role to provide financial support to states.
According to her, “A total of N5.03 trillion plus an additional US$3.4 billion has been released to states by the federal government over the life of this administration. Each of these payments has distinct repayment terms with some given as grants and others as loans with favourable repayment terms including a long amortisation period.
“The support also covers the 13% Derivation Refund to oil producing states, refund for construction of federal roads, ecological support, support from the development of natural resources fund, Paris Club refunds, support from the stabilisation fund, COVID intervention amongst others.”
Explaining the federal government’s expenditures for 2022 budget, the minister said that total expenditure to fund the 2022 budget is estimated at N17.32 trillion. She, however, stated that as of September 2022, spending fell short of the target by 16.4%.
“Of this amount, 39% was allocated to Debt Service; 30% was utilised for personnel cost, including pensions; and 17% was released for Capital Investment. The fiscal deficit for 2022 is estimated at N7.35 trillion with 92% of debt financing obtained from domestic sources” she explained further.
Asked whether the federal government is considering approaching its lenders for debts cancellation/restructuring or not, the minister said the country doesn’t need to restructure its debts.
“We are managing our debts. We are comfortable about our ability to pay our debts”, Dr Ahmed added.
On the high level of poverty in the country, the Minister of Finance, Budget and National Planning said the federal government is very concerned, explaining that President Muhammadu Buhari is giving huge support to address the challenges,
She also requested the states and local governments to also key into ongoing efforts to address the issues of poverty in the country, stating that it is a collective responsibility.
Highlighting the main achievements of the ministry, Dr Ahmed said it has given support to the domestic revenue mobilisation efforts, saying the Strategic Revenue Growth Initiative (SRGI) was introduced in January 2019.
“The non-oil revenue shares of total FGN revenues to fund the budget increased from 30% to 73%. In particular, revenues collected by FIRS grew from N6 trillion for the 2021 fiscal year to N10 trillion from January to September 2022.
“Introduction of the annual Finance Acts as a fiscal tradition to support the annual budget in the delivery of the fiscal strategy of the government. As an omnibus bill, it complements our DRM strategies and stimulates investment in the Nigerian economy by allowing the targeting of specific provisions in extant tax laws impacting revenue generation and collection, tax administration and improvements to the business environment. The fourth in the series is under preparation”, she added.
She also talked about the launching of the Road Infrastructure Development And Refurbishment Investment Tax Credit Scheme (RITCS) in 2019 to leverage private sector capital and expertise to construct, repair and maintain critical road infrastructure in key economic corridors and industrial clusters.
Under this support, the Minister said that President Buhari has approved 33 Road Projects, covering a total length of 1,564.95 km as of 2021, adding that about N78.7 billion (about US$190 million) in tax credits have been issued thus far.
The minister further said that the ministry is restructuring the Ministry of Finance Incorporated (MOFI), which manages GOEs and government-linked companies (GLCs) to drive value creation from different asset classes or investments of the FGN.
She revealed that MOFI’s current portfolio consists of 130 corporate entities valued at about N19 trillion, saying that the goal in the next 10 years is to grow MOFI’s Assets Under Management (AUM) to about NGN 34 trillion and drive a minimum annualized average return of 15%.
“The Ministry coordinates and aligns the operations of Banking and Financial Institutions by establishing financial relations between the Federal, States and Local Governments as well as parastatals and government owned companies.
“The Ministry approved for Nigeria Export – Import (NEXIM) Bank to increase its share capital from N121 billion to N500 billion over the next five (5) years.
“In collaboration with AMCON, the Ministry was able to resolve a significant part of Eligible Bank Assets (EBA) disposable and recoveries of Non-Performing Loans. NDIC provided N113 billion to depositors of failed banks”, she explained further.
She also explained the ministry’s collaboration with the Ministry of Power in the implementation of the Presidential Power Initiative (PPI) between the Nigerian and German governments to resolve challenges in the power sector and expand capacity for future power needs through a partnership with Siemens AG.
The minister said the aim is to modernise and increase the Nigerian electricity grid capacity from the existing 5GW to 25GW over three (3) phases.
While substation equipment has been arriving in country, contracts for upgrade of existing transmission substation and also for distribution lines (over 5000km) are at a very advanced stage of award while financing negotiations with German Banks and Euler Hermes for the pilot project (62m Euros) are being concluded while those for the main project (2bn Euros) are progressing.
Earlier while making a remark at the event, the Minister of Information and Culture, Alhaji Lai Mohammed, said that no administration, since the beginning of the current political dispensation in 1999, has done more than the Buhari Administration in supporting states with all sorts of financial interventions.
“When the administration assumed office in 2015, at least 27 states could not pay salaries. Imagine what would have happened if Mr. President had not offered a helping hand, without discrimination, to the states? But for Mr. President, most of the states would have been plunged into serious socio-economic crisis, with dire consequences for the country”, Alhaji Mohammed claimed.
He said the support to the states came at a time when national resources had dwindled drastically, and also at a time of competing needs in many areas, including infrastructure, security, global pandemic and others.