•Fed Govt rolls out social policy for women and households with 5 children
The Federal Government says it is targeting additional N480 billion or $3 billion revenue within the next thee years from its recent austerity measures particularly from surcharges on luxury items.
Coordinating Minister for the Economy and Minister of Finance Dr Ngozi Okonjo-Iweala spoke yesterday at the fourth annual Capital Market Committee Retreat in Abuja.
Mrs. Okonjo-Iweala listed the areas where the amount would be generated to include taxes on luxury items and stoppage of abuses of investments incentives, such as exemptions and waivers.
According to the finance minister, government is looking at its policies on investment incentives, and waivers and exemptions, and is working “with Nigerian Investment Promotion Commission (NIPC) to stem the tides of abuses. Over 30 per cent of companies operating under pioneer status abuse their tax exempt status”.
Government she said will “also look at Customs to plug existing leakages and loopholes to enhance revenues”.
Other areas that would help boost revenue are remittance of surpluses to the treasury by all agencies of government in line with all extant laws establishing them and the strengthening of tax administration to boost non oil tax collections. To this end, President Goodluck Jonathan is said to have directed all revenue generating agencies and parastatals to expedite their remittances to the treasury.
According to Mrs Okonjo-Iweala, “this is crucial, as many agencies have not been remitting surpluses to the treasury as they should. In this regard, I recently met with Managing Directors of Banks to ensure their collaboration and compliance”.
The finance minister also revealed that the austerity measures announced last week were not directed at the poor or middle class to make them suffer but that with the new measures government has resolved to build “a social safety net for the poor and vulnerable in our society with support from the World Bank and DFID.”
This, she said, is a direct outcome of Jonathan’s social policy drive from which “a Conditional Cash Transfer system will be developed targeted at women anda their households of up to five children. This will encourage them to send children to school especially girls and get themselves maternal and infant health care.”
Mrs. Okonjo-Iweala assured that the economic management team is ensuring that the economy does not collapse with the decline in oil prices and as a strategy, she said, the government is adopting a scenario-based approach to address the decline of oil prices on the economy, noting that the government will address each scenario that plays out on its merit, with additional measures to be unveiled to cushion the impact.
“We are not taking a point-estimate position as regards the future price of oil. We fully recognise that oil prices may fall lower or even rebound. Prices could fall to $70 a barrel, $65 or even $60. Prices could also rebound to $75 – $85 a barrel. What we did was to work within a range of $60 – $85 thought possible by analysts, put a package of measures around an estimate at the midpoint of that range, that is, $73, and then build additional measures for scenarios at $70, $65 and $60 a barrel.”
In 2015, Mrs Okonjo-Iweala said government plans to cut certain recurrent spending, such as purchase of administrative equipment, overseas travels and trainings. “We shall also complete the work on Integrated Personnel and Payroll Information System which has already covered half the agencies and weeded out 60,000 ghost workers saving N160 billion.
“There will also be some cuts in capital expenditure in the 2015 Budget, but this she said “is being done in a way that is pro-poor and pro-average Nigerian. Focus will be on priority sectors of infrastructure, Health, Education, and Security, as well as growth stimulating and job creating sectors like Agriculture, Housing and Creative industries,” she said.
With regards to the contentious fuel subsidy question, the finance minister said fuel subsidy in the 2015 budget was reduced from N971 billion to N458 billion because the drop in prices of oil in the international market.
She said: “Since global oil prices were declining, the landing cost of oil for marketers would automatically reduced, thus leading to drop in fuel price and subsidy payment.
“Also, for the avoidance of doubt, let me clearly state here and now that on the issue of oil subsidies there has been misinformation.”
As part of measures to boost liquidity of the capital market, the minister disclosed that government will soon unveil its plans to compel multinational companies in the telecoms, food, and oil and gas sectors to list their shares on the Nigerian Stock Exchange (NSE).
This, according to her, would help to make the market more attractive and diversified. She said a working group made up of the Minister of Communications Technology, the Director-General of SEC, and the DG of the NSE had commenced discussions with these big companies to list their shares on the floor of the capital market.
The Federal Government, she added, is working on more incentives for capital market operators. For instance, she said the government is planning to increase the percentage of pension funds assets to be invested in the stock market from 10 per cent of the 25 per cent allowable pension investible funds, to a higher percentage but she did not disclose the new minimum limit being planned.
The minister said a significant portion of the billions of dollars drained from the oil savings account over the past two years was distributed to governors instead of being saved for a rainy day.
The Excess Crude Account (ECA) had around $9 billion in December 2012, but it has since fallen to around $4 billion, Finance Minister Ngozi Okonjo-Iweala noted in a speech to capital market authorities. Most of the falls occurred during a period of record high oil prices, when oil savings are supposed to accrue.
Mrs Okonjo-Iweala said some of the money had been needed to cover revenue lost due to outages caused by oil theft and pipeline vandalism, thought to drain hundreds of thousands of barrels a day.
She said: “Some of it (the ECA) was then legitimately used to offset revenue shortfalls arising from quantity shocks and to narrow the fiscal deficit,” she said. “But against our advice, significant portions were also used to augment monthly allocations,” to local and state authorities.
“States argued that rainy days were already at hand and in fact (the rain) was already pouring, so the money needed to be used right away.”
The Director-General of the Securities and Exchange Commission (SEC), Ms. Aruma Oteh, stated that “without any master plan in place, we have been able to grow our stock market by a cumulative annual growth rate (CAGR) of 21.52 percent over the last 10 years. I have no doubt, that with faithful implementation of these master plans, our market will eventually emerge as one of the world’s deepest, most liquid and largest capital market that will not only contribute to the socio-economic development of our dear country but will also serve as a global financial hub offering opportunities into other parts of Africa.”
By 2025, the capital market if it faithfully implements the master plan is expected to be “a deep, highly liquid, broad and diversified market that is a multiple of Nigeria’s GDP. It must boast of one of the most efficient and favorable operating environments that engenders best practice, innovation and competitiveness,” she said.
SEC, she said, wants “a market that is very inclusive with majority of Nigerians participating in it through a multi-trillion naira collective investment schemes industry. We want a bond market that will enable us meet the infrastructure deficit estimated at $3.9 trillion over the next 30 years.”
