The Nation Newspaper

Tag: recovery

  • Anti-graft war: Supreme Court justice gives tips on loot recovery

    •Akaahs urges Fed Govt to explore plea-bargain option

    A Justice of the Supreme Court, Justice Kumai Bayang Akaahs, has suggested that the war against corruption should be targeted at recovering stolen funds as against securing conviction and sentencing to terms of imprisonment.

    He said efforts should be directed at using the plea bargain option, where substantial part, if not all, of the looted funds are recovered, as against the practice where plea bargain allow for a negotiated exit for a defendant, who is still allowed to retain a substantial part of the loot.

    Akaahs spoke in Abuja on Saturday evening, while reacting to a lecture on Reforming the Nigerian Justice system, delivered by Lindsay Jones, a judge and Law Professor at Emory University, United States, at the annual dinner/ reunion of International Dispute Resolution Institute (IDRI).

    He said instead of directing efforts at ensuring that treasury looters are all put behind bars, there should be a way of making these looters return all they have stolen and perhaps, be asked to go home and sin no more. He added that such people could later be punished if they return to the act.

    ed that keeping such individuals in prison will serve to the detriment of the society, which is already the victim of such looter’s act, because the state must feed such a convict and cater for his/her health, security and other needs while in prison.

    Jones, in his lecture, identified some major challenges of the Nigerian judicial system. He argued that the system was long overdue for reform.

    He suggested areas that require urgent reform.

    The U.S. judge regretted that the nation’s judicial system was yet to overcome the problem of delay that affect public confidence in the system’s ability to deliver justice at the appropriate time and create rooms for external meddling in court’s operations.

    Jones suggested that efforts should be made to ensure the full integration of the various Alternative Dispute Resolution (ADR) mechanisms into the court system.

    He noted for instance, that there were still contradictory positions among the nation’s courts on issues like how to address applications for stay of proceedings pending arbitration and how to set aside arbitral awards.

    Justice Mary Peter Odili, also of the Nigerian Supreme Court, agreed that the nation’s judicial system require urgent overhaul for it to function effectively.

    Hailing Jones for his lecture, Justice Odili urged the event’s organisers to ensure that Jones’ paper was made available to the committee inaugurated last Friday by the Chief Justice of Nigeria (CJN), Justice Walter Onnoghen, to reform the judiciary.

    IDRI’s Chairman, Prof C. J. Amasike argued that the integration of ADR mechanisms into the judicial system will curb the hardship occasioned on litigants by the challenge of delays associated with the system.

  • ‘Fiscal stimulus, political’ll drive economic recovery plan’

    For the Federal Government’s Economic Growth and Recovery Plan (EGRP) to revive the  ailing economy, there is a need for the government to introduce fiscal stimulus in key sectors and industries and also muster the necessary political will to implement the plan.

    The President/Chairman of Governing Council, Nigerian Institute of Training and Development (NITAD), Mrs. Janet Jolaoso, stated this at the 21th Annual General Meeting (AGM) of the Institute held in Lagos, during the week.

    President Muhammadu Buhari launched the EGRP in Abuja, recently, for a period of three years, covering 2017 to 2020. The medium term plan broadly targeted the restoration of growth, human development and a globally-competitive economy, in an effort to combat recession and reposition the economy on the path of sustained growth.

    Mrs. Jolaoso said while the Institute supported the President’s new economic recovery plan, “we implore the Federal Government to muster the necessary political will, which has always been a challenge in the implementation of otherwise laudable policies and plans.”

    She also said the government should create an enabling environment for local and foreign investors to do business in the country. She said to exit recession, it was necessary to turn Nigeria to an investors’ destination while not relenting on the fight against corruption.

    Mrs. Jolaoso further called for the introduction of fiscal stimulus in power, manufacturing, financial services, mining, rail and roads to stimulate activities in those sectors, and in turn, create jobs for competent Nigerians.

    She said it was no longer news that Nigeria is in a recession. According to her, the International Monetary Fund (IMF) recently projected a contraction of 1.8 per cent for 2016 “The Federal Government while not officially contesting the IMF estimates and assessment, still clings to the faint hope that the economy will show recovery in the third quarter of this year,” Jolaoso said.

    She, however, said it was heart-warming that after almost a year of negative growth that resulted in the collapse of businesses, the economy is looking up, signalling an end of recession as confirmed by London-based organisation, World Economics.

    According to Jolaoso, the organisation’s report indicated that the Market Growth Index grew to 58.5 in April as the Sales Growth Index ticked up to 56.7, its highest value since 2015, giving an indication of rapid growth.

    “This report was confirmed by the Ministry of Budget and National Planning that the statistical analysis and economic experts’ assessments clearly indicated that the economy was coming out of recession,” Jolaoso stated.

    She however, added that what was needed to give the growth more push was political will and fiscal stimulus for some critical sectors.

  • How to make economic recovery plan work, by experts

    How to make economic recovery plan work, by experts

    For Nigeria to achieve the strategic objectives outlined in the Economic Recovery and Growth Plan (ERGP), there is need for consistency in its implementation, experts have said.

    The experts, among them, Prof. Olu Ajakaiye and the Rwandan High Commissioner, Stanislas Kamanzi, spoke at the second edition of the Bullion Lecture organised by Centre for Financial Journalism in Lagos. They said the Federal Government must be consistent in implementing the policy.

    Noting that the ERGP could propel the country’s economic growth and development, they, urged the government to be committed, creative and determined to see it through.

    Ajakaiye, Chairman of African Centre for Shared Development Capacity Building (ACSDCB) in Ibadan, the Oyo State capital,   said past efforts to turn around the nation’s economic fortunes failed primarily because of  inconsistent implementation.

    In his lecture titled: “Nigeria’s economic recovery and growth plan: options for low cost financing of the programmes”, Ajakaiye expressed optimism that the recently-launched ERGP would not go the way of others before it.

    According to him, there are indications that the ERGP-2017-2020 will be accompanied by a Federal Government’s investment programmes, raising the prospects of a strong plan-budget link, a pre-requisite for an orderly effective and efficient plan implementation.

    He also expressed hope that state governments as well as private sector operators would be guided by the Federal Government’s Investment Programme (FGIP) in their investment plans.

    Ajakaiye, who also serves on the Federal Government’s Economic Advisory Group, said it was important for the government to be mindful of the dangers of another round of external debt overhang.

    He, spelt out options for low-cost financing of the programmes articulated in the plan. For instance, he stressed the need to broaden the tax base and improve the nation’s tax administration capacity and processes.

    According to him, this was to mobilise additional non-oil revenue to support the various programmes and activities aimed at structural transformation of the economy envisaged in the ERGP.

    Ajakaiye also suggested that Federal Government should consider using the stock market to privatise commercially viable national assets. “The government should list all of its commercial enterprises on the stock exchange (SE). This way, the government portfolio can be divested to the general public, including foreign investors and avoid the controversial and sometimes questionable privatisation arrangements,” he said.

    The ACSDCB chairman said in this case, the government divestment could be instrumental in mobilising financial resources to support worthy development activities, including infrastructure projects.

    “Clearly, the major attraction for Nigeria is the oil industry, making it imperative to ensure peace and stability in Niger Delta region if the projected annual foreign direct investment flow of around N970 billion is to be realised,” he further said.

    Ajakaiye regretted that Nigeria was experiencing stagflation, which, according to him, is marked by high inflation, low employment and negative growth. These, he pointed out, made it necessary for the government to pursue low cost measures to financing the multi-trillion naira investments envisaged in the ERGP.

    For the Chief Consultant, B. Adedipe Associates, Dr. Biodu Adedipe, there is need to deploy the over N7 trillion Pension Fund to finance the growth of the economy. He also noted that Pension Fund Administrators (PFA) can be encouraged to invest in bonds.

    The expert argued that the nation’s economic recovery would depend on the government’s commitment, creativity and determination to see through her well-thought out ideas and bring them into fruition. He advised on the need for the country to stand its ground on its convictions and economic models to stimulate the economy.

    Adedipe, for instance, recalled how the World Bank campaigned against the development of the steel sector in South Korea, but because of the country’s resolve, it now boasts cars that are sold all over the world.

    Citing instances with other countries that rejected some so-called expert advice by some global financial institutions and overseas countries, Adedipe advised government to pursue the policy without recourse to what anybody outside the country says.

    He regretted, for instance, that while South Korea took Nigeria’s model from Ajaokuta steel rolling mill and made something out of it, Nigeria sold hers as scrap, helping foreigners to engage in asset stripping. “No economy can grow with the way we do things,” he said.

    The expert, therefore, advised the Federal Government and policy makers to take time to study the country’s peculiar situation to determine what is good for her and insist on that path of growth rather than being dictated to by development partners and other countries.

    Kamanzi said micro finance was a  tool for poverty alleviation and wealth creation.

    The envoy said micro finance was essential to people-centred development, as it is an important stimulant of the creation of a middle income class that is critical for African economies to substantially take off.

    Ambassador Kamanzi, who was special guest at the lecture, added that it was important for lay people to understand the tenets and mechanisms of micro finance. He, therefore, challenged financial journalists to play a key role in this connection and to build on synergies with the operators in micro finance.

    He said in the past decade, Rwanda has been able to move more than a million people above the poverty line through a combination of strategic investment meant to uplift livelihoods of identified poor communities and tapping their own capacity to solve their problem, with a minimal push from Government.

    Former Acting Managing Director of Niger Delta Development Commission (NDDC), Mrs Ibim Semenitari, urged the government to be consistent in the implementation of its programmes.

    Mrs Semenitari challenged players in the private sector to show interest by identifying with government programmes and the need for them to see themselves as partners in progress with the government.

    Listing some factors that could aid the realisation of teh government’s programmes, Mrs Semenitari said: “There must be transparency on the part of government and all its agencies; the elite must show interest to the point of insisting that the right things must be done.

    “There must be a justice sector that guarantees transparency and fairness; there must be strong institutions that guarantee the actualisation of the plans, and matter of security is something we cannot wish away.”

  • CBN policies at the core of economic recovery

    CBN policies at the core of economic recovery

    The Central Bank of Nigeria, CBN, holds the key buttons to the success of the Federal Government Economic Recovery and Growth Plan (ERGP), which should redistribute and diversify our crude oil earnings into building a robust private sector (primarily small and medium scale businesses) as the backbone of our economy.

    Expanding the local economy involves these basic areas: 1. Job Creation. 2. Private sector growth in small and medium businesses (SMBs) – Food and agro-allied industries, Construction (infrastructure and real estate) which are the backbone sectors of economic development. 3. Quality/Standard of Living. 4. Local Production Capacity. So, are the current CBN policies geared towards achieving the aforementioned and supporting sustained economic recovery?

    For the CBN to play this crucial role it also requires the collaboration of FGN owned financial institutions – Bank of Agriculture, Bank of Industry, Bank of Infrastructure, Federal Mortgage Bank of Nigeria, FMBN, etc. and other financial institutions, to cause a major transformation and expansion of our economy and complement the FGN thrust. Rather, the CBN, with high interest rates is contracting the economy and stunting growth.

    In addition, the FGN owned financial institutions are running bureaucracies that ensure limited or no access to credit for SMBs, which has further exacerbated the negative economic situation. Our policymakers should note that no nation has ever achieved sustainable real economic growth with double digit interest rates. So, the Economic Team and CBN must therefore think out of the traditional, theoretical economic box, bringing uniquely innovative and creative ideas, as the Asian Tigers and China did, to carve out our own success story that will form the new body of future economic work.

    Furthermore, no economy has achieved real growth by discouraging borrowing and blocking access to credit and financing for SMBs. This is even more serious in our peculiar situation, where over 50% (estimates) of the businesses and the working population are informal; reducing inflation cannot be achieved and should therefore, not be priority. Our policy thrust should be to expand the local productive capacity by encouraging SMBs in the real sectors.

    On the currency market area, the method of shoring up the Naira by dumping foreign currencies in the market is not a sustainable policy, as the source is finite, unpredictable and unreliable. In addition, the discriminatory policy regime for the exchange rate encourages corrupt practices such as “round tripping”, so No preferences, whatsoever, should be given for foreign currency purchases.

    Indeed, if the lower interest rates are given to businesses in the real sectors, there will be no need to give them any preferences for foreign currency purchases.

    In order to accelerate our development in general, I wish to propose a radically different approach to the FGN: Eliminating Capital Expenditure, CAPEX, for infrastructure development from its annual budget and transferring it to the CBN and other FGN owned financial institutions, including the responsibility for obtaining borrowed funds, both local and foreign, ensuring its utilisation and repayment, so that the Federal Ministries will only perform administrative and oversight functions. This process will become even more efficient when CAPEX involves borrowed funds, domestic or external. The implication is that the FGN annual budget will only deal with administration, education, foreign affairs and security. This is a revolution that will gut corruption and improve efficiency!

    In operating this system, the FGN owned financial institutions, will initiate borrowing guaranteed by the CBN, who will house such proceeds and release Naira to them. Lending in Naira at very low interest rates will be to SMBs involved in agriculture and related industries, construction (infrastructure and real estate), manufacturing and other real sectors. The CBN shall sell the foreign currencies through the commercial banks and bureau de change, causing availability for currency stabilisation, with no preferences to any individual, business or sector. I believe it is absolutely essential for this change to be made, as it will greatly increase accountability, reduce corruption (round tripping and mismanagement) and the politicisation of critical development projects.

    It is against this background that the full impact and value of these key institutions: Bank of Agriculture, Bank of Industry, Bank of Infrastructure, Federal Mortgage Bank of Nigeria, FMBN, Nigerian Import Export Bank, NEXIM and Nigerian Mortgage Refinance Corporation, NMRC, would be appreciated. These development institutions, given strict targets, should be the primary drivers of our economic recovery and sustained development. If the FGN is not confident in the capacity of their boards and management, which explains their under usage, then they should change them, as these institutions are fundamental to the success of the ERGP and our nation.

    Finally, I have proposed these non-traditional, unconventional policy approaches in line with the peculiar disposition of the Nigerian economy and her corruption index, with some bend to pragmatic capitalist and socialist economic policies.

    On the side of economic history, real economic development and growth have been accelerated mainly through small and medium businesses, where some grew into large businesses, even multinational corporations. These businesses are the engine for employment, redistribution and recycling of funds to the larger population in a myriad of ways. The Four Asian Tigers, Hong Kong, Singapore, South Korea and Taiwan, are classic cases for review. Their uniquely creative economic policy ingenuity, which blossomed into unprecedented growth and prosperity, that transformed their economies in less than 30 years, remains a concrete point of reference.

    China is even more significant, as it made adjustments to straddle between her communist political structure and the Asian Tigers’ model of capitalism to deliver a unique economic innovation and model, whose success remains unparalleled in economic development history!

    Our economic policymakers must therefore, wean themselves of the Western Colonial Complex Mentality, WCCM, and reach within, to structure our own contribution to further economic thought and theory,  derived from a combination of our peculiar circumstances and various other approaches!

    • Aniagolu is Managing Partner, Fit Consult Limited (Finance, Investment & Trade Consult Ltd)
  • ‘Skill acquisition vital to economic recovery’

    ‘Skill acquisition vital to economic recovery’

    Mrs Janet Jolaoso is the President/Chairman of Council, Nigerian Institute of Training & Development (NITAD). In this interview, she says no organisation can grow without continuous training of workers. She speaks with Assistant Editor Okwy Iroegbu-Chikezie

    What does Nigerian Institute of Training & Development (NITAD) have to offer to industries in these days of recession?

    The institute has a vision, which is to be a world-class body in learning, training, facilitation and development. Our main focus is to develop and maintain best practices in these four areas by providing mandatory, continuous professional education to our members, so that they can  deliver effectively when they have clients. I believe knowledge is light.When they deliver effectively, there will be increase in productivity and we will also be able to influence our environment through this positively. It is about ensuring that people change for better, so that the economy can improve.

    When you talk of ensuring best practices, is it in the private or the public sector?

    It is for both the public and private sectors. Training and development cut across everything in life. After your education in the university, nobody actually gather people to teach them management. You begin as a professional medical doctor, engineer or whatsoever your field is. But as time goes on and you acquire more experience and prove yourself to be good, you begin to manage people. So, NITAD is to ensure that you have effective management of people, so that they can deliver.

    You have talked about increasing productivity and the Gross Domestic Product (GDP). In practical terms, how can you achieve this?

    In this age and time, people need to look inwards to see what they can do. We come in by helping to see how attitudes, skills and knowledge can increase.The more knowledgeable you are about a certain job, the better you become in doing it and when you sharpen your skills, it helps in cost reduction. Money and jobs are scarce in the country but improving skill and attitude can go a long way to being cost effective and   affording people the opportunity to afford a particular product against its competitors. All these can curb recession. The idea is that if your price does not increase much and the value that people are getting from your products on the other hand is increasing, no matter how bad the recession period may look, you will still keep being in business. So, these are the areas we come in to improve the skills, knowledge and attitude of people through effective training packages.

    How do you structure your training to fight poverty? Does it include those in the lower rung of the ladder?

    We have postgraduate diploma in various courses that can help to upscale people, especially in lower management cadre and we have also developed what we call a finishing school. So, if one has a School Leaving Certificate, for instance, and is seeking admission and may be without money to do anything for yourself, we will be able to help you look inwards for what you can do. Many young people roaming the streets find it difficult to articulate their thoughts and see where their passion lies. When I was in secondary school in Mayflower, we had different societies – shoe making, wrist watch repairing, and catering. We were taught how to repair shoes, wrist watches, change bulbs, etc. Some who couldn’t get admission into tertiary institutions for one reason or the other went into these businesses and some of them are very successful cobblers today. Our desire is to help to pursue their passion; our belief is that it is not a university degree that can make one successful. We not only train people on lucrative skills but also help them raise funds and expose them to markets. And for the young graduates, a lot of them don’t really understand what etiquette is all about. For instance, you want to go for interview, how do you prepare yourself for people to see you as the preferred candidate above and among others? So, we prepare them in terms of dressing, approach, mannerisms. Some people fail interview because of their mannerisms, dressing; when you see green on red, you wonder where to start. All these are things we are packaging because it is a big market and it is a large gap from coming out of the university. That’s why we say education does not make a man. It is not only in character alone, it is also in your appearance and mannerisms.

    Most organisations lack the basic rudiments of ethics.Does your institute  address these?

    We organise learners’ forum at least once in a year and we look for a topic that is germane to situations in the country. Corruption is endemic and is not allergic to any sector, people tend to see corruption as a public sector thing but l disagree. The only difference is that in the private sector, the likelihood of the owners of a business challenging a manager, for instance, is high unlike in the public service. Due to bureaucracy and nepotism, people are not held responsible for whatever job they are given. To tackle corruption in Nigeria, we need to attack the mind-set. Once we can address the inner man to start thinking differently, they will behave differently.

    As the president of the institute, what are your achievements?

    When we came on board, we set up an eight-point agenda. One of them is to complete our chartered status processing.  Currently, our Bill has gone through the first and second readings in the House of Representatives and public hearing. We will be at the Senate in a few weeks. This is very significant because if we are not backed by law, we will not be able to regulate training, development, facilitation and learning in the country. When we are chartered, before anybody can engage in consultancy or training as a means of reward profession, he must register with us. For example, if a woman wants to cook, there are some steps you must take. If you don’t take those steps, the result will not be the same. If you want to be a trainer, there are steps you must take and there are certain principles you must know to effectively deliver the value that the client is expecting. Aside from the fact that we regulate that, and make sure that when you are buying into anybody’s services, you ask for evidence of being a member of NITAD because any member of NITAD must have gone through training the trainer. We also produce the membership directory and categorise our members as part of the agenda. The other thing is to also improve the soft skill areas of training. Whether you are working in a company or you are manager, you need management skills to manage your people effectively. What happens is that some people are promoted but this intervention is not there so when they become executive directors for instance, they will lack managerial skills. In that situation what you see is a executive managing the job instead of managing the people who will manage the job. In most cases, you will see some bosses go over their immediate subordinates because nobody taught them to manage the people, but only trained to manage the job.Another achievement is that we have raised our acceptance index. We now see people calling us, obtaining out forms at very high profile level. We have people from the National Assembly, director-generals and Heads of Service that are willing to join us.

    What is your advice to the government in terms of job creation?

    The government needs to come up with a policy, including creating a body that will look into skill acquisition and implementation. There must be a body, an independent agency, that should be dedicated to skill acquisition and full implementation. Furthermore, when people have acquired the needed skill, avenues must be created to empower them until they practise what they have learnt. Many youths are frustrated because they have gone ahead to acquire skills without funding for them. Our proposition to the government is to come up with an interest-free loan with less stringent conditions. This will help create entrepreneurs who will be employers.

    What role is NITAD playing to regulate learning and development?

    We are kick-starting our mandatory continuous professional examination this month for our members. And, invariably, when you are chartered, if you want to be a training consultant, you must be our member. Not only that, you will go through training the trainer course, but you also have to have this mandatory continuous examina-tion. You must know what is going on in other countries and you must know the best way to deliver the value that your clients are expecting from you. We keep upgrading our knowledge and we also want to pass this on to our members.

    Who are these members?

    We have various members, such as those training for reward in the administrative sector and those heading training departments. Our members cut across all professions but mainly those who are into training and development either for reward or for where they are working as leaders. We also have student members. They go through the PostGraduate Diploma (PGD). In addition we are also collaborating with the University of Ibadan (UI), where people can come for our course and use it to obtain a degree.

  • Fashola, Adeosun, others for IIM’s economic recovery confab

    The Minister of Power, Works & Housing, Mr. Babatunde Fashola, Minister of Finance, Mrs. Kemi Adeosun, Minister, Budget and National Planning, Senator Udoma Udo-Udoma are set for this year’s annual lecture of the Institute of Information Management (IIM).

    The lecture is slated for tomorrow at the University of Lagos.

    Other members of the Federal Executive (FEC) expected at the occasion are the Minister of Industry, Trade & Investment, Dr. Okechukwu Enelamah, Minister of Solid Minerals, Dr. Kayode Fayemi and the and his counterpart in the  Labour & Employment Ministry, Dr. Chris Ngige.

    Fashola will grace the occasion as guest speaker. Information Management: A Strategic Tool for Economic Recovery & Growth is the of the forum.

    The event is also expected to recognise and honour different stakeholders, including past and present public office holders, captains of industries including leaders in different sectors of the economy.

    President/Chairman Board of Directors/Governing Council,  IIM-Africa, Dr. Oyedokun  Oyewole, said  the event is aimed at highlighting the role of IM in supporting and ensuring adequate implementation of government’s Economic Recovery and Growth Plan (ERGP).

  • Waiting for the Budget of Recovery and Growth

    Waiting for the Budget of Recovery and Growth

    Barring the unforeseen, efforts to pass the N7.298 trillion 2017 Budget will peak with the scheduled resumption of the National Assembly this week. But the level of implementation and performance of the N6.07 trillion 2016 Budget, which was targeted at raising revenue from non-oil sectors, including taxes, and increasing capital spending, has come to the front burner. NDUKA CHIEJINA writes on the shortcomings of the previous appropriation  and the expectations of this year’s.  

    Last year, the implementation of the budget ran into stormy waters from the outset with the continued decline in oil revenue. The fall was a carryover from previous years.

    The N6.6 trillion appropriations dubbed: “Budget of Change” by the President Muhammadu Buhari administration remains a milestone in the annals of budget making. It was the first time the Federal Government would be allocating 30 per cent of the budget to capital expenditure. It was also the first in modern day Nigeria, where the National Assembly would reduce the proposal submitted by the executive as against the usual ‘ritual’ of increasing it.

    According to the Budget Office of the Federation (BoF), tracking annual budget entails “monitoring and evaluation of the process of implementing the approved revenue and expenditure; conduct of field visits to ministries/agencies and periodic evaluation of the performance of the capital and recurrent budget.

    A communications’ officer in the Office of the Accountant-General of the Federation (AGF), Ifeanyi Okereke, noted:  “To ensure the ‘Budget of Change’ delivers on its set goals and impact positively on the lives of Nigerians, the President must ensure that things are done differently now through a deliberate mechanism and plan to track implementation of the 2016 budget, using modern monitoring and evaluation system.”

    Budget tracking, he explained, “enables the government and its stakeholders to examine the flow of public funds from the point of disbursement to the point of utilisation, as it helps to identify funds breakdown as well as cases of mismanagement and corruption within the budget implementation chain.”

    Armed with the Monitoring and Evaluation (M&E) framework for tracking the implementation of last year’s budget, the Minister of State for Budget & National Planning, Mrs. Zainab Ahmed, said tracking the budget and its implementation will be anchored nationally by the ministry of Budget & National Planning with the Department of Planning Research and Statistics in the Ministries, Departments and Agencies (MDA’s).

    The government, Okereke said, “should go beyond official pronouncement to enthrone a culture of monitoring and evaluation in the MDAs. It must develop realistic, thorough, but simple result-based strategies to trap and track fiscal spending in the 2016 budget plan.

    “More importantly, efforts must now be geared towards restructuring the MDAs to establish M&E units. Presently, capacity for carrying out result-based monitoring and evaluation in the MDAs are lacking.

    “If government implements the 2016 Budget, by ensuring that there is a systematic tracking of the funds to the actual projects, the budget will indeed signal the birth of a New Nigeria.”

     

    Key budget components Revenue

    Using the PricewaterhouseCoopers (PwC) analysis of the budget, the government planned to reduce over-reliance on oil revenue and reduce the country’s exposure to oil price volatility. Non-oil revenue like Corporate Income Tax (CIT), Value Added Tax (VAT), Customs & Excise Duties, federation levies and FGN independent revenue were estimated at N2.96 trillion.

    Expected earnings from the non-oil sectors account for about 77 per cent of budgeted revenue of N3.86 trillion for 2016. To shore up the nation’s financial base, changes were made to the leadership of the revenue generating agencies. These included appointment of Mr. Tunde Fowler as the Executive Chairman of the Federal Inland Revenue Service (FIRS) and Hamid Ali, a retired Colonel as the Comptroller-General of the Nigerian Customs Service (NSC).

    The government re-emphasised the need to focus on increasing tax collection. The gross receipts from corporate tax and VAT were expected to rise to N1.8 trillion and N1.4 trillion compared to N1.4 trillion and N1.3 trillion respectively in the previous year’s budget (i.e. increase of 22 per cent for CIT and eight per cent for VAT).

    Independent revenue and remittance of operating surpluses from MDA’s was projected to improve significantly with the full implementation of the Treasury Single Account (TSA) system.

     

    Recurrent Expenditure (non-debt)

    Spending was planned to increase last year (compared to 2015) by about 35 per cent to an aggregate expenditure of N6.08 trillion. Non-debt recurrent expenditure for 2016, representing about 39 per cent of the aggregate expenditure was projected to drop by nine per cent to N2.3 trillion. It excluded a N300 billion vote for Social Intervention Programme (SIP).

    In order to reduce the recurrent expenditure, the government pledged to focus on initiatives such as the Government Integrated Financial Management Information System (GIFMIS) and Integrated Payroll and Personnel Information System (IPPIS).

    The top recurrent expenditures heads were N369.6 billion for Education; Defence (N294.5 billion); Police (N283.1 billion); Health (N221.7 billion) for and Interior (N145.3 billion).

     

    Debt service and capital expenditure

    Since the government relied on borrowing to fund last year’s budget, it projected to increase its debt service expenditure. The debt service cost was expected to rise by 42.8 per cent (N1.36 trillion), accounting for about 23 per cent of the budget. The total debt profile would become 14 per cent of the Gross Domestic Product (GDP).

    The capital expenditure was proposed to increase by about 216 per cent to N1.8 trillion. The challenge of previous administrations was the implementation of the capital expenditure budget.

     

    Statutory transfers

    There was a decrease in statutory transfers from N375 billion in 2015 to N351 billion in 2016. Based on the Medium Term Expenditure Framework (MTEF), the aggregate amount was expected to increase in subsequent years.

     

     Priority sectors

    Agriculture

    In last year’s budget speech, President Buhari spoke of a plan by his administration to subsidise funding for the agricultural sector to encourage participation in the sector and increase job creation. As part of the plans to boosting activities in the sector, the administration also projected the attainment of self-sufficiency in rice production and wheat.

    The overall objective was to make agriculture one of the drivers of the economy. To achieve the feat, other challenges, including infrastructure, fiscal and investment policies, were to be giving priority. 

    Solid minerals

    The government also proposed to boost investment in the mining sector, where 34 minerals had been identified across the country. However, only 13 of the minerals are being mined, processed and marketed. These are: coal, kaolin, barite, limestone, dolomite, feldspar, glass sand, gemstones, gold, iron ore, lead-zinc, tin and its associated minerals and recently gypsum.

    Some of the initiatives of the Federal Government that are targeted at boosting the solid minerals sector include: the revival of the Ajaokuta and Aladja Steel Companies through policies and proper funding/ownership arrangements; gold exploitation through policies and adequate funding to increase output.

    In the budget under review, plans were made to provide subsidised funding to the solid minerals sector.

     

    Tax changes

    There was no proposal to change tax rates or impose new taxes in 2016. The budget speech was silent on the government’s proposals to introduce a National Security Tax (NST) and the proposed increase in Tertiary Education Tax (TET).

     

    Custom duties

    Levies and duties on the value of imports were projected to reduce last year compared to 2015. However, there is expected to be an increase in custom collection from N862 billion in 2016 to N921 billion next year. This is highly dependent on monetary policies of the Central Bank of Nigeria (CBN) and security at the borders to check smuggling.

     

    Corporate taxes

    The projection for corporate taxes is quite optimistic. Corporate tax collection is expected to grow from N1.87 trillion in 2016 to N2.23 trillion in 2018. This is as a result of heightened effort by the FIRS towards tax collection. Some of the initiatives include collaboration with financial institutions on tax collection and partnering with the Corporate Affairs Commission (CAC) in identifying non-compliant taxpayers.

     

    VAT

    The budget makes no mention of an increase in the VAT rate from five per cent other than the fact that the rate was meant to increase to 10 per cent by mid-2015 which was not implemented. However, VAT collection is expected to increase due to more enforcement of compliance.

     

    Luxury tax

    There was no mention of luxury tax in the 2016 budget speech. But based on the MTEF paper for 2016-2018, the surcharge on luxury items was expected to generate about N15 billion in 2016.

     

    Taxes for smaller companies

    The unemployment situation was also priority. There was a plan to reduce tax rate for smaller businesses. It was not clear what taxes would be reduced and what constitutes “smaller companies”. It was, however, noteworthy that a lower CIT rate of 20 per cent (rather than 30 per cent) is currently applicable to small companies that meet certain conditions.

     

    Further insights on the MTEF 2016-2018

    The MTEF is the roadmap for the implementation of the various plans and social development programme. It provides a high-level strategic policy direction of the government over the next three years.  A social welfare package of about N500 billion was proposed for 2016 in the MTEF. The package is aimed at three areas of school feeding programme initiatives, conditional cash transfer to the most vulnerable and post National Youth Service Corps (NYSC) grant to promote entrepreneurship.

    The government must be deliberate with implementation of the budget and take periodic stock of how well programmes are being implemented. The value of each programme to the economy and social wellbeing of citizens must be measured. Any programme that does not add value beyond its associated cost should be discontinued or reviewed very quickly as the huge borrowing has to be justified by clear results.

     

    Diversification of the economy

    The MTEF reiterates the emphasis on diversification of the economy. The main areas of focus are agriculture and solid minerals. The Buhari administration needs clear policies and regulatory framework for investors to thrive in the identified sectors. Ultimately, these sectors should be able to earn significant foreign exchange to replace the shortfall from crude oil earnings. This will have a positive impact on the exchange rate and the economy as a whole.

     

    Zero-based budgeting system

    The MTEF is a zero-based budgeting system. If implemented properly, it will encourage the attainment of a more prudent public fund management. It should help to reduce inefficiency and wastage, especially in the recurrent expenditure and free up more funding for infrastructural development.

     

    Increase of VAT

    In the MTEF paper, the VAT rate was projected to increase by mid-2015 to 10 per cent but it was not implemented. The document did not suggest that VAT will be increased in 2016 as the projected 20 per cent increase was projected to come from improved compliance. It is also not clear whether five per cent will be maintained over the three-year period (2016-2018), especially in view of the full implementation of the Common External Tariff (CET) for ECOWAS projected for 2019.

     

    Infrastructure development and power

    The MTEF highlights some effort on increasing access to energy supply and improving transportation infrastructure. In order to achieve this, the Federal Government would setup an infrastructure development fund.

    One of the crucial extracts from the document is that the government will encourage off-grid power. Though there is no detail information on the off-grid power, it suggests that the Independent Power Projects (IPP) will be encouraged while government focuses more on ensuring adequate investment in transmission infrastructure and regulation. This will impact on the regulation of tariffs and the ability of investors to earn commercial returns across the power value chain.

    Explaining the gray areas of this year’s budget estimates, the Director-General of the Budget Office, Mr. Ben Akabueze, told reporters that “from 2016, funding of capital projects will be based on availability of funds.”

    He disclosed that changes have been made in the way budgets will henceforth be monitored and evaluated, beginning from last year. Confirming that the disbursements in first and second quarters for the 2016 budget implementation had been made public, Akabueze said the figures for the third quarter would be made public after the Federal Executive Council (FEC) approval of the report used as a baseline for the new approach to monitoring and evaluation.

    Experts have agreed that releases do not translate to implementation. According to them, what determines the success of budget implementation is the procurement process.

    In the breakdown of the first and second quarters releases for last year’s budget implementation and evaluation, the Ministry of Power, Works & Housing got the largest allocation with N170,425,193,949. A total of 40.03 per cent of the budget has so far been released and cash backed.

    The curtain is expected to drop on the implementation of the 2016 Budget next month.

  • Towards recovery and growth

    SIR: The Nigerian economy is in a quagmire and the need to draw up a framework for economy growth and recovery is key to moving this stalled economy out of a recession.

    The issue of the exchange rate has been a crucial challenge. Nigeria operates on about five exchange rates, the rate at which oil importers source for the United States dollar is different from that of people going for pilgrimage. The manufacturers have a different exchange rate used in importing raw materials and the exchange rate used to cater for the needs of tuition fees for student also differ. The black market rate also differs and the black market rate is used by majority of the populace.

    Investors will not have confidence in an economy that operates on several exchange rates and Nigeria needs investors in crucial sectors so as to drive growth and development. Investors might even be confused with which exchange rate to operate with and this might chase investors away to other African countries. The Central Bank of Nigeria needs to come up with a uniform exchange rate so as to stabilise the naira.

    Nigeria is an import-dependent economy and the pressure on the demand for the dollar outweighs the supply which leads to a rise in the exchange rate from naira to a dollar. The propagation of Made in Nigeria product is key to stabilising the naira. The rice sector is growing and over time Nigeria will not need to import rice again and this will reduce the need for foreign exchange in the importation of rice thereby strengthening the naira.

    If the importation of basic agricultural as well as petroleum products can also be reduced, there will be significant decrease in the need for foreign exchange thereby strengthening the naira. Nigeria needs to move from an import-dependent economy to a producing economy and the government needs to drive policies that will favour small scale industries, provide easy and accessible loan facilities to encourage and drive made in Nigeria products.

     

    • Folawiyo Kareem Olajoku (PhD)

    Lagos.

  • Experts predict economic recovery in 2017

    Despite the prevailing harsh economic situation in the country, experts are optimistic that there are clear indices indicating economic recovery and growth in 2017.

    A research document packaged by a team of financial and economic experts at GTB and made available to The Nation attempted a prognosis of the challenges that bedeviled the economy these past months and offered plausible solutions aimed in their view at getting the country out of the doldrums.

    While x-raying performance in the outgone year, the experts noted that: “Despite the economic challenges, the business community found a way to stimulate economic activities albeit at a rather slow pace relative to the previous year. It is however believed that the non-implementation of full terms of the CBN flexible exchange rate policy brought about a multiplicity of exchange rates with tough consequences for all sectors of the economy rather than foster effective price discovery.

    “In view of the heightened regulatory oversight, we expect corporates to conduct their businesses within the ambit of law whilst displaying the highest level of professionalism and compliance to regulatory provisions. Should our first scenario play out, we expect to see an improvement in foreign exchange earnings with attendant impact on foreign exchange supply, business activities, and economic wellbeing. On the flipside, any further deterioration could lead to a worsening of the foreign exchange environment, a depression of business activities and protracted economic contraction.”

    On the exchange rate, they said, it is their considered opinion that a credible FX market is an important factor in building a thriving economy, we expect a full implementation of the terms of the flexible exchange rate policy, which will aid effective price discovery and eliminate multiplicity of rates.

    “The combination of such policies with an improvement in foreign exchange earnings will ultimately lead to a moderation of inflation, and narrowing of the gap between the official and parallel rates. Further delays can only create further fragmentation and escalate FX scarcity, with attendant consequences for the economy.”

    Expatiating, they said: “With productions costs driven primarily by exchange rate   concerns, we expect that an improvement in foreign exchange availability and stability, coupled with base effects will cause a further moderation in inflation.

    “A continued illiquidity of foreign exchange will however result in increased inflationary pressures on the economy. We believe that the present inflationary pressure is not entirely a monetary phenomenon and the use of monetary policy tools alone might be ineffective.

    “Consequently, we expect the government to commence the implementation of fiscal policies that will not only augment the monetary policies in place, but also spur productivity and encourage local production.”

    Concluding, the team said it was heartening to note that: “Despite the beating the Nigerian economy has taken in the last 24 months, one thing is still clear; the fundamentals of the economy, which includes the market size, population, enterprise competency of Nigerians, demographic, natural resources etc., are still very strong. In our opinion, the harmonisation and implementation of the right policies (both fiscal and monetary), that will optimise these fundamentals into stimulating economic activities and maximising productivity, appear to be the missing link.”

  • How to put economy on sustainable recovery, by stockbrokers’ chief

    Nigeria needs to launch a boutique of policies aimed majorly at increasing investment in infrastructure, abrogation of multiple taxations and taming of inflation and interest rates among others to create an enabling environment for sustainable economic growth and development.

    President, Chartered Institute of Stockbrokers (CIS), Mr Oluwaseyi Abe, who spoke against the background of the 2017 Federal Government budget, said Nigeria needs good economic policies and disciplined execution in order to get the economy back on the track.

    He noted that the business terrain must be more investor- friendly for micro small and medium scale enterprises to flourish which means the capital market itself must be developed to assist local entrepreneurs.

    Abe, who stated that fundamentals of the Nigerian economy remained strong and competitive, regretted that the country had been weak in infrastructural development, thereby limiting the revenue base.

    “The successful implementation of the Federal Government’s 2017 Budget of Recovery and Growth is critical.We believe that the economic fundamentals of Nigeria are still strong, while we have enjoyed political stability for a while,” Abe said.

    According to him, the first step is a strict execution of the budget in order to get out of recession but there must also be reduction in interest rates to boost the real sector and empower the populace with more investible funds.

    “It is good that the government has decided to spend more on infrastructure as a necessary measure for long term and sustainable economic development,” Abe noted.

    He pointed out that the Nigerian stock market has strong potential for huge returns on investment (ROI) as many blue chip companies are trading below their intrinsic values.

    He therefore, advised investors not to despair on the current period but take advantage of the low share prices to beef up their portfolios in order to reap bountiful gains when the economy becomes fully revived.

    He urged the Federal Government to consider the age-long plan to encourage multinational companies to list on the Nigerian Stock Exchange (NSE) in order to deepen the market and enhance liquidity in the medium and long term.