The Minister of Finance and Coordinating Minister for the Economy, Mr Wale Edun, on Tuesday, said the country needs to take advantage of cheap concessionary loans and climate financing to raise revenue to fund the 2024 Budget.
Edun made this revelation in his speech during a one-day retreat on the 2024 Appropriation Bill organised by the Senate Committee on Appropriation.
The theme of the retreat was “Budget and Budgetary Process: Improved Outcomes in 2024”.
Edun insisted that Nigeria’s fiscal space was exhausted in line with the position of the International Monetary Fund (IMF) and proposed a strategic shift towards concessionary funding including climate financing as a viable option.
Edun said: “Nigeria’s fiscal space is exhausted, we have to focus on the concessional funding, the cheaper funding, even free funding and climate financing is the way.
“Solution is that we have to focus on concessional funding, the cheaper funding, even free funding, and climate financing is the way”.
“Our 2024 proposed budget states clearly that there is room for privatisation, maximizing our own assets without borrowing.
“We have to be brave, courageous and innovative to make sure that we use the financial market to take our fiscal stress down so as to reduce our debt servicing and reduce our emphasis on borrowing.
“One of the ways available is that there are now countries and organisations willing to invest in our economy more than ever before.
“We need to optmise the resources we have particularly oil resources. The world is turning to Compressed Natural Gas (CNG).
“Hence a few days ago, the President launched an initiative of electric vehicles. Major manufacturers of electric vehicles expressed interest and started discussions with us on their determination to establish electric vehicles plant in Nigeria.
“Such is the opportunity for our market here and such is the attraction the new innovation has attracted to us as a nation.”
He highlighted the urgency of addressing the fiscal constraints and reducing dependence on borrowing particularly foreign borrowing.
Edun noted that an estimated $1trillion annually to be spent on climate change, underscore the importance of climate financing in funding the N27.5 trillion budget.
“Just yesterday UAE announced a $30 billion for climate action. What that means is that as we look to fund the N27.5 trillion budget this year, our first port of call must be the most cheapest and the most concessionary finacing including climate financing.
The Minister highlighted recent strides, including the signing of an €100 million foreign direct investment for reforestation of the mangrove forests in Cross River.
He underscored the importance of maximising existing assets without resorting to excessive borrowing.
The minister also noted the option of leveraging countries and organisations willing to allow funding based on their credit ratings which could alleviate debt service burdens for Nigeria.
He added: “At the meeting we just conclude in Dubai, the International Monetary Fund (IMF) managing director said the world is still suffering the shocks of major global incidences like the COVID-19 and that the fiscal space is exhausted. Nigeria fiscal space is exhausted and the solution is that we have to focus on concessioning funding and climate financing.
“There is an estimated $1trillion per annum to be spent for climate change. Just yesterday (Monday), the UAE announced $30billion for climate action. Another $1.5billion was announced by another global group.
“What that means is that as we move to fund the N27.5 trillion budget next year, our first port of call must be to target the cheapest concessionary financing including the climate change financing.”
Edun further insisted on the need for Nigeria to quickly optimise its resources to align with the changing global dynamics that emphasised equity over excessive debt.
The Minister expressed hope for a swift passage of the budget, signaling a proactive approach to addressing the nation’s financial challenges.
In his remarks, President of the Senate, Senator Godswill Akapbio said that Nigeria would not achieve much, unless the country increased revenue.
He urged all revenue generating agencies in the country to do more and block all leakages.
“No matter how beautiful the budget is, if there is no money to spend, the budget will not work.
‘Let’s get up and block the loopholes of leakages and wastages and then bring more revenue so that the 2024 budget becomes realistic,” he said.
He stressed the need for aggressive revenue drive saying “all revenue generating agencies must rise to the occasion. No matter how beautiful the budget is, it will not work if there is no money to spend.
“My message is that all the GOEs must gear up to raise more revenues, block all the loopholes, leakages and wastages so that the 2024 budget would be successfully implemented.
“The Senate and the House of Representatives are very determined to pass the budget before the end of this year to continue with the tradition of the January to December budget cycle.
“It however depended on the attitudes of the ministers and the MDAs to the budget defence sessions which will start immediately.
“I will urge the ministers to take the exercise very seriously by bringing all the heads of agencies under their supervision while coming to the National Assembly.”
The Chairman Senate Committee on Finance, Senator Sani Musa, stressed the need to have the statistics of all the National Assets which are almost non-existing because some Government Owned Enterprises (GOEs) are keeping the assets as if they owned them. There is the need for us to harmonise and get a national registry for assets.
On his part, the Minister of Budget and National Planning, Senator Atiku Bagudu said: “There is National Integrated Infrastructure Master plan which is in the custody of the Federal Ministry of Budget and National Planning. It has over 19,000 projects.
“We have commenced meetings with stakeholders in the infrastructure space, the MDAs, the Bureau of Public Enterprises, the infrastructure Bank, the DMOs, and the NIPC, to analyse them and take them to Investment Grid.
“This is to provide adequate information to investors. The 2024 budget also has provision for the Infrastructure Project Development Funds for that purpose.
“President Bola Tinubu has asked the Coordinating Minister for the Economy to ensure that all GOEs operate accounts that could only be debited on the authority of the Coordinating Minister of the Economy and the Accountant General of the Federation.”
The keynote speaker on the occasion, Prof. Ayo Teriba, a Professor of Economics, expressed confidence that the country has the potential of meeting its revenue projections for 2024 based on the performances of the 2023 budget in the last quarter of this year.
He called for a paradigm shift from the over reliance on petroleum revenue and tax to leverage of marketing the nation’s assets.
He said: “There is the need to take 35 per cent of the Government Owned Enterprises assets to the market to generate some liquidity.
“Apart from GOEs, national assets also included real estates. There is no MDA that does not have one choice real estate or the other and most of them are lying there fallow.
“We need to know the current value of the real estate of the MDAs and the value of their current usage.”
He also stressed the need to develop infrastructure that could generate revenues through a public-private sector participation.
He said the country should focus attention on what it own rather than what it owes as debt.
He said: “We talk about what we own as against what we owe. We have assets that can attract foreign direct investment which can liquidate our N89trillion foreign debt.”
