Government, agencies must synergise on foreign exchange management- Adeleke

Last Tuesday, President Muhammadu Buhari presented to the joint session of the National Assembly in Abuja, N8.612 trillion 2018 Appropriation Bill. In this interview with GANIYU OBAARO, a financial expert, Mr. Azeez A. Adeleke, FCIB, examines some key issues in the budget, including sectoral allocation, foreign exchange, diversification, taxation and job creation. Excerpts

How would you assess Budget 2018 recently presented by President Muhammadu Buhari to the joint session of the National Assembly?
When you look at the size of the Nigerian economy, one will agree with the operators of the economy that the budget is not too ambitious; it can be said to be moderate.

The target already set by the president is achievable. But, if we are able to achieve current tempo, at least the relative peace in the Niger Delta area of the in the North east; block financial leakages in the economy;

sustain the onslaught on and degrading of Boko Haram; massive focus on revenue generation as envisaged in the budget, then, we are on the path of recovery and growth.

Also, the basic parameters- $45bp/d oil benchmark; 2.3 million production capacity, which is slightly ambitious anyway, considering the new threat posed by the Niger Delta Avengers to attack critical infrastructure-oil pipelines- in the region, if we are able to overcome these challenges, the government’s target could be said to be achievable.

Can you comment on sectoral allocation of the budget; and whether such allocations could turn the economy around?
The question to ask is; what are the economic the government seeks to achieve? Part of the goals include full employment;

economic growth; balance of payment equilibrium, which means avoiding deficit; that is deficit control of inflation. How will this aid government’s focus, political stability?

For political stability to be achieved, the government, I think, is spreading projects across the six geo-political zones in the country. The recent N100bilion Sukuk fund, which the government is deploying to finance projects across the country is good.

So, the various allocations to sectors like Power, Works, Housing, Agriculture, Education, Tourism, Solid Minerals, etc are good, since they could aid economic growth and development, which is what we need at this time.

How would the budget impact positively on employment generation, given the massive unemployment situation in the country?
Capital projects as spelt out in the budget are instruments to generate employment for the people. They are avenues to also create assets in the economy, increase money in circulation and reduce poverty.

So, roads, housing, works will get people to work; who would be paid wages, salaries and allowances, even with attendant massive wealth creation and multiplier effects in the long run.

Government has said it would continuously explore revenue potential like taxation, and has put in place Voluntary Assets and Income Declaration Scheme, VAIDS, to generate more revenue. What is your assessment of the plan?
Taxation is a veritable source of government’s revenue, not only in our country, but across the world. However, the current trend has shown that the government can leverage revenue from taxation.

So far, the Nigerian Customs Service has shown that they could perform, also, are the other agencies, including the Federal Inland Revenue Service, FIRS. For VAIDS, it’s a gradual thing to achieve by the Federal Government.

To what extent has the economic diversification policy of the government worked?
I think the Federal Government is showing seriousness to diversify the economy. The focus of the 2018 budget is on nonoil revenue.

Now, the government is looking at solid minerals, agriculture, tourism, among other sectors because oil is no longer selling globally unlike before now.

For example, agriculture would improve the economy in so many ways; increase in export of agricultural products lke yam, cassava, plantain, sorghum, rice, cocoa, palm oil.

There would be a reduction in food importation, saving of foreign exchange for the economy, especially as the government is targeting zero per cent rice importation soon.

What is your assessment of foreign exchange management by the government and the Central Bank of Nigeria?
There are two extremes to foreign exchange market. First, is absolute free market determinism of the market. Second, absolute exchange rate control and third, is, exchange rate managed mechanism.

Mind you, Nigeria is largely an import-dependent economy. That is why the government intervenes from time to time so as to allow liquidity in the market, reduce pressure in the parallel market.

Now, some level of stability is being enjoyed in the market/economy. Once there are no shocks like security challenges, such as Niger Delta Avengers, Boko Hram, etc, the economy will stabilize.

As regards the CBN, my take is that the management of the economy has to be looked at from two fronts- monetary and fiscal policies. Fiscal policy has reduced leakages in the economy.

As for monetary policy, the CBN must manage money supply in the economy; collaborate and synergise with fiscal authorities to achieve stability.

Nigeria has never been short of fine programmes, but the bane of such programmes had been implementation. Do you think next year’s budget will deviate from past tradition?
The government should be given the benefit of the doubt about how it would go about implementing the budget. Buhari is determined to drive the economy well; and he has expressly stated this.

Considering that he looks more fit health wise now, I think we should expect a better deal from him in the months ahead.