Hurdles, task before Zainab Ahmed as double minister

Following the inauguration of the Federal Executive Council (FEC) and re-appointment of Zainab Shamsuna Ahmed, PHILIP CLEMENT sheds more light on the hurdles and huge task ahead of the double minister, who is now in-charge of the Finance Ministry and the Ministry of Budget and National Planning.

The minister, who had earlier served as a minister of state at the ministry of budget and national planning, will now supervise the ministry and will be supported by Clement Agba as Minister of State.

Tasks ahead

With her new portfolio, Ahmed will serve as the coordinating minister of the economy and will supervise all major activities of the economy. This includes, but is not limited to determining tax rates and policies Small and Medium Scale Enterprises (SMEs), synergize with Central Bank to curb inflation and set interest rate (the cost at which you borrow and lend money in an economy).

As such, some of the pertinent tasks and issues to be looked into in this new assignment by the Minister of Finance, Budget and National Planning include: Preparation of the 2020 budget; Expanding Nigeria’s Revenue base; Addressing Nigeria’s rising debt profile; Economic policies to absorb low oil price shock; Variance in tax target and actual collections, and Synergies with budget and national planning ministry.

Preparation of the 2020 budget

The Nigerian government had promised to return the budget circle to between January and December annually. This is even as the National Assembly expects the executive to submit the 2020 budget proposal by September when the national assembly will return from their annual recess.

Zainab Ahmed as the minister of budget and national planning is to ensure that the budget is available in time for onward transmission to the National Assembly and subsequent passage, which she earlier confirmed while making submissions to the National Economic Council (NEC) last week.

Ahmad Lawan, Chairman of the National Assembly and President of the Senate, recently also said the legislative arm will pass the 2020 national budget before the year winds down.

Expanding Nigeria’s revenue base

There is no doubt about the fact that Nigeria majorly depends on oil revenues, which has long been stretched and calls for urgent attention in diversifying the revenue base to attract more revenues for the government.

Although, the minster revealed that the non-oil sector has experienced eight consecutive growth since Nigeria exited recession, but the growth is still fragile which is why she acknowledged that the expenditure performance cannot be in isolation of revenues, which as a result outturn largely depends on the government’s ability to generate budgeted revenues with deficits funded through borrowings.

For instance, projected revenue for 2018 was N7.2 trillion which is far beyond the N3.96 trillion realized, signifying a negative variance of 45 per cent.

Addressing Nigeria’s rising debt profile

Nigeria’s debt profile is one a persistent hike and now stands at N24.4trillion, showing an increase of N2.96trillion (8.74%) just within a year. This is disturbing, because finance experts have suggested that is it risky for Nigeria to keep borrowing to finance projects, fund budget deficit and meet other domestic obligations as 68per cent of the debt is local.

Although, the debt by international standards, at 19.09 per cent sets Nigeria’s debt to GDP ratio below the threshold of 56 per cent for countries similar to Nigeria, it is high time concerted efforts be put in place to curb our rising debt profile through positive debt alternative strategies. This will facilitate the safeguard of the economy and reduce its risk to external shocks.

Economic policies to absorb low oil price shock

The current price of crude oil in the global market now hovers around $55 per barrel to $60 per barrel.

The unpredictability of crude oil prices determined by global forces requires vibrant economic policies.

Also, getting the economy on a sustainable growth trajectory will require fiscal policy and structural reforms to complement already existing financial policies

Controversial VAT, variance in tax target and actual collections

In January this year, Mrs Ahmed said the country is working on modalities to increase VAT on some carbonated drinks and luxury items.

Currently, small and medium scale enterprises, startups and the loss-making e-commerce sector, as well as Nigerians, are awaiting the government’s green light on the implementation of various tax policies.

At its 125th MPC meeting outcome, the Central Bank of Nigeria (CBN) urged the fiscal authorities to expedite action on expanding the tax base of the economy to improve government revenue and stem the growth in public borrowing.

Nigeria is facing a huge fiscal challenge which the minister has admitted if not properly address will make the country slip into crisis.

Synergy with Budget and National Planning ministry

Zainab Ahmed had during a brief welcome ceremony on her behalf last week, assured to reach out to the budget and national planning in identifying gaps with a view of resolving and establishing a good cordial working relationship.

This is a vital task because the synergy will aid in fast-tracking policies that will set the economy on the path of growth.

Achievements

However, under her leadership as a finance minister, Nigeria’s foreign reserve which stood at $28.3 billion increased significantly to about $44.69 billion as at May 2019.

The minister stated that the foreign reserves stood at $28.3 billion in 2015 when President Muhammadu Buhari took over governance from ex-President Goodluck Jonathan.

Also, year-on-year inflation rates have been witnessing a downward trend from a high rate of 18.7 per cent in January 2017 to 11.08 per cent as of July 2019 as stated by the National Bureau of Statistics.

Real Gross Domestic Product(GDP) growth has also increased from 1.89 per cent in Q2 2018 to 2.01 per cent in 2019

She was also one of the key drivers of the implementation of the Economic Recovery & Growth Plan (ERGP) which the Buhari’s administration developed in 2017 which led to the economy’s exit from recession and moved upwards on a path of sustainable, inclusive and diversified growth.

During her first tenure, the FX market witnessed a bit of stability from 2017 with the convergence of the NIFEX and NAFEX windows witnessed by November 2018.

In the area of diversifying revenue generation, Ahmed has made some commitments in boosting the country’s revenue base.

“As Minister of Finance, I have taken on the President’s important call to action, by prioritising revenue generation, and formally launching in January 2019, the Strategic Revenue Growth Initiatives, a suite of comprehensive and cross-cutting interventions aimed at boosting revenue performance.

“I am pleased to share that we have made significant progress since launching the initiatives and the Ministry has achieved seven consecutive quarters of Gross Domestic Product (GDP) growth since the country’s exit from recession in Q2, 2017.

As at Q4 2018, the economy grew by 2.38 per cent in real terms (year-on-year), representing an increase of 0.27 per cent compared to Q4 2017 and, a rise of 0.55 per cent compared with the growth rate in Q3 2018.

“Overall, GDP grew at an annual rate of 1.93 per cent in 2018 compared with 0.82 per cent in 2017, representing an overall increase of 1.11 per cent year on year. With the reforms, taxpayer database has been expanded to 35 million from 9 million in the four years of the Buhari-led administration.

“Through reforms at the Federal Inland Revenue Services (FIRS) and the Joint Tax Board (JTB), we have been able to harmonize the Tax Identity Number (TIN) database to cover Federal, States and Local Governments to establish a unified identity number system for uniquely identifying tax-payers.

“The country’s taxpayer database has been expanded to 35 million from 9 million at the beginning of the administration” the minister said as she reeled out her achievements during her stewardship.

Quote

As Minister of Finance, I have taken on the President’s important call to action, by prioritising revenue generation, and formally launching in January 2019, the Strategic Revenue Growth Initiatives, a suite of comprehensive and cross-cutting interventions aimed at boosting revenue performance.