Nigeria’s Fiscal Discipline And Economic Growth

Policy analysts claim that one of the factors inhibiting Nigeria’s economic growth over the years is the lack of transparency, accountability and fiscal discipline in the day-to-day governance.

They argue that the country can never attain any meaningful development if drastic measures are not adopted to reposition the national economy through appropriate and translucent accounting standards.

The experts, nonetheless, stress that developing nations are mostly prone to challenges emanating from fiscal indiscipline, as the world gradually recovers from the global financial crunch.

Observers, however, insist that fiscal discipline is very vital to the development of all the countries of the world, stressing the need to evolve schemes aimed at managing the countries’ resources prudently.

At the recent 42nd Annual Accountants Conference, Mr the President of Institute of Chartered Accountants of Nigeria (ICAN),  Mr Adedoyin Owolabi,  called on government at all levels to address issues relating to the rising cost of governance, which had taken a heavy toll on the economy.

“Nigeria requires strong institutions that will make development and regulatory environment conducive to effective operation of economic development and democratic process that is consistent with good governance.

“The task of building such strong institutions must start today for the benefit of tomorrow.

“We must take those painful but necessary decisions that will lead us to where we desire to be as a nation by the year 2020. As leaders, we need to think outside the box and act strategically,’’ he said.

Owolabi said that Nigeria could still achieve a remarkable infrastructural development with the available resources, if projects were properly evaluated and monitored.

In his speech, President Goodluck Jonathan commended ICAN for its contributions toward efforts to set up the Nigerian Accounting Standards Board (NASB) in 1982.

He said that the Board later metamorphosed to the Financial Reporting Council of Nigeria (FRC) in 2011, in attestation of his administration’s commitment to promoting best practices in financial reporting.

Represented by the Accountant-General of the Federation, Mr Niyi Otunla , the president noted that abandonment of development planning and inadequate performance benchmarks for public officers had posed great challenges to Nigeria’s development.

He, nonetheless, expressed his government’s determination, through pragmatic policies, to tackle these development challenges headlong.

“Our aim is to re-institutionalise development planning, place greater premium on capital allocation in annual budgets and deliberately set performance benchmarks for public officers, so that the citizens, on whose behalf they hold office, can objectively assess their performance,’’ he said.

Jonathan stressed that his administration was creating an enabling environment for the country’s growth through fiscal, monetary and legislative initiatives for private-sector investments in telecommunications, wholesale and retail trade, tourism and entertainment, manufacturing, building and construction.

“I would like to assure you all that financial prudence, discipline, transparency and value for money will continue to guide the implementation of these initiatives

“ We will not sacrifice accountability on the altar of political or economic expediency,’’ he vowed.

Jonathan, nonetheless, urged ICAN members to take up the challenges of fostering Nigeria’s economic transformation and social rebirth with their creative expertise as professionals.

He urged them to strengthen the institute’s public sector department, stressing that his administration was rebuilding enduring institutions around its Public Financial Management Reforms programme.

“Through high fiscal discipline, we have not only brought down the fiscal deficit, we have also enhanced the predictability of public expenditures,’’ he added.

Jonathan said that his government had initiated some measures to promote the country’s financial management system and accountability.

According to him, these include the new Integrated Payroll and Personnel Information System (IPPIS), Government Integrated Financial Management Information System (GIFMIS), improved Cash Management System through Treasury Single Account (TSA) as well as other non-financial reforms.

The president noted that these reforms had created a big challenge for the capacity building of financial experts within and outside the civil service, expressing the hope that ICAN would provide invaluable support for the initiatives.

All the same, economic experts contend that Small and Medium Enterprises (SMEs) are pivotal to the growth and progression of the economy of any country.

In the light the above, the conference’s participants harped on the need to give priority attention to the development of SMEs in Nigeria.

Mr Vernon Soare, the Executive Director of the Institute of Chartered Accountants of England and Wales (ICAEW), urged Nigeria to empower its domestic entrepreneurs, saying that this was one of the factors behind the economic growth of developed countries.

“ It is good for foreigners to invest in a nation but domestic investors should also be encouraged.

“Small-scale enterprises should be made to grow in all spheres of the country’s economy and as for the shareholders, they need to be aware of the ups and downs of the stock exchange market,’’ Soare added.

Sharing similar sentiments, Mr Oscar Onyema, the Chief Executive Officer of the Nigerian Stock Exchange (NSE), expressed the need to empower shareholders and domestic investors to enable them to make appreciable impact in the running of their companies.

He stressed the need for the creation of an avenue that would allow shareholders to have a voice in the companies’ management, adding the shareholders’ views ought to be respected in management issues.

“Shareholders own the company; so they should have the right to be informed on what is going on in the organisation,’’ he added.

Besides, Onyema called on the government to empower domestic investors, especially those who owned small-scale enterprises, to strengthen them for the capital market.

“So much emphasis is being placed on foreign investors but the truth is that ‘charity begins at home’; the Federal Government should work more on empowering home-grown investors,’’ he said.

Onyema underscored the need to strengthen the country’s SMEs to meet international standards, adding that the NSE had already taken the initiative in that regard.

“The NSE has introduced a forum to assist SMEs to adopt the International Financial Reporting Standards method and to get access to legal backing to grow their business,’’ he said.

Mr Sunny Nwosu, the National Coordinator of the Independent Shareholders Association of Nigeria (ISAN), however, bemoaned the lackadaisical attitude of courts when entertaining cases filed against companies.

“Right now, we have several cases in court where we have sued companies but some of the courts are not responding well to the lawsuits.

“There is a policy somersault in this country; this has to be checked, particularly to promote the shareholders’ interests,’’ he said.

In his speech, Governor Ibrahim Dankwambo of Gombe State appealed to ICAN to reposition the accountancy profession for effective service delivery, while ensuring the elimination of corruption in the country.

The governor rejected the notion that accountants largely functioned as instruments of corruption, arguing that the fact that accountants were the custodians of funds did not make them agents of corruption.

He noted that ICAN had resolved to act as a preventive force against corruption, while adding value to governance and humanity.

“We, as the members of the noble profession, are determined to contribute our quota to the development of the economy, while building a virile institution that will sustain the economy.’

“So, we have resolved to readjust and strive to ensure that corruption does not find a place in the economy,’’ he said.

Dankwambo stressed that the ICAN leadership had empowered its president to take disciplinary measures against any member who was found wanting on the issue of corruption.

However, experts believe that the theme of the ICAN conference was apt, particularly now when the federal and state governments were preparing their 2013 budgets.

Mr Bode Augusto, a former Director-General of the Budget Office, called on the government to be more prudent in its management of resources.

In his comments on the Federal Government’s proposed budget for 2013, Augusto urged the government to invest more in capital projects.

“In the past nine years — 2003 to 2012 — a large chunk of the nation’s revenue was used to service the Federal Government’s daily expenditure, while a small fraction was left to fund vital national needs,’’ he said.

Financial analysts, therefore, stress the need for ICAN to play a major role in advising the government on budget implementation processes, noting that poor budget implementation has somewhat led to a decline in citizens’ the quality of life.

They also underscore the need for the government to consult professional accountants on all budgetary and fiscal issues so as to engender the country’s economic growth in a pragmatic way.

Okoronkwo writes for News Agency of Nigeria.

Chijioke Okoronkwo