Business
Using Recovered Loots To Finance Budget Deficit: Matters Arising
President Muhammadu Buhari
Former President
Olusegun Obasanjo recently expressed concern that “Nigeria may be on its way to another crisis of debt overhang if the current fiscal challenge is not creatively addressed.’’
Obasanjo expressed the viewpoint at a conference of the Ibadan School of Government and Public Policy (ISGPP), which has “Getting Government to Work for Development and Democracy in Nigeria: Agenda for Change’’ as its theme.
“If the current fiscal challenge is not creatively addressed, Nigeria may be on its way to another episode of debt overhang which may not be good for the country,’’ he said.
“It will be recalled that a few years ago, we rescued Nigeria from its creditors with a deal in which the Paris Club of sovereign creditors wrote off 18 billion dollars of debt, Africa’s largest debt cancellation,” he added.
He, nonetheless, attributed the critical economic situation to the continuous fall of crude oil prices in the international market.
Observers, however, insist that Obasanjo’s sentiments, which are seemingly alarmist, are not completely misplaced, as the Federal Government has admitted that the N1.84 trillion-deficit out of the N6.08 trillion 2016 budget proposal would be financed via local and foreign borrowing.
All the same, President Muhammadu Buhari tried to allay such fears recently when he said that Nigeria might need not to borrow money to fund the projected budget deficit.
Buhari gave the assurance when he addressed some Nigerians in Addis Ababa, Ethiopia, on the side-lines of the 26th Summit of Heads of State and Government of the African Union (AU).
He said that the money recovered from those who looted public funds would be used to reduce the deficit in the 2016 budget.
He also said that for the first time in recent times, Nigeria’s budget would be largely financed from non-oil revenue.
“Recovered assets of the country would also be used to reduce the budget deficit.
“Besides, the theft of oil by some Nigerians that happen to live there who feel that the oil belongs to them and not the country is an irritating thing for those of us who participated in the civil war for 30 months in which at least 2 million Nigerians were killed,’’ he said.
Buhari said that the proposed budget would focus on increasing efficiency and transparency in government operations, while blocking leakages from revenue generating agencies.
He, however, emphasised that the on-going war against corruption in Nigeria would not be very effective without the active support of the country’s judiciary.
He said that far-reaching reforms of the judiciary were imperative in efforts to achieve the goals of the anti-graft agenda of his administration.
“On the fight against corruption vis-à-vis the judiciary, Nigerians will be right to say that is my main headache for now,’’ he said.
The president, however, expressed the confidence that with the support of the Chief Justice of Nigeria, he would strive to improve the nation’s judicial administration system.
On the provision of basic infrastructure, Buhari announced that the Federal Government had ordered a review of the contracts signed by the previous administration with the Chinese government on several railway transport projects.
“The Chinese Government was very generous to Nigeria on the projects signed with the previous government because they agreed to fund 85 per cent of the projects’ cost.
“But the Nigerian Government had been unable to meet up with its counterpart funding of 15 per cent and so, the Chinese government was unable to make any impact on the projects,” he said.
He said that he had directed the ministers of transportation, finance as well as power, works and housing to revisit the agreements and explore ways of re-approaching the Chinese Government for sustained assistance.
Besides, Buhari said that the Chinese Government had indicated interest to assist Nigeria in project financing through its Export-Import Bank.
To further strengthen his administration’s resolve to ensure transparency in the cost of governance, the president disclosed that his administration had saved about N2.2 trillion through the initiation of the Treasury Single Account (TSA).
Apparently giving a progress report on his administration at a roundtable with Nigerians resident in the United Kingdom during his recent visit to London, Buhari said that the feat was achieved in the last three months alone.
He said that prior to the implementation of the TSA; the Nigerian National Petroleum Corporation (NNPC) had over 45 accounts domiciled in different banks, while the Nigerian military also had 70 accounts in different banks.
“We are really in trouble. We just tried to enforce what we called the Treasury Single Account (TSA) and the reason was simple.
“This government did not initiate the TSA; it was the previous government that initiated it but it was so unpopular to the bureaucracy and the previous government, for its own reasons, couldn’t enforce it.
“When we came and found that we were broke, we said this is the way to do it. And I will just tell you two examples to convince you.
“First, NNPC, the cow that was giving the milk, had more than 45 accounts, the Ministry of Defence, that is the Army, Navy and Air Force, had over 70 accounts. Tell me which account we can trace in these several accounts. So, we enforced TSA.
“We said there must be TSA. By the end of December, coming to January this year, that is last month, we mopped up more than N2.2 trillion which we have used through the bureaucracy system to raise vouchers and sign cheques so that they don’t go into the next budget.
“We found out, when I say we, I mean the present Federal Government, that some of the directors in the Central Bank own bureau de change businesses. So, whenever foreign exchange comes, they take it and give government the change. Therefore, we stopped the Federal Government giving bureau de change foreign exchange.
“Fellow country men and women, I am giving you a tip of the iceberg of the problem that we inherited and we are getting so hard because we have no other way of running the country unless we make everybody accountable,” Buhari said.
Shedding more light on the steps being taken to stimulate greater economic growth in the country, the Minister of Finance, Mrs Kemi Adeosun, said that the priority of the Buhari-administration was on how to grow the economy and achieve a Gross Domestic Product (GDP) growth rate of 4.2 per cent through the 2016 budget.
Presenting a paper titled: “Nigeria’s Economy: The Road to Recovery’’, the minister said that the full and diligent implementation of the 2016 budget would facilitate the Federal Government’s efforts to achieve meaningful economic growth.
She said the administration was equally determined to reduce cost of governance, provoke quality public service delivery and enhance revenue collections.
Adeosun said that the decision of the Buhari-administration to increase government expenditure on infrastructure, transport, roads, housing and power, was aimed at achieving a substantial increase in gross capital formation.
“This will keep the government within the acceptable and sustainable debt ratio expected of most emerging economies,” she said.
She further explained that main macroeconomic objective of the Federal Government in 2016 was to combine an expenditure-led growth strategy with a stimulant approach, based on injection of more efficiently collected revenues and blocking of leakages.
“The combination of these fiscal injections will have a catalytic multiplier effect on the GDP growth rate,” she said
According to her, the government has developed a “shadow budgeting process with tactical responses to build in flexibility in the country’s borrowing needs”.
Adeosun pledged that the administration would go ahead with its robust commitments on infrastructure development in spite of its dwindling resources occasion by the fall in crude oil prices.
“For an economy dependent on crude oil for 70 per cent of government revenues, the 12-year-low in oil prices, the downward revisions to the global outlook and the re-ordering of the global economy are ominous signs.
“For years, oil prices were at historic highs, and at 114 dollars per barrel; we spent, government spent, people spent and our economy seemingly ‘grew’ but this growth masked much vulnerability.
“There were consistent warnings about the volatility of oil prices and the need to diversify our economy to support our huge population.
“Whilst we paid lip service to this need and extolled the potential of many sectors, we did not plan adequately to ensure that we worked towards this,’’ she said.
By and large, economic analysts urge the National Assembly to hasten the passage of the 2016 budget in order to assuage the hardships of the ordinary citizens.
They also underscore the need to channel a substantial part the recovered loot towards the rehabilitation of the north-eastern states that were ravaged by the Boko Haram insurgency.
Adamu is of the News Agency of Nigeria (NAN)
Sani Adamu
Some Commercial drivers in Port Harcourt have said that the Federal Government’s N1,350 fuel discount is yet to reduce their daily operating cost.
A cross session of commercial drivers who spoke to The Tide correspondents in Port Harcourt said they are yet to feel the impact of the government discount, adding that most filling stations in the city are even selling above the pump price
A driver Jude Ogbo who operates the mile 1 Rumuokoro axis of Port Harcourt said plies the discount has not reflected in his daily fuel expenses.
“Since the discount was announced, many filling stations still sell at the old price. When you go there, you discover they sell you two litres at the price of one. For now, we have not seen any reduction,”_ he said.
Another commercial driver, Comrade Ishmael Uzeho who operates within the Port Harcourt metropolis, said the discount is not being implemented across the country.
“How has the discount affected us? I will say it has not. Many stations are not working. Only NNPC is working and that is just one person in the whole country. If government really wants to help, let the fuel price go down properly,”_ he said.
Uzeho added that if the price of fuel goes down, transport fares will also go down. He noted that his route fare has remained at N500.
On his part, Mr. Moses Dapa, Supervisor at Sam Jaja Foundation Transport Company, said the company has not increased its fares despite the high cost of fuel.
“We are still running normal price. We charge N2,000 and N5,000 depending on the destination. We will not increase our price. I don’t know about other parks, but for Sam Jaja, we are maintaining normal price,”_ Dapa said.
He appealed to passengers to understand that drivers are not using high fuel price as an excuse to charge excessive fares.
Other drivers who spoke said the federal government should monitor the NNPCL retail stations to ensure that the directive is implemented.
Recalled that The Federal Government in abid to reduce transportation cost in the country had announced a 30-day margin discount at NNPC Retail stations across the country from October 1 to 31,
However investigation revealed that the policy is yet to affect transportation cost in the country.
By; Stephens Sopakriba and Saint Davies
In a press statement released to The Tide’s source on Friday in Abuja, the group said Nigeria had a significant resource advantage due to its vast natural gas reserves.
“At a time when global energy markets face unprecedented volatility and rising operational costs, Nigeria stands on a massive resource advantage with its vast natural gas reserves,” the group said.
Highlighting this potential, Alfa Designs urged the nation to move past complaints over energy costs and aggressively embrace Compressed Natural Gas (CNG) as a sustainable engine for economic growth.
While federal policy adjustments have sought to cushion the impact of global energy shocks, industry experts emphasised that long-term relief hinges on a rapid, nationwide transition to gas.
“Transitioning away from expensive traditional petroleum products promises to ease the financial burden on ordinary citizens.
“It will also reposition Nigeria as an attractive industrial hub capable of drawing foreign direct investment and driving job creation,” it said.
To demonstrate the practical feasibility of this transition, the group said it recently partnered with a global Original Equipment Manufacturer (OEM) to lower the entry barriers for commercial drivers.
“By negotiating directly with the manufacturer, we reduced the total cost of acquiring and installing a CNG conversion kit for commercial tricycles (commonly known as Keke NAPEP) from up to N700,000 down to under N450,000.”
The group said this shift offers dramatic immediate financial benefits for local operators, with petrol currently selling at roughly N1,390 per liter.
It said that, in comparison, at a CNG equivalent price of about N98 per liter, a daily commercial driver using 10 liters of fuel reduces its daily energy expenditure from N13,900 to N3,980.
“This represents a daily net savings of N9,920, or more than 71 per cent.
“Over a standard 26-day working month, drivers save over N257,000, allowing them to fully recover the cost of the CNG conversion in less than 46 operational days.”
The company further stated that when scaled nationally, the economic implications are monumental.
“Nigeria consumes approximately 50 million liters of gasoline daily, costing roughly N69.5 billion per day.
“A nationwide 71 per cent reduction in fuel expenditure would generate daily national energy savings of N49.6 billion.
“On an annualised basis, this shift equates to approximately N18.1 trillion, or $13.5 billion, kept within the domestic economy.”
The group added that those recurring national savings would offer a vital mechanism to help address Nigeria’s estimated $2.3 trillion infrastructure deficit.
It said reinvesting those funds into the economy helps eliminate the 30 to 40 per cent operational overhead currently consumed by imported fossil fuels.
“The resulting boost to corporate margins expands the national tax base, generates reliable user-fee revenues to make major transit projects bankable, and creates a self-sustaining financial cycle,” it said.
