Minister of Finance, Mrs. Zainab Ahmed, in this interview says the federal government’s intervention through its Social Investment Programme is targeted at lifting the most vulnerable persons in the society out of poverty. She also speaks about the school feeding programme which currently takes care of 9.5 million pupils as well as clarifies issues around the growing number of beneficiaries in the government’s Marketmoni and Tradermoni. Obinna Chima presents the excerpts:
As good as the federal government’s policies might look, a lot of Nigerians are still not convinced. Also, when you look at the amount the government has borrowed so far and the infrastructure projects, some are still not convinced about its impact and some feel the targets in the ERGP are not realistic? Also, when you say government’s borrowing is for capital project, where do you classify NNPC’s N1 trillion subsidy and what is the update on the VAIDS programme?
Let me say that the targets that we set in the Economic Recovery and Growth Plan (ERGP) are very realistic and achievable targets. And because you have a revenue target and you perform 50 per cent or because you have a projection target, for example, when you look at our budget we said that NNPC’s production target should be 2.3 million barrels per day, but we do have a production capacity that is over 2.5 barrels per day. So we have been told by people when your average performance is two million, why do you still set it at 2.3 million barrels per day? We will say because you have to incentive agencies to perform. Because agencies are under performing does that mean you just sit back and just reduce the targets? What you should do instead is to find out what are their challenges and drive them to achieve those targets. So the targets are realistic targets. And NNPC’s expenditure and fuel subsidy is not a capital expenditure and we did not and we will never use borrowed funds to pay for recurrent expenditure like fuel subsidy. The current regime that you are referring to as fuel subsidy is different from the previous fuel subsidy regime. What we have now is under recovery, it is the cost of the NNPC’s operations. It is the cost of buying the refined products, storing them and distributing them. In the previous regime there was cost of borrowing that is added because you are engaging a marketer and there was also profit that you have to add. So this is achieving better efficiency and then you have only one agency of government that buys and then sells to the marketers. So fuel subsidy is not a capital expenditure, it is a business expense of NNPC and the federal government is not using borrowed money pay for fuel subsidy. Investment in infrastructure is very important for any economy to grow in a manner that is sustainable. So, when you are building rail lines or roads, you don’t do that and complete it in one day. It takes time to build and it is only when you build and the assets are put to use that the citizens will get the impact. If you say there is no impact, ask the people that are riding on the Kaduna-Abuja rail line every day. The benefit of that rail line is very significant. You can go between Abuja and Kaduna, do business in the morning and go back to Kaduna in the evening. The road that is being constructed now between Lagos and Ibadan, when completed, it is a 50- year investment. You will not have a situation where you have to invest more on that road. And the most important access road in this country is that road because it is the heart between the ports and Lagos, to the rest of the south-west and indeed, the rest of the country. So, that is a very critical road and because it is not completed, people are still complaining because there is traffic. But the construction has to be done first of all before the benefits are reached. The Voluntary Assets and Income Declaration Scheme (VAIDS) programme ended last June, and we had an increase in tax payers’ base of five million and that was a significant improvement. In terms of revenues realised, we had N92 billion. But the most important benefit of the VAIDS programme for us in finance ministry, is the data that we gathered from that exercise. That is because we now have the data base of those individuals who were previously not in the tax net, who we can on a routine basis ensure that they pay their taxes. And we are building up on this exercise. The Federal Inland Revenue Service (FIRS) has a scheme called the high net worth individual scheme, similar to the VAIDS programme. It is a programme where they identify high net worth individuals through the level of their transactions in the banking industry, through their ownership of businesses and they pursue such high net worth individuals and make them pay tax. These are both individuals and as well as companies. The result of this is that the FIRS performance improved by 40 per cent last year, compared to their performance in 2017. So this is both a combination of the automation effort, the VAIDS programme and the high net worth individual programmes and it is growing. So there is significant improvement.
The World Bank projected that Nigeria’s economy will grow by 2.3 per cent this year and the IMF said the economy will grow by two per cent, while the federal government is projecting a 3.01 per cent growth. What are you seeing that you think the World Bank and IMF are not seeing? Secondly, considering the country’s high debt service ratio, why wouldn’t the government go for aggressive revenue mobilisation so as to increase capital expenditure?
The figure that the World Bank and the International Monetary Fund (IMF) provide as to the potential of growth of any country, is in most cases at variance with the country. That is because we have more information about what we are doing as a country than they do. We have more information on the various indices relating to growth in our country than the World Bank and the IMF. And I am not saying they are wrong because they are seeing it from a prism that is different from ours. The ERGP as well as the 2019 budget projects that Nigeria’s GDP will be 3.01 per cent by the end of 2019. What this means to us is that we are saying this is a growth target but what do we have to do to get there? It is broken down into what each sector has to contribute. We have to now drive implementation on a sector by sector basis so that the contribution leads us to this growth. So when you say target, the target is supposed to drive performance. So if you say targets that are low, what you are doing is that you are dis-incentivising improved performance. The debt service obligation, I said earlier on, is higher than what we would like, but we are able to meet our debt service obligation at an average of about 50 per cent of revenue. That is not good enough. When you look at the budget, the debt service performance is supposed to be 25 per cent, but because the revenues are under performing it results to an average of 50 per cent. So what we have to do is to address revenue. And we are embarking on several revenue initiatives.