Kemi Adeosun, Minister of Finance: Viewpoint

Viewpoint:  Kemi Adeosun

I think there is now a consensus that the worst is over, but we must act with conviction to ensure that we do not repeat the mistakes that left us so vulnerable.

This government is resolved to restore the role of government in the provision of public goods and services. This is not just a function of the fulfilment of constitutional responsibilities, it is part of setting a standard of value for money in the deployment of government resources and the prevention of leakages.

Our focus on infrastructure provides the basis for the much-talked-about diversification of our nation’s economy and revenue sources away from a reliance on oil. Our agriculture, solid minerals, manufacturing and services sectors can only be enabled by the provision of solid infrastructure. Our country is vast, and to actualise potential growth, our transport system is critical. It is only when we can move with ease from Abia to Zamfara State and connect the entire nation that we will have strong growth that proves that the whole is greater than the sum of its parts.

This administration is signalling strongly that it will continue to prioritise infrastructure spending as a fiscal lever to unlock growth. In the last 12 months we have expended an unprecedented N1trn ($3.5bn). Our road spend alone was above N70bn ($247.4m) compared to just N19bn ($67.1m) in 2015. In 2016 transport and aviation received a total of N143bn ($505.4m) This drive is coupled with important reforms in the ease of doing business, which addresses the soft infrastructure that will enable businesses and commercial activities to flourish. Our infrastructure deficit is so deep and so critical that we fully recognise that the government cannot do it alone. Indeed, even if we were to dedicate our entire budget to capital projects, which before you suggest it as a solution, is impossible, as it would not be sufficient.

To this end, we intend to revive public-private partnerships (PPPs) in Nigeria, and are presently reviewing the PPP framework, while trying to resolve outstanding issues with existing and even failed PPP projects. Investor confidence will grow as a function of how we rectify the inherited situations, rather than how quickly we can open up new opportunities. Nigeria’s private sector is very efficient, resilient and creative.

There is a huge opportunity to partner with private capital in the provision of infrastructure and social projects across many sectors, however, this needs to be de-risked. We are working to achieve this, and hope to introduce a new asset class of guaranteed instruments that will provide adequate safe guards for the engagement of private capital. Nigerians have accepted the concept of “user-pays” in a range of areas, and there is scope to extend this.

Our realisation that our ambitions cannot be financed by oil revenue is an equal acceptance that there is a finite limit to how much can and should be financed by debt. We will always have a conservative appetite for borrowing, however, in the short term, we must all bear the discomfort of an imbalance between our debt service and revenue as we exit the recession and return to growth. The manner in which this will be corrected, apart from rebalancing our borrowings in favour of longer tenure loans and external sources, is by finally and frontally facing the issue of revenue.

Revenue mobilisation is critical to the success of Nigeria’s economic reform agenda. We are working on strategies to drive non-oil revenue growth and achieve inclusive growth. To do this, we must amend Nigeria’s low level of tax compliance. A tax to GDP ratio of just 6% suggests widespread ignorance of our tax laws. We are working to amend this. To this end, we have been engaged in a massive data gathering exercise since 2016. We have engaged one of the world’s leading global investigation agencies, and we have traced funds that originated from Nigeria to all parts of the world. The illicit flow of funds out of Nigeria harms our country, depriving us of essential funds, which are used to finance development in other nations.