Finance Minister, Adeosun, outlines 10 steps for reviving Nigerian economy

Minister of Finance, Kemi Adeosun
Minister of Finance, Kemi Adeosun

The Minister of Finance, Kemi Adeosun, on Friday outlined a 10-point fiscal roadmap to reset the Nigerian economy to a path of growth.

The Minister, who represented Vice President Yemi Osinbajo at the annual dinner of the Lagos Business School, itemised fiscal policies and actions being rolled out to tackle the key barriers to growth.

Speaking at the session which was attended by industry leaders across key sectors of the economy including oil, banking and telecoms, Mrs. Adeosun said “The Federal Government’s Fiscal Roadmap is addressing barriers to growth that will drive productivity, generate jobs and broaden wealth creating opportunities to achieve inclusive growth”.

She said that the President Muhammadu Buhari administration was determined to convert Nigeria to a productive economy rather than one that is consumption driven.

To do so, government would tackle the infrastructure deficit to unlock productivity, improve business competitiveness and create employment.

She stated that Government would actively partner with the private sector to achieve this by use of a number of new funding platforms. These include the Road Trust Fund, which will develop potentially tollable roads, and the Family Homes Fund which is an ongoing PPP initiative for funding of affordable housing.

In addition she detailed a revision to the Tax provision that allows companies to receive tax relief for investment in roads on a collective basis.

She explained that the existing provision that enabled companies to claim relief for road projects had only been taken advantage of by two companies, Lafarge and Dangote Cement.

This was because few companies were large enough to fund roads alone. The revision would now allow collective tax relief such that companies will be able to jointly fund roads, subject to approval by FIRS and the Ministry of Works, and share the tax credit. This would be particularly attractive to firms in clusters such as industrial estates, many of which are plagued by poor road conditions.

She emphasised the role of infrastructure in creating inclusive growth, explaining the current barriers to growth in agriculture, solid minerals and manufacturing.  She stated that the drivers of inflation were structural and were being addressed through the focus on power, rail and road infrastructure.

The Minister also outlined measures planned to deal with the problem of hidden liabilities, which were affecting the banking sector and efforts to revive the economy.

The Minister explained that the conversion from cash accounting to IPSAS (International Public Sector Accounting Standards) had unveiled unrecorded debts owed to contractors, oil marketers, exporters, electricity distribution companies and others.

These liabilities were estimated at N2.2 Trillion and would be addressed with a 10 year Promissory Note Issuance programme in conjunction with the Central Bank of Nigeria.

This measure would be subject to a rigorous audit process of all claims to ensure validity and mitigate against fraud and the impact of past corrupt practices.

Henceforth, the Minister said that measures would be put in place to prevent recurrence of such a problem by ensuring that contracts are managed in a manner that firms have assurance over when they would be paid.

She cited the fact that many contractors were owed as a reason that many of those recently paid by the government were slow in remobilising to site: “Some contractors had not been paid in the past 4 years and in some cases the banks they were owing refused them access to the funds released, causing delays”.

She explained that those receiving the Promissory Notes would be expected to provide a material discount to government. The issuance was a solution to a long term problem that was ‘a drag on economic activity’.

Mrs. Adeosun concluded her remarks by assuring that, despite the current economic challenges facing the Nigerian economy, the outlook is positive due to the strong fundamentals of Nigeria and the ongoing reform programme.

She reiterated that the government was determined to create an enabling environment and put in place supportive policies to return to growth in 2017 including greater alignment of monetary and fiscal policies.

The fiscal roadmap is detailed in the attached 10-point plan

 

Fiscal Roadmap 2017

  Fiscal Policy Initiative  Expected Impact 
1. Recognise inherited debt profile after a robust audit process:

§  Introduce promissory note program to finance verified liabilities

§  Issue debt certificates to contractors, Ministries, Departments & Agencies (MDAs), and State Governments

§  Improve cash flow of businesses

§  Improve Banks’ Non-Performing Loans
(NPLs)

§  Free up Banks’ balance sheet for lending to private sector

§  Improve Government’s business interaction with the private sector

 

2. Mobilise private capital to complement Government spending on infrastructure:

§  Roads Trust Fund

§  Family Homes Fund

§  Extend infrastructure tax relief to a collective model to attract clusters of corporate entities

 

§  Expand the provision of infrastructure

§  Drive growth of non-oil sector.

§  Drive economic growth

3. Strengthen fiscal/monetary handshake:

§  Replace administrative measures on list of 41-items with fiscal measures to reduce demand pressure in parallel market

§  Encourage domestic food production through specific incentives e.g. accelerated depreciation on food manufacturing equipment and Zero (0%) duty on green houses

§  Planned revitalisation of refineries

§  Increase Diaspora remittances via participation in the buyer support scheme for the Family Homes Fund

 

§  Reduce demand for US Dollars

§  Increase supply of US Dollars

 

4. Incentivise exports:

§  Restructure the Export Expansion Grant (EEG) to a tax credit system

§  Rationalise tariffs and waivers in key export sectors

 

§  Encourage/incentivise non-oil exports

§  Drive import substitution

5. Encourage investment in specific sectors through fiscal incentives:

§  Accelerated depreciation on equipment in strategic sectors e.g. food processing, mining and power

§  Rationalise tariffs and waivers in priority sectors

 

 

§  Drive investment in strategic sectors

 

6. Continue expansion of fiscal space through revenue  enhancement and cost consolidation:

§  Customs Single Window (being implemented through a Private Public Partnership (PPP) scheme)

§  Template for non-allowable expenses for Government Agencies.

§  Overhead cost control by the Efficiency Unit

§  Continuous risk based audit by the Presidential Initiative on Continuous Audit

 

§  Revenue enhancement

§  Cost containment

7. Improve fiscal discipline at Sub-National level:

§  Extension of efficiency unit at Sub-National level

§  Fast track municipal bond issues to deepen the bond market

§  Conversion to International Public Sector Accounting Standards by all State Governments.

 

§  Improved fiscal position at Sub-National level

 

8. Enable and accelerate Recoveries process:

§  Whistle-blower scheme

§  Centralised database on recovered assets

§  Asset tracing

§  Professional management of recovered assets

 

§  Increased efficiency of Recoveries process

§  Increased budgetary funding availability from Recoveries

 

9. Rebalance debt portfolio to extend maturity and optimise debt service cost:

§  Rebalance public debt portfolio with increased external borrowing (60:40 target)

§  Extend maturity profile of public debt portfolio

§  Deploy long-term debt instruments including Infrastructure and Retail Bonds

§  Maximise use of concessionary loans

 

§  Rebalanced debt profile with improved debt service to revenue ratio
10. Catalyse Micro, Small and Medium Enterprise (MSME) growth           through specific measures to improve capacity and access to finance:

§  Development Bank of Nigeria (US$1.3bn)

§  Increase share of business awarded to MSMEs from Government contracts

§  Tax harmonisation and tax incentives

§  Accelerated depreciation

 

§  Acceleration of MSME growth

 


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  • Romberg

    And she is planning all these in the face of a full blown recession. This lady’s you is truly irredeemably incompetent.

    • St

      What do you suggest she plans?

      • Eldorado

        Romberg we are waiting for your reply

      • Romberg

        Who is going to pay for my advice? Are they not receiving salaries for their poor advice? Pay. I will strink her solutions to two and produce 10 real plans that will send Nigeria out of recession in no time.

        I can provide you a few faults in her lines. She wants to audit government’s own debts to contractors and pay with promise notes. That is errant nonsense. These are debt owed for 4 years now. Imagine owing someone N10 in 2012, and at that person’s cost, you want to subject him to a useless audit process to know you truly owe that person N10 but not in current prices. Was it the person’s fault that you did pay? How about time value of money? They just have to loose out because you are the client? That is the only way to kill contractors’ confidence in government, and the only way to breed corruption.

        Pay those you owe with cash. N500bn a quarter, not promissory note will return those people to the supply chain. Don’t owe more money. Maintain trust. That is how the rest of the world behave.

        She is asking business clusters to provide infrastructure in lieu of tax break. That is another nonsense. This is because projects will be inflated. Is there any crime is they pay their fair share and government provides infrastructure or you let them use the tax break to hire new manpower? They know they are not achieving. They then want to use an army private companies to do stuff, partly substandard projects with inflated costs only for them not to pay taxes for 10 years? This will not benefit the economy. Let them pay their tax or you reduce the tax and let them hire more people – not provide roads…!

        You want more? Pay!

        • St

          Romberg I nor fit pay for your advice, else I go die. Imagine your conclusion “not provide roads”…. these kind of advice led this country to the dilapidated state bcos of brotherly love by GEJ. Just so you know, am not praising this current administration

    • Dualpolemedia

      The plan is for those who have head and not for voodoo economist. The plan is to get the country out of this hard time and lay down a precedent for economic growth and sustainability.

      Only those who benefited from hardship will always pray nothing good comes from this government effort, in the end, they shall be shamed.

  • Dàn-gôte Cémént Cóm-pány

    CementPromo!CementPromo!!CementPromo!!!
    This is to inform republic that DAN-G0TE3XCEMENT is now sold direct from the factory for a promo price of #1000 per bag and #300 to deliver per bag,buyers can order a minimum of 100bags,trailer load of 600bags,trailer load of 900bags and above,contact the sales manager Mr Emmanuel on 2348O36909383 or assistant Mrs Grace on 2348O60478998 to get 50 rice 50kg for #9000 per bag and #1000 to deliver per bag minimum of 50bags and above delivery is national.

  • Muhammad

    This is undoubtedly good economics for good business .
    Timing is the factor that will breathe life into it for Nigerians to get the feeling .
    This is critical in our environment where , for want of ethics processes that should take hours take days . Checking should be inbuilt and active without mentioning . No society has decent , sympathetic or saintly people doing business .

  • Otile

    God forgive sin. Nigeria is sinking further and further into the pit latrine under this she goat called minister.

  • Dr Pat Kolawole Awosan

    Nor matter the efforts put into reviving the deep recession of Nigerian-economy without the cooperation and due support of the CBN governor,Godwin Emefiele and his team who refused to reduce the high interest-rate from 14% down to a single digit like 9% to boost liquid-cash circulation and increase borrowing to business community by commercial banks in N|igeria, to promote the economy, in addition, to those ten-conditions listed by the finance minister,Mrs Kemi Adeosun, in order to move Nigeria out of deep recession.
    @Otile: You lacked caution,common-sense and you a product of poor parental upbringing by your classification of the finance minister,Mrs Kemi Adeosun, as she-goat.Maybe, your sister, former finance minister NOI. who misa-managed our economy under GEJ. is a she-goat as well.Shameless maggot.

  • Cosmodammy

    “She said that the President Muhammadu Buhari administration was determined to convert Nigeria to a productive economy rather than one that is consumption driven.” Is this a mere rhetoric or is she serious? What are the facts on ground supporting this mere hypothesis.