12 monetary, fiscal policies that shaped 2016
Nigeria’s economy was affirmed recessed this year, but there remained raging controversy over its origin. Two schools of thought emerged- one blamed the current administration for policy flip-flop and aggravation of the matter. But the other said the situation was already out of control, but aggravated, not by policy choice, but by the economic structure- oil economy and lifestyle of (dependence on imported items).
Of course, the mid-point of both arguments is that no one is accepting responsibility, but there is only one option for the economy- moving forward with new ideas. It could also mean fine-tuning existing ones to fit into purposes. While foreign exchange market has always existed, in June last year, its operations changed to flexible mode- determined by market conditions.
The year 2016, aptly described variously by different individuals as “challenging”, “difficult,” “worst in history”, and a host of others, however has 12 things that characterised the monetary and fiscal space.
Led by the Finance Minister, Mrs. Kemi Adeosun, as the head of the economic management team, in a period of months, she has taken a handful of knocks and some kudos too.
Bank Verification Number (BVN)
Granted, this is not the initiative of this administration, but has been used prominently in the last one year. Within the period, the challenge of connecting banks’ customers were heavily recorded, but silently solved. This project was sustained despite initial hitches, but unlike before, there was no new contract on the same issue. Now sustained, it is near 100 per cent on smooth run. The payment of workers is also riding on it, with results of the revelation of “ghost workers.”
Treasury Single Account (TSA)
This initiative was also on ground, but not fully implemented. It’s full implementation from September 2015, was fully felt in 2016. From the side effects on the banking industry to a transparent record for government accounts, everything was perfectly measured. Of course, TSA provided a transparent system for improving the efficiency required in managing federal government’s revenue collections. Besides the sterilisation of the “free fund” against banks and subsequent illiquidity effect on them, it made them to rediscover their traditional role of financial intermediation.
Integrated Payroll and Personnel Information System (IPPIS)
The IPPIS has remained one of the Federal Government’s reform initiatives for public service, management of human resources and a centralised payroll system. The project went live in April 2007, with seven pilot Ministries, Departments and Agencies. About 447 MDAs are already on the IPPIS platform, including the ambiguous Armed Forces payroll, with more expected to have enrolled before the year ended December 30th for official duties. But as feared by some, the policy was sustained, not sidelined.
The Supervising Committee for the establishment of the Efficiency Unit was inaugurated in November 2015.
It is entirely an initiative of this administration. This Unit is mandated to look at all aspects of government expenditure as well as revenue collection to find smart ways of improving efficient revenue collection and ensuring that government can save money whil achieving more with its money.
Outcomes include placing limits on government spending on meetings, travel, printing.
The Committee is chaired by the Finance Minister and has members drawn from both public and private sector.
With assessed increase in recurrent expenditure plan for 2017, this fledgling unit will be put to test soon. Only transparent and cogent explanations will justify its existence.
There is an approval to carry out tax reform in 2016. Already, the proposal for or implemented increase in rate on PAYE is generating controversy. But there is assurance for Small and Medium Enterprises (SMEs). The President of the Chartered Institute of Taxation of Nigeria, Dr. Olateju Abiola Somorin, at the body’s 12th induction ceremony, said the “institute has forwarded reactions on five specific issues to National Tax Policy Review Committee, which are geared toward effective delivery of a virile tax system.”
The Federal Government has initiated plans to use technology as an enabler to fight smuggling and increase revenue collections. Going forward, all vehicles will be registered using the Vehicle Identification Number effective March 31, 2017. Customs clearance will be linked to the VIN and this in turn will be required by each State Government at the point of vehicle registration. Effectively, any vehicle on which duty has not been paid will not be able to be registered and driven in Nigeria.
Development Bank of Nigeria
The initiative was unveiled at the last IMF/World Bank Group meetings in Washing DC, United States. Government had reached agreement with the World Bank Group and other development partners for the release of $1.3 billion for its take-off. Adeosun insisted the bank is not a duplication of duty taken by the Bank of Industry.
The Minister of Finance during the year, called for a review of the mode of donations from Nigerians in Diaspora, noting that some of the donations had become avenues for abuse with the attendant revenue leakages. She stated that presenting consumer items as medical donations had created windows for the importation of expired drugs as well as drugs that are intended for resale.
Financial Sustainability Plan
This is a contract between states and Federal Government to promote, transparency, accountability, efficiency and assist the states to stimulate local economies. Many of the initiatives successfully applied at the federal level are being cascaded to the states through the scheme. Some are already reaping rewards as they take ownership, through public private partnerships, in agriculture, mining and some industries.
Family Home Fund (FHF)
A N500 billion had been earmarked to finance affordable houses for Nigerians, starting with the construction of 100,000 houses yearly from 2017. The housing fund is expected to increase from N500 billion to N1 trillion to make it possible for the private sector to deliver about 400,000 houses yearly through developer finance and mortgages through Mortgage Banks. At single interest rate of 9.99 per cent with tenures of up to 20 years, the targeted low and middle-income earners can make their initial deposit from 10 per cent.
In 2016, recovered loots were part of the budget. Although it was not clear how nmuch of that was used in the budget, government has again, begun tracing Nigerian funds that were illegally moved out of the country to foreign nations with the aim of recovering and repatriating them.
This is the latest initiative, just before the year ended. It is designed to encourage anyone with information about the stealing of public funds to report it. The type of information to be reported includes mismanagement or misappropriation of public funds and assets like properties and vehicles, financial malpractice or fraud. There is a reward attached to compliance.