‘Our goal is to increase revenues to meet obligations, address poverty gaps’
In your summary of the Budget 2019 targets, it appears that the figures don’t match the present reality?
The aim of the budget is to restore the economy to a diversified, inclusive and sustainable growth path.
That is the thrust of the ERGP. I have to say that the ERGP has put us on a better position today than when we started in 2015. Not where we want to be, but in a much better place.
So, the budget is a budget of continuity and it reflects the various reforms and initiatives of the ERGP and roadmap to economic prosperity.
The benchmark oil production is 2.3 million barrels, oil price $60 per barrel and exchange rate N305 to a dollar and inflation rate 9.98 per cent. We also have growth rate target of 3.01 per cent for 2019.
As you can see, the expected revenues are slightly less than that of 2018.
The expected revenue is N6.9 trillion, whereas in 2018, it was N7.1 trillion. And the expected revenue was slightly less because they were some revenue items that we were unable to achieve.
We tried very hard to increase independent revenue, but we couldn’t achieve them. Therefore, we have cut the projection down to N624.580 billion.
As you must have heard, we are not satisfied with the revenue. Our whole target is to find ways of increasing revenue.
It is because of the revenue situation that the budget is slightly smaller this year and because we don’t want to continue borrowing.
Because of the commitment to the minimum wage and in paying salaries, the amount we provided for in the recurrent expenditure will rise from N3.52 trillion in 2018, to N4.72 trillion.
So, there is substantial increase in our recurrent expenditure. That was the reason the president set up the technical committee.
It was meant to look for additional revenue and make sure that paying a higher minimum wage alongside the consequences of the salary adjustment which normally follows a minimum wage increase; we would still be able to spend on capital infrastructure such as roads, education and health.
That was why the committee was set. The committee is simply to look at how to raise additional revenue, so that as our wage bill goes up, we get more revenue to ensure that our spending on capital infrastructure is not reduced.
We are also bringing the projected deficit from N1.95 trillion to N1.859 trillion and it is still within the Fiscal Responsibility Act. We want to ensure that our Debt Service to Revenue ratio does not rise, because ultimately you pay your debt from revenue.
So, it is a very prudent budget. I know many people have said what we need is a larger budget. We all want a larger budget.
Indeed, Nigeria deserves a much larger budget. Our budget is too small for our needs and everybody can see that.
However, we have to find the money. There is no point having a large budget that you can’t fund.
So, this is a budget we believe we can fund. But I believe that as we get more revenue, we would continue to increase the size of our budget.
There is poverty in the land and the budget impact is not being felt?
We need to increase the size of our budget. But what we are looking at is sustainability.
So, when you realise that your pattern of expenditure is increasing, you need to do something. It is not something that can be done in the short-term.
All these things take time and some even require legislation. So, we can see that recurrent expenditure is rising and capital budget is getting smaller. To address this, we have put up a committee. We have a long-term strategic plan.
It is not a one-year thing and you can see that from the Economic and Recovery Growth Plan (ERGP).
You can see from the budget that recurrent is rising while capital is getting smaller.
But we provided for it because we believe that salaries must be paid and if you notice, the President has directed all state governments to make sure they pay salaries.
What we are doing is to increase our revenue, so that we can pay salaries and still have enough resources for our capital expenditure.
Having said that, we need to ensure that the government is not just about paying salaries, but has revenue to be able to meet other obligations.
Don’t you think your crude oil assumption is over ambitious?
The current oil production is about 2.09 million barrels per day and you are saying we shouldn’t be ambitious and that we should just stay where we are. I don’t think so. I think we should challenge the NNPC. They have the capacity to produce 2.5 million barrels per day.
Let us not say because we are producing 2.09 million barrels per day, that we should remain at that. No. you challenge them and we believe we can achieve it.
The Senate President said the budget is useless, do you think the budget is useless?
You know the Senate President is the Director General of the campaign of the Peoples Democratic Party; what else do you expect him to say? I think a number of comments were made by the Atiku Campaign Committee and we have responded to them.
Comments were made that the budget is too small and that we need to spend more.
Yes, we know, but they didn’t suggest where the money would come from. They were also comments about the oil price and other benchmark and we have responded.
From 2015, the level of growth the country has recorded is way beyond trend and I think it is not eliciting as much concern as it should be. What explains the new normal of two per cent growth in Nigeria in the past three years?
If you look at the ERGP, our target is seven per cent. But you don’t start from minus zero and get to seven per cent overnight.
What I think we should be looking at is the direction of movement. Are we moving towards that target? I will like us to be growing at, at least seven per cent and that is our focus and we can only do that year-on-year.
So, the Economic Management Team meets every week and looks at the indices and we tweak where we can. One of things that will help is an increase in private sector investments, but it takes time.
Even if a company wants to build a factory, just the planning of the factory alone takes time.
One thing about the economy is that it takes some time to gain momentum, but once you gain the momentum you grow rapidly. So, what we are doing right now is to build up that momentum.
What do you have to say about the repeated items in the budget?
It depends. A lot of infrastructure projects take time. For instance, if you are doing a road that takes about four years, you see some of the items repeated.
But let’s face it, even in our homes, if you are going to do your family budget year after year, you will be amazed at how many items will recur in your family budget.
Talk about cars for instance, no agency buys all the cars that it needs in one year because there are not enough resources.
There is no agency where all the cars they have were bought in one year. So, the cars would be replaced as at when they fall due for replacement.
So, some of the fleets would be due for replacement this year, while some would be due to next.
That is why you see vehicles in the budget every year; same with computers. You have an agency that has a need for 500 computers; they are not going to buy all of them in one year.
The budget won’t even allow that. It would be bought in piecemeal. Another thing is that just because it is in the budget for a given year does not mean it was bought.
This is because sometimes, due to paucity of resources, the budget is not fully implemented and if it is not fully implemented, the item is repeated and carried over to next year. It doesn’t mean it is same items that are being bought over and over.
What is the state of sale of power assets?
Yes, as you are aware, the process of selling those assets is ongoing. Late last year, the BPE announced that they have carried forward the sale to 2019. So, we have carried forward the projections.
In 2018, we projected about N300 billion from the sale of those assets. We have even moderated the projections down in 2019 to N210 billion. The process is ongoing and the projected revenues have been captured in the 2019 budget.
Is the ERGP actually feasible and does the ERGP have a self sustaining mechanism in case another administration takes over?
You will recall that in the development of the ERGP, we did extensive consultations and I spent quite some time with the National Assembly across party lines.
We also spent some time with the states across party lines, the private sector and we took on board all the views of every one. And when the document came out, there was unanimity that, this is the blueprint that can take Nigeria to where we want to be – a diversified, inclusive and sustainable growth. And so, I believe that being a document that everybody was part of, then that document must be fully implemented.
It is moving in the right direction and what the president has told those of us involved in governance is that we should focus in trying to make sure that the economy doesn’t slow down or doesn’t suffer because of the election and that we should concentrate on our work.
That is what we have been concentrating on and that is why you don’t see me make political statements.
So, this is a national document and a document that everybody believes and shares. Of course, a new government will want to fine-tune one or two things. But from all indications, it is same government that is going to be there. This is a document that can transform Nigeria.
In the course of your work you have had some challenges; can you share some of them? Going by your very long private sector experience and as a minister, what can you say about public service delivery in Nigeria?
You know the management of people and resources – whether in the public or private sector – is same.
So, anybody who has had experience at a high level in the private sector as I had, as Chairman of Union Bank, Chairman of UAC as well as building one of the largest law firms would understand. I started the law firm just myself and my clerk and now we have other partners and overall we have over 100 staff.
So, I have experience in motivating people and managing people. So, that has helped. So, I am just here as minister to do a certain job, do my best and go back to the private sector.
My father always told me that whatever success you make in life, if you don’t give something back to your nation and your people, then you have failed.
So, what I am doing today as a minister is my way of giving back to my country.
Many people have said the 2019 budget is dead on arrival. What do you think will happen to the budget at the National Assembly if the election goes either way?
I think that basically, a government has to manage situations. So, you have to reach out and find common ground, which is what I have been doing.
So, you will find out that whether the Senate President is in PDP, I meet with him and brief him. I do same with the Speaker. This is because you are dealing with the office.
So, we need to sit down and find common ground with the National Assembly.
I believe that all members of the National Assembly are nationalists and at the end of the day, they would want to see a situation where this country improves. So, we sit down and engage.
There is nothing that can be achieved unless we engage.
You listen to them to hear the issues that they may have and you explain because ultimately, without their support, you can’t do anything. So, we would engage them.
This government has increased borrowing and the level of debt service and revenue to debt ratio has continued to rise?
I think this is something we have addressed quite a lot. Our problem is not a debt problem; it is a revenue problem.
Our debt is quite low, relative to most comparative countries. But our problem is revenue. We are not able to maximise the revenue potential of this country. Our tax collection for instance, is still low.
So, you can imagine if we can move our revenue level to about 12 per cent of Gross Domestic Product. It will immediately knock down the debt service to revenue ratio.
That is why I keep on saying that what we have is a revenue problem and not a debt problem. So, we must go after revenue.
The problem with revenue is that ultimately, it means getting Nigerians to pay taxes. So, you can’t do it dramatically.
To ask for more tax, you have to show people what you are doing with the tax you have collected. But we are not asking people who do not have money to pay tax.
We are asking people who earn money to pay tax. But if we are able to show people how we are using the money, then they would gladly pay more.
You know sadly, for so long, we depended on oil revenue. The fastest growing economy in Africa today doesn’t have oil.
So, that over reliance on oil is part of our problem. So, we are working on it. But it is not easy.
People don’t like to pay tax and so you have to take it step by step. Look at our agencies; we try to see how they can generate more revenue.
For instance, for years, the Joint Admission and Matriculation Board (JAMB), was returning less than N500 million and when a new person was appointed, he returned N7.8 billion in the first year. So we need more of such and we must find a way to reward people who perform.
Generally, in the private sector, that is how we do it. We tie compensation to performance. But it is more difficult in the public sector and we must find a way of tying compensation to performance.
You have all sorts of challenges in the public sector. But challenges are meant to be overcome. I do not believe that there is any challenge in Nigeria today that we cannot surmount.
It is a question of application and doing the right thing continuously for a long time. If you look at those countries that we always talk about, they did the right things for years.
Sometimes, it takes about five years before results start manifesting. But Nigerians expect it in six months.
We are on the right track and what we need to do is stay on that path and don’t be discouraged and over a period of time, we would see a dramatic change and even surpass the seven percent growth rate we talked about.
Once again, in Nigeria we have the capacity to grow and that capacity is what we must leverage on to get Nigeria to where it ought to be.
What is the implementation level of the 2018 budget?
We now have the final numbers for last quarter. We reckon that the total performance is about 75 per cent. That means we didn’t spend about N2.2 trillion of what we projected to spend.
Sadly, bulk of that shortfall comes from drop in capital revenue, where we had projected about N2.8 trillion to be spent.
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