Government, states set outlook for economy in next three years
• Government to rationalise number of ministers, commissioners, perm secs
An outlook of what to expect for the country’s economy in the next three years, including a gradual increase of Value Added Tax (VAT) rates, was yesterday made public from the ongoing National Economic Council (NEC) retreat through highlights released from the presidency.
VAT compliance is also to be expanded.
An agreement was reached for concerted and consistent efforts to diversify revenue sources, while there will be an increase in expenditure through borrowing for infrastructure development through Public Private Partnership.
Capital expenditure for federal and state governments, the retreat agreed should be pegged at a minimum of 30 percent, while they will develop a financial inclusion strategies to cater for the poor and vulnerable.
With the theme, Nigerian States: Multiple Centres of Prosperity, the retreat states that federal and state governments are to focus on fiscal responsibility as a critical element in macro-economic balance.
Other thematic areas covered and the resolution on them are as follows:
The Federal Government is to re-position Bank of Agriculture to enhance its capacity to finance agriculture. Funding for agricultural sector is considered critical and sources of intervention funding from the Central Bank of Nigeria should be considered. A single digit interest rate for agricultural loans should be considered while duties and taxes for agricultural products and equipment should be waived.
Also, there should be development of strategic partnerships between federal and state government. Each state should make specific commitments to crops in which it has comparative advantage and request Federal Government intervention. National targets for self-sufficiency should be set for identified crops, which should be monitored–Tomato paste – 2016, Rice – 2018 and Wheat – 2019.
The federal and state governments should roll out agricultural extension services nationwide The Commodity Exchanges should be established for price regulation and avoidance of losses due to lack of markets. The Abuja Commodity Exchange should be revitalized.
The National Agricultural Land Development Authority (NALDA) should be re-established. Federal Government should develop an agriculture implementation plan whereby state governments are encouraged to identify at least two crops in which they have comparative advantage. It was agreed that states should open up of rural/feeder roads to facilitate transportation of agricultural produce to be supported by the Federal Government
The federal and state governments should establish minimum price guarantee for farm produce The Federal Government should provide immediate funding to upscale efforts of agricultural institutes of research and development across Nigeria.
State governments should also be encouraged to fund research and development in agriculture through technical colleges, universities and research institutions.
On solid minerals, it was agreed that Ministry of Solid Minerals Development should complete and present the solid minerals development roadmap. This framework should address issues of illegal miner, licenses, taxes and royalties by 31st March 2016.
The Federal Government is to engage with state governments on the roadmap and agree on any amendment that may be required by 30th June 2016. The government is to initiate relevant legislative changes that maybe necessitated by the agreed roadmap by 31st July 2016. It is to conclude the revalidation/recertification of all mining leases by 30th September 2016.
The retreat resolved that the Federal Government should agree with states and local governments on respective responsibilities for developing feeder roads and other critical infrastructure for solid minerals development. Federal and states are to set deadlines to achieve self-sufficiency in Bitumen/Asphalt and tiles (to discourage/stop importation.) Government is to make and communicate final decisions on operationalization of Ajaokuta steel plant by 30th June 2016, just as it should establish joint committee to address issues of data on quantity and quality of minerals exploited and exported.
The Federal Government is to set up of mining cadastral zonal offices for proximity to states for the purpose of issuing licences and easy monitoring by states. It should discourage use of wood for cooking by promoting use of coal briquettes. Government should guarantee access to finance for solid minerals development via intervention funds and private sector capital.
The retreat urged the government to block revenue leakages in the sector through effective monitoring of activities in the mining sector and organise artisanal/small-scale miners as a mechanism for reducing illegal mining and to establish Mines Surveillance Taskforce by September 2016.
In the area of investment, industrialisation and enabling Monetary policies, it was resolved that Ministry of Industry, Trade & Investment (MITI) should develop a matrix of actions to be taken by federal and state governments towards achieving the targeted improvements in Ease of Doing Business ranking by 30th April 2016.
The ministry should present an incentive scheme for states taking actions towards improvement of the investment climate in their states, including grants by 30th September 2016. It should forge strong links between the Nigeria Investment Promotion Commission (NIPC) and the State Investment Promotion Agencies.
State governments were urged to collaborate more actively on regional basis on investments and industrialization while the Federal Government should work with the states and other stakeholders to create an enabling environment for trade and investment through the implementation of the Nigerian Industrial Revolution Plan (NIRP) to encourage industrialization.
Also, the ministry should make environment conducive for the micro, small & medium enterprises to create jobs for the unemployed and undertake deliberate policies to create access to funds.
It was also resolved that states and the Federal Government must emphasize the patronage of “Made –in-Nigeria” products. “Import competition” rather than “import substitution” should be emphasized.
Governors were urged to set up task forces to monitor implementation of trade/ investment policies and strengthen planning institutions by linking federal and sub-national planning; in this regard, a monthly meeting between the Minister of Budget and National Planning and state commissioners for planning will be institutionalized.
Besides, states are to set up one-stop shop for investors where they do not currently exist to attract investment and improve on internally generated revenue as well as safeguard competitive market economy.
Other resolutions include promotion of regional cooperation on investment and industrialization, Implementation of institutional and structural reforms as a way of improving the efficacy of monetary policy, including greater consultation with the National Economic Council.
It was resolved that predictability and consistency of the Central Bank of Nigeria’s communication to key stakeholders is required to manage expectations The Central Bank should carry the states along in some of its reforms in areas of SMEs and agricultural funding initiatives.
Besides, long-term development goals should anchor policy decisions, while effective regulation and supervision to improve confidence in the soundness and stability of the banking system should be carried out.
On infrastructure and services, it was agreed that government should develop infrastructure delivery plan considering current financial capabilities, driven principally by the goal of improvement of the quality of life for the populace.
Government should also develop financing model for infrastructure projects and integrate training and job creation components in infrastructure projects. It should also implement empowerment and entrepreneurship policies to foster inclusive growth.
In the area of investing in people, the federal and state governments are to work collaboratively to ensure sustainability of the school feeding and other social protection programmes. Others are:
Cooperation from the States’ Ministries of Education and State Universal Basic Education Board (SUBEBs) for the Teacher Corp programme.
The retreat agreed that government should provide logistics support on the proposed upgrade of 75 existing National Directorate of Employment (NDE) facilities (across the various states) to empowerment centers. There should be cooperation and coordination with the states on their specific job creation efforts.
State government should support identified needs such as infrastructure and/or space for innovation hubs. They should also support artisan training, scoping and support for existing artisan cultures, use of existing training facilities.
Government should institutionalize a single register as a platform for targeting the authentic poorest and vulnerable for safety net programmes; for government, donor agency, organizations or individuals. Government should create a delivery mechanism that ensures efficient, consistent timely and direct payments in the remotest parts of the country.
On revenue generation and fiscal stability, the NEC retreat agreed that there is need for deliberate effort to generate relevant data on the respective economies of the states and the nation generally in order to drive revenue generation.
Moreover, the Federal Inland Revenue Service (FIRS), and the State’s Revenue Services (SIRS) need to invest in relevant technology to support efforts to improve tax collection.
The retreat agreed that there is a need to develop incentive schemes for federal and state revenue generating agencies, while FIRS and SIRS need to actively collaborate on initiatives to improve tax collection, including joint audits of major corporate tax payers.
All state governments were encouraged to establish efficiency units to review/enhance the quality of expenditure as well as plug revenue leakages. They are also to focus on property and consumption taxes to help in improving revenues in a fair manner.
Tax-payer education should be intensified to expand the tax base and avoid political back-lash from intensifying tax collection. State government were encouraged to rationalise number of ministers, commissioners and permanent secretaries
Cost control measures should be identified and implemented on an ongoing basis; in this regard, various examples from Nigeria and other countries were recommended
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