FG Admits Revenues Crashing, Says Nigeria Faces Hard Times
The Minister of Finance, Budget and National Planning, Zainab Ahmed, on Monday admitted that Nigeria’s economy was facing a difficult time, saying states must improve their internally generated revenues.
Ahmed, who stated this in an interview on a daily breakfast show on the Nigerian Television Authority, Good Morning Nigeria, stated that the money shared at the March Federation Account Allocation Committee meeting was short of N50bn.
The minister was speaking on a controversy generated by a claim by the Edo State Governor, Godwin Obaseki, that the Central Bank of Nigeria printed N60bn in March to augment the money shared at March FAAC.
But the minister and the CBN Governor last week dismissed Obaseki’s claim.
In the interview on the NTA on Monday, the finance minister stated the country’s economy was stabilising from the recession, which the country exited a few months ago.
She, however, added, “These are very difficult challenging times because revenues are low and the demand for expenditures are very high understandably because we have to keep intervening to make sure the pandemic is contained as well as the economic impact it has caused.
“In our case in Nigeria, the crash of the crude oil prices really hit us very hard in terms of revenue. We have very low revenues, we have very high expenditures. What we have done so far is just to provide some stability to make sure salaries are paid, pensions are received every month; that we send funds to the judiciary and the legislature; that we meet our debt service obligations.
“That’s what we are doing. It also means we have had to borrow more than we have planned before the COVID-19 started because we need to still continue to invest in infrastructure using our national budget. We borrowed to invest in key projects such as roads, rail, airports, seaports and several other investments that are required in health and in education and upgrading the social standards and quality of life of our people and Nigeria is not unique as several countries of the world went into recession.
“Almost every other country has had to borrow more than it planned. It means we expanded our deficit very fast in 2020. 2021 is a year that we see as the year of recovery.”
According to him, government hopes to achieve a growth of three per cent in 2021, adding that some of the multilateral institutions are putting it at 2.5 per cent.
She stated, “It is a very difficult time. I can explain to you how difficult it is, not just for the Federal Government but also for the states. We see increasing reductions in our FAAC revenues; FAAC revenues are the revenues that we put together every month, that are collected from both oil and non-oil sectors from the collection of the NNPC (Nigerian National Petroleum Corporation) the FIRS (the Federal Inland Revenue Service) and all other revenues collection agencies.
“ So, FAAC reduces and whenever FAAC reduces, it is a very difficult situation and in the past one year, we have tried to fall back on some specific accounts that are meant to be saved; savings that when you have such a situation, you fall back on the resources and augment.
“So, we take funds based on Mr President’s approval either from Excess Crude or Stabilisation Account or in some cases, President approved for us to take funds from LNG (Liquefied Natural Gas) dividends. In the month of March, we had a shortfall of FAAC that was about N50bn; we didn’t have enough accrued in any of those accounts other than some N8.5bn that we took from exchange rate differential account so we added that and we ended up with the FAAC of N605bn.
“An average FAAC that is healthy for us is N650bn, so it means we had a shortfall of about N50bn. The states to be honest wanted us to go and borrow from the central bank to augment FAAC.”
She stated that advice by states was rejected, adding that the three levels of government were asked to manage what was available.
“So, it was very surprising when we had a sitting governor saying that the CBN had printed money for FAAC. That was very unfortunate because it was not true. The FAAC information is published so you can see the revenue contributed by each of the agency; that is what we shared.
“The states would have wanted us to borrow and augment but we didn’t do that. And we would make sure we don’t have to do that because it’s time all of us to go back and do more. A lot of states are trying to do that in terms of increasing the performance of their internally generated revenues, but it is difficult to do that at a time when growth is very, very slow.”
“Going forward, what we have been doing in the ministry of finance, budget and national planning is a plan that we have put in place to grow revenues. Our revenues have been growing but because the expenditures have been growing at a pace that is much faster than the revenue growth, the impact is not felt.
Wike canvasses state ownership of minerals, govt’s royalty
Governor of Rivers State, Nyesom Wike, on Monday said dependence on oil was one of the problems of the country.
He, therefore, advocated that the federating units in Nigeria should be allowed to develop and operate their respective minerals and pay royalty to the Federal Government.
He said this had become pertinent because the Federal Government which unilaterally controlled the country rich minerals endowment had failed to translate the minerals wealth into overall economic development.
Wike made this assertion when the Minister of State for Mines and Steel Development, Uchechukwu Ogah, paid him a visit at the Government House, Port Harcourt.
The governor, in a statement by his media aide, Kelvin Ebiri, maintained that in order for the country to benefit from its vast endowment, the Federal Government should concentrate on formulation of policies that would facilitate an improvement in the governance of the mining sector to improve social welfare of the citizens.
“The Federal Government is carrying so much load that it is not supposed to carry. Allow states to develop these minerals and pay royalty to the Federal Government. That is the way it’s supposed to be.”
“It is very important for people to know that part of the problem in this country is that everybody is depending on oil, when we are also supposed to look at other minerals. Minerals play a great role in terms of raising revenue for any country. So, our overemphasis on oil has reduced our impact on other minerals,” Wike stated.
He noted that if the country fully harness the gold deposit in Zamfara as well as other minerals in other states of the federation, the country would make a lot of revenue from these minerals that can accelerate her development.
Wike lamented that despite the possibility of the Ajaokuta Steel Company project generating huge revenues for the country and creating not less than 10,000 jobs, the Federal Government for political reasons, had failed to actualise the country’s aspiration to become a major player in the global steel industry.
The Minister of State for Mines and Steel Development, Uchechukwu Ogah, told the governor he was in the state to share with him the vision and policy focus of the Federal Government for the development of the nation’s solid mineral resources.
According to him, his visit is to solicit for the support and partnership of the Government of Rivers State in ensuring the orderly and efficient exploitation of huge deposits of silica sand, glass sand and clay in the state.
Also on Monday, the Edo State Governor, Mr. Godwin Obaseki, said the Federal Government should stop financial gymnastics and face the reality that dependence on oil could not take the country far.
Obaseki, who stated this in a statement on Monday, called for a quick diversification of the nation’s economy to increase non-oil revenue.
Obaseki said, “Before the civil war, we had no crude oil. The regions relied on the resources that they had and the government was run based on taxation, which was derived from the regions and production, particularly agricultural production in the regions.
“In the last 40 years or so, crude oil came and replaced those economic activities and earnings. So, we now run a federation relying almost exclusively on crude oil. For a country that is still hoping on crude oil, it’s only a question of time and pretending and doing all sorts of interesting and financial gymnastics to keep it going; it’s only a question of time.”
Noting the need for leaders to listen and work, always, in the interest of the people, Obaseki said, “When they say government, what they really mean is us; it’s about how we engage with the citizens.
“The people in government think they are better and know more than the citizens. When you say something, they disagree with you because they think they are in power and know more than you.
“We; officials of government, civil servants and politicians, because we are government, think that we know better than the people. But it’s a fallacy, because it’s the taxes these people pay from their own economic activities that will sustain us going into the future.”
“It is their sweat that will pay our salaries; they cannot be foolish for them to be producing the resources that keep us. Therefore, our emphasis must be on them; we have to keep them alive.
“That is why the government must create an enabling environment for the citizens to thrive, so that from their wealth, the government can be sustained,” he added.
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