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Udoma Calls for Action to Tackle Revenue and FX Shortages in 2017

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Udoma Calls for Action to Tackle Revenue and FX Shortages in 2017

 

The federal government monday restated that Nigeria was facing “not just a revenue problem, but specifically, a foreign exchange shortage” and that much more needs to be done to diversify the economy away from reliance on oil exports. Minister of Budget and Planning, Senator Udoma Udo Udoma made these comments while unveiling details of the 2017 Budget proposals presented to The National Assembly last week by President Muhammadu Buhari. Udoma said while a ministerial committee has been set up to improve oil receipts, much more need to be done to reduce foreign exchange demand by “producing more of what we consume” in Nigeria in an apparent alignment between fiscal and monetary policy. Udoma said: “we must reduce the demand for foreign exchange by producing as much as possible of what we need in Nigeria. From refined petroleum products to textiles, clothing and most of our food items. But we will continue to need imported items so we must increase the supply of foreign exchange by tweaking some of our policies to make them more investor friendly, and by creating the right incentives for non-oil exports. Ultimately, the sustained growth of our economy must be on the back of an export led revival. The proposals in the 2017 Budget are aimed at creating the right incentives for Nigerians to achieve all these.

The 2017 Budget proposals are therefore also a call to action.” During the briefing, it emerged that the N50 billion naira fine so far paid by a telecoms operator, MTN Communications Nigeria Limited, and about N258.6 billion (recovered and expected to be recovered) looted funds would provide part of the funding window for the 2017 budget.

The Director General, Budget Office of the Federation, Mr. Ben Akabueze, made the disclosure in Abuja as Senator Udoma, unveiled the provisions of the 2017 budget proposal.

Akabueze, who was responding to a question seeking clarification on how much recovered loot the federal government was planning to inject into the 2017 budget, put the figure at N258.6 billion.

Providing the breakdown, he said N96.8 billion was part of the Abacha loot from Switzerland, N72 billion cash recovered locally, and another N90 billion expected to be recovered soon.

According to him, the process of recovering the N90 billion had reached an advanced stage as the legal hurdles were being scaled.

Senator Udoma, in his presentation, also indicated that the recovered loot and MTN fine were to form part of funding for the 2017 budget.

Also responding to questions, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said he had already intervened in the ExxonMobil industrial dispute with a view to resolving the impasse.

Kachikwu, who expressed optimism that the matter would soon be resolved, hinted that the federal government was expecting royalty payments of about $1 billion from the oil sector in 2017.

Giving an overview of the 2017 budget proposal, Udoma said the budget reflected the government’s “commitment to restore the economy to the path of sustainable and inclusive growth”, adding that efforts had been made to ensure that the budget aligns with Nigeria Economic Recovery and Growth Plan (NERGP).

“A Medium Term Economic Recovery and Growth Plan (ERGP 2017 – 2020) is being finalised which addresses the current economic challenges and is aimed at restoring growth.

“The plan builds on the existing Strategic Implementation Plan (SIP), and contains strategic objectives and enablers required to revive the economy,” he said.

The strategic objectives of the NERGP, he added, include pulling the economy out of recession, investment in manpower and, laying the foundation for diversified, inclusive and sustainable growth.

The 2017 budget, Udoma stated, reflects many of the reforms and initiatives in the SIP and NERGP and in the 2017-2019 Medium Term Sector Strategies (MTSS), as well as the 2017-2019 Medium Term Fiscal Framework.

According to him, a Multi Criteria Analysis (MCA) approach was adopted to prioritise and select 2017 capital projects for 14 large capital spending ministries, departments and agencies (MDAs) involved in the MTSS.

“Projects were linked to government policies and strategic priorities. MDAs that were not involved in the MTSS process used the Rapid Appraisal Project Identification and Prioritisation System (RAPIPS).

“Zero-Based Budget (ZBB) principles were used in preparing the budget. ZBB ensured that expenditures in the 2017 budget are linked to government’s strategic reforms and initiatives for economic recovery,” he added.

Next year’s budget, according to him, was designed to expand the partnership between the public and private sectors, including development capital to leverage and catalyse resources for growth.

He explained that the decision to make the private sector a key driver was because the government is hamstrung by the paucity of funds.

The minister reaffirmed that the budget would focus on ongoing critical infrastructure projects such as roads, railways, power and ICT, among others which have quick positive effects on the economy.
He also alluded to plans to utilise special economic zones and industrial parks as vehicles to accelerate domestic economic activity for innovation and wealth creation.

Speaking on the key assumptions and macroeconomic framework for the 2017 budget, Udoma restated that it was predicated on an oil production target of 2.2 million barrels per day (mbd), benchmarked oil price of US$42.5/b,
exchange rate of N305/US$, and inflation rate of 15.74 per cent.

Others are GDP growth rate of 2.5 per cent, consumption of N87.95 billion and nominal GDP of N107.96 trillion.
He acknowledged that analysts had described the size of the budget as massive, noting that in real terms, it was not humongous when compared with South Africa, Ghana and some other countries in relation to GDP.

The minister could not, however, explain why there was high domestic borrowings to finance the deficit in next year’s budget, relative to this year.

The overall projected budget fiscal deficit of N2.36 trillion for 2017 is about 2.18 per cent of GDP.
The deficit is to be financed mainly by borrowings which have been projected at N2.32 trillion.
Of this amount, N1.067 trillion or 46 per cent will be sourced externally, while N1.25 trillion will be sourced domestically.

He also explained that four MDAs: The Ministry of Interior for N482.37 billion; Ministry of Education – N398.01 billion; Ministry of Defence – N325.87 billion; and Ministry of Health – N252.86 billion.
The minister assured that government was not embarking on any retrenchment of civil servants, adding that there were sufficient provisions for personnel cost next year.


The Lead Director, Centre for Social Justice (CSJ), Eze Onyekpere asked the minister why the government was breaching extant laws by presenting the 2017 budget proposals to the National Assembly without getting approval for the MTEF and still went ahead to publicly unveil details of the proposal.

In his response, Udoma said the parliament was already in possession of the budget MTEF and Appropriation Bill, and expressed optimism that the lawmakers would opt to do the first thing first.
At the unveiling of the 2017 budget proposal which took place at the Congress Hall of the State House, Abuja, were no fewer than ten ministers.

They were Udoma; his Minister of State, Mrs. Zainab Ahmed; Minister of Agriculture and Rural Development Audu Ogbeh; and Minister of Interior, Maj.-Gen. Abdulrahman Dambazau.

Others were the Ministers of Health Prof. Isaac Adewole; Information, Lai Mohammed; Niger Delta, Usani Uguru Usani; Communications, Adebayo Shittu; and Kachikwu.

However, the Minister of Finance, Mrs. Kemi Adeosun, was conspicuously absent.
Her Director Information, Mr. Na’Innah Dambatta, who was present at the event, parried the question when some reporters enquired from him on the minister’s absence.

Meanwhile, President Muhammadu Buhari has expressed optimism that the economic recession will begin to ebb in 2017.
A statement by his media aide, Mr Femi Adesina, said the president spoke yesterday in Abuja while declaring open an induction course organised by the Ministry of Foreign Affairs for Nigerian Career Ambassadors-designate who were recently cleared by the Senate.

The president said:‎ “We are optimistic that the external factors that partly contributed to push our economy into recession will ebb in 2017. Until then, I regret that the resources available to fund our missions abroad will not be as robust as we would like.

“We are working hard to turn around our national economy by effectively reforming our macroeconomic environment through measures, some of which were outlined in my budget speech to the National Assembly last week.”

The president, who said the prevailing economic circumstances had led to the restructuring of Nigerian missions abroad, called on the ambassadors-designate to make judicious use of the resources put at the disposal of their missions.

He said: “As heads of missions, you will be held accountable for the utilisation of all resources under your control. These are lean times, and all of us are expected to do more with less.”

Buhari charged the ambassadors-designate to change the narrative of Nigeria outside the country by playing up the positive values and outstanding contributions of Nigerians in the global arena.

“I want to emphasise on your duty to change the narrative of Nigeria as seen by the outside world. For far too long, we have allowed Nigeria to be defined by others, always emphasising our negatives.

“To the average foreigner, Nigeria evokes 419, terrorism, militancy, communal and religious clashes, insecurity, corruption and all our other faults,” he said.

The president continued: “You have a duty to correct this narrative by taking the initiative to define and portray our country for what it truly is. We are a nation of 180 million vibrant, enterprising, hardworking, hospitable and peaceful people.

“We are a remarkable nation that has succeeded in harnessing our multiple diversities as strengths such that we are the leading country on the continent.

“Therefore, you will need to mobilise, sensitise and motivate all your staff so that together you engage with your host governments, the private sector and other segments of the society to explain that Nigeria is much more than the negative image portrayed to them.”

Buhari also enjoined them to leverage on the achievements of Nigerians within the country and in the diaspora.
“Think of people like Nobel Laureate, Wole Soyinka, Chinedu Echeruo who founded the Hotspot application which he sold to Apple for over a billion dollars; think of Bayo Ogunlesi, who runs over a billion dollar infrastructure fund and is now an adviser to US President-elect; and Jelani Aliyu, an accomplished car designer at General Motors.

“Indeed, these and other hardworking Nigerian professionals in the diaspora have never forgotten their roots and have been making significant contributions to their communities back home, and even to our economy through their huge remittances,” he said.

He urged them to sustain the work ethic characterised by the love of country, professionalism, excellence, integrity and honour associated with the “Nigerian diplomatic tradition established in 1957 by the pioneers of the Nigerian Foreign Service, sometimes referred to as the “Twelve Apostles” and also “bequeath same to succeeding generations.”
Buhari also charged the ambassadors-designate to stress Nigeria’s commitment to international peace and security through contributions “to nearly every UN peacekeeping initiative since 1960 when we achieved our independence. In addition, we are the stabilisers and shock absorbers of West Africa having helped to contain potentially de-stabilising developments in the sub-region”.

He urged them always to be mindful of the national priorities that “revolve around the economy, security, anti-corruption, good governance, agricultural transformation and infrastructure development, including rail, roads and power” and use their roles “as principal representatives to build meaningful partnerships to attract foreign investments, new skills and technologies.”

He also asked them to set the standard of putting Nigeria first in all their actions.
“You must show leadership, fairness and justice to all. Discipline, probity, accountability and zero tolerance for corruption must be your watchwords.

“You are expected to project the best image and traditions of our country in your conduct and all you do,” he added.


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