The Federal Government will reform the Nigeria National Petroleum Corporation (NNPC) to ensure that all revenues earned are accounted for, Finance Minister Mrs. Kemi Adeosun said yesterday.
Mrs. Adeosun spoke at a joint news conference with Central Bank of Nigeria (CBN) Governor Godwin Emefiele at the end of the 2018 International Monetary Fund/World Bank Spring Meetings in Washington D.C.
She said the government’s priority was to ensure that all earned revenues entered government coffers and were better managed.
The minister said: “Government will continue to efficiently and effectively manage costs and plug leakages. We must make sure that every money that is earned comes in. We will drive the process of improving governance.”
The reforms of state-owned enterprises, she said, would boost the country’s fiscal buffers, which will lead to a rise in the Excess Crude Account (ECA). The ECA, Mrs Adeosun said, was expected to rise now that crude oil prices have risen.
“Now that we have $72/per barrel oil price and $45/per barrel oil benchmark, we must begin to see ECA accumulation and to do that, we have to focus on the cost of state-owned enterprises. If every time the price of oil goes up, and the cost goes up, then there is no net gain,” she said.
Mrs Adesoun said her ministry would work closely with the NNPC. “In terms of what we are doing, even tomorrow (today), I am staying back because we are having a team from the NNPC coming in, and we have meetings with technology providers who will help us control some of those costs. We have to look into state- owned enterprises and look at their costs very, very closely. And as Chairman of the Federal Account Allocation Committee (FAAC), and on behalf of their owners and NNPC, we are going to be strengthening their governance,” she said.
“And the NNPC is working very closely with us. We sit down, and look at the numbers together. If we are not happy with the numbers, we ask more questions. I think in the past, NNPC will simply come and present a figure, now, we are questioning those figures. Why are we spending so much on this, and I think that is very, very important to us to take advantage of this period to really rebuild our buffers,” she said.
Mrs. Adeosun and Emefiele said the country’s positive growth outlook would be sustained.
The minister, who noted that the present growth outlook contrasted with the outlook in 2015, said inflation rate was slowing down while the foreign reserves were rising.
She said: “We are confident that if we diligently implement our economic plan, we will grow the economy. We have room to grow but other countries do not have rooms to grow.
“By 2019, the growth will be far more robust than the present level in 2018. We are, therefore, very optimistic in sustaining Nigeria’s economic growth. We are going to use this opportunity to grow our fiscal buffers, particularly aggressively growing our revenue base.”
Mrs Adeosun confirmed the recovery of $322,515,931.83 Abacha loot from the Swiss government into a special account in the CBN. The funds, according to her, would be used for the government’s National Social Safety Nets Programme .
“The objective of the National Social Safety Nets Project for Nigeria is to provide access to targeted transfers to poor and vulnerable households under an expanded national social safety nets system,” Mrs. Adeosun stated.
Explaining his absence at the US Investors’ Forum held in Washington on Friday, Emefiele said the minister and himself were in the United States to attend the World Bank/IMF statutory meetings.
He said: “For the Minister of Finance and me being the governor of the CBN, what takes preeminence is the meetings in the IMF as well as the meeting at the world Bank. I think it is important for me to say this, when I arrived in Washington, the officials of the embassy spoke with me that there was going to be a US-Nigeria summit and I said I would check my schedule because I was not consulted when this summit was being organised.
“What one would have expected is that they would have checked my schedule and that of the finance minister if they thought that our presence at the summit was very necessary. They could have checked our schedule to see that there was no conflict. I sit here to say the US-Nigeria summit was meant to hold between 2 pm and 3 pm whereas the World Bank Development Committee plenary session which is an Assembly of Ministers and Governors of Central Banks was to hold between 2.45 and 5pm. There was no way the Minister of Finance and myself could have been at those meetings,” he said.
Emefiele added: “But I think it is important to say it is unfair for people to begin to cast aspersions without understanding our schedule. The main reason we are here is because of the statutory meetings of the IMF and World Bank. I felt I should explain this. We are not irresponsible people and please, we apologise to those investors who had gathered at the Nigerian Embassy for the summit. But I know we also held some side meetings with some investors and there will always be lots of opportunities to meet with them. But I want to say this is not the fault of the Minister of Finance and myself the CBN Governor”.
Speaking on Voluntary Assets and Income Declaration Scheme (VAIDS), Mrs. Adeosun said the Common Reporting Standards agreement was signed, which is a reporting standard that forces multinational companies to report their figures in a consistent way, to allow us compare. The aim, she said was to stop a lot of multinationals which earn a lot of money in Nigeria but do not pay a lot of taxes in Nigeria and also ensure that they are not using profit shifting to move those taxes abroad.
The VAIDS compliance deadline, she said, was extended because of appeals, especially from professionals, who said, the volume of people that wants to comply, demands that government gives more time and we considered the options and decided that on the balance of averages, it is better to have people who pay voluntarily and get the revenue quicker than to be strict and chase after them. That informed us giving another three months.
“The level of compliance has been considerable especially personal income taxes, and the state is excited about the number of people who have adjusted their level of compliance. Let me give example with Ogun State. I was speaking with the chairman there, and he said the number of people paying N10 million and above in Ogun State has risen to 200. We asked for that statistics before, I do not think that Ogun had more than 20. So, VAIDS has succeeded in getting an High Net-worth Individuals (HNIs) really stand up to pay their fair share for national development,” the minister said.
“There is one person that paid N250 million and more under VAIDS. It is a very successful programme and we know a lot of people are waiting for the extension and we want more people to come in. The level of compliance is quite reasonable, especially the personal income tax and the states are very excited about it. In my own state of Ogun, the number people paying N10 million and above has risen to 200 from less than 20. So VAIDs has succeeded in getting our high net worth individuals to stand up and pay their fair share of national development. I know that the figures for Lagos are very significant. We have a case of one person paying N250 million and more,” she said.
On debt rebalancing, Mrs. Adeosun said before now, 80 per cent of Nigeria’s debt was short dated, with a tenure of two years or less. “Interest was compounding on debt service to revenue. So, what we did was to restructure, and we told the debt management office to stop issuing 90 days bill. Issue 180, 360 and bonds to reduce your interest cost. Secondly, most of what we owe was domestic and the interest rate was high between 19 and 20 percent. Today, what Debt Management Office is paying is around 13 per cent because we have restructured that portfolio, refined some into dollars,” she said.
Mrs. Adeosun said one of the advantages of the government borrowing heavily and coming out of the domestic market was to enable the banks to lend to the real sector. ”If we don’t allow the private sector to grow and only government is borrowing, we cannot grow. The real fiscal buffer is an economy that is growing strongly. That is the real shock absorber and then we can weather the storm if there is a storm,” she said.
Emefiele described the foreign reserves as economic variables that should be focused on not just by Nigerians, but by everybody. “Today, our reserves have risen close to $47.93 billion as I speak with you but it is not to say it cannot come down. It’s a fluctuating number. You make payments, you receive money. So, if tomorrow you hear that it has dropped from $47.9 billion to $47 billion, then moves to $50 billion, don’t be surprised. I don’t want to raise hopes,” he said.
The CBN, he said, would continue to build the reserves, adding that Nigeria’s decision to rebuild its reserves from as low as $23 billion in 2016, to almost $48 billion today was a decision in the right direction.
“So, we are going to continue to do so. If we had reserves when we were hit by the exogenous shocks, we would not suffer the recession that we suffered. And there is a very strong likelihood that there could also be reversals,” he said.
He said the CBN would love to have inflation as low as possible. “Last month, inflation was 13.43 per cent. We are hoping that in 2018, we should achieve a very low double digit inflation level and if we are lucky, high single-digit. And I think with that we should be seen to be moving in the right direction. I keep saying the Monetary Policy Committee (MPC) has the primary mandate for monetary and price stability.”
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