BAGUDU: TIBUBU’S PLAN TO DE-RISK CONSUMER CREDIT, MORTGAGES WILL REVITALISE ECONOMY
the time. Even at the cabinet discussions and the retreats have shown that we should learn from what has happened both in Nigeria and what is happening elsewhere.
If you go to many countries, the health sector is largely private sector. Even in Nigeria, we have some first-class hospitals. Maybe in the 70s, we though hospitals could only be built by the government. We are seeing airports owned by companies. We are seeing roads being concessioned. If we recall, when the President was a Lagos governor and we saw how the private sector could drive development even in areas like waste management.
We understand that there is a lot the private sector can do. There is much money out there in the private space, which we must leverage. The role of public officers is even to lead so that that private capital can come and the President has been doing this. He visited India, the UAE, Germany and a couple of other countries for this purpose. He continues to emphasise the need to interact with investors, meet and hear their expectations.
It has been announced that a coastal railway of over 780 kilometers from Lagos to Calabar is going to be undertaken by the private sector. We have seen Siemens investing more and expanding; it is supporting us more to expand our power sector. We have seen gas deals sealed. Every day we are seeing deals in different sectors.
We understand that over 90 per cent of our revenue goes into debt servicing yet we continue to add more debt? Why are we piling up debts that do not translate to higher revenue?
Unfortunately in our national life, some things cannot wait. We have many children. We want them to have education. We have security challenge. We need more boots on the ground. So as much as you would want to cut back on borrowing, there is an irreducible minimum that you need to do. So it is a choice.
And investment in, maybe, security is not like building a house, certainly. So, you won’t see it when you come back, maybe that invisible spending. During Gen. Yakubu Gowon ear, he made the famous statement that money was not Nigeria’s problem. We became more populous country thereafter. Demand for everything – infrastructure and security – started growing. So, we need an irreducible minimum of spending and we don’t have the money to meet that irreducible minimum. Revenue is also a problem. There are countries that collect 50 per cent of their GDP. Most European countries are over 30 per cent; France is about 50 per cent. Italy, I think, is around 38 per cent. Nigeria used to be the second lowest in the world. Think of it – you don’t have revenue and you have irreducible commitments. You are in trouble somehow. But what we recognise this and that is why the 2024 budget, despite the need for spending, we want to make private sector to have confidence in us.
From the economic planning point of view, what are we doing about our exchange rate policies so that prospective investors have confidence in the economy?
Beyond economic planning point of view, the President has signed two executive orders, because we had been deceiving ourselves. We had run a system where we did not have foreign exchange anymore. So even if your desire is to ensure repatriation, you don’t have because you have boxed yourself into a corner. And that’s why the President said let us allow central bank to liberalise the market; let it be a rule-based market.
If somebody makes legislation today that says every bag of yam must cost N100, the people who hold there will just take them quickly back to the stores and lock them up. So, the steps taken by the President and the Central Bank might be inconvenient now in terms of the fluctuation. But I will believe it will stabilise and get better. Countries that have chosen the route have done better on average in the long run.
Nigeria has not tapped the international bond market in the past two years. Is there any plan to do so this year?
Well Nigeria officially might not have done so, but the entities like the Bank of Industry have done well in Eurobond market.
So, in terms of improving our credit rating, we appear to be in the junk territory…
No, we are not. We have seen two outlooks and the Eurobond spread for Nigeria have been narrowing, which is a major sign of confidence. Once you liberalise your market, there are investors who reckon that Nigeria economy is big, it will get better and they rightly think that if Nigeria can meet its commitment into the future and with increased growth, even the exchange rate will stabilise. There will be potential for exchange rate gain.
The gap between projected deficits and actual fiscal deficits has been growing partly because of the poor performance of revenue parameters? What are we doing to ensure this narrows in the coming years?
It is beginning to narrow. The reason we have a significant jump in debt service this year provision from N6.5 trillion to about N8.5 trillion is because we took the interest payment on the N22 trillion ways and means that was securitised on. The nine per cent interest is about N2 billion – a reason we have that increase.
We are realistic. The first element of conditioning or disciplining yourself is to tell the family that we are overborrowed. Maybe that will resonates. It is very tempting for a minister of budget to want more money for spending, rather than paying debt service. But we must begin to reduce the divergence and provide adequately for that. The major step being taken to narrow the gap is improving tax revenue. Even when the tax revenue comes, it should not be used to fund those things that the private sector can do but on things that will build confidence among the private sector.
How will the budget impact women who constitute about 50 per cent of the population? Also, how will security of oil pipelines and global headwinds such as the war in the Middle East affect the implementation of the budget?
Well, I dare not miss out on women. Because they don’t constitute 50 per cent, they constitute 100 per cent. All of us are a product of their biology and magnanimity. So we are absolutely indebted to them and the budget contains increase in areas, all of which will benefit women.
I don’t know whether you heard this before, when the Ministry of Women Affairs was contemplated, there was a famous woman activist who was even against it. She said that, let there be no thought that we have given you your own and the rest belongs to women.
Everything is women - education, health, infrastructure, everything. So it should be mainstreamed into everything we do. Because without getting that right, then everything else will go wrong.
So the budget, the agriculture, food security, poverty alleviation, inclusivity, all are measures to ensure that everyone has a pride of place, particularly women. And there are women-specific programmes that Mr. President has just approved, for example, the expansion of the World Bank Nigeria for Women project, $550 million, which was taking place in some pilot states, but now to be extended to, and even in the choice of beneficiaries, he has always emphasised more women for government programmes.
Headwinds, yes, the international economy is affecting everyone, but luckily for us, we are an economy with a strong absorptive capacity, even as challenged as the international economy is.
Because across Nigeria, in all the 36 states plus FCT, whether it is in farming, there are hard-working men and women, they are out in the farm, who if you support them with either seedling or fertilizer or input, they do better.
They produce more, with which they can take care of their families, and even generate to lower inflation because less people go to market, it is the same thing in fisheries, hardworking men and women. It is the same thing in the livestock sector. It is the same thing in small processing. Trade amongst ourselves. So Nigeria is a lucky country, in the sense that the domestic economy is an engine of growth by itself and even when the international policy is challenged, we can do much better to promote growth, and in what we are doing, significant growth will be generated by domestic activity.
The security of the oil facility is a function of the wider security, and more money has been put into security and a lot of attention is being brought to bare. If somebody breaks a pipeline, he is destroying livelihoods. Fishing grounds will be destroyed. Even what can be planted in contaminated in that area. So these are even survival issues.
Two days ago, we saw the governors forum reviving a committee on crude oil theft and prevention. Just to also lend support so that those issues that are threatening us, not just from a revenue and environmentally are contained.
What is the government’s plan to enhance revenue from the maritime sector?
Well, first, the institutional realignment of recognising and creating a ministry of Blue and Maritime Economy goes to support the point you made that we appreciate that this is a sector that deserves attention by itself.
The second element is, and that’s why one of the reasons why we are here, look, we should task people. We should ask questions of public officials so that if you don’t think you can do it, step aside and allow somebody who can do it. That’s how companies are run. If you are given a sector to run and you accept that it can contribute X to our national life, and without any decent reason, you can’t, then the searchlight should be beamed on you to make a choice.
President Bola Tinubu, in signing the budget, said as much, if you cannot help us, then you may consider leaving and you have all responsibilities to put us to task.
A budget, just like the mission of a private company, demands hard work. It’s not a presumed achievement. It depends on the industry and hard work of those who are bestowed with delivering it. And we should put everyone to task.