It was not a surprise that some of the decisions and positions of participating member-countries at the just concluded Spring meetings of the International Monetary Fund (IMF) and World Bank have continued to reverberate in the local and international media, days after the curtain was drawn on the all-important economic forum.
Thanks to the power of the traditional and the social media, Nigerians and other members of the international community were able to follow proceedings that took place in far-away Washington through spontaneous reports on what transpired in the course of the Spring meetings.
I was one of the few pessimists, who had feared that Nigerian government officials that attended the global event might fall to irresistible offers of the International Monetary Fund, which has been flaunting its capacity to help nations out of critical financial positions.
However, it was with a great relief I received the news of the unequivocal position of the Federal Government’s delegation led by the Minister of Finance, Mrs. Kemi Adeosun, indicating that going for IMF loan is not in the agenda.
Perhaps, what excited people like me was not the rejection of the temptation to run cap in hand to the IMF alone, but the sincerity of the Minister in acknowledging the precarious situation of things back at home and her clear explanation on how the government plans to tackle the problems headlong. One of the reports quoted the Minister as saying that `’we are not saying Nigeria doesn’t have challenges. We recognise those challenges and we are facing them. What we want is the opportunity to take responsibility to provide solutions by ourselves.”
But was the Minister grandstanding? Definitely no. I came into this conclusion when I read about the Minister’s blueprint on how to confront the challenges in the nation’s economy.
For those of us who were adults when previous administrations made wave, Adeosun’s modesty deserves commendations because we are familiar with various regimes of propaganda when warnings of impending economic disasters were often ignored.
Today, I want to agree with the Minister “We are not the only country that has challenges.” So rather than brood over those issues distracting us, the Minister told the global financial community that our problem can be solved by making necessary adjustments. This, she said would be done not only by monitoring the in-coming revenue, but also by taking practical steps to block leakages.
So, we are fixing the problems ourselves. In Nigeria, we have the capacity and we have the will to sort out our issues in our won way,” she said.
By opting for a budget support in form of loans from the World Bank and African Development Bank, I cannot but agree with the Minister that the Nigerian economy is not sick in the real sense of the world.
Economists have argued in the recent times that Nigeria’s case is not as bad as to have required urgent bailout from the IMF which often dangles its facilities with serious conditions. And if the media reports on the fruitful discussions that transpired between the Nigerian delegation and representatives of the World Bank, Islamic Development Bank and ADB is anything to rely upon, then hope of getting back on track is not lost after all.
The truth is that Nigeria has been hit hard by the fall in crude prices since oil sales account for around 70 per cent of its income.
The economy grew 2.8 per cent last year, its slowest pace in decades, and in March annual inflation rose to a near four year high of 12.8 percent.
Last month the IMF said it had again cut its growth forecast for Nigeria, predicting that gross domestic product growth would slow to 2.3 percent in 2016. It has said it hopes exchange rate limits imposed by Nigeria will be removed.
Government, we are told, wants to boost non-oil income by 87 per cent to offset the impact of the oil slump and squeeze informal small traders to boost tax revenues by 33 percent. As Mrs. Adeosun also admitted in one of her widely circulated articles in the national dailies, at the lower levels of our social and economic life, the waste, inefficiency and culture of non-performance have, like a financial cancer, eaten away at our core institutions.
So, it will not be out of place for the administration to look inwards for solution to Nigeria’s problems by taking conscious efforts to redress the infrastructure deficit, unlock the rich diversity in the economy with a determined and focused turnaround programme.
As the Minister put it, it would be a tragedy to have endured so much pain and not emerge better and stronger. The provision of a spending stimulus to the economy is critical to releasing the upside in the economy. Investing specifically in Power and Transportation, will release the opportunities in solid minerals, manufacturing and agriculture.
From my understanding of the position of this administration on financial aid, efforts need to be made to purge the system of the virus of corruption that turned previous loans into economic burden. So, I support the position of the Minister of Finance that it is important to link the fiscal housekeeping initiatives of this administration with the wider economic strategy. Specifically, questions around the focus on corruption and the elimination of ghost workers, controlling inefficient spending and preventing revenue leakages, need to be evaluated in the context of how it impacts our ability to stimulate the economy.
One way to go is through fiscal housekeeping, which the minister listed during her presentations at the Spring meetings.
There is no doubt that growing the economy at a rate that will address the employment needs of our huge population requires a fundamental change in how government collects its revenues and spends. The 2016 budget is deficit financed. And the fiscal housekeeping, which is aggressively blocking revenue leakages and reducing costs, is firmly aimed at ensuring that the borrowed funds are channelled into capital projects, rather than seeping through an inefficient financial management system. This is not only prudent economics but it is a moral necessity, since these borrowings will be repaid by future generations.
In an unmistakable term, the Minister declared that financial discipline is going to be a game changer in shaping the future of Nigeria’s economy.
The seriousness of this administration to put things right can be measured by its resolve to bringing discipline and effective system of managing our financial resources to ensure maximum value and according to the minister, we should no longer measure performance by the size of our budget or the amount disbursed; we must measure by the impact of that expenditure on the lives of Nigerians.
I’m equally glad to hear that this administration has made some key changes in the way funds are released. One way of doing this is to abandon the old system of capital releases that funnelled a proportional share of available funds released to each ministry, department and agency. Government now tie funds released to specific outcomes as documented by each agency. This is being supported by follow up reviews to ensure implementation.
– Ojeme writes from Lagos.