Adeosun: Nigeria’s Economic Growth Rests on Financial Discipline, Others

  • Says states have greater role to play in economic diversification

The Minister of Finance, Mrs. Kemi Adeosun, monday said if Nigeria was to achieve sustainable economic growth, it needed a planned approach to financial discipline, targeted investment and economic diversification.
Adeosun also said state governments in the country have key roles to play in the country’s desire to diversify from being a mono-product economy. She stated at a Channels Television programme, The Sunrise, which THISDAY monitored in Abuja that the government had opted to build its economic plan for the country on financial discipline because of its longstanding mismanagement of resources.

“The government’s economic plan is strong on fiscal discipline because people know we need to get our country working. And to do that, we need to do three things: get the country’s spending in check with firm financial controls, raise money for targeted investment in much needed infrastructure and see us diversify the economy from a damaging dependence on oil,” Adeosun stated.

She said state governments have a key role in diversifying Nigeria’s economy, adding: “We see the states as strong partners in diversifying our economy away from oil as well as getting Nigeria working again.

“This is one of the key drivers behind this administration’s fiscal sustainability plan with states. It is about improving accountability and transparency, increasing public revenue, effective expenditure, improving public financial management and managing debt sustainably.”

The minister described these measures as true reform which starts with discipline and ends with diversification of the economy.

She explained that there are 22 action points of reform which the government hopes to use to achieve key objectives which include improvement in accountability and transparency; increase in public revenue; rationalisation of public expenditure; improvement in public financial management and sustainable debt management.
Adeosun also said the financial system plan would take 18 months to fully become operational with key milestones to measure compliance.

“The objective is to ensure that states are set on a path towards fiscal sustainability with a clear link between federal government funding and necessary reform.

“Monthly disbursements to each state will be conditional on compliance with pre-agreed FSP milestones. FSP reforms will take 18 months to fully implement, but there are key milestones within the period to measure compliance.

“The states have agreed and endorsed this approach. It is also a path to supporting and increasing productivity and diversification of states economies, such as in agriculture, increasing food security and opportunities for exports,” she added.

The minister equally said 35 states have applied to the federal government’s loan and are in the process of submitting the required documentation which are being reviewed.

According to her, there have been erroneous claims that only seven or five states have met the government’s conditions. She said this was factually wrong.

“Diversification of the economy will increase when each state starts to increase their Internally Generated Revenue (IGR); this will create local jobs and expand wealth within the states.

“The economic blueprint is about putting in place the financial pillars to enable states work effectively with the federal government, also as recipients of infrastructure investment.
“Getting this right will enable states to be critical economic drivers for prosperity and pillars of professional probity,” she stated.

The minister also spoke on the decision of her ministry not to reinstate special bonus and overtime payments paid to civil servants in 2013 and 2014, saying: “This is part of the same clear goal which is to ensure fiscal discipline.

“We recognise the value of our staff and have made sure salaries are paid and we’ve worked hard to avoid redundancies. Although, I understand the disappointment some staff may have, any special payments wouldn’t be appropriate and there simply aren’t any provisions to pay out the N 1.2 billion. We need to return fiscal discipline not just to the Ministry of Finance but to every arm of government.

“Any delayed legitimate overtime payments will be paid. The Director of Finance Administration will address these and ensure that they are paid. Staff will get what they are legally entitled to.” On the new foreign exchange policy, the minister said: “We are happy with the new FX policy, this was the missing link between monetary and fiscal policy and we are happy that it is now in place. It is supply and demand drivers.”

On policies to support large manufacturers, she stated that: “It is not about only one policy but a framework of policies to ensure competitiveness both for local consumption and for exports. This would include looking into tariffs, customs as well as power.”

She also confirmed that disbursements in YouWIN have commenced but there was a serious need to reform the YouWIN programme to suit present Nigeria.

According to her, currently, the government gives winners N 10 million as a grant, adding, “that is a lot of money that will not come back to government, so we need to make sure that these funds create sustainable enterprises that create jobs. We also need to look at whether the figure should be N 10 million to one winner or N 1 million each to 10 winners.”