Adeosun: With Growing Confidence in Our Economy, Foreign Investors Have  Signalled Interest in Aviation, Power


The 2017 Spring Meetings of the IMF/World Bank ended  last Sunday in Washington DC, United States of America.  At the meetings, various economic challenges facing the country such as   how investment in infrastructure can aid economic growth, government’s committed to affordable housing,  the need for collaboration between the executive and legislature to curb leakages, prevent illicit financial flows,  power sector recovery, crackdown on tax evasion and commitment to drive and increase domestic revenue were discussed. At the end of the meetings, Minister of Finance, Mrs. Kemi Adeosun fielded questions from journalists. Kunle Aderinokun,  Funke Olaode, Obinna Chima, Kasie Abone and Nosa Alekhuogie were there

The 2017 Spring Meetings of the IMF/World Bank ended last Sunday in Washington DC.  At the meetings, various economic challenges facing Nigeria were discussed. They included the issues of infrastructure, housing, executive/legislature cooperation in curbing fiscal leakages, illicit financial transfers, power sector recovery, crackdown on tax evasion, and revenue generation. Minister of Finance, Mrs. Kemi Adeosun, later elaborated on the above subjects after the meetings, when she fielded questions from journalists. Kunle Aderinokun, Funke Olaode, Obinna Chima, Kasie Abone and Nosa Alekhuogie were at the media parley 

Can you throw light on the outcome of the various sessions held at this year’s IMF/World Bank spring meetings?

 Nigeria had a successful outing at the meetings held with stakeholders. Myself; the Minister of Budget and Planning; Minister of Power, Works and Housing; Minister of Water Resources; the Central Bank of  Nigeria Governor; Director-general of the Budget Office, and other top government functionaries were at the meetings. We discussed the global economy, emphasising the fact that there is a growing momentum in both developed and developing economies, but that further progress will be dependent on policies that continue to support recovery, lift productivity, growth and enhance resilience.

The meetings recommended that working within a multilateral framework, countries should strive for strong and more balanced growth and focus on providing economic opportunities for all. The meetings actually prescribed some actions, such as a mix of policy buffers to implement countercyclical policies, especially for commodity producers, like Nigeria, with continuous adjustments and a clear focus on innovation and productivity improvements;  keeping and accelerating the growth momentum through stimulation and  boosting of both public and private qualitative investments, especially in utilities and infrastructure; urgent implementation of the right type of structural and macroeconomic reforms as well as better allocation of production and use of fiscal incentives in a strategic manner to drive growth and investment.


What are the takeaways for Nigeria in these meetings?

 All the delegates’ engagements focused on advancing discussions with development partners on the accelerated implementation of critical projects outlined in the economic recovery growth. As part of the efforts to adequately address the issue of domestic resource mobilisation, I addressed a group of global parliamentarians where I emphasised the need for collaboration between the executive and legislature to reduce leakages, prevent illicit financial flows, and crack down on tax evasion. We agreed with the World Bank Group to focus on scaling up the level of disbursements on projects in Nigeria, including projects that focused on enhancing the social safety net and improving life for our citizens. The World Bank Group commended the government’s affordable housing scheme, acknowledging its potential impact on job creation and the role it can play in reducing corruption. The World Bank Group pledged to support the further development of the scheme. We were joined by representatives from the National Assembly for very productive meetings with stakeholders – World Bank Group, IMF, African Development Bank, International Finance Corporation – on Nigerian power sector recovery plan; issues relating to financing, gas production and processing, generation and transmission.  If there is one thing that will drive economic growth in Nigeria, it is power because of the number of opportunities, wealth and jobs it will create. So, getting power right is not negotiable. In summary all these projects are on economic recovery and growth. The major thing is implementation and putting the foundation in place is accelerating the implementation. And we are quite confident that we are going to get back to sustainable growth that would be less vulnerable, so that even if the oil prices fall in the future, Nigeria won’t be at the receiving end, as we found ourselves in the past few years.


 The Nigerian tax base is large but the major problem is enforcement, which has been hampered mainly by the issue of tax evasion. What is the federal government doing to ensure that people pay taxes? 

The federal government doesn’t intend to introduce new taxes because  the problem we have with  the taxes is that Nigeria has six per cent GDP tax ratio, South Africa has 30 per cent, and most  advanced countries are on 30 per cent plus. But even with six per cent, a lot of taxes we collect are resource taxes, such as petroleum tax. So if the price of oil goes up we collect more and if it goes down we get less. This is vulnerable. The solution is broader taxes that reflect the total economy. We have got to broaden the issue of tax in Africa. The society works when everybody pays tax. The problem is tax evasion and illicit cash flow. So we call for support from the World Bank, colleagues in other countries that the money leaving Nigeria going abroad not taxed is illicit money and we need it to develop Africa. Of course, they have agreed to cooperate with us to reverse the flows.  If you are able to get away without paying tax, majority won’t and the work of the government is to ensure that people don’t evade tax. We have already started that job by gathering data and over 800,000 companies have been gathered, and registered. 

How was that done? We simply went to Corporate Affairs Commission to enquire about companies that are active and checked their tax rates and the accountant general’s office checks out the tax status of any company that wants to collect money from the federal government. Everything we are doing is driving people and forcing them to pay taxes. In developed countries, people pay tax because they have to. The other thing is that, there is going to be better cooperation from the international community on the illicit cash flow because a lot of money has left Nigeria and with what is happening now, there is a focus on data under the ownership beneficiary, which the president signed with former British Prime Minister David Cameron before he left. The British government is going to give us a list of every Nigerian that has a property in the United Kingdom. We would be able to compare if this person who owns one or five properties in the UK is paying tax in Nigeria. So, it is going to be a very systematic process using a lot of data and moral persuasion telling people this is the right time to do the right thing. And this is the only way the country can move forward. We travel across the globe and see the level of their infrastructure in terms of good roads, etc. These countries have good tax systems. Nigeria has one of the lowest tax ratios in the world – six per cent. So we have to look for a way of making our tax collection effective. We have about 13 million tax payers in Nigeria and about 12.5 million are those who have their taxes deducted. Are we saying all the wealthy and self-employed are only 500,000? This is not possible. We are going to be more aggressive on tax collection; we are not witch-hunting anybody. Those who have been able to get away with it over the years know that the game is up.


 What is the World Bank’s position on the funding of projects in Nigeria? 

As said earlier, we had a detailed meeting with the World Bank Group, where we discussed our projects and how we are going to focus on scaling up World Bank projects in Nigeria. Some of the projects  are at the state governments level while some are at the federal government level, like polio, and there are lots of World Bank projects, such as North-east, school feeding, the N5,000 stipends. We are waiting for the National Assembly’s approval so that we can tidy up those loans. Of course, they are concessionary loans with about 0.75 per cent service charge; pay back in 20 years, because they are for social rebuilding programmes. About $500 million is committed: school feeding, N5, 000 stipend and empowerment. They have raised more money to be made available to the African countries. The point is, how do we design the projects that disburse quickly and take advantage of these monies? We have some projects that have been going on for four to five years. We need to address that and we agreed to use project preparation facilities, like pilot scheme, to check if it will work before rolling it out. There are some key schemes, for instance, financial provision for women and women having access to finance. We found out that when women have access to finance, there are multiple effects on the society. Basically, when woman have money, they spend it on their families. We asked the  World Bank to help us with that and they are coming with a pilot project at local grassroots level where  women can be given loans and this will complement social intervention programmes.

How confident are you on the successful implementation of the affordable housing project, considering the failures of successive administrations in the past?

 The family housing scheme, which we are piloting, is a laudable achievement.  Affordable housing   is paramount to the fight against corruption. If someone worked for 35 years and did not own a home you are sowing a seed of corruption because if you put such person in charge of public money you know what will happen.  We have to have a system, where you put 10 per cent down and pay installmentally for 20 years and by the time you retire you become a proud house owner. We need the mortgage market to be stabilised. The family scheme is going to back the mortgaging financing scheme to push the housing project.  There is a housing pilot project going on in six states and we want to finish before we announce it. Already, it is going on in Nassarawa State. It is affordable housing of about N2.9 million. You can pay N290, 000 and pack in and spread the payment over 20 years. We are probably the only country that doesn’t have proper mortgage plans. We, in this administration, are very passionate about empowering people and providing affordable housing for the masses. It is going to create jobs for carpenters, welders, and bricklayers. 


You talked about investors planning to invest in Nigeria. How comfortable are they with the government’s policies, the issue of corruption, and so on?

 Most of them are interested in making investment in Nigeria and just want to be sure that the time is right and some are even looking at buying the airlines from AMCON and just waiting to ensure that our policies are right. I think it is a welcome sign that investors are now looking to invest in Nigeria, which we are looking for. We have shown the world that we are fighting corruption; we have shown the world that we are serious and the next phase is investment. And, I am very excited about it. We have very multilateral meetings with investors. They want to invest in power project and they want to buy airlines.


How do you think the energy sector can be reformed considering past failed efforts? 

I don’t think the problem in the power sector is related to the ethical issue. The problem really has been the structure, as government is trying to provide power and for so long couldn’t do so. Did the privatisation really save the sector?  What the power sector recovery has done is to look at the problem holistically. Now the multilateral agencies have looked at the plans we put together and they like it that it is really stable: from DISCOs to GENCOs, end users and meter rate. What everybody is clear about is that, it is a big problem that will take time to solve. But the most important thing is that there are milestones in what we are expected to say. The multilateral agencies have pledged their support financially because those things are tied to results. For instance, if you look at issues around generation companies, there is an issue because the capacity to generate electricity is not there. So investing in generation capacity will change the power outlook. From the impression I got during the meeting, they were optimistic that we implement what we have planned and the minister of power promised to drive the implementation. So I am optimistic that it is a realistic plan, not a plan that says there would be electricity by December. We are not saying that you should throw away your generator by December.  But it is a realistic plan that is going to take time but let’s move towards it so that we can make progress and meet up key needs especially on business because if there is constant power, a lot of companies that have closed down can reopen. There is a huge plan for economic recovery and growth. I am optimistic that this time we would get it right.


Considering the social and cultural inhibitions in many parts of Nigeria that tend to make it difficult for women to engage in certain economic activities, like property ownership, are there measures being put in place to ensure that women have access to the proposed economic empowerment Loans?

 On training women and collaterals, the World Bank came and did a study and discovered that in some cultures and even in Nigeria, women stay at home. How do you get loans across to those women?  That was discussed. And in some countries women have to go and fetch firewood and that is where they discuss.  With the discovery, women can actually get loans through cooperatives. Again, some start-up capital of some of them is just N10, 000 while for some their total working capital is N2, 000, which they turn out on daily basis. So every day, they have to go to the market. If you give such woman a loan of N20, 000 and she goes to the market once in a week you have changed the income and her life earning capacity. We had a similar project, while I was a commissioner in Ogun State, in collaboration with Ecobank. We gave them N50, 000 and they paid back interest daily. They had their own collectors, though. The payback rate was about 96 per cent. It was a different ball game when we carried out a similar project with men. The payback was 33 per cent. One of the things this plan is doing is to lend without collateral. Although it may sound unscientific, women don’t owe. If you lend to a woman she would pay back. So we need to develop trust and that is why the cooperative is key. They are not looking for big loans. As traders they are part-time traders trading to help and support their families. So we are going to do a pilot programme in all the local governments in the six geo-political zones in the country. 


On the fight against corruption and recovery of looted funds, how are the recovered funds being utilised?

 On the recovered money, we have a recovery account that all the recovered money goes into. Also, in the budget, there are provisions that the recovered money will take care of certain things in the budget and we have to wait for any excess recovery and take a decision. So far, we haven’t recovered the expected money in the budget. What we did is to create a separate Recovery Account.  Many agencies are recovering and we have to keep an eye on those recovering to ensure that the money is not re-looted. We ensure that the agencies send us a return on recovered money every month, how much they have recovered, the account in which it is kept and  central recovery account under the supervision of the Accountant-General so we can reconcile. Recovery is something that is new and I think it is good. We are now arguing about recovering, it is a good problem in Nigeria. And I think as we recover more, we will get it right. It is a good thing.


What is your assessment of the whistle blower policy, which is now popularly called Mrs. Adeosun policy, and how do you think it can be strengthened?

 The whistle blowing policy, I don’t know if it is Mrs. Adeosun policy. It started with us wanting to have a whistle blower policy for agencies under finance. We planned for customs where people complained about being forced to settle and FIRS wanting that policy to be there. But when we took it to the Presidency, the vice president said no, this can’t just be for finance. We want it to be a national policy. So, we took it to FEC and the president endorsed it and it became a national policy.

Now, I am more interested in the deterrents because from the experience of what I have seen as Minister of Finance, all the money that went missing, two to three, four people knew about it. When we came in and asked them, they said, yes I knew, I saw so, so, moving the money to here and there. So, why didn’t you speak up and when we began to speak to them, there were two things: one was fear, if I speak up and I lose my job, who is going to help me. So, we now need to protect people who have information about missing money. It started with some bank staff, when TSA came, they were asked to rename accounts, the banks knew that the money belong to the government but they don’t want it to go to TSA and a lady came to us and said her conscience was heavy. She gave us information, we wrote to the bank, the bank admitted it and paid the money. It was about N1.6 billion but she lost her job. That really hit me hard and that was unfair. We should be able to compensate somebody like this for that loss. And that was why we said, let there be financial reward. So, that does two things, it makes somebody who is doing a bad thing to think somebody may go and blow the whistle and that stopped money from going out.

But one of the consequences we did not really anticipate was money that has already been stolen now coming back. That is music to our ears. It is not nice but it can be a bit embarrassing when you see money in the soak-away, in the ceiling, in burial grounds but it is our money and we are entitled to get it back. When we started it was five per cent but if you notice now, the first billion is five per cent and it goes down to 3.5 to 2.5 per cent for anything over, I think N5 billion. When we began to do the number, some people will not even know what to do with the money. If you do five per cent on this amount, it is a life-changing money, but people should be rewarded. What is very interesting is the kinds of people that are bringing the information tend to be very low-level people. Now, people are treating their drivers very well as well as your cooks, house girls. One of them, who came to give us the information, was actually the one carrying the money. He said he was carrying the money and he could feel that it was money. So, we may end up with unintended whistle-blower millionaires. I am not so worried about how much they get. What we should worry about is the person that took 100 per cent of the money and would have kept everything. So, five per cent should not really be a problem for us. We have become a whistle blower nation, everybody now is looking over each other’s shoulders to see what is going on but I think that is a very good thing.

What is the federal government doing to try to institutionalise the whistle blower policy?

 You know there is a whistle-blower draft law that has been forwarded to the National Assembly and it has not been passed. This policy is like a stop-gap; we cannot wait for the law. The law is still going through the process of the National Assembly but in the meantime, we need to have a framework to protect whistle blowers. So, the policy covers things like loss of income, it provides anonymity for the whistle blowers. 

We have continued to refine it. Of course, we need a legal framework but in the meantime, a policy will do just as well. We have continued to refine it but now there is a legal document prepared by the Attorney General, which is signed between the Federal Government of Nigeria and the information provider and that is because some whistle blowers are concerned, when I give this information, how am I sure you won’t turn around tomorrow and say you already knew? So, there is now a legal agreement. We will continue to refine the policy as we go. If the law is passed, of course, it will subdue everything. It is the way to go forward. It is not new; we did not invent it in Nigeria. You have whistle blowers in every other country of the world. But for us, because of the significant amount of money that went missing in the last few years, the amounts being recovered are just beyond what anybody imagined. But we must institutionalise it; we must protect people’s lives. For example, in the agreement, many whistle blowers use lawyers, some whistle blowers are illiterate. How do we protect them? We have to give them code names. That is why the whistle blowers unit was put in the Ministry of Finance. The reason for that was that it was seen as a less intimidating place for people to come. There was a long debate, should it be in the EFCC, DSS.

The vice president said no, some people just walked into EFCC and they are already scared, you make it in the Ministry of Finance where people feel relaxed. We have a whistle blower unit with seconded staff from EFCC, ICPC, DSS, all other investigative agencies. They have been seconded to that unit and they work full time in the Ministry of Finance. Let them go and do the preliminary investigation and refer it to the various agencies and this is just to make sure that the whistle blower is looked after and is protected. I have one or two who said they were not going to speak to anybody except me. When my people went for preliminary investigation, I said these people are serious and I had to make time to see them. It is important because it energises your fight against corruption. 

For the first time, those who stole should be the ones to be worried, not we, the victims. You should be the one sleeping with one eye open, wondering whether their doors are going to be broken down. But there is a proper legal process. All those are obtained; they go back and get orders to search because some of the money recovered becomes evidence in cases. So, it has to be done in a proper and legal manner and, of course, the Attorney General is involved, DG SSS, IG, ICPC, chaired by the vice president. I am also a member of that panel. We all refine the policy as we go because we don’t want to in the zeal to recover money compromise the case. So, we have to make sure we do it the right way.

What were the key factors responsible for the IMF’s recent positive assessment of Nigeria’s economic recovery effort?

 We have been very consistent. The recession we found ourselves is very unfortunate. We should have been heading in that direction for quite a while and we have always said that we will pursue the right long-term policies, not only to get us out of it but more importantly to also get us growing again, in a different kind of growth. A growth that will be more inclusive, growth that will be more sustainable and we just pursue the policies doggedly. We need to make Nigeria a productive economy. The only way you can create jobs, create business and wealth for Nigerians is to be productive. You cannot rely on oil because when the price of oil goes down, you wipe out people’s wealth and hope. We need an economy that, whether oil is high or low, Nigeria is growing. There are countries that don’t have oil and they don’t die. So, let us focus on the rest of the economy that has potentials for growth and that is what we have been doing. I concur with the IMF view, we will get out of recession but more importantly, we will start growing again in a new kind of direction, which I think will transform Nigeria.


But it does seem many Nigerians are yet to feel the impact of the economic improvements. When would these improvements begin to reflect in the standard of living of the average Nigerian?

 It is like building a house, you start with a foundation. If you go and look at the site you won’t see anything. That is the sort of thing, because these projects are major projects. We are not just doing a few things here and there. We are fundamentally trying to change the Nigerian economy, so that foundation stage can be very frustrating. You don’t see anything at first but suddenly things begin to come out of the ground and the impact will be very rapid, that is what we are saying. We have spent about N1.2 trillion this year on capital projects. We hope to do more than that in 2017. But then, you will get to the stage where projects begin to move from projects to actually delivering value for the people. The foundation work has been done, now, you move to the stage of creating jobs because people are building houses, creating jobs in financial services, carpenters will be employed, tillers, plumbers will be employed. That is the next stage of the type of projects that we are now focusing on and it is then people will really begin to feel the difference.


IMF and World Bank have had reasons to express reservation about certain economic policies, such as the administration of the new forex regime. Did you get any concrete assurance of their assistance or willingness to help the country to exit recession?

 There is the need to clarify, what is the role of the World Bank and IMF. IMF is your lender of last resort. When a country is in trouble and nobody else will lend, you run to the IMF and the IMF will put some conditions in place. You have to go and do this and that and say look, the things the IMF wants us to do, we will do by ourselves. We want to take ownership of Nigeria’s recovery, because when we got into problem, nobody helped us get into problem and so, we need to get out ourselves. If we don’t take ownership of this thing, it will look like the IMF came to rescue us. We are trying very hard to avoid IMF. It is not part of our objectives at all. We are not even trying to apply to the IMF for loans at all. There is no question they are not supporting us. We have not even asked for their support. 

What IMF does is that they go to every country, America, Britain and the rest, and they go on Article IV, on every country. It is not just because you are in trouble that IMF comes, no. IMF goes to every country which is what you are referring to in terms of growth. So, we have not asked them for money. What we care for is technical support for specific projects for our economic growth and recovery plans.

We just finished a meeting on housing, we are going for another meeting on power, we were in a meeting on water. So, we are now saying these are the specific things that Nigerians want to do to grow its economy and how can you support us? That support could be financial, and it could also largely be technical. It is not that they have expressed reservations per se, it is just that we made a decision as an economic management team that we are Nigerians, we must take responsibility for this situation and we must get out of it on our own terms and that is what we are doing.