• Govt making progress in economic diversification
• Not satisified with handling of budget
By Kunle Aderinokun
The Institute of Chartered Accountants of Nigeria (ICAN) has said at 63 per cent, Nigeria’s debt servicing ratio is “unreasonable”.
ICAN President, Razak Jaiyeola, who made this declaration in an interview with THISDAY at the weekend, also said the servicing ratio was unsustainable and would not help the growth of the economy.
“The debt servicing ratio of about 63 per cent of revenue is unreasonable and has not helped the economy to grow. It is unsustainable and should bother every right thinking Nigerian,” Jaiyeola stated.
The Institute’s chief believed what “misled the country is the wrong position of relating debt servicing to GDP.”
He added that “the relationship should be between debt-servicing and revenue generated”. According to him, this would give a better idea of what the situation is and help chart a new path.
Jaiyeola, however, said: “What level of progress are we making when crude oil still remains the major source of government revenue in Nigeria?”
The ICAN president, who argued that increasing the tax rates and widening collection capacity were not the answers to Nigeria’s budget deficit, said, “Diversification is the answer; the only way to move out of poverty to prosperity and be a player in the global economic space.”
Continuing, he explained: “One of the most potent areas for diversification is agriculture. A legion of measure had been put in place in the past but not much has been the outcome. Agriculture is formidable as it can increase the supply of food for both internal consumption and export, provides labour, enlarging the market for manufactured and other goods and services as well as increasing domestic savings.”
Notwithstanding, he observed that the nation required a high level of ethics and innovation for “our products to be acceptable in the international market”.
“Though we are making progress, it is at a snail’s pace. We require much more than we are doing,” he added.
Jaiyeola however frowned upon the way the country’s budget is being handled.
“It would be difficult for anyone to confess that he is satisfied with the way the nation’s budget is being handled,” he said.
“A lot of improvements are needed to bring the budgeting process in line with global leading practices by eliminating all fundamental challenges currently being experienced. For instance, the budget preparation and scrutiny are always late. This makes it difficult for stakeholders to plan appropriately,” Jaiyeola stated.
Speaking further, the ICAN disclosed: “There is also the issue of assumptions underlying the budget estimates which are often over ambitious. We need to begin to learn from previous budget in preparing current ones. We do not have to impress anybody with high sounding but unrealistic assumption, especially in the area of crude oil production.
“The budget is also usually skewed in favour of recurrent expenditure. This is a disservice to the nation and an aberration. We equate budget performance in Nigeria with the release of funds such that nobody actually critically examines whether the budget is performing based on the parameters set in the budget or not.”
According to him, this is even compounded by the erratic release of budgeted funds to the respective agencies and units that need funds to execute projects and programmes.
“Unless and until all these fundamental challenges are dealt with sincerely and timely, the budgeting process in Nigeria would continue to be a challenge,” he warned.