The Federal Government has
outlined a 10-point fiscal roadmap to revive the Nigerian economy on the path
of growth, reports ITRealms.
The Vice President, Prof.
Yemi Osinbajo, who as represented by the Minister of Finance, Mrs. Kemi
Adeosun, gave these indications at the annual dinner of the Lagos Business
School (LBS),
Osinbajo, itemised fiscal
policies and actions being rolled out to tackle the key barriers to growth, at
the session which was attended by industry leaders across key sectors of the
economy including oil, banking and telecoms, Adeosun said “The Federal
Government’s Fiscal Roadmap is addressing barriers to growth that will drive
productivity, generate jobs and broaden wealth creating opportunities to
achieve inclusive growth”.
He said that the President
Muhammadu Buhari administration is determined to convert Nigeria to a
productive economy rather than one that is consumption driven. To do so,
Government would tackle the infrastructure deficit to unlock productivity,
improve business competitiveness and create employment.
Also, he said that
Government would actively partner with the private sector to achieve this by
use of a number of new funding platforms. These include the Road Trust Fund,
which will develop potentially tollable roads, and the Family Homes Fund which
is an ongoing PPP initiative for funding of affordable housing.
Giving details on a
revision to the Tax provision that allows companies to receive tax relief for
investment in roads on a collective basis, Osinbajo explained that the existing
provision that enabled companies to claim relief for road projects had only
been taken advantage of by two companies, Lafarge and Dangote Cement.
“This was because few
companies were large enough to fund roads alone. The revision would now allow
collective tax relief such that companies will be able to jointly fund roads,
subject to approval by FIRS and the Ministry of Works, and share the tax
credit. This would be particularly attractive to firms in clusters such as
industrial estates, many of which are plagued by poor road conditions,” the VP
said.
He emphasised the role of
infrastructure in creating inclusive growth, explaining the current barriers to
growth in agriculture, solid minerals and manufacturing, stressing that the
drivers of inflation were structural and were being addressed through the focus
on power, rail and road infrastructure.
The VP also outlined
measures planned to deal with the problem of hidden liabilities, which were
affecting the banking sector and efforts to revive the economy, explaining that
the conversion from cash accounting to IPSAS (International Public Sector
Accounting Standards) had unveiled unrecorded debts owed to contractors, oil
marketers, exporters, electricity distribution companies and others. These
liabilities were estimated at N2.2 Trillion and would be addressed with a 10
year Promissory Note Issuance programme in conjunction with the Central Bank of
Nigeria. This measure would be subject to a rigorous audit process of all
claims to ensure validity and mitigate against fraud and the impact of past
corrupt practices.
Henceforth, the Osinbajo
pointed out that measures would be put in place to prevent recurrence of such a
problem by ensuring that contracts are managed in a manner that firms have
assurance over when they would be paid.
He cited the fact that
many contractors were owed as a reason that many of those recently paid by
Government were slow in remobilising to site: “Some contractors had not been
paid in the past 4 years and in some cases the banks they were owing refused
them access to the funds released, causing delays”.
He explained further that
those receiving the Promissory Notes would be expected to provide a material
discount to government. The issuance was a solution to a long term problem that
was ‘a drag on economic activity’.
Osinbajo further remarked that, despite the current economic challenges facing the
Nigerian economy, the outlook is positive due to the strong fundamentals of
Nigeria and the ongoing reform programme.
Osinbajo reiterated that
Government is determined to create an enabling environment and put in place
supportive policies to return to growth in 2017 including greater alignment of
monetary and fiscal policies.
Below is detailed in the fiscal roadmap 10-point plan:
Fiscal
Roadmap 2017
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|
Fiscal Policy Initiative
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Expected Impact
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1.
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Recognise inherited debt
profile after a robust audit process:
§ Introduce promissory note program to
finance verified liabilities
§ Issue debt certificates to contractors,
Ministries, Departments & Agencies (MDAs), and State Governments
|
§ Improve cash flow of businesses
§ Improve Banks’ Non-Performing Loans
(NPLs)
§ Free up Banks’ balance sheet for lending
to private sector
§ Improve Government’s business interaction
with the private sector
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2.
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Mobilise private capital
to complement Government spending on infrastructure:
§ Roads Trust Fund
§ Family Homes Fund
§ Extend infrastructure tax relief to a
collective model to attract clusters of corporate entities
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§ Expand the provision of infrastructure
§ Drive growth of non-oil sector.
§ Drive economic growth
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3.
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Strengthen
fiscal/monetary handshake:
§ Replace administrative measures on list
of 41-items with fiscal measures to reduce demand pressure in parallel market
§ Encourage domestic food production
through specific incentives e.g. accelerated depreciation on food
manufacturing equipment and Zero (0%) duty on green houses
§ Planned revitalisation of refineries
§ Increase Diaspora remittances via
participation in the buyer support scheme for the Family Homes Fund
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§ Reduce demand for US Dollars
§ Increase supply of US Dollars
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4.
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Incentivise exports:
§ Restructure the Export Expansion Grant
(EEG) to a tax credit system
§ Rationalise tariffs and waivers in key
export sectors
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§ Encourage/incentivise non-oil exports
§ Drive import substitution
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5.
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Encourage investment in
specific sectors through fiscal incentives:
§ Accelerated depreciation on equipment in
strategic sectors e.g. food processing, mining and power
§ Rationalise tariffs and waivers in
priority sectors
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§ Drive investment in strategic sectors
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6.
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Continue expansion of
fiscal space through revenue
enhancement and cost consolidation:
§ Customs Single Window (being implemented
through a Private Public Partnership (PPP) scheme)
§ Template for non-allowable expenses for
Government Agencies.
§ Overhead cost control by the Efficiency
Unit
§ Continuous risk based audit by the
Presidential Initiative on Continuous Audit
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§ Revenue enhancement
§ Cost containment
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7.
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Improve fiscal
discipline at Sub-National level:
§ Extension of efficiency unit at
Sub-National level
§ Fast track municipal bond issues to
deepen the bond market
§ Conversion to International Public Sector
Accounting Standards by all State Governments.
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§ Improved fiscal position at Sub-National
level
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8.
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Enable and accelerate
Recoveries process:
§ Whistle-blower scheme
§ Centralised database on recovered assets
§ Asset tracing
§ Professional management of recovered
assets
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§ Increased efficiency of Recoveries
process
§ Increased budgetary funding availability
from Recoveries
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9.
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Rebalance debt portfolio
to extend maturity and optimise debt service cost:
§ Rebalance public debt portfolio with
increased external borrowing (60:40 target)
§ Extend maturity profile of public debt
portfolio
§ Deploy long-term debt instruments
including Infrastructure and Retail Bonds
§ Maximise use of concessionary loans
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§ Rebalanced debt profile with improved debt
service to revenue ratio
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10.
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Catalyse Micro, Small
and Medium Enterprise (MSME) growth through
specific measures to improve capacity and access to finance:
§ Development Bank of Nigeria (US$1.3bn)
§ Increase share of business awarded to
MSMEs from Government contracts
§ Tax harmonisation and tax incentives
§ Accelerated depreciation
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§ Acceleration of MSME growth
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Oye Midele/GEE
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