It is a minister’s job to do good economic policy, but an equally important part of the job would be to sell it. In the light of this, Zainab Shamsuna Ahmed, the Nigerian Finance Minister, is a reassuring figure to passionately stir the Nigerian economy without undermining its stability. She would help to pursue policies with entrenched interest for service to the people without wrecking the economy.
Of course, the measure of any finance minister, just like Ahmed, former Executive Secretary and National Coordinator of the Nigeria Extractive Industries Transparency Initiative (NEITI), is whether he or she is capable of divining either a new order for the economy or a decided step-change in the functioning of the current one. Her measure has been her in her ability to comprehend danger and act decisively to get rid of or minimise it.
Ahmed, an Accountant who was in 2015 appointed Minister of State for Budget and National Planning by President Muhammadu Buhari, has a thorough understanding of budgeting, with which she will have to balance government’s spending priorities with the need to maintain public services and hold up the economy even at a time of fragile growth. The Nigeria’s expenditure performance, for her, cannot be taken in isolation of revenues. The 2018 budgeted revenue was N7.2 trillion as against the realised figure of N3.96 trillion, signifying in her position a negative variance of 45%. Despite the shortfall, the government was able to fully pay salaries and service 100% of debt. The government had then also released seven months overhead for 2018, two months for 2019, and N2.079 trillion capital expenditure as at 14th May 2019.
She, with extensive knowledge and diverse experience in public sector reform and management, would probably be among the first to admit that she who assumed office as finance minister in 2018 has indeed had some luck. But her work as finance minister can be acknowledged much for what she did for Nigeria on her careful eight-month watch – during the economic straits in the face of the recession, which she confronted in her time during the first four years of President Buhari.
The fiscal rules that she and her economic team put in place to deal with the recession when she moved to stimulate the economy were seemingly proactively ahead of the impecunious. The efforts of Ahmed, a graduate of both Ahmadu Bello and Olabisi Onabanjo (formerly Ogun State University) Universities, have become almost anal in her insistence and imposed discipline to make sure the economy was headed in the right direction. Through the implementation of policies in the Economic Recovery and Growth Plan (ERGP) which the administration of President Buhari developed in 2017, the economy in the real sense exited recession and has since then moved towards a path of growth that is sustainable, inclusive as well as diversified. Notably, Nigeria has achieved seven consecutive quarters of Gross Domestic Product (GDP) growth since the economy exited recession in the Q2, 2017.
It was a really important moment for the country as the country rallied her and her team; Nigerians worked together through that period and the results are all there, reflecting well on the government and really arguably well on the people. Apart from the fact that there is continued and deliberate effort to deepen the Nigerian non-oil economic performance with non-oil GDP growth of 2.70% as at Q4 2018, which represents a 0.38% increase in growth compared to Q3 2018, every sector is targeted to contribute to the increase in growth.
Ahmed, the Chairperson of the Board of Trustees of the African Union (AU) Peace Fund, has underpinned the Nigerian economy by moving fiscal policy rapidly into a higher gear, to provide a stimulus by way of government demand in the face of a marked contraction in private spending. The scale, speed and the modality of that stimulus made all the difference to activity within the economy.
Nigeria has witnessed strategic investments in critical infrastructure and in human capital to spur further economic growth. The plan, according to her, has been to improve the fiscal space by boosting revenues as well as implementing the ongoing effort through Strategic Revenue Growth Initiatives (SRGI). Considering revenue growth as a strategic priority for the ministry of finance, the SRGI is a key aspect of the government’s strategy to improve non-oil revenue through fiscal buffers, and ultimately improve the revenue to debt service ratio and to improve the ratio of non-oil revenue to non-oil GDP.
Obviously a set of initiatives have been itemised in the SRGI to increase the country’s revenues across all revenue types, to ensure that the whole of government is focused on revenue generation. Of course, the greater efficiency is meant to help the economy grow, to stimulate the economy and to make life better for all in Nigeria. Similarly, under watch, year-on-year inflation rates continue to improve from a high rate of 18.7% in January 2017 to 11.37% in April 2019. The external reserves on one hand grew from US$28.3 billion in 2015 to US$44.69 billion as at May 13, 2019, and this represents a significant improvement that has helped to stabilise the economy, including stabilising the exchange rates.
If the proof of the pudding is in the eating, Ahmed’s stewardship had brought Nigeria through the bumps. More so when the ongoing integration of different biometric databases in Nigeria is completed, it is anticipated that the figure on the taxpayer database will grow to 45 million individuals, inclusive of corporate tax payers. In essence, the taxpayer database has expanded from 10 million that was inherited by President Buhari in 2015 to 35 million as at the end of 2018.
The Nigerian economy now is much more resilient and that has something to do with a much stronger foundation of the way she managed the economy. Government had adopted a prudent debt management strategy which ensures that it invests what it borrows in capital projects. Although the national debt by international standards, at 19.09% Nigeria’s debt to GDP ratio, is a reasonable ratio, but it is well below the average threshold of 56% for countries similar to Nigeria.
Nigeria had issued N100 billion Sukuk bond to carter for the upgrade and maintenance of 23 roads across the country. Similarly, there has been an implementation of the infrastructure tax credit scheme and the conclusion of the upgrade of four major airports in the country launched through an Executive Order. In the Q1 2019, the Honourable Minister of Finance also led Nigeria delegation to the 44th meeting of the Islamic Development Bank Group Board of Governors, during which they signed two Technical Cooperation Agreements, one of which is focused on boosting Cotton, Textile and garment production.
In the area of Climate Finance, Nigeria was the first Sub-Saharan African country to issue a (N10.97 billion) green bond in December 2017 for the financing of solar and the country is currently in the process of issuing a second N15 billion green bond later this year to finance various sectors in agriculture, power, health and water resources. Recognizing the critical role of the Ministry of Finance in steering the economy and managing risks, including climate change, climate finance, Nigeria has joined an international coalition of Finance Ministers committed to ensuring continued focus on climate finance. Considering the robust relationship between the Federal Ministry of Finance and other federal ministries, department and agencies (MDAs), and also other levels of government in the country, the Federal Ministry of Finance under the leadership of Ahmed has continued to remain responsible in ensuring revenue sharing to the three tiers of government in accordance with the provision of the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) Act.
The minister has presided over Nigeria’s ambitious tax scheme, even as the Buhari administration’s major investments in infrastructure has earned just a promising reputation. In addition to the mapped out initiatives, the ongoing Value Added tax (VAT) expansion programme is designed to ensure improved collection efficiency while ensuring there is automation of VAT collection at source in some key sectors. FIRS has already begun the programme for banks and other large industries. The target at improving the VAT collection, which was N148.92 billion as against the budgeted figure of N207.51 billion in 2018, also considers seriously the digitalisation and transformation initiatives, which are an integral part of the whole revenue collection process.
The entire effort is based on the fact that independent revenues are a critical part of the revenue mix of Nigeria. Though there is not yet optimal performance of independent revenue, but the Honourable Minister believes there has been some improvements. The independent revenue that was generated in 2018 was N454.34 billion as against a budgeted figure of N847.95 billion, representing 54% performance. In 2017, actual independent revenue performance was 25% of the target.
Under her mandate Nigeria has achieved tangible results in reducing poverty, improving the standard of living, prudently managing public debt and boosting the transparency of public transactions. She can also be recognised for her efforts in fighting corruption and increase transparency in government. Worthy of note is the outcome of the Presidential Initiative on Continuous Audit (PICA). The initiative, according to Ahmed, has saved the Federation N603.78 billion from its inception in 2016 to date. Among the figure is the savings of N8.30 billion during Q1 2019.
In support of healthcare, Ahmed recognises the important role of domestic revenue mobilisation in ensuring critical financing for key sectors such as health and education. The Basic Healthcare Provision Fund (BHPF), which was included in the 2019 budget, is being implemented in some States already, and there is a project to automate payment across all Federal Tertiary Health Institutions known as Health Pay was launched in 2017. An initial operational model of the project, meant to provide visibility across the healthcare value chain, was piloted in 2018 from which a steep learning curve has been established. Through the learning curve, there is need to come up with a more effective sustainability framework for all aspects of the ecosystem, allowing multifaceted plugins; ranging from Micro Insurance (National Health Insurance Scheme (NHIS) and Health Management Organisations (HMOs), etc.), as well as considering working with pharmaceutical companies, hospital equipment manufacturers etc.
Her reappointment is obviously based upon her leadership, innovation, the social and economic impacts and the scalability of her initiatives and policies, among others because, “We need credible fiscal plans to deal with our deficits and debt, credible to markets and a clear way forward. We need to set a very clear and firm course”, Ahmed, former Managing Director of Kaduna State of Investment Company, former Chief Finance Officer of Nigeria Mobile Telecommunications Company, and Ex-Officio Member of the Board of Governors, Islamic Development Bank, would always say.
