President Buhari’s four-year tenure is ticking gradually to a round off this May. The man who has held forth at Aso Rock since May 2015 has apparently been through the toughest four years of his life. Defying the limitations of age and illness, he has presided over an economy that had to be delivered from recession so early in his administration alongside raging battles at various fronts.
He came into government at a time that the state of the Nigerian economy needed an emergency ward treatment. There was a pressing need to recharge economic activities and extend life lines to so many Nigerians dislocated by economic hardship. His government’s change mantra fitted into the scenario perfectly and new hopes downed for Nigeria with Buhari’s return to the government house.
Driving the economy into a new momentum required enormous resources that weren’t available to the new government. Yet the economy needed to gain speed and urgently so in order to spur the production and consumption functions needed to deliver new jobs and lift people out of poverty. The Buhari administration therefore had to bend backwards in search of money before bending forward to deploy it into the productive function.
Something new to offer
In the strategy and the processes of mobilizing resources for the work, Buhari has somewhat something new to offer the nation. He has ushered in a time of reckoning for great ills of plundering the nation. So many idols have been seen to be standing on feet of clay.
The nation has lost to corruption good money it needed for development. The development function couldn’t proceed smoothly without first finding the energizing money. Turning on a searchlight on Nigeria’s stolen wealth has revealed unimaginable ways people have diverted the nation’s wealth away from productive engagement.
The mission to recover stolen money involves waging a full scale war against treasury looters. Being a former military general, Buhari was trained to fight battles. While battles are raging, at least criminals tend to pull back even if in the interim. Perhaps that has offered some respite to the economy, opening a little widow of opportunity for a turnaround.
Resource recovery battle has been carried to the door steps of key public institutions to seal the loopholes for revenue losses and enlarge the revenue flow channels to the public purse. Buhari has in place some good lieutenants with whom he has dressed up some key government institutions for efficient operations.
Creating fiscal space
His battle line extends to all the key arms of government – the legislature and the judiciary. His battle axe has fallen on budget padding practices in the national assembly, exposing for the first time a long existing black hole for diverting public funds to private use by lawmakers.
The judiciary has been hit by Buhari’s battle axe as well where judges, high and low, have been made to face the same law they administer to others. There has never been a better proof in recent times of the slogan that says ‘nobody is above the law’ than the example that the Buhari administration has made of the high and mighty in the judiciary.
Is Buhari desperate? The answer is a resounding yes! What for? The recovery of enormous resources that Nigeria has lost and continues to lose to corruption is a key element of his mission. He is keen to find the money in order to fund development projects that can stimulate economic activities, step up economic growth and deliver new jobs.
Buhari needed to engage robust stimulatory spending right away on assumption of office but lack of sufficient fiscal space was a hindrance. If he had put down new money big enough in the hands of producers and consumers, economic recession would have been averted, according to Mr. Godwin Emefiele, the Central Bank governor.
Emefiele insists that the absence of fiscal stimulants was the cause of the economic decline in 2016 and has remained the key factor in the sluggish recovery and growth of the economy so far.
In search of money
Money has remained a big problem in funding capital projects that empower the economy to higher levels of production and consumption, income and employment. Yet it is largely a man made problem – national resources disappeared into private pockets, robbing the system of its internal capacity.
The very funds desperately needed to build the nation’s economic capacity have been hidden in cracks and crevices. While most crude oil exporting nations used their oil wealth for economic development, much of Nigeria’s oil wealth has been lost to corruption.
The situation seems to underscore Buhari’s vexation against the nation’s treasury looters. Here is a nation desperately in need of every kobo it can get to stimulate the economy and improve the well-being of the people. It has been denied the use of the resources for development by ‘corrupticians’.
Charting the course
Moving the nation forward has to necessarily involve a grand confrontation with those who have denied the nation of its wealth. The nation desperately needs all its stolen funds to be put back into the system for stronger economic growth and development. Irrespective of how it is attained, whether by direct engagement or through an institutionalized framework, getting the nation’s resources back into the economy is by a wide agreement, the most feasible way forward for the nation.
Buhari has shown the light for direction, pointing the way forward for the nation. The full realisation of this goal may not happen during his term but the journey of a thousand miles has at least begun. Economies the world over have been monetized and how far an economy can grow now depends on how much money gets into the system.
Buhari takes the credit for setting the pace and leading the way to recover and redirect the nation’s wealth into activities that build economic capacity. So far, he holds the record of being the only Nigerian President in memory that has stepped on big toes, flogged sacred cows and ransacked no-go areas in the course of recovering national resources from looters.
The top 10 legacies of his administration consist of activities and measures he has pursued that point to the nation the right way to go from here. The level of success attained so far isn’t ranked as much in importance as having defined the direction and setting the pace.
In recognizing Buhari’s legacies, Top 10 magazine is measuring government’s achievements more by defining the path of the future than by projects started and finished while in office. It is convinced that no matter how rough the platform built by one administration, it provides a stepping stone for the next government to improve, innovate and advance the pace of economic development.
The President’s first term is ending with challenges in some key areas mainly security, job creation and poverty level, confidence on the economy and the general living conditions of the people. It is expected that he would take special measures to address these areas- which are of grave concern to Nigerians in his second term in office.
- Growing What We Eat
Food is a basic human need and the government of President Buhari has taken a number of steps to ensure its security for the nation. He is leading a departure from the well trodden path of import-dependent consumption towards a new path where “Nigerians must grow what they eat and consume what they produce”, according to the President.
His strategy for changing the fortunes of the nation for better focuses on agriculture. The sector has the potential to counter balance the rise and fall pattern of crude oil earnings, sustain the level of economic activity and yet deliver the largest number of jobs in the economy.
In his 2017 budget, Buhari defined his approach as a simple principle by which “we will increasingly grow and process our own food, we will manufacture what we can and refine our own petroleum products. We will buy ‘made in Nigeria’ goods. We will encourage garment manufacturing and Nigerian designers, tailors and fashion retailers.
“We will patronize local entrepreneurs. We will promote the manufacturing powerhouses in Aba, Calabar, Kaduna, Kano, Lagos, Nnewi, Onitsha and Ota. From light manufacturing to cement production and petrochemicals, our objective is to make Nigeria a new manufacturing hub”, he said.
This is obviously not the first time that the call to curb external dependence and look inwards has sounded in Nigeria. This time, it is the only option with a sustained reduction in oil revenue and a massively depreciated naira spiking domestic prices. Nigeria’s capacity to import basic consumer goods has dropped considerably and a major improvement in agricultural output is needed to meet the gap.
Growing attention to made in Nigeria products is raising the fortunes of farmers, traders and transporters engaged in production and distribution of domestic consumer goods. “From Argungu in Kebbi to Abakalaki in Ebonyi, rice farmers and millers are seeing their products move”, the President said.
Government is working to replicate the success in domestic rice production to other staples such as wheat, sugar, soya, tomato and dairy products. A private sector-led N600 billion project is helping to make this happen. The project is expected to launch Nigeria into self-sufficiency in the staple products in three years.
Past declarations of intent to build local production capacity faded as soon as the oil market cycle turned on the sunny side. Despite some recovery in crude oil prices, the President has maintained his vow to lead Nigeria to change its habits and change the nation.
It is a presidential call to the nation that has given domestic production a new level of attention. Nigerians have been awakened to the new consciousness since 2017 and increased food production has brought down prices from their 2016 highs. This is viewed a major accomplishment for the government.
Attaining self-sufficiency in food and basic products is one major step that underpins Buhari’s economic recovery and growth plan. Government has defined the work to be done across the value chains, including availability and affordability of agricultural input.
The initiative includes reviving fertilizer blending plants across the country under the Presidential fertilizer initiative. The benefits are coming in terms of new jobs created, foreign exchange savings of up to $200 million annually and elimination of ₦60 billion fertilizer subsidies annually. Reduction in the price of fertilizer by up to 30% is also a major benefit of the scheme.
Through government’s fiscal intervention, agriculture is gradually assuming its proper place in the economy in terms of food production and employment deliveries. The President considers Nigeria’s present economic challenges as a great opportunity for the nation. He sees good prospects for Nigeria transforming from the import dependent, jobless state to a productive and job creating economy.
Increasing the output capacity of the agricultural sector requires increased funding as well. Government is addressing this need by creating access to bank credit facilities to empower small holder farmers that account for 80% of Nigeria’s agricultural produce. This intervention is considered imperative for Nigeria to head off serious food crisis.
The Central Bank of Nigeria runs Anchor Borrowers Programme that has provided N82 billion funding to 350,000 farmers – who have cultivated various food crops on about 400,000 hectares of land. The financing programme has raised local production of rice and has doubled product yields per hectare compared to 2014 levels.
Latest reports show that between 2016 and 2018, eight new rice mills have come on stream across the nation. Private investors have pumped in over a billion dollars in the production of rice, wheat, sugar, poultry, animal feed, fertilizers, etc since 2015. Nigeria’s milled rice production has increased from 2.5 million metric tonnes in 2015 to 4 million metric tonnes at the end of 2017.
- From Recession To Recovery
Pulling out the economy from recession and setting it on a path of recovery and growth was one of Buhari’s early challenges. His 2017 budget presented a road map for the economy from recession to recovery and growth.
The measures lined up centred on riding on the back of Nigeria’s population power to drive consumer-led economic recovery. His target was to exploit the country’s large internal market opportunity where the rural producer takes the place of the foreign producer in meeting the demand of the urban consumer.
In April 2017, the government rolled out the Economic Recovery and Growth Plan (ERGP), which provided a medium-term economic framework for the nation. The plan charts a course of action for the economy over a four-year period to 2020. The goal of the ERGP is to restore economic growth, invest in developing human capacity and sharpen Nigeria’s competitiveness in the global arena.
Five execution priorities were identities, which include, stabilizing the macroeconomic environment; achieving food security and ensuring energy efficiency, especially in power and petroleum products. Others are improving transportation infrastructure and driving industrialization, primarily through SMEs.
Economic recession was an outcome of past policies that discouraged domestic production and capacity building in the industrial sector. By taking new steps towards channeling resources to productive sectors of the economy, government has charted the course for attaining the defined goal of economic recovery and growth.
Results were needed as a matter of urgency and fast-tracking the plan implementation became a necessity. Government acted decisively by launching the ERGP Focus Labs for a targeted 6- week intervention to April 2018. This brought together all stakeholders to identify the hurdles facing investment projects of various scales in Nigeria and proffer measures to resolve them.
The first phase of the ERGP Focus Labs identified private-sector projects valued at $22.5 billion with a potential for creating 500,000 jobs in the key sectors of agriculture, transportation, manufacturing and processing, power and gas. These are targeted for unlocking by 2020.
The effort to empower domestic output and improved performance of the oil sector has seen the economy back on the path of growth. Despite some slowdowns along the way, the economy has so far sustained its recovery journey since exiting recession in the second quarter of 2017.
The priority government has placed on agriculture and solid minerals enabled the two sectors to maintain consistent growth all through the recession. Agricultural exports grew by over 180% in 2017, raw materials exports rose by 154% and solid minerals exports surged forward by 565% during the same period. Total export revenue grew by over 59% in 2017 and the strong growth is expected to have been maintained in 2018.
The benefits have been further enhanced by the steps taken by the President to revive the export expansion grant that used to come as tax credits to export companies. The incentives have worked to accelerate the development of targeted agricultural and mining activities, draw new investments into the sectors and create new jobs. The contribution of solid minerals to the federation account has risen several folds since 2016.
Revenue diversification has been embarked upon as a desperation expedient measure. Increasing the tax base is one of the areas where an outstanding success has been recorded. Millions of new taxpayers have been added to the tax base since 2016. This has led to considerable growth in tax revenue over the four years of Buhari’s administration.
Economic recovery is expected to gain speed in the post election period as confidence is regained among domestic and foreign investors. The 2019 general election had halted a progressive increase in capital importation that enabled Nigeria’s stock market to emerge one of the best performers at the end of 2017.
At the end of the first quarter of 2018, capital importation grew for the fourth consecutive quarter. The total value for the quarter stood at $6.3 billion, which is a year-on-year growth of 594% and a 17% increase over the figure for the preceding quarter.
A foreign exchange window the Central Bank introduced in April 2017 was seeing an average of $1 billion in weekly turnover by the first quarter of 2018 and generated about $25 billion inflows in one year. This has enabled the bank to maintain reasonable stability in the naira exchange rate.
Improvement in capital spending allocation in the federal budgets has also been achieved as a strategy to speed up the economic recovery and growth functions. Capital projects activate the productivity-employment multiplier chain and also induce private sector investments. Increased spending on infrastructures since 2016 has therefore helped to spur economic recovery and growth.
- Making Business Environment Friendly
Nigeria has had a long standing record of a difficult business environment. This status needed to change as a matter of urgency in order to attract the much needed capital to facilitate economic recovery and growth. Government therefore embarked upon the Ease of Doing Business Reform aimed at ushering in a significantly improved and friendly environment for doing business in Nigeria.
The President inaugurated Presidential Enabling Business Environment Council and the Enabling Business Environment Secretariat [PEBEC/EBES] in August 2016. Their operations resulted in Nigeria moving up 24 places on the World Bank’s ease of doing business rankings in 2017 and making an entry on the list of 10 most improved economies.
The Nigerian Investment Promotion Council has improved access to information on investment incentives to existing and potential investors in Nigeria. It has come up with a comprehensive listing of Nigeria’s investment incentives, making it a marketing tool for new investment inflow into the country.
Another innovative move by NIPC is the launching of an online, multilingual investors’ guide. This contains all the basic information that investors need about starting a business, land acquisition, labour laws and taxes, among others.
The Buhari administration has also issued executive orders that have positively impacted Nigeria’s business environment. These include executive orders on planning and execution of projects and promotion of Nigerian content in contracts and science, engineering and technology, promoting local procurement by government agencies and improving efficiency in the business environment.
Under the ease of doing business reform, the Senate passed the Companies and Allied Matters (Repeal & Re-enactment) Bill 2018 in May last year. The new bill gave legal backing to some of the reforms introduced by PEBEC/EBES.
The bill has also permitted flexibility such as the use of electronic signatures for company registration documents and the submission of applications for reservation of names through electronic means. It has also permitted the creation of a new form of legal entity known as Limited Liability Partnerships (LLPs) and has made it possible for a single person to form a private company in Nigeria, among other reforms.
Business name reservation, submission of registration documents, payment of registration fees, generation of tax identification numbers and filing of federal taxes have all been simplified. Visa-on-arrival system for business visitors is now in operation, which is a big incentive for foreign investors.
The Senate has also passed a bill to give legal backing to movable assets registry established by the Central Bank of Nigeria in May 2016. Federal ministry of finance has taken steps to ensure that goods entering Nigeria are properly stacked according to global best practices. This has enabled efficient inspection and discouraged rent seeking associated with 100% physical inspection of goods.
Creating access to credit and other forms of intervention are also part of government’s business environment reforms. The Buhari administration has in place an elaborate funding and capacity development initiatives designed to support MSMEs. Government has taken steps to expand its development banking capacity through recapitalization of Bank of Industry and Bank of Agriculture.
In addition to huge loan disbursements, Bank of Industry has also established a N5 billion fund for artisanal miners as part of the federal ministry of mines and solid minerals development’s programme to boost mining activities in Nigeria.
A big capacity in development banking has been added with the creation of Development Bank of Nigeria. The bank, which is capitalized to the tune of N396.5 billion, has been established to provide medium and long-term loans indirectly to micro, small and medium enterprises [MSMEs].
It is a wholesale bank and deals directly with microfinance banks, which in turn on-lend to MSMEs. The bank has created a N5 billion credit line to be accessed by MSMEs through its partner institutions.
The empowerment of MSMEs has an interactive and feedback programme in place named MSMEs Clinics. The clinic regularly brings small businesses across the country and relevant government agencies together to enable the agencies provide direct support to the businesses. The interactions permit better understanding of the issues facing small businesses and provide a platform for speedy resolutions.
- Anti- Corruption War and Recovery of Looted Funds
Corruption is considered the greatest enemy of economic development in Nigeria, having swallowed up resources, more than enough to lift every Nigerian out of poverty. A head-on confrontation of this vice has been a key engagement of Buhari’s government. Quite early in his administration, he issued a zero-tolerance for corruption mandate to the crime fighting agencies of government. The task is to get every stone everywhere overturned to rid Nigeria of corruption.
The first term in office of the President has recorded top recoveries of looted funds, including N329 billion subsidy fraud from petroleum marketers, the forfeiture of N32 billion and $5million to the federal government by former minister of petroleum resources and the forfeiture of N449 million discovered at Legico Plaza in Victoria Island, Lagos.
A forfeiture of over $43 million discovered in an apartment at Osborne Towers in Ikoyi, Lagos has been secured. A withholding tax recovery of over N27.7 billion has been made from banks and over €6.6 million has been recovered for Nigerian Ports Authority in addition to major recoveries for AMCON and other institutions and funds stolen through subsidy fraud.
There is an elevated number of convictions secured and the number of high profile cases handled or in process. Stopping corruption that has stopped Nigeria is agreed to be the only way to bring succor to the nation and its people.
The onslaught has tackled high profile cases previously swept aside to ‘no-go areas’. Buhari has demonstrated will power not just to step on big toes but set them on a probing fire. Top ranking suspects in the $1.1 billion Malabu oil scandal have been brought forward for prosecution.
Top military officers and other actors involved in the $2.1 billion arms deal scandal are also on trial. Former state governors, serving senators and members of federal and state assemblies are made to give account of their stewardship.
Even the judiciary that used to put on an air of infallibility has seen for the first time the probing lights of the anti corruption battle of the Buhari administration. Never before has the anti corruption wind blown so violently at the corridors of the bench and bar.
High ranking lawyers and judges have been brought to face trial at various courts across the country for bribery and corrupt enrichment. To the government, cleaning up the judiciary is a key strategy to successfully fighting corruption in the country and obtaining justice from the law courts.
Apart from case by case handling of corruption cases, a number of institutional reforms have been set in motion to provide a structural support to the anti-corruption effort of government.
The first committee the President set up after he was sworn into office was the Presidential Advisory Committee Against Corruption (PACAC). He set up the committed in August 2015 to promote his government’s reform agenda and advise on prosecution of the war against corruption and reforms in Nigeria’s criminal justice system.
The committee has done a lot in empowering judges and federal and state prosecutors through training on the administration of Criminal Justice Act, 2015. It has helped to build capacity of prosecutors on proper drafting of charges.
It has also empowered anti-corruption agencies on procedures for obtaining forfeiture of fraudulently acquired assets before prosecuting suspects. This advocacy has led to a significant increase in the use of non-conviction based asset forfeiture mechanisms by anti-corruption agencies.
PACAC also set the pace for the establishment of the Presidential Committee on Asset Recovery, headed by Vice President Yemi Osinbajo. The asset recovery committee oversees a dedicated account in the Central Bank that receives all recovered funds.
PACAC has produced manuals, protocols and standard operating procedures such as corruption case management manual, plea bargaining manual, sentencing guidelines in high profile cases, framework for management of recovered assets and asset recovery strategy document. The committee is the initiator of the whistle-blower policy for recovery of stolen assets and it drafted a bill for the establishment of special crimes court.
The Buhari government has pursued both domestic legislation and international agreements in pursuit of recovery of looted funds. His government submitted an executive bill in February 2016 for mutual legal assistance in criminal matters between Nigeria and other foreign countries. The bill is designed to facilitate the identification, tracing, freezing, restraining, recovery, forfeiture and confiscation of proceeds, property and other instrumentalities of crime. It was passed into law in May 2017.
Treasury looters used to flee to other countries in order to escape justice and recovery of looted funds. The government of Buhari has taken steps to seal the escape routes though international cooperative agreements. Nigeria has signed agreements and MoUs with a number of countries for international cooperation in investigation, tracking, freezing and recovery of stolen assets.
- Infrastructure Development
Infrastructure development, specifically rail, roads and electricity, have received priority in government capital spending since 2016. They attracted the largest single capital vote amounting to an average of over 20% of the capital spending budgets. The President has demonstrated his commitment to fast-track the modernization of the railway infrastructure and rehabilitation of roads.
The hopes to spur economic recovery and growth rest largely on how good are the infrastructures in place. Infrastructure spending has helped to activate the productivity-employment multiplier chain and has also attracted private sector investments.
Major investments have been made in the development of transport, power and health facilities under the Buhari-led administration. In May 2018, government launched Presidential Infrastructure Development Fund, which is managed by Nigerian Sovereign Investment Authority (NSIA). The fund kicked off with a seed capital of US$1.3 billion.
NSIA has made major investment in development of health facilities across the country. This includes the establishment of cancer treatment centre at Lagos University Teaching Hospital and development of modern diagnostic centres at Aminu Kano University Teaching Hospital and Federal Medical Centre, Umuahia.
Improved capital spending disbursements have enabled resumption of work on several stalled projects on roads, rail and electricity across the country.
Consistent investments in key sectors of transportation, agriculture, power, works and housing have enabled resumption of work on many abandoned development projects. Road projects are the main beneficiary of this development, as many of the projects had been abandoned due to huge debts owed to contractors.
The issue of N100 billion Sukuk bond in 2017 has gone a long way in funding major road construction projects. Proceeds from the bond issue have been deployed to fund 25 major road development projects across the six geopolitical zones of Nigeria.
Rail development is one Buhari’s biggest dreams – to see the whole country linked by rail, touching all state capitals and major cities. Rail development has therefore received a major boost with the commencement of upgrade of Nigeria’s 3,500 kilometre network narrow-gauge railway network.
In April 2018, an interim phase of a concession agreement between the government of Nigeria and an international consortium led by General Electric was signed. The target of the interim phase is to achieve reduced travel time by rail between Lagos and Kano and to commence scheduled freight rail services within 12 months.
Further to the opening up of Abuja–Kaduna rail link in July 2016, Abuja’s light rail system has been completed connecting the city centre with the airport and linking Abuja-Kaduna railway line.
Government has also undertaken major development programmes in the aviation and maritime sectors aimed at building new capacities in their operations. Reconstruction of Abuja Airport runway was completed within the scheduled six-week period in April 2017.
A number of water supply and irrigation projects, including dams have been undertaken and completed by the Buhari administration. These include a regional water project in Bayelsa and Edo States and a water supply project in Katsina State. Others include rehabilitation of dam/irrigation projects in Taraba, Delta, Edo and Sokoto States.
More than 70 ecological fund projects across the six geopolitical zones of Nigeria have been undertaken and completed by the Buhari administration. These involve flood and erosion control, bridges and dams, channelization and de-silting, etc.
In January 2018, an aircraft maintenance, repair and overhaul facility was opened in Lagos. The facility has the capacity for C-checks and other comprehensive levels of maintenance. It is estimated that the facility will save Nigeria $90 million annually.
A considerable improvement has been made in the various segments of the power sector from electricity generation, transmission and distribution. Power generation has increased from 3000 megawatts in 2015 to a peak of 7000 megawatts and transmission capacity has risen to 6,900 megawatts. Electric power distribution has also increased from around 2,690 megawatts in 2015 to a new peak averaging 5,000 megawatts.
A great milestone attained in the power sector is an increase in power supply in dry weather, which is made possible by an increase in gas supply to gas fired plants. New power plants have come on stream, including the 459 megawatts Azura power plant in Edo State, 240 megawatts from Afam and 215 megawatts from Kaduna power plant.
Under capacity building initiatives in the sector, government has launched a payment assurance programme valued at N701 billion. The programme is designed to resolve liquidity challenges in the power sector by guaranteeing payments to power generating companies and gas suppliers.
This intervention has raised confidence in the sector, opening it up to draw new investments, particularly in the gas production sector.
There is also a transmission expansion and rehabilitation programme that has lifted grid capacity by 50% to over 7,000 megawatts. In place also is a power distribution expansion programme, which is planned to raise power distribution capacity in collaboration with distribution companies. Procurement of distribution substations and electrical equipment under the programme commenced last year.
An innovative approach in achieving incremental power supply has been introduced through government’s Energizing Economic Programme. This is designed to supply electricity to economic clusters and markets around the country. Pilot projects have been implemented in Ariaria Market in Aba, Shomolu printing community and Sura Shopping Complex both in Lagos. Others are Sabon Gari Market in Kano and Isinkan Market in Akure.
Another government’s innovative approach is tagged Beyond the Grid Programme, a public-private partnership scheme championed by the presidency and Niger Delta Power Holding Company. The programme has successfully deployed 20,000 units of solar home systems to rural households across 12 states of the federation as at April 2018.
- Restructuring Government Finances
A lot of borrowings have happened earlier even when government revenue was comparatively high and rising debt servicing obligations have been choking off government finances. About N1.7 trillion or about 23% of aggregate expenditure was devoted to debt serving in 2017, rising to over N2 trillion in 2018.
A new approach to debt management became necessary and government has responded by introducing a new debt management strategy. The strategy seeks to rebalance the domestic and external components of government’s debt stock to achieve a 60% to 40% ratio respectively. Other objectives of the strategy are to moderate growth in debt service costs, shore up external reserve and free up space in the credit markets to avoid crowding out private sector operators.
The strategy involves increased external capital raising to part finance the deficits in the 2017 and 2018 budgets and the refinancing of short term high cost Nigerian treasury bills with lower cost external borrowing. Progress has been recorded in the domestic to external debt ratio from 84% to 16% by June 2015 to 73% to 27% by December 2017. Also, interest rates on FGN Bonds and Nigerian treasury bills have dropped from 16-18% to 13-14% per annum.
The economic management team established Nigerian Office for Trade Negotiations, which has produced Nigeria’s first annual national trade report. It has also compiled, for the first time in Nigeria’s history, a comprehensive database of Nigerian trade deals and agreements.
A renminbi-naira swap agreement has been established between the Peoples Bank of China and the Central Bank of Nigeria as part of government’s foreign exchange management effort. The deal has taken off a lot of pressure from the demand side of the foreign exchange market.
In the course of external capital raising, government issued $4.5 billion Eurobonds in the international capital market in 2017. The proceeds were applied for part financing fiscal deficits in the 2017 and 2018 budgets to the tune of $4 billion. The balance was used to redeem treasury bills that matured in December 2017.
It was a feat accomplished by Nigeria for issuing for the first time Eurobonds of 30-year tenor and again having the bonds highly oversubscribed. With that, Nigeria became the second African country (after South Africa) to issue bonds of a tenor that long. The 30-year tenor is ideal for financing long-term capital projects.
Also for the first time, Nigeria issued a $300 million Diaspora bond in the international market with a 5-year tenor. The proceeds were used to part–finance the 2017 budget.
New securities issue has also been made in the domestic financial markets for the purpose of broadening the market’s base. The federal government introduced three new products in the market to promote financial inclusion and finance specific capital projects. The instruments have also offered investors additional products for portfolio diversification.
The new instruments are the N100 billion Sukuk fund for road construction projects across the country, N10.69 billion debut green bond to finance infrastructure projects that tackle climate change and the FGN savings bond targeted at retail investors.
Government has recognized increased consumer spending as a stimulatory force in the economic recovery and growth. It has taken steps to empower consumers through settling outstanding pension arrears and financial support to state governments to meet salary and pension obligations. The federal government has settled pension arrears dating as far back as 2014 and cleared pension claims up to 2017.
About N2 trillion in financial support has been given to state governments over a period of two years in the face of revenue constraints. The support has come by way of a budget support facility of N606.55 billion in May 2018, Paris Club refunds and infrastructure loans.
A loan restructuring support has also been arranged for state governments to reduce their debt service burdens. In 2015, Debt Management Office restructured bank loans valued at N575.516 billion for 23 states. The banks were issued 20-year FGN bonds at a yield of 14.83% per annum in payment for the loans to state governments.
The step enabled the states to reduce monthly debt service requirements by between 55% and 97% for various states. This freed up a lot of cash flow to run the machinery of government with interest rate savings ranging from 3 – 9% per annum.
- Plugging System Leakages
The Buhari administration has applied direct and indirect approaches to block the system leakages exploited by treasury looters. A key aspect of its direct approaches is the whistle blowing policy initiated in December 2016. The policy has proved quite effective in not only recovering funds stolen from the system but in deterring people from further breaches.
A number of fund recoveries have been made directly from whistle blower tips. These include N13.8 billion recovered from tax evaders in May 2018 and recoveries of N7.8 billion, $378 million and £27,800 from public officials targeted by whistle blowers.
By making whistle blowing highly rewarding through payment of a percentage of recovered funds to suppliers of specific tips, government has stemmed the tide of revenue defaulters. Ministry of finance has received more than 8,000 communications on contract inflation, ghost workers, illegal recruitment and misappropriation of funds under the whistle blowing policy. The information has enabled the ministry to undertake hundreds of investigations and prosecutions of which some convictions have been secured.
Institutional reforms aimed at plugging system loopholes has also happened under the government of President Buhari. This has resulted in increased oversight of ministries, departments and agencies of government [MDAs].
An audit of key federal revenue generating agencies has been undertaken, which revealed underpayment of a total sum of N526 billion and $21 billion to the federation account between 2010 and 2015. Impressed by the outcome, National Economic Council then approved the extension of the audit to cover the period until June 2017.
Investigative light has also been shed on remittance of operating surpluses by MDAs. The result is equally amazing, of which JAMB – the university examination board, is a good example. From a remittance of only N51 million between 2010 and 2016, JAMB’s remittance soared to N7.8 billion in 2017.
Buhari also set up Presidential Initiative on Continuous Audit for the purpose of strengthening controls over government finances through a continuous internal audit process across MDAs, particularly in respect of payroll. Through the initiative, 54,000 fraudulent payroll entries have been identified with payroll savings of N200 billion, according to government’s report.
The government of Buhari gave life to treasury single account [TSA] system for government that was launched in 2012 but did not gain traction. The President gave a matching order to MDAs to this effect in August 2015. The policy required all MDAs to close their accounts with banks and transfer their balances to the Central Bank of Nigeria on or before 15th September 2015.
The policy has enabled managers of government’s finances to have, at any point in time, a comprehensive overview of cash flows across the entire system of government. TSA is a public accounting system that enables government to manage its revenues and payments using a single/unified account, or series of linked accounts domiciled at the central bank.
The implementation of the policy in Nigeria involved the consolidation of more than 17,000 bank accounts previously held in private banks in the country. Government is counting gains from the policy in savings on bank charges averaging N4 billion monthly.
Other gains from the TSA system include improved transparency and accountability in the management of government receipts by providing a consolidated view of cash flow. Leakages and abuses that used to mark public finance management in Nigeria have been significantly blocked.
The new system ensures availability of funds for execution of government projects and ensures adequate controls of aggregate cash flows within fiscal and monetary limits. It has also improved management of domestic borrowing programme and investment of idle funds.
Deployment of bank verification number [BVN] for payroll and social investment programmes of government is another key element of plugging system leakages. Through deployment of BVN to verify payroll and pension entries, 54,000 fraudulent payroll entries were detected. BVN-based verification has been adopted for payments to beneficiaries and vendors in the Central Bank’s Anchor Borrowers Programme, the N-Power Scheme and the Homegrown School Feeding Programme.
Under the Buhari-led administration, the federal government, for the first time, is able to locate, identify, assess and evaluate all its moveable and immoveable assets on a real-time basis. This follows the implementation of its Asset Tracking and Management Project launched by ministry of finance in 2016.
The ministry has also created and domiciled a central asset register for recording the actual quantity, value, condition and location of all capital assets belonging to the federal government. These initiatives are in line with the requirements of the International Public-Sector Reporting Standard, which has been implemented by the ministry of finance.
The cash-based accounting system previously in use has been replaced with accruals–based system under the present government. This has addressed the shortcomings of the old system that makes no reference to future possible liabilities of government and also does not recognise any benefits that may be obtained from assets purchased over a period of time.
What government has done is simply to replace an accounting system that may present an illusion of positive financial results in the short term at the expense of longer-term fiscal stability and sustainability. Accruals-based accounting presents the true financial position of government’s assets and liabilities.
The new system places managers of government finances in a position to plan for future funding needs for asset maintenance and replacement and repayment of existing and contingent liabilities. The conversion from cash accounting to accrual accounting led to the discovery of unrecorded debts owed contractors, oil marketers, exporters, electricity distribution companies and some others.
In July 2016, Nigeria became the 70th country to join Open Government Partnership [OGP] – an international transparency, accountability and citizen engagement initiative. This was in fulfillment of Buhari’s promise to enlist Nigeria in the organisation at an international anti-corruption summit organised by the UK government earlier in May.
Further to this, Nigeria constituted an OGP national steering committee, which has developed a national action plan (2017–2019) for deepening transparency mechanisms and citizens’ engagement in the management of public resources across all sectors. In 2018, Nigeria was elected to lead the OGP, alongside Argentina, France, and Romania.
In pursuit of cost cutting and elimination of wastages in government, an efficiency unit was created in the ministry of finance in November 2015. The unit is charged with reducing recurrent expenditure by promoting efficiency, ensuring prudence and adding value for money in all government expenditures. The unit monitors MDAs to identify and eliminate wasteful spending, duplication and other inefficiencies and ensuring best practices in procurement and financial management.
The efforts of the unit have paid off with a saving of N34 billion on travel and transport in 2016 and another N57 billion also on the same expenditure head in 2017. A total of N34 billion was saved on office stationery and computer consumables over the same two-year period. In order to plug loopholes and improve accountability in public spending, the unit has recommended the use of debit cards for official purchases instead of cash.
The system reforms have also reached the door step of the state owned oil company – NNPC. The corporation’s accounts that had long been held in secrecy have been published monthly since August 2015. This has shed light of transparency and probity on the company’s performance.
The corporation’s offshore processing arrangement, which has been quite controversial, has been cancelled and replaced with a direct sales and direct purchase scheme with reputable offshore refineries.
Cash call arrears of $6.8 billion as at December 2015 accumulated by the corporation in its joint ventures with international oil companies have been negotiated down to $5.1 billion, saving $1.7 billion for the nation. A long-term repayment plan has been drawn up for the balance of US$5.1 billion.
- New Vision for Niger Delta
Peace in the Niger Delta is central to the economic diversification plan of the Buhari administration. The government needs all the oil revenue it can get to diversify the economy away from the oil sector. The President’s initial hard stance in dealing with hostility in the oil producing communities soon gave way for an engagement strategy.
The engagement strategy followed a woeful performance of the 2016 budget due to disruptions in crude oil production. Actual revenue fell significantly short of budget targets, constraining fiscal injections needed to spur the economy in recession.
The provision for presidential amnesty programme was increased to N65 billion in 2017 and the figure was retained in 2018. The capital provision for the Ministry of Niger Delta was increased to N53.89 billion in 2018 from N34.20 billion provided in 2017. The objective is to ensure adequate security, minimum disruption to oil production, rebuild crude oil output to 2.2 million barrels per day and possibly extend it to a new high.
Crude oil production target of 2.2 million barrels per day was assumed for the 2016 budget, which could not be attained due to renewed community hostility in the Niger Delta. Major improvements were attained in 2017 and 2018 as a result of a peaceful environment created with government’s engagement strategy.
In November 2016, Pan Niger Delta Forum submitted a 16-point demand agenda to President Buhari. In response to the demand, the President unveiled a new vision for Niger Delta. The new vision has put together a robust set of promises, solutions, targets and initiatives aimed at ensuring that the people of Niger Delta benefit maximally from the region’s oil wealth.
The results of the working of the new vision include the opening of Nigerian Maritime University in Okerenkoko, Delta State. The University was granted approval to commence undergraduate degree programmes in January 2018 by the National Universities Commission effective 2017/18 session. It has commenced academic activities since April, 2018.
A take-off grant of N5 billion was made to the university and an additional N1 billion was also granted to support essential infrastructure works and staff recruitment in the University.
Government has set aside $170 million seed funding for the Ogoni clean-up project. An approval has been granted for the establishment of modular refineries across the nine states of the Niger Delta. The first two refineries were scheduled for completion at the end of 2018.
Construction works have resumed on abandoned projects across the Niger Delta, including the all-important east-west road, which had a budgetary provision of N17.32 billion in 2018. A face lift of Niger Delta is in view under President Buhari’s new vision for the region.
- Investing in People
Investing in human development is one of the major areas where Buhari has given priority in his first term in office. His government has developed Social Intervention Programme – the largest and most ambitious social safety net programme in the history of Nigeria. A budgetary allocation of N500 billion has been made annually for the programme in the past two years.
As part of the social interventions, N100 billion is set aside for social housing programme. Through the interventions, more than nine million direct beneficiaries have been accessed. N-Power beneficiaries are estimated at 500,000, who are placed on a monthly stipend of N30,000.
Government has also launched Enterprise and Empowerment Programme [GEEP] under which financial support is provided to boost small businesses. The scheme provides interest-free loans ranging from N50,000 to N350,000. Trader Moni is part of the enterprise empowerment scheme designed for petty traders and artisans being executed by Bank of Industry. Under the scheme, beneficiaries can secure interest free loans ranging from N10,000 to N100,000.
Government has disbursed over N15 billion to more than 300,000 market women, traders, artisans and farmers across the 36 states of the federation and the Federal Capital Territory [FCT], Abuja. Beneficiaries under GEEP are skewed in favour of women, who account for 56% of loans disbursed.
Government has shown great interest in the educational development of Nigerian children through financial support to state governments. The Buhari administration has disbursed N42.2 billion in universal basic education matching grants to state governments and FCT.
It has also made N851.5 million special education grants to 23 states and private providers of special education. Government has also invested in the professional development of school teachers in 33 states and the FCT with a contribution of N2.2 billion to Teachers Professional Development Fund.
GEEP is also the vehicle for advancing the financial inclusion goals of the Buhari administration. The programme has led to the opening of hundreds of thousands of new bank accounts/wallets for beneficiaries and intending beneficiaries. In November 2017, GEEP was chosen as the pilot programme for the Bill & Melinda Gates Foundation Policy Innovation Unit in Nigeria.
Home Grown School Feeding Programme is another innovative programme of the Buhari government to ensure healthy and balanced development of Nigerian children. As at May 2018, more than eight million pupils in over 45,000 public primary schools across 24 states had come under the programme. The number has grown far beyond the numbers with the inclusion of the remaining states of the federation.
The school feeding programme has created direct and indirect jobs across the states. Cooks alone numbered more than 87,000 in the first 24 states covered. There is a healthcare aspect of the programme under which over 3 million pupils have been de-wormed. The de-worming programme is organised as a bi-annual exercise aimed at eradicating the danger posed by worms to children’s health.
Government’s social safety net is cast around the poorest and most vulnerable households in the country through its Conditional Cash Transfer. A monthly allowance of N5,000 is made to beneficiaries under the scheme. At the last count, 297,973 families are listed under the scheme.
- Diplomatic Breakthroughs
Re-establishment of Nigeria’s position and influence in the regional and global arena is one of the accomplishments of the Buhari administration. A number of broken or fragile diplomatic relations have been restored or strengthened since June 2015. These include improvement of relations with the United States, the United Kingdom, South Africa and neigbouring countries of Chad, Niger and Cameroon.
Buhari’s anti corruption stance ensured Nigeria’s prominent participation in the Anti-Corruption Summit and the Commonwealth Conference on Tackling Corruption, both held in May, 2016 in London. The events rolled out major diplomatic breakthroughs for Nigeria.
The first is the signing of an MoU in August 2016 with the British government on modalities for the return of Nigeria’s stolen assets to the country. A global forum for asset recovery was established, focusing on assisting Nigeria and three other countries to reclaim their stolen assets.
Nigeria joined the Open Government Partnership – an international transparency, accountability and citizen engagement initiative in 2016 and developed a national action plan, which is being implemented for deepening transparency mechanisms and management of public assets.
In 2016 Nigeria signed an agreement with the United Arab Emirates on identification and repatriation of illicit funds. Buhari’s government has secured the cooperation of the governments of Switzerland, Jersey Island, the United States, United Arab Emirates and Liechtenstein among others in an effort to ensure the repatriation of Nigeria’s stolen assets. The engagements preceded the repatriation of $322 million Abacha loot by the Swiss government. The fund is marked for government’s social investment programme.
Another major diplomatic breakthrough by the Buhari administration is the mobilization of international support for its war against terrorism. Government has formed strong partnerships with key countries, including the United States, the United Kingdom, France and Germany, ECOWAS, the African Union, the United Nations, among others.
After years of stalemate, the United States finally agreed to sell arms to Nigeria. Nigeria’s purchase of 12 Super Tucano aircraft from the Unites States has helped in the war against insurgents.
Other major accomplishments include the revamping of the multinational joint task force comprising troops from Nigeria and Chad, Niger, Cameroon and Benin. Collaboration with International Organization for Migration has ensured successful evacuation and repatriation of more than 10,000 Nigerian migrants from Libya.
Nigeria under Buhari’s government accomplished a feat by a successful rallying of OPEC and non-OPEC members for stabilisation of the global oil market. Nigeria also secured an exemption from the OPEC production freeze agreed at the 171st OPEC ministerial conference in Vienna in November 2016. Oil prices rallied for the first time in 16 months as a direct result of the stabilisation measures.
Improved bilateral relations with a number of countries have aided Nigeria’s development efforts. These include the unlocking of billions of dollars in concessional infrastructure funding by China, primarily for critical road and rail construction projects. A currency swap agreement between the Peoples Bank of China and the Central Bank of Nigeria has also helped Nigeria in foreign exchange management.
Nigeria has renewed cooperation with the United States government in security and anti-corruption. Apart from arms supplies for fighting terrorists, the United States is assisting in repatriating recovered looted funds and Nigerian assets stashed in the country.
Nigerian and American military forces collaborated to host the 2018 African Land Forces Summit held in Abuja in April 2018. The event was the largest gathering of African army chiefs, who deliberated on international cooperation aimed at improving security on the African continent.
In 2018, Nigeria began the implementation of automatic exchange of tax information protocol with the United Kingdom. The protocol will provides Nigeria with data on bank accounts, property and trusts held by Nigerian nationals in the UK. It is planned to support the voluntary asset and income declaration scheme by allowing Nigerian tax authorities to check the accuracy of declarations received regarding overseas assets and incomes.
The Presidential fertilizer Initiative of government is based on a partnership with the government of Morocco for the supply of phosphate as well as technical assistance. The initiative has resulted in the revitalization of 14 fertilizer blending plants across Nigeria.
Bilateral cooperation with Switzerland resulted in the repatriation of $322 million of looted Abacha funds in December 2017. The funds are being disbursed as part of the Buhari administration’s social investment programme interventions.
Nigeria has signed and ratified an extradition treaty with the United Arab Emirates that allows extradition of Nigerians who flee to the emirate after committing crimes in Nigeria.