At the presentation of the details and analysis of the 2020 Budget to civil society groups in Abuja on Thursday, the Minister of Finance, Budget and National Planning, Zainab Ahmed, fielded questions on a variety of issues. She was supported by the Minister of Information and Culture, Lai Mohammed, and Minister of State for Budget and National Planning, Clem Agba.
QUES: There is no provision in the budget for people with disabilities. Is that because people with disabilities do not have a commission?
ZAINAB: Yes, there is no commission for people with disabilities. But, let me assure you there is a department for people with disabilities in the Federal Ministry of Women Affairs. And there is a clear provision for people with disabilities made in the Women Affairs Ministry’s budget.
On the need for a commission for people with disabilities, I am aware there have been discussions about it. I truly don’t know how that has gone. But, I know that is something the Ministry of Women Affairs is also leading on.
QUES: Do you feel a need to fast-track the release of the new Finance Bill 2019?
ZAINAB: We note that there is a need to fast-track the release of the new Finance Bill 2019. The expectation is for the Finance Bill to have been sent to Mr President for assent before the end of the week (last week).
Until the bill is assented into law, the measures the government has to take are just plans for now. We are confident that within this week (last week), Mr President will have this bill from the National Assembly. As he normally does, he will ask the various ministries to review it and advise him before he assents to it.
Government’s target is that it will take effect from the first of January 2020 for the work on its implementation to start.
This is not to say that every provision in the Finance Bill will take effect from January 1, 2020. I have seen in the newspapers reports that from January 1, without TIN (tax identification number), people will not operate their accounts again. It doesn’t work that way.
That is why the Federal Inland Revenue Service (FIRS) will have to engage the commercial banks and work out the modalities on how this will be implemented.
Normally, there will be information that is given out to citizens, a reminder on how they can get their TIN, which is a simple visit to the FIRS website to register and get their TIN.
Then, there will be some time given for that process to be activated before any impositions on stopping the use of accounts is taken.
QUES: Why only ten government-owned enterprises brought under the Fiscal Responsibility Bill and not all of them?
ZAINAB: The decision to include only the top ten government-owned enterprises in this budget is because they account for the largest proportion of the budget. Because we were working to ensure the budget went to the National Assembly on time, we decided to limit ourselves to the top ten. But, subsequently, the target is to bring in all government-owned enterprises.
This will help us in ensuring greater scrutiny in their budgets and also help the citizens to have visibility of what the budgets of those GOEs are.
QUES: When does the government plan to provide Nigerians services that will better their lot, in view of population outstripping GDP growth?
ZAINAB: This is a matter of very significant concern to the government. Until we get to a level where the gross domestic product (GDP) growth rate is so much higher than the population, the work government is doing will not be felt by the majority of Nigerians.
The government’s aspiration is to grow to a GDP rate of 7 per cent. Initially, the target was 2020. But remember what happened during the last administration when we went into recession. The economy came out of recession and grew to 2 per cent, which is an effective growth of about 4 per cent – from minus 2 per cent that we reached.
So, it is a journey we are undertaking, and the president is supporting us to make sure that this time around we take some deliberate measures that are very significantly different and radical to fasten the rate of growth so that Nigerians will feel the difference.
The president has also committed to taking 100 million Nigerians out of poverty over the next ten years and every ministry is being asked to make contributions to this task. So, all of us have a role to play, including all of us citizens.
QUES: With the year coming to an end and the January-December Budget cycle kicking off, any further capital budget releases?
ZAINAB: Government has been able to release N1.212 trillion as capital budget. The government will not be making any more releases during December 2019. However, there are some allocations that are in various stages of processing that will be completed.
The 2020 budget takes effect from January 1, 2020.
Earlier, I had indicated that the capital indicated in the budget is 26.4 per cent of the total size of the budget. I specifically said this is below the government’s aspiration of 30 per cent.
This is something the government is working on to make sure we get to that 30 per cent and actually be moving forward, instead of regressing backward.
QUES: What is the main objective of the new Finance Bill 2019?
ZAINAB: The major challenge is that of revenue. The government has to increase revenue. But, with the passage of the Finance Bill, with the passage of the amendment Production Sharing Contract of the Inland Basin Act, which is going to change the fiscal terms in our PSC, we will be expecting significant incremental revenues going forward. This will help us to budget more for capital projects.
The Finance Bill has 83 modifications. Several of these modifications are meant to improve the business environment, especially to improve small and medium businesses.
We have reduced taxes from 30 per cent to 20 per cent. We have even waved taxes completely for some categories of industries, especially the smallest ones that have a turnover of less than 25 per cent.
We have made some adjustments in the laws that have put significant pressures on the insurance industry.
We have tried to make things easier for everyone. It was not about increasing taxes. The only item that is on increase in the Finance Bill is the increase of VAT from 5 per cent to 7.5 per cent. Everything else is targeted at improving the business environment.
The government’s belief is that when we have a large proportion of the informal sector, which are largely small and medium enterprises brought into increased productivity, and they are able to move into the tax net, they will become financially-inclusive. They will be able to, going forward, pay taxes, increase their productivity and employ people. That for us is the major objective of the Finance Bill; to enhance growth in a simple language.
In respect to the protection of industry, and the impact the Finance Bill will have if we move beyond the VAT increase, which is for the first time, the administration of VAT releases a threshold under which it will not apply.
In Nigeria, some people argue that if you are running a N25 million business, one is already big. But, that is the threshold we have set for the applicability of VAT going forward.
But, going forward, this budget is heavily inclined towards investment in infrastructure, and that can only be positive for business.
This budget also includes a N15 billion provision for recapitalisation for DFIs – BOIs and BOA. This is in addition to the N10 billion grant to BOI to subsidise the cost of lending to SMEs.
There is a provision in the budget for the Presidential Enabling Business Environment Council (PEBEC) to enable then continue the good work it has been doing, which has seen the improvement in Nigeria ranking in the World Bank Ease of Doing Business.
We have made substantive progress. We still are not where we want to be, not in the top 100, which is our target. But, we have moved about 36 points in the upper level.
QUES: Did you make adequate provision in the budget to pay the new National Minimum Wage to workers?
ZAINAB: Let me confirm to you that the government has made adequate provision in the budget for the payment of minimum wage and we are also planning in December to pay for the arrears of the consequential adjustments.
QUES: What is government doing to boost the country’s tourism potentials?
ZAINAB: This government, more than any other, has put a lot of emphasis on the creative industry and the entire value chain as a whole, not just tourism.
This is talking about film, music, theatre, photography, fashion, etc. This is to be seen in the kind of policies and programmes the government has put in place.
Starting with the Creative Industry Finance initiative being put together by the Central Bank of Nigeria. Under this particular programme, anybody who is into the creative industry (films, music, theatre, fashion, etc) is entitled to single digits loan ranging from N3 million to N500 million. This excited the people in the industry.
Two years ago, the federal government also put the creative industry under what is called the pioneer status, which entitles beneficiaries to a tax holiday of between three and five years if a certain amount of money is invested in the industry, and at the same time dividend from such companies are tax-free also.
Also, the Bank of Industry has done a lot to boost growth in the tourism sector. They have spent billions of Naira on tourism. People do not seem to appreciate what the government is doing in the area of culture and tourism because it is being done by different arms of government. It is not what people see in the budget that is what the government is doing in the industry.
The other area the government has tried to put emphasis on is culture and tourism. This is receiving attention in the highest level of government.
We cannot promote tourism without infrastructure. That is why the lion’s share of this year’s capital budget expenditure is actually in the Ministries of Works and Power, which are the areas where we need to invest if we want tourism to thrive.
I am glad that the Ministries of Aviation, Transportation and Works made the top 10 among those that received highest allocations in the budget.
This means the right infrastructure for the growth of tourism is actually very much at the forefront of government priorities.
The government will continue to do its best to grow the sector, which is the next sector after agriculture that employs more people.
If we continue to have blockbusters, films, theatres, we will continue to employ more and more people and see how we can get direct assistance to the practitioners.
The government’s major challenge is revenue. We have to balance both. People must pay their taxes so that we can give back to the community.
QUES: How do government carry out its monitoring and evaluation of projects in the budget?
ZAINAB: What we have is that each MDA has an M&E Department monitoring their own projects, apart from a national M&E department in the Federal Ministry of Finance, Budget and National Planning. What that department is doing currently is to use technology to monitor projects to enable the government to know what is going on.
This will not be complete without the involvement of citizens. The government is working on a technology to ensure that citizens are able to give us feedback either by way of pictures or write-ups on projects around their areas and the way it’s going.
This is not going to come up immediately in 2020. But, by 2021 or 2022, the government should have something in place where citizens can report directly to the government on how project implementation is going on in their areas.
We are actually working towards a situation where every project will have a GPS coordinates, which will allow you to sit anywhere and check what is happening at that particular point.
On infrastructure, a sizeable amount of the budget is being put to infrastructural development, namely roads, rail and power.
However, even within the infrastructure sectors, the government is re-strategising. You will find that none of the rail lines starts from the ports.
But, the government is extending all rail lines to the ports, so that we can move a huge chunk of the heavy cargoes away from the port from the roads to ensure they last longer.
So, a new seaport is being built in Warri, Delta State, because what we currently have is a river port. There is always a lot of siltation, which allows the draught to go down on our vessel. With the new seaport, the rail will take off from there in Warri, Tin Can and Apapa to town.
QUES: Are you carrying civil society group along in the budget process?
ZAINAB: We have always tried to carry the CSOs along in the budget process right from the formulation stage.
The budget is based on the medium-term expenditure framework and fiscal strategy paper. We normally have open consultative fora in that process where we interact with CSOs on the budget.
But, with respect to providing support, in the form of funding to CSOs in this process, that is something government has been very reluctant to do, because the government wants the CSOs to be able to maintain their independence. It used to be the practice that when the Budget Office was going on inspection or monitoring of the project, CSOs will be sponsored to accompany them.
But, we no longer do things like that. We think that that really subtracts from the independence of the CSOs.
Of course, if CSOs want to tag along when the Budget Office goes out for projects monitoring and evaluation trips, we will gladly have CSOs come along with us, as long as they pay their own bills.
The revised Production Sharing Contracts (PSCs) in the Nigerian oil and gas industry will …