Kemi Adeosun, Nigeria’s new finance minister, has so far struck the right chords with her first few public utterances since assuming her new role. She stated in her recent FT interview, that the focus of her office will not be on oil, but on ‘micro issues’ such as stricter enforcement of earnings collection from federal agencies and more diligent bookkeeping. She aims to go after agencies that have ‘habitually’ under-reported their revenues, and thereby shortchanged the government.
Since Adeosun hails from Nigeria’s investment banking community (she was a former managing director at Chapel Hill Denham, a Lagos-based investment bank), we thought it wise to see what young professionals from her ilk think she should strive to tackle.
Dolapo Oni, Oil & Gas Analyst at Ecobank Capital
Oni says that among the several tasks she should tackle upon resumption, the key ones are:
1. Providing clear and concise information on the country’s exchange rate regime and how it should be managed going forward – including the tools and likely policy direction.
2. Ways have to be sought to reduce the risk factor in the Nigerian lending environment. BVN is only one step; people need to have credit records and ratings before they are allowed to borrow. Companies also. This will help reduce the risk involved in lending and contribute to lower lending rates. The prime driver of lending rates will remain the cost of government borrowing but with adequate system liquidity, even that can be reduced.
3. Financing SMEs and agriculture are key but have been done mostly the wrong way. The finance minister needs to find more creative ways for agriculture to be financed. Banks have to be enabled to lend to the sector. SME funding is really about strengthening credit processes and tackling the issues in the point above should address this.
4. Tax benefits for companies listed on the NSE as a way to boost listings is also in order.
Dayo Oduwole, former mergers and acquisitions analyst at JP Morgan:
According to Oduwole, around the issue of Govt taxes and spending, the following are key:
- There should be adequate transparency in government spending, down to a granular level
- Improved budgeting and actual monitoring and benchmark implementation
- Efficiency in tax collection and the education of the tax base (also, getting rid of multiple tax problems)
- There could be reduction in tax rates to boost sectors requiring relief and encouragement.
- Agenda for inflation targets should be set.
Wale Smith, Research Analyst at one of Nigeria’s leading Investment Managers:
According to Wale the focus should be on:
1. Firstly summarising the state of govt revenues. The impact of oil price decline on FGN revenues should be chronicled.
- Developing a budget for 2016 using the zero cost budgeting. This budget should take the APC manifesto into consideration.
Rationalizing recurrent spending. What elements of wastage can be gotten rid of using reforms like IPPIS (a centralized database system for Nigerian Public Service with single, accurate source of Employee information), GIFMIS (Government Integrated Financial Management Information System) and others.
Since the government might have to borrow, a strategy to ensure we borrow cheaply and without crowding out private sector should be designed. This would mean some cooperation with CBN.
5. Improving the transparency of the Federal government by fostering quick publication of fiscal accounts in a concise manner, periodically and easily accessible.
Beyond these immediate needs, others are:
Identifying high-impact quick win projects that will improve life of citizenry. Reformation of parastatals like the FIRS (Federal Inland Revenue Service), CACS (Commercial Agriculture Credit Scheme), NCS (Nigeria Customs Service) etc for improved efficiency, and make the bureaucracy lighter.