The Minister of Finance, Budget and National Planning, Zainab Ahmed, has admitted that Nigeria’s economy is facing a difficult time, saying states must improve their internally generated revenues.
Speaking in an interview on the Nigerian Television Authority’s show, Good Morning Nigeria, she stated that the money shared at the March Federation Account Allocation Committee (FAAC) meeting was short of N50 billion.
The minister was speaking on the controversy over a claim by the Edo State Governor, Godwin Obaseki, that the Central Bank of Nigeria printed N60 billion in March to augment the money shared at March FAAC.
But the minister and the Central Bank of Nigeria governor, Godwin Emefiele last week dismissed Obaseki’s claim.
The finance minister stated that the country’s economy was stabilising from the recession which the country exited a few months ago.
She, however, added, “These are very difficult challenging times because revenues are low and the demand for expenditures are very high understandably because we have to keep intervening to make sure the pandemic is contained as well as the economic impact it has caused.
“In our case in Nigeria, the crash of the crude oil prices really hit us very hard in terms of revenue. We have very low revenues, we have very high expenditures. What we have done so far is just to provide some stability to make sure salaries are paid, pensions are received every month; that we send funds to the judiciary and the legislature; that we meet our debt service obligations.
“That’s what we are doing. It also means we have had to borrow more than we had planned before the COVID-19 started because we need to still continue to invest in infrastructure using our national budget. We borrowed to invest in key projects such as roads, rail, airports, seaports and several other investments that are required in health and in education and upgrading the social standards and quality of life of our people and Nigeria is not unique as several countries of the world went into recession.
“Almost every other country has had to borrow more than it planned. It means we expanded our deficit very fast in 2020. 2021 is a year that we see as the year of recovery.”
According to him, the government hopes to achieve a growth of three per cent in 2021, adding that some of the multilateral institutions are putting it at 2.5 per cent.
“It is a very difficult time. I can explain to you how difficult it is, not just for the Federal Government but also for the states. We see increasing reductions in our FAAC revenues; FAAC revenues are the revenues that we put together every month, that are collected from both oil and non-oil sectors from the collection of the NNPC (Nigerian National Petroleum Corporation) the FIRS (the Federal Inland Revenue Service) and all other revenues collection agencies.
“So, FAAC reduces and whenever FAAC reduces, it is a very difficult situation and in the past one year, we have tried to fall back on some specific accounts that are meant to be saved; savings that when you have such a situation, you fall back on the resources and augment.
“So, we take funds based on Mr President’s approval either from Excess Crude or Stabilisation Account or in some cases, President approved for us to take funds from LNG (Liquefied Natural Gas) dividends. In the month of March, we had a shortfall of FAAC that was about N50 billion; we didn’t have enough accrued in any of those accounts other than some N8.5 billion that we took from the exchange rate differential account so we added that and we ended up with the FAAC of N605 billion.
“An average FAAC that is healthy for us is N650 billion, so it means we had a shortfall of about N50 billion. The states to be honest wanted us to go and borrow from the Central Bank to augment FAAC.”
She further said advice by states was rejected, adding that the three levels of government were asked to manage what was available.
“So, it was very surprising when we had a sitting governor saying that the CBN had printed money for FAAC. That was very unfortunate because it was not true. The FAAC information is published so you can see the revenue contributed by each of the agency; that is what we shared.
“The states would have wanted us to borrow and augment but we didn’t do that. And we would make sure we don’t have to do that because it’s time for all of us to go back and do more. A lot of states are trying to do that in terms of increasing the performance of their internally generated revenues, but it is difficult to do that at a time when growth is very, very slow.”
“Going forward, what we have been doing in the ministry of finance, budget and national planning is a plan that we have put in place to grow revenues. Our revenues have been growing but because the expenditures have been growing at a pace that is much faster than the revenue growth, the impact is not felt.”