Akinwunmi Adesina, president of the African Development Bank (AfDB), has described the continent’s flagship financial institution as the most transparent financial institution in the world. Adesina said that this conclusion was arrived at by many reputable institutions that were impressed by its management, stellar leadership quality, and impressive numbers, which rank the bank as the most transparent financial institution in the world.
Speaking at the Presidential Inauguration Lecture in Abuja on the Topic: “Deepening Democracy for Integration and Development” on Saturday, which is part of the series of events to transition political power from President Muhammadu Buhari to President-elect Ahmed Bola Tinubu on Monday, May 29, the AfDB president also used the opportunity to show gratitude for the unflinching support received from President Buhari.
“The African Development Bank was ranked this year as the most transparent financial institution in the world,” Adesina said, to resounding applause from the guests, who included President Buhari, Vice President Yemi Osinbajo, President-Elect Tinubu, Vice President-Elect Kassim Shettima, former President of Kenya, Uhuru Kenyatta, and other dignitaries. “Last year, your excellency, Mr. President, the African Development Bank was ranked the best multilateral financial institution in the world.”
He used the opportunity to congratulate Bola Tinubu as he prepares to take the mantle of leadership from President Buhari.
“I will like to congratulate the incoming president, his excellency, Bola Ahmed Tinubu (GCFR), who will take over the mantle of leadership from you, and I am delighted that my very dear friend, Uhuru Kenyatta, the former president of Kenya, was invited to deliver the inauguration lecture—he is a great leader, not only for Kenya but for Africa.”
Continuing in his speech, he reiterated the belief that many Nigerians would be looking to the incoming administration of Bola Tinubu and Kassim Shettima to “restore renewed hope in the assurance of security, peace, and stability.”
“I hope that you will heal and reunite a fractured nation. I hope that you will rise above party lines and forge a compelling force to move the nation forward with inclusiveness, fairness, equity, and justice.
“Hope that you will dramatically improve the economy, and hope that you will spark a new wave of prosperity. And hope must be brought to the present, as hope deferred makes the heart wary,” he added.
He advised the incoming administration on assumption of office to focus on achieving macroeconomic and fiscal stability, insisting that unless the economy is revived, the resources to develop it will not be there.
He noted to buttress his earlier points that the country “currently faces huge fiscal deficits estimated at 6 percent of the GDP.” A situation made possible by some of the ravaging challenges ranging from “low receipts to dwindling revenues from the export of crude oil, vandalism of pipelines, and illegal bunkering of crude oil.”
He cited recent statistics from the Debt Management Office (DMO), which state that the country now spends 96 percent of its revenue servicing debt—a situation that needs urgent attention.
“The debt-to-revenue ratio is rising from 33.2 percent in 2021 to 96.3 percent by 2022. Some will argue that the debt-to-GDP ratio of 34 percent is still low compared to other countries in Africa, and that is absolutely correct.
“But no one pays their debt using GDP. Debt is paid using revenue, and Nigeria’s revenue has been declining. Nigeria earns revenue today to pay its debt and not to grow,” he emphasised.
He advised that the first step to take in redirecting the country towards economic prosperity is “to remove the inefficient fuel subsidy.”
According to the former minister of agriculture, Nigeria’s fuel subsidy benefits the rich, not the poor.
“Estimates show that the poorest 40 percent of the population consume just 3 percent of petrol. Fuel subsidies are killing the Nigerian economy and costing the economy of Nigeria $10 billion alone in 2022. What that means is that Nigeria is borrowing what it doesn’t have to borrow for,” he said.
Adesina added that once this money is freed and put to the right use, especially by supporting the setting up of more private petrol refineries and other modular refineries, the pump prices of fuel and other petroleum products should definitely go down.
He also extended words of congratulations to Aliko Dangote, president of the Dangote group, for the commissioning of the $19 billion petroleum refinery situated in the Ibeju-Lekki axis of Lagos State, insisting that the refinery will help drive economic growth and development for the country.
He also highlighted the cost of governance as one of the debilitating factors hindering efficiency and the effective spread of the dividends of democracy.
“The cost of governance in Nigeria is way too high and should be drastically reduced to free up more resources for development,” he said.
The AfDB president advised the incoming government and other key stakeholders to “rely heavily on the private sector to reduce the fiscal burden on the shoulders of government.”
The president also identified the tax-to-GDP ratio as a problem that needs solving, as according to him, the incoming government must address “tax collection, tax administration challenges, and moving from tax exemption to tax redemption.”
“Ensuring that multinational companies pay appropriate royalties and taxes and that our leakages in our tax collection are closed.”
He added that raising taxes isn’t the ultimate solution to driving up government revenue but advised that the government should concentrate more on delivering on its constitutional promises of providing infrastructure that would discourage individuals and corporate entities from tax exemption and avoidance.
“Nigeria is the only country that has the highest implicit taxes in the world,” he said.
He noted that Nigeria should follow the example of nations that have better social contracts with their citizens.
“Your excellence, we must rebalance the structure and performance of the economy,” he advised.
Continuing in his speech, the AfDB president rejected popular belief, especially in the academic field, which pinpoints the country’s problem as being more of an economic diversification problem. Rejecting the belief that Nigeria is more of a monoculture economy, depending entirely on crude oil and less on other sectors to drive up revenue and employment.
“Nigeria’s challenge is not diversification; Nigeria’s challenge is revenue concentration,” he stated clearly.
“This is because the oil sector accounts for 75 percent of export revenue and 50 percent of all government revenue. The solution therefore is to unlock the bottlenecks that are hampering 85 percent of the economy; these include low productivity, very poor infrastructure, and logistics, despite gains being made,” he said, backing up his thought.
He advised the country to shift away from relying on import substitution and put more attention on export-focused industrialization.
He also advised the incoming government to put more attention on power generation, as, according to him, “there is no justification for Nigeria not having power.”
“Providing electricity will make Nigeria’s industries more competitive within the context of the African continental free trade area,” he added.