Fashola, Kachikwu, Adeosun signpost Buharinomics at Senate

Three of the incoming ministers in the proposed cabinet of President Muhammadu Buhari’s administration, Emmanuel Kachikwu, Babatunde Fashola and Kemi Adeosun, yesterday gave clear signals of hope for economic revival when they recommended massive investments in infrastructure to stimulate the economy, as well as splitting of the proposed Petroleum Industry Bill (PIB) into parts, to avoid further delays to reforms that have denied investments in the downstream sector for over seven years.

The trio, who were among 18 ministerial nominees  that were confirmed by the Senate, also suggested effective implementation of the Treasury Single Account (TSA) to reduce government borrowing and the attendant reduction of interest rates and blocking of leakages for the much needed inclusive growth.

For Emmanuel Kachikwu, managing director of the state-owned Nigerian National Petroleum Corporation,(NNPC) who is being considered as minister of state for petroleum, “As long as we continue to want to pass a holistic PIB, it’s going to be a major challenge.”,

Kachikwu, who sees the  PIB as aiming to consolidate a slew of oil and gas legislation and help make Nigeria’s oil industry more transparent, further said, “Once you begin to break it up into critical aspects, you begin to make a faster run to passing it.”

The proposed petroleum law, first presented in parliament in 2008, has been held up largely by political wrangling and objections by international oil companies, which say the government is demanding too big an increase in its share of the revenue. The delays have caused “a level of uncertainty that no international investor wants to grapple with” and cost the country $15 billion a year in lost investments, said Kachikwu.

Kemi Adeosun,commissioner for finance, Ogun state, who is being tipped for finance ministry, said there is need for reduction of interest rate, so as to reduce the overall lending rates in order to make investment cheaper.

“Nigeria needs to bring down its interest rate. The biggest driver of interest rate is government borrowing” Adeosun said.

Speaking further, she said “Nigeria needs to stimulate the economy by investing in infrastructure that will help the nation avoid recession,

“The country is currently in a slow down and not approaching recession because the GDP is still growing. The growth must be an inclusive growth that will create wealth,” she said.

Adeosun said that effective implementation of the single account at the federal level, as currently being done in Ogun, will instill transparency and discipline in government finances, adding that “TSA makes the government a lender and an absolute important economy tool that we all need to support.

“We need to set targets for ourselves to increase revenue, introduce better cause that will encourage audit compliance and create other source of funding by doing public private partnership to achieve a better mix between recurrent and capital budget.”

She also called for a shift in Nigeria’s financing regime which puts total recurrent expenditure at 78% and total capital expenditure at 22%, saying there must be a systematic switch in the financing regime.

According to her, reducing recurrent expenditure in favour of capital expemditure would provide economic platforms for massive investment in infrastructure and also attract foreign direct investment in terms of industrialisation and employment opportunities for decreasing unemployment rate, as well as dictate investment flow into entrepreneurship.

Babatunde Fashola, former governor of Lagos state said, “Credibility of a government is not how much it has in the bank but how credible it is to manage its debt”

“There is no way we can conceptualise long term projects in Nigeria today without borrowing.

“USA owes over $16 trillion….. but we go to their hospitals, universities and they also dictate what is happening all over the world…I will like to be such a debtor.”

Fashola believes that “Security remains the primary but toughest job a leader can have; It was a competition; government exists to protect citizens and their assets, therefore criminals are my competitors; online Technology is a very versatile tool for tax collection… moving to it would be important; before we increase taxes we must optimise the capacity to receive what is in place.”

Kachikwu lamented that despite being Africa’s largest oil producer, the country of about 180 million people relies on imports for more than 70 percent of its fuel needs. NNPC, according to some analysts operates at a fraction of their capacity because of poor maintenance and aging equipment.

Kachikwu further said that the reorganisation of oil taxes should provide scope for giving producers incentives to invest when prices are low and for increasing the rates they pay as prices recover. The tax changes for the oil industry can be incorporated into the national tax code.

“The times when oil prices are so low that nobody is willing to invest in your country, you may give some incentives,” he said. “At the time when they’re so high and people are making outrageous profits, you may increase your taxes.”

Nigeria depends on crude exports for two-thirds of state revenue and more than 90 percent of export earnings. A halving of crude prices in the past year have put pressure on public finances, while the currency has declined 7.8 percent against the dollar since January.

Lamenting on the state of the refineries, he said that of the four state-owned oil refineries, two units at Port Harcourt with a combined capacity of 210,000 barrels a day are currently producing at 67 percent of their capacity.

The Warri refinery in the south is shut down, while Kaduna, a processing plant in the northern part of the country that also hasn’t been operating, will re-open on Thursday, after pipeline repairs have been completed, he said.

“At the end of December, we would sit down and say which ones have shown the capacity to consistently perform at levels that make optimal sense. Those that are not, we’ll have to shut down and do complete maintenance,” Kachikwu said.

John Omachonu, Josephine Okojie, Owede Agbajileke & Rasaq Ayinla