• Sunday, March 03, 2024
businessday logo

BusinessDay

Okonjo-Iweala cautions incoming governors on debt, urges transparency

Okonjo-Iweala cautions incoming governors on debt, urges transparency

Ngozi Okonjo-Iweala, director general of the World Trade Organization (WTO), on Monday, called on incoming and re-elected governors to watch their debt profiles, and keep control of expenditures, even as they invest in infrastructure, education, and basic health systems.

She also encouraged the new governors to exhibit transparency and make judicious use of the resources of the state, saying if they govern well, open, transparent and manage their state well, they would attract private investment and multilateral support.

According to her, the FAAC allocation received by some states is bigger than the budgets of several African countries.

She said these while addressing the 2023 induction of the new governors-elect and re-elected at the State House Abuja.

Okonjo-Iweala said: “Watch your debt profiles, and keep careful control of expenditures, even as you invest in infrastructure, education, and basic health systems. Please endeavour to pay teachers, health workers, and others their salaries, and retirees their pensions.

“You must share with your state citizens how much FAAC allocation you receive each month, how much IGR you collect, and how you spend it. We used to publish this information routinely during my time as finance minister under Presidents Obasanjo and Jonathan. We must resume this practice so your citizens can hold you accountable.”

According to her, Nigeria’s debt service to revenue ratio is certainly alarming, at 83.2% in 2021 and 96.3% in 2022, according to the World Bank, saying this means that at the federal level, after servicing our debt there is little room to pay for recurrent expenditures, let alone investment.

She further observed that dealing with the fiscal deficit will of course be infinitely more difficult with an oil subsidy bill of N3.36 trillion for the first half of 2023 (or N6.72 trillion if it is not removed), and that the deficit is made worse by revenue losses from oil theft.

“The difficulties around this issue underscore the importance of political consensus – whether you are in government or in the opposition – on policies critical for nation-building,” she said.

On the World Trade, Ngozi Okonjo-Iweala also enjoined the news governor’s to aim to double Nigeria’s share of World Trade from 0.33% to 0.66% within a decade.

She noted that Nigeria, and Africa more generally, have some of the world’s highest trade costs, saying WTO economists estimate that Nigerian exports to other countries in Africa face trade costs equivalent to a 460% tariff, while exports to the rest world face the equivalent of a 210% tariff.

The DG WTO lamented worrying signs of regional divergence, with Africa’s export volumes projected to shrink by 1.4% this year, compared to 3.3% growth for North America.

She informed that for Nigeria, the IMF projects 3.2% GDP growth this year and 3.0% next year – slightly better than global growth but underperforming the projected growth rates for sub-Saharan Africa as a whole, which are at 3.6% and 4.2% respectively.

Ngozi Okonjo-Iweala said the current GDP growth rates are higher than the very low 1.2% average annual growth rate registered between 2015 and 2019, the five years before the pandemic, but well below the 6.4% average for the preceding five-year period, from 2010 to 2014.”In most developing countries, and across much of Africa, per capita incomes remain well below pre-pandemic trends.

Read also: Nigeria’s debt burden re-echoes danger of ‘rubber stamp’ lawmakers

On digitalization, DG WTO said digitally-delivered services trade is driving growth and global trade, adding that between 2005 and 2022, global trade in these services – everything from streaming games to consulting services to finance, insurance and tourism services provided by internet – grew by an annual average of 8.1%, compared to 5.6% for goods.

“The total value of digitaly-delivered services exports rose to $3.8 trillion in 2022. In 2012, services delivered over computer networks accounted for about 8% of total global trade in goods and services. A decade later, that share had risen to 12%.

She, however, acknowledged that Nigeria’s exports of digitally-delivered services are growing fast – by 23% on average per year since 2005, compared to 8% for the continent as a whole.