Wale Edun’s economic reforms: A blueprint for alleviating Nigerian suffering

By Jide Peters

Olawale Edun, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, is tasked with the monumental challenge of revitalising the nation’s economy amidst global uncertainties. His unwavering commitment to reform is evident as he lays the groundwork for transformative changes. To fulfil the campaign promises of the Renewed Hope administration, Edun emphasises the necessity of broad-ranging reforms in fiscal and tax policies. These reforms are essential for enhancing fiscal governance, driving revenue transformation, and fostering economic growth. Appointed by President Bola Tinubu, Edun’s extensive experience in economics and finance positions him as a key player in steering Nigeria toward a prosperous future.

Between 1999 and 2007, when Tinubu was the governor of Lagos, Edun served as the commissioner for finance, who has a background in economics, international finance, merchant banking, and corporate finance at the national and international levels, as the new Minister of Finance and Coordinating Minister for the Economy.

Additionally, he began working with the World Bank/IFC in Washington, DC, under the esteemed Young Professionals program. He worked on economic and financial plans at the World Bank for a number of nations in the Far East, Latin America, and the Caribbean.

Edun has been Chapel Hill Denham Group’s chairman since March 2008. Upon his return to Nigeria in 1989, he co-founded and held the position of Executive Director of Stanbic IBTC Plc (previously Investment Banking & Trust Company Limited). He founded Denham Management Limited in 1994, which later merged with Chapel Hill Advisory Partners to become Chapel Hill Denham Group, a leading independent investment banking firm. At the time of the merger in 2008, the company had shareholder funds in excess of N9bn ($12m).

While serving as the commissioner of finance in Lagos, he was credited with being instrumental in a monumental increase in the state’s revenue.

Four things were instrumental in achieving this feat:

-Commitment to technology helped to increase revenue generation and block loopholes; total computerization of the operations of government; reliance on the private sector and private investment to drive the economy; and efficient use of the financial markets.

-Wale Edun played a part in the design and implementation of innovative, home-grown technology-driven solutions that increased the resources available to the government, grew revenue in large quantities, and thereby gave the government the wherewithal to spend on infrastructure, social services, and job creation.”

-It is in view of all these and his doggedness that he was saddled with the responsibility of championing unprecedented economic growth and stability, which the nation has witnessed as both the Minister of Finance and the Coordinating Minister of the Economy.

-He has been at the forefront of transformative policies that have strengthened our financial systems, promoted sustainable development, re-engineered the government expenditure process to achieve full visibility of transactions, and fostered a resilient economy.

The key achievements to date of the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, include:

Fiscal and tax policy reforms:

broad-ranging reform of fiscal and tax policies geared towards improved fiscal governance, revenue transformation, and economic growth.

The new national fiscal policy is in its final stages, focused on streamlining taxes, increasing collection and compliance efficiency, and promoting an efficient incentive framework.

Expenditure control:

-Re-engineered the government expenditure process to achieve full visibility of transactions.

-Under the 2024 capital budget, payments shall be made directly to contractors, suppliers, and other service providers.

-FGN has also enhanced the import duty exemption certificate (IDEC) platform to include monitoring and evaluation.

Revenue Increase:

-Increased revenue with oil production reaching 1.69 mbpd in March 2024 due to improved security.

-The Federal Government of Nigeria’s (FGN) retained revenue from ministries, departments, and agencies (MDAs) and federal government-owned enterprises has substantially increased (Q1 2024 was N2.85 trillion vs. Q1 2023).

-Due to increased tax and customs revenues and improved assurance that employed technology-backed systems to automatically deduct revenue due to FG.

-In a historic development. FGN also earns FX income under the new revenue model.

Reduction of Ways and Means exposure:

The FGN, via the debt management office (DDMO), raised N4.8 trillion from domestic capital markets to repay outstanding obligations to the Central Bank.

An additional N2.5 trillion is to be repaid from the proceeds of further issuance of government securities, bringing the outstanding balance to N2 trillion.

Debt service without recourse to Ways and Means:

As part of the commitment to improved fiscal discipline, the government has financed debt service obligations mainly through available cash balances instead of relying on the ways and means account.

The Ministry of Finance has funded foreign debt services as other obligations of FGN without recourse to ways and means of debt.

Support of Monetary Policy:

Through the issuance of government debt securities by the DMO at higher interest rates that provide a better risk-adjusted return to investors, the Ministry of Finance has supported monetary policy authorities in attracting FPIs and stabilising the exchange rate of the naira.

-Active coordination between the fiscal and monetary authorities to ensure effective transmission of monetary and fiscal policies in line with the economic vision of Mr President.

National Single Window (NSW):

-Launching of NSW by Mr President. The NSW is an e-community platform for trade facilitation and import administration. Once fully implemented, it is expected to generate an annual economic benefit of approximately US$2.7 billion.

Financing the commencement of major infrastructure projects:

The Ministry of Finance has provided critical initial funding from internal finances to kick-start major infrastructure projects such as the Lagos-Calabar coastal road.

Infrastructure and housing finance fund:

MOFI is partnering with government agencies and the private sector to boost investment and provide 25-year low-interest mortgages.

It is anticipated that an estimated N2.00 trillion from institutional investors will be mobilised for the infrastructure and housing sectors.

Foreign Direct Investments:

MOF, under the leadership of Mr President, has actively engaged with a broad range of international investors from the Middle East, Europe, and India to showcase the reformed economic policies of the FGN.

It has been anticipated that well-advanced discussions with investors from the Middle East would result in definitive investments in the near term.

Protecting the poor and the vulnerable:

MOF has played a critical role in the strengthening of the social protection system by reframing the process and administration of the direct benefit transfer programme.

-Ongoing transfer of up to N75,000 to approximately 15 million households using unique identifiers to improve transparency and limit fraud.

Approximately 3.2 million beneficiaries have already been funded.

Intervention funding:

-MOF facilitated the funding of critical special intervention programmes up to N500 billion.

-N100 billion in funding for the procurement of CNG-fueled buses and supporting infrastructure.

-N200 billion for food production.

-N200 billion for SMEs for production and nano-grants for small businesses.

Increased revenue generation:

Nigeria’s customs service revenues increased by 86.68 percent to N3.2 trillion in 2023 compared to the previous year. In Q1 2024, the service collected N1.30 trillion, a substantial increase of 122.35 percent compared to Q1 2023.

Federal Inland Revenue Service (FIRS) achieved 107.00 percent of the 2023 revenue target by collecting N12.36 trillion, and Q1’s 2024 revenues were N3.94 trillion, 56 percent greater than the same period in the prior year.

Increased revenue collection:

The Office of the Accountant General of the Federation’s collection of revenues from federally owned enterprises increased from N2.85 trillion through the automation of the deduction process:

-mobilisation of loan financing.

-catalysing capital inflow.

-greater effectiveness and efficiency through digitalisation, which streamlined trade processes and reduced bureaucratic bottlenecks through the implementation of efficient clearance procedures and the deployment of advanced technology, resulting in an average clearance time for goods reducing by 300:00 percent.

Improved lives and livelihoods:

FHA’s financing of over 9,150 affordable homes across the six geopolitical regions.

Following the success of its three pilot healthcare facilities, NSIA is developing and operationalizing 23 new modern medical diagnostic centres, 2 oncology centres, and 7 catheterization laboratories. Construction has commenced on 10 of the facilities, which will be operational in 2025.

-NAICOM’s optimisation and deepening of the effectiveness of the Nigerian insurance sector, surpassing Q1’s 2024 targets for the number of Nigerians covered and the gross premium generated.

-PTAD has enrolled 3,208 legitimate pensioners who had been wrongly removed from the database or never previously been added, improving their economic livelihoods and welfare.

Driving public education and awareness:

-NDIC pursued various public education initiatives aimed at enhancing financial literacy to promote financial inclusion.

-DMO commenced the publication of the quarterly debt bulletin in Q2 2023 in compliance with the World Bank’s performance and policy actions for 2024.

-Nexim has launched the Nigerian Export Academy (NNEXA), a digital learning platform to promote capacity building among exporters and raise awareness of export procedures, documentation, and other related issues.

Other reform implementations and initiatives:

-MOFI played a lead role in implementing the presidential compressed natural gas initiative (PCNG), including the development of appropriate standards, securing tax and duty waivers, launching of pilot conversion centres across each geopolitical zone, and ordering of over 44,000 key assets (i.e., CNG vehicles, tricycles, conversion kits, etc.) expected to be received within the next month.

-Developed a MOFI real estate investment fund that is awaiting presidential approval. An implementation programme starting with a pilot of 25,000 units will be developed as a proof of concept for the delivery of the proposed intervention.

-MOFI set up a special purpose vehicle (SPV) to manage the day-to-day operation of the presidential initiative.

Meanwhile, the Office of the Attorney General of the Federation (OAGF) is monitoring the implementation of public financial management reforms.

Wale Edun’s tenure as Minister of Finance and Coordinating Minister of the Economy has the potential to reshape Nigeria’s economic landscape fundamentally. However, achieving this vision requires unwavering dedication to implementing comprehensive fiscal and tax reforms, fostering transparency, and ensuring equitable distribution of resources.

By addressing these critical areas, Edun can drive sustainable economic growth, enhance public trust in governance, and improve the quality of life for millions of Nigerians.

The road ahead is challenging, but with steadfast leadership and a commitment to accountability, Nigeria can look forward to a brighter, more prosperous future. The success of these reforms will not only alleviate immediate suffering but also lay a solid foundation for long-term stability and development.

Jide is a public analyst.