Home Business Kemi Adeosun – Minister for Finance address at Stakeholders Meeting held with Commissioners of Finance on the Fiscal Sustainability Plan ( FSP)

Kemi Adeosun – Minister for Finance address at Stakeholders Meeting held with Commissioners of Finance on the Fiscal Sustainability Plan ( FSP)

by Business News Report

I welcome you to this engagement, which is a critical part of the President Buhari led administration’s plans to reset and reflate the economy.

Nigeria’s economy is a confederation of  the economies of her 36 States and the FCT. Thus, we recognise the critical importance of  developing a broad based  economy, with  productive activities in every region and State.

We must ensure that the necessary conditions for growth are firmly put in place. We are working to achieve this through investment in enabling infrastructure and reforms in the ease of doing business, which will  spur  growth and development in the private as well as public sectors.

At Federal level, to create headroom for the urgently needed  investment in infrastructure , we are pursuing a very disciplined approach to managing public funds, ensuring the maximisation of revenues and the minimisation of the costs of governance. The  Fiscal Sustainability Plan (FSP)  replicates this far reaching  public financial management reform programme across all tiers of Government and marks a turning point in the management of State Finances. By raising the standard for public financial management in the areas of transparency, accountability and efficiency, States will be repositioned to embark on a path towards fiscal independence.

On the cost side, the pressure is to cut costs  starting with the commitment to eliminate, once and for all, the menace of ghost workers by BVN checking of payroll and the requirement that all salary payments are made directly to the individual accounts. This  will enable States  to control the size of their wage bill and ensure that it is affordable. The  formal commitments  being made  to improved expense management, greater efficiency in recurrent spending and   prudent debt management, will combine to ensure that States can move towards improved long term financial health.

In the area of revenue, The FSP is based on the fundamental principle that each and every state in Nigeria must be economically viable. Accordingly, it recognises the fact that Internally Generated Revenue must be maximised and we have extended the definition of revenue beyond the traditional confines of  taxes, licences and fees.  In some States, there is no significant private sector and therefore, States are being encouraged to identify their own areas of comparative advantage and to embrace partnerships with the private sector to generate revenue and stimulate development.  Such projects will establish the viability of key opportunities and will attract investors. In certain States, we are already seeing  notable progress  being made in specific agricultural products  including rice and yam as a source of state revenue. Similarly, other States are  working in new partnerships and exploiting their own solid minerals to generate funds. This is a development to be encouraged and emulated.  Never before has there been a greater need nor a greater opportunity to look inwards  to identify and explore local resources. This may entail, in certain States, a fundamental review of the role of Government  in line with revised objectives, but will yield long term sustainable dividends.

When fully  implemented,  The FSP will begin the process of guaranteeing that States take responsibility for  their financial viability. Pursuing the objective that  IGR rather than  Federal Allocation, should be their principal focus of  revenue is a fundamental change in approach. This is in line with our objective to have a diversified and inclusive economy where every state adds value.  We realise that this is not an overnight process, rather a journey, but it is a necessary one for the future of State and Local Government in Nigeria.

By agreeing that  further financial support under this  guaranteed loan package,  is  conditional upon independently verified attainment of  the 22 milestones, the State Governors are to be commended. They are sending a strong signal that they are indeed partners in the journey towards the recovery of the Nigerian economy and are  fully prepared to pay the price for a sustainable future.



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