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.
