On Thursday, the Finance Minister, Dr Ngozi Okonjo Iweala, appeared before the House of Representatives Finance Committee, headed by Dr.Abdulmumin Jibrin, after she presented the 2014 budget to both chambers of the National Assembly. She was presented with 50 questions on the economy to answer. After explaining that her health was not sound, the committee chairman gave her two weeks to answer the questions in writing. She, however, explained that she could cope but the chairman insisted she should go and take care of her health.
Below are the 50 questions:
1. What should you consider as the major economic achievements of this government in the 2013 fiscal year and why? In your explanation, we will need facts and figures in demonstrating such achievements.
2. You have been credited with many announcements regarding Nigeria’s economy as one of the fastest growing economies in Africa. If the economy is one of the fast growing economies, what is exactly growing the economy? What role does government play in the said economic growth, especially given that as high as 80 percent of the country’s total annual budget spending still goes into recurrent expenditure?
3. Since your arrival as minister of finance in 2011, you have publicly announced the need to reduce the recurrent expenditure so that more money would be made available to capital spending which is critical to growing and diversifying the country’s economy. How far has government succeeded in making these necessary cuts; and where exactly have these cuts been made in this effort to reduce recurrent expenditure? In other words, based on real amount spent on capital expenditure, how much reduction was made in 2011 against 2010, in 2012 against 2011 and in 2013 against 2012?
4. You are known to be celebrating a single-digit GDP growth. But speaking recently at a breakfast dialogue with some members of the organized private sector in Lagos, organized by the Nigerian Economic Summit Group (NESG), you were quoted as saying: “We are growing, but not creating enough jobs. That is a very big challenge…We need to grow faster. I think it needs to grow at least 9 to 10 percent to drive job growth the way we want.” Don’t you agree that a good finance minister managing an economy like ours should be celebrating a GDP growth as high as 20 percent annually? Why is it that our economy cannot grow beyond a single digit? How many jobs are being created as a result of these said growths? In which sectors of the economy are these jobs created? If in private sector, what contributions is government making to further assist these private sector firms?
5. In the presence of Nigeria’s huge infrastructure deficit, why is it that the country’s debt-to-GDP at about 19 percent in 2012 remains one of the lowest in the world when compared to nations already with world-class infrastructure and industrial economies such as America’s 105 percent, Brazil’s 65.49 percent, India’s 67.60 percent, and South Africa’s 40.9 percent?
6. Since facts don’t lie, have you any disagreements with the September 4, 2013 Global Competitiveness Report of the World Economic Forum for 2013-2014, which ranked Nigeria 120th out of 148 countries ranked in the Global Competitiveness Index, including being ranked far behind some African countries such as Mauritius 45th, South Africa 53rd, and Kenya 96th?
7. ‘’For the first time in Nigeria’s 53rd year history, we have successfully privatized the electric power industry,” so said the President at a recent meeting in London with some foreign investors. As minister of finance should you agree that the recent privatization of the country’s power infrastructure is worth celebrating as a major economic achievement in 2013, when in reality there is little or nothing to show as an improvement in the country power supply? Also why our rush to wholesale privatization of the power sector when countries like South Africa, generating as high as 42,000MW still have their power sector mostly in public hands?
8. What was your reaction to the November 12, 2013 statement credited to the World Bank Country Director for Nigeria, Marie-Francoise Marie-Nelly, who said that over 100 million Nigerians are today living in absolute destitution, representing an unheard-of 8.33 percent of the world’s total number of people living in destitution?
9. Nigerians are increasingly perplexed that these days nothing happens without government borrowing. And for most Nigerians, it is frightening how those managing the economy are just dragging us into excessively unproductive debts. More worrisome is the fact that every effort is being made to hide the details of the country’s debt stock from Nigerians. Where are the facts that the country’s current high rate of borrowing is productive, let alone have the ability to be repaid without having to resort to more borrowings?
10. Is prudence in our borrowing simply reduction in borrowing or simply constructive borrowing with government putting necessary measures in place to ensure that domestic debt profile is properly supervised and utilized by curbing corruption?
11. From Debt Management Office (DMO) 2012 Annual Report, the total public debt outstanding between 2008 and 2012 for external stock rose from $3.72bn to $6.53bn, while domestic stock rose from $17.68bn to $41.97bn. The total debt service the same period saw the percentage of external debt service drastically reduced from 11.46 per cent to 5.96 per cent while the percentage of domestic debt servicing grew from 88.54 per cent in 2008 to 94.04 per cent in 2012, drastically increasing the cost of the total debt service since the cost of domestic borrowing is atrociously higher than the cost of external borrowing. How could your debt sustainability analysis rationalize this without seeing some narrow interests being the overriding reason? Could this be the explanation why commercial banks in the country are declaring unheard-of three digit profits and the high Foreign Portfolio Investment and low Foreign Direct Investment?
12. It’s an established fact that the willingness and ability to borrow do not automatically translate into economic growth. If you agree with this fact, how productive are the country’s recent borrowings?
13. Why should our internal debts continue to represent more than two-thirds of Nigeria’s external debt profile, when the cost of servicing domestic debts is ridiculously far more expensive than servicing external debts? Why should government continue to borrow internally when in so doing results in insufficient funds, skyrockets the cost of borrowing and above all, crowds out the real sector from the money market? Shouldn’t the high cost of domestic borrowing override whatever are the assumed benefits? Since both London Interbank Offer Rates (LIBOR) and the US Treasury Bonds rates offer far better interest rates for sovereign borrowings, why have we continued not to take advantage of cheaper interest rates?
14. Your references to the country’s economic growth profile have always been based on Fitch, Standard and Poor’s, and Moody’s ratings. Are you aware that these same rating agencies are being sued in New York (with case # 652410/2013) by two Bear Stearns hedge funds for fraudulently assigning inflated ratings to securities in the run-up to the 2008 financial crisis? If you do, why do you insist on accepting the rating as reliable.
15. How much exactly has been the amount of money lost in government revenue as a result of import duty waivers in 2011, 2012 and 2013? Provide the names and beneficiaries and justification for same. In your opinion as the minister of finance who oversees the economy, what are the implications to the country’s economy? What efforts have you have made to stop this waiver policy, which is distorting the economy? Our non oil income has dropped in 2013. A case where increased tariffs on various items effectively reduced importation to zero in some sectors. However, those items now find their way into Nigeria through our borders. Does it make any sense to increase these tariffs when we have such porous borders? As an example, officially, Benin Republic imported more rice this year than Nigeria.
16. It was reported that the FIRS is to engage foreign consultants for tax collection in 2014. Could the Minister clarify this position and what Nigeria stands to gain? Have the FIRS not been working effectively?
17. Do you really believe that Nigeria needs a ‘Sovereign Wealth Fund’ at this critical juncture of budgetary deficits, and having to be borrowing extensively in an effort to address government revenue gaps? Shouldn’t the presence of Nigerian Sovereign Investment Authority (NSIA) simply mean spreading government’s scarce resources thinly? Why will you insist that no matter what we still need to operate a sovereign wealth fund? Sincerely speaking, how sustainable are the objectives of Nigeria’s Sovereign Wealth Fund, particularly in the long-term?
18. You should agree that a lot of Nigerians are interested in the link between NSIA and the government. Since there is no doubt that Nigerian Sovereign Investment Authority is an agent of government — or is it not? The question is: How should we think about the management structure in so far as major decisions are concerned? Where is the line between NSIA, as a commercially minded entity, and the government, especially given government’s policy of having no business doing business? If, for example, government does not get involved in specific investments, then, who appoints the external managers involved in managing some parts of the NSIA funds?
19. Who determines the investment objective and who establishes the risk parameter for the NSIA’s portfolio? In providing answer to this question, it is also important to understand and explain why NSIA recently hired a Swiss national as its chief portfolio investor? Answering this question is important since it should help us to know who determines the maximum draw-down that the government would be comfortable with in extremely negative market environments.
20. What should be your explanations for awarding MasterCard a multimillion dollar National Identity Smart Cards, when there are indigenous ICT companies that not only have what it takes but would have done it cheaper and create local jobs at the same time?
21. Have you taken into considerations how foreign company could use such information available to it to invade the privacy of Nigerians?
22. What are reasons for SURE-P to give preference to Chevrolet cars for SURE-P taxis, when it is known that not only are such cars very expensive to maintain compared with Asian and European cars, but also are also not fuel efficient and not durable on our roads?
23. Honorable Minister of Finance, you will agree that SURE-P is very important to the people of this country, taking into cognizance that it is the only thing they stand to gain from the increase on petroleum product pump prices almost 2 years ago. Who is in charge of the management of SURE-P and who takes responsibility for its successes and failures?
24. You will agree that inasmuch as the interest rate regime is critical to the real sector borrowing decisions, most principal factor in making borrowing decisions is the business’s expected rate of return on investing borrowed money? The question, without efforts to protect local businesses from their foreign counterparts, the high cost of doing business in Nigeria, puts them at such a disadvantaged position that it makes no economic sense borrowing to invest in their local businesses, why should we expect private sector firms to be investing in the economy?
25. You are quoted as saying, ‘’ Very soon, the US would become a net exporter of oil…So, it would be disingenuous for anyone to say that just because the price of oil has hovered at around $100 per barrel, it cannot crash…Lest we forget, as recently as 2008, oil prices crashed from a peak of $147 per barrel to $35 per barrel ina space of months triggered by the global financial crisis. Is the minority leader saying he has forgotten that?” This forces one to wonder from which source should the US become that net exporter of oil, given that the US daily oil consumption was 18.7 million barrels with (10.6 million of which was imported daily) in 2012? Or, should it be from the shale oil which the International Energy Agency (IEA) demonstrates to be at two million barrels daily? In other words, given the IEA global oil price trajectory, can’t we agree that “There are many constraints on supply keeping pace with demand” which means that within this decade, oil prices should always hover around $125 per barrel? Answering this question will help us understand why you insist on benchmarking the oil price for the 2014 appropriation at below $79 per barrel? In answering this question, would you also agree that as the global economy shifts from West to Asia, so will the appetite for global oil consumption shift from the West to Asia?
As crude oil continues to sell at $100-$110, how low will production have to fall for us to record a net loss or at what production level can we break even at a 2013 benchmark of $79.
26. Do you agree that the Excess Crude Account as being operated by government is illegal and unconstitutional, especially given how it has been managed?
27. Can you explain with clarity how the ECA is being operated? Also provide a statement of account of the ECA from 2011 to 2013? Also how much have we made in excess of the benchmark price from January 2013 till date.
28. If there is nothing like Excess Crude Account, would you have been demanding lower oil price benchmark for the budget, especially when the executive arm of government around world is known for demanding more money from lawmakers in order to be able to meet government spending obligations, particularly capital spending. Why is the reverse the case in Nigeria only, notably since 2011?
29. With respect to the Excess crude account and our Sovereign wealth fund again, there have been allegations and counter allegations on its legality. Assuming, for the sake of the committee’s enlightenment, the FGN alone saved its own excess in its ECA/SWF (which is about 52% of the Federation account) and the states and LGs get their funds in full compliance with the constitution, what would be the effect on the economy?
30. Do you believe in the fight against corruption? If you do why has EFCC not been proper funded? Without properly funding the commission, how should it be expected to carry out its duties effectively?
31. Can you confirm with figures if we have met our cumulative revenue projections for 2011, 2012, 2013, and if we have, how and if we have not, why? Also provide backup performance information under the various revenue generating agencies—NNPC (Oil and Gas), DPR, FIRS, Customs, Independent Revenue and other anticipated and unanticipated revenues e.g. privatization and sales of government properties etc.
32. As Minister of Finance, are you familiar and comfortable with all the present business arrangements of the NNPC? Why were these business arrangements excluded from the MTEF which used to be the practice? Provide all the present business arrangements, the parties involved, the share of each party, and justifications for such.
33. Provide details of government stake in NLNG. All categories of revenue under the NLNG and total amount generated so far and evidence of remittances.
34. Why do you always prefer a lower benchmark which leaves government with wider deficits and your attitude of no qualms with domestic borrowings at excessively high interest rates to balance deficit as against our position of increasing benchmark to reduce deficit which consequently reduces domestic borrowing, that frees up funds for the real sector of the economy, thereby bringing down the interest rate, increased private sector investments and creating jobs.
35. What is the total amount expended by certain statutory agencies of government without appropriation for 2011, 2012, and 2013? Also provide aggregate appropriated expenditure for the same period. As the Coordinating Minister of the Economy, do you feel comfortable with allegations that almost equal amount of our yearly aggregate expenditure is being spent without appropriation, yet we are crying that the country is running short of revenue?
36. Between May 7 and 9, 2014, it is expected that Nigeria will be hosting World Economic Forum on Africa. Who will finance this event and why? In concrete terms, what are the expected tangible benefits to the country in return to justify hosting such expensive event that will require lots of money for logistics, accommodations, security, especially given that South Africa that recently hosted the event has nothing to show for it.
37. If you should for any reason say it will attract foreign investors, the question, then becomes, what kind of foreign investors are we talking about here because as we all know, no serious foreign investor needs to attend such a forum in Nigeria in order to recognize that our country should have been one of the world’s favored investment destinations had our perennial infrastructure deficit been addressed head-on?
38. Most of the developing economies like China, India, and Brazil that the world is today celebrating as economic success wouldn’t have become this successful without adopting multi-year development plans. Why after knowing that their successes are as a result of carefully designed multi-year economic planning, we are yet to adopt such a multi-year development model? In other words, why wouldn’t you agree that Nigeria too needs that in order to move faster and more sustainably in its quest for industrialization and economic diversification and job creation for millions of the country’s unemployed young men and women. Specifically, what concrete, visible strategic efforts and action are you taken to diversify our economy
39. As the Coordinating Minister of the Economy, can you precisely clarify how much is AMCON’s debt exposure and what will its defaulting mean to the country’s economy?
40. Why are we using the 10 to 15 years moving average to arrive at your 2014 proposed benchmark as against the traditional 5 to 10 years moving average we have always used? Is it because using the 5 -10 year average will not give you the benchmark price you desire?
41. This time last year you informed this committee that our external reserve position was about $48 billion and the balance on our excess crude account was about $9 billion. You also said that the plan was to grow these balances to about $50 billion and $10 billion respectively. However we are hearing that the balances have dropped to $43 billion and $3 billion respectively. And you are saying all is well?
42. Crude oil projections for 2013 were 2.53 million barrels per day while actual figures as supplied by the NNPC/DPR/MTEF have averaged about 2.3 million barrels per day giving a shortfall of about 9%. Could this alone have caused such a drastic reduction in our reserves and savings positions?
43. Is any money missing from our anticipated revenue from the NNPC in particular and oil industry in general. If there is, how much? If not, how come such issues emanate from high offices in the executive arm of Government? However, if the reconciliation figures is the issue, how long will Nigerians wait for the reconciliation to be completed. In other words, how long will the reconciliation last and the outcome announced?
44. Referring to the pre-shipment inspection of exports act of 1996 and the Federal ministry of Finance export guidelines. If any good (oil, gas or non oil) is exported from Nigeria the exporter is compelled to repatriate these proceeds through the domiciliary account of a Nigerian bank. What has been the effectiveness of these laws? Is there full compliance.
45. If there has not been compliance, would it not make it difficult for us to build up our foreign reserves?
Could we not say that the main thrust of the CBN letter was that our foreign reserves are not growing even though there has been a consistent high selling price of crude due to the fact that huge funds are not being repatriated at all or are repatriated through the black market?
46. Could we say that the issue is not so much that money is missing (which is yet to be determined) but that proceeds that should have found their way back to the Nigerian economy have grown wings or they fly in through the black market, allowing oil industry players have a field day making spreads of up to N7 per dollar in some cases.
47. What is the Minister’s take on the apparent stagnation of the economy as there seems to be very little job creation and growth in small businesses. Even though the Minister has read out growth figures before it is not telling on the average man on the street.
48. Would the Minister say that the various Government initiatives at job creation have not lived up to expectation as they affect only a very small part of the population?
49. Wouldn’t the Minister think that the private sector should be the main driver of job and wealth creation through natural growth of business and start ups being financed by the banking industry?
50. If so, what does the Minister think it would do for the local banking industry if this same pre-shipment inspection law and your own export guidelines are enforced to the letter. The oil industry in Nigeria is worth about $50 billion per annum. If even $10 billion of this passes through our local banks wouldn’t that give the economy a boost with banks now able to fund longer term and bigger projects?
Signed: Hon. Abdulmumin Jibrin, Ph.D
Society News3 years ago
EXCLUSIVE: The Complete Story of Dolapo Awosika, John Fashanu and Prophet Kasali Sex Mess
News12 months ago
BREAKING: Ajimobi’s daughter-in-law blast Gov. Makinde, says gov can’t surpass ex-Oyo gov
News11 months ago
BREAKING: Police take over Edo House of Assembly as APC, Oshiomhole move to seize control
News11 months ago
BREAKING: 2 arrested as NAF begins investigations into Tolulope’s death
Crime1 year ago
Exclusive: Female Aide Fingered In Oko Oloyun’s Murder + Banking Transactions That Nailed Husband
News11 months ago
How Ex-EFCC Spokesman, Tony Orilade Buried Dad
News12 months ago
Pastor Osagie Ize-Iyamu, His Membership Of Secret Cult, And Other Issues Touching On His Public Credentials Examined by Barr. PATRICK I. BIOSE
News11 months ago
Buruji Kashamu’s Health Worsens, Moved to First Cardiology Hospital!