How Nigeria Can Attain Fiscal Sustainability- Okonjo Iweala

As new governors and old ones in many states begin their new tenure today, Ngozi-Okonjo Iweala, Director-General of the World Trade Organisation (WTO) has asked the governors to look inward to ensure the sustainability of their states.

She stated that the country needs to attain fiscal sustainability as the current borrowing spree is no longer sustainable.

She also advised policymakers in the country to look inwards to effectively manage the issues surrounding dwindling oil revenue, oil theft, and an unfavorable environment out there. Excerpts

How Can States Ramp Up IGR alongside Federal Allocation And Why Is It Essential For The States To Do This?

Having states whose revenue is about 70% dependent on FG’s FAAC Allocation, even though they are entitled to it is not very healthy at this point because the world is changing, the world is diversifying from oil and gas which is our main source of revenue in this country.

So, if you do not look inward in your states and see how to diversify, by the time the FG is no longer be able to get the bulk of this revenue from oil and gas, then, you will be left stranded. So, this is the time to start looking at Internally Generated Revenue (IGR).

What can they do? Many states have entrepreneurial activities going on, I certainly know that in some of the states with large cities, you have people running Small and Medium Enterprises and many of those businesses are informal.

What I am advising them is that they should not go and tax them immediately but to provide them services so that they can grow and manage their businesses and then set sights on them so that in a few years down the line, they can be properly registered, brought into the tax net and then be able to tax these enterprises, but, not right away.

Please note that if you want to tax people, you must provide them with services, you cannot be taxing them if your services are not good, so, they have to do the two.

There are other types of taxes on properties, and on land which some states are already implementing, like Lagos State does that, they can also look at that.

Again, I repeat, if you want to tax your citizens, they must get better services, no one would want to pay taxes if the services are not good.

Why Do You Insist That States Must Publish Their FAAC Allocation And IGR, What Benefits Will This Bring?

The benefit is transparency. Many times, states don’t pay Teachers’, Health Workers’ salaries and they don’t pay pensions and many people don’t know why.

So, if you set a standard as a transparent governor that every month, you publish the allocation that you got from FAAC and you publish your own IGR, we used to do that under former Presidents Olusegun Obasanjo and Goodluck Jonathan when I was Finance Minister, we were doing it monthly.

So, everybody in the state knows what did they get. You know some people hide behind the fact that they didn’t get an allocation, so, publish it every month and let everybody know, if you didn’t get it, they will see it immediately that you didn’t get it and they wouldn’t blame you. If you got it, they would also know. So, transparency helps to make good governance and trust.

You charged the state governors to rise to the occasion, with the current realities on the ground, do you think they can do that?

There are two things in the current conjecture, in my speech, I also said the external factors in the world are militating against growth and development in many countries in the world. If you look at the external environment, it’s not very friendly at the moment.

But we also have to look at our internal management. So, you can’t just leave it and say that because the external factors are so bad there is nothing I can do, yes, that is true and is partly to be blamed, but also to be blamed is our own domestic management of our own resources, that just has to get better, it has to be more efficient and effective. The little you have, manage it well so and then seek to if we can generate more resources from elsewhere. So, yes, we do have part of our destiny in our own hands.

You Have Just Coined A New Term, Kapa, There Is The Japa Syndrome Which We Are All Aware Of When Young Nigerians Seek Greener Pastures Elsewhere, Tell Us About That

In the past years, we have many Nigerians over 50, 000 Nigerians with technical skills who have travelled to Canada, just Canada alone. Another 20, 000 in 2022. The British have also just given Visas to about 16, 000 Nigerians, the numbers keep mounting. This means we may lose about 100, 000 Nigerians to Japa in a year or two. If we keep doing that, how are we going to build this country?

Like I said in my speech, I am not telling young Nigerians not to go, this is a free country. What I am telling the leaders is that we need to make the country attractive so that they can stay or if you Japa, you will Kapa which is you will come back as you would like to stay. I Japaed but also Kapaed to come back and serve my country and I am encouraging young people to do the same.

What Is Your Take On Our Current Mounting Debt Level And The Debates Surrounding Fuel Subsidy Removal?

We should look at our fiscal deficit, we cannot continue to be borrowing because the more you borrow, the more the debt that you need to service. We need to look internally to see what we can do.

I am not going to comment on fuel subsidy, during my time, we did our bit when we insisted that it must go because it is fiscally unsustainable, it was opposed and we were only able to do 50% of that under former President Goodluck Jonathan.

Now, everybody is talking about removing it, so, I will leave it to those who are policymakers, I have done my bit, it is left to them to decide what is best for the country.

All I am saying is that we need fiscal sustainability and when we have issues surrounding dwindling oil revenue, oil theft, and an unfavorable environment out there, we need to do our homework, we must decide how to manage the situation. Because we can’t continue borrowing and borrowing and borrowing.