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365 days of Buhari: Our agenda to stabilise the economy -Udo Udoma

Minister of Budget and National Planning, Senator Udoma Udo Udoma, can rightly be described as a key player in the Nigerian project, who has seen it all-having been actively involved in all tiers of government and the private sector. Apart from running one of the largest law firms in Nigeria, Udoma had served variously as chairman of blue chip companies and had been a senator during which he was saddled with the arduous task of being the Chairman of the Senate Committee on Finance and Appropriation before being made a Minister of Budget and National Planning by President Muhammadu Buhari last year.

Udo Udoma
Udo Udoma

In this interview, the minister speaks on what is being done to grow the Nigerian economy, create jobs for Nigerians and make Nigeria great again.

By Soni Daniel, Northern Region Editor

Buhari 1yearWhat lessons has the 2016 Budget taught  you. And  what  safety valves have been put in place to protect future budgets and reduce tension in the land?

A certain amount of tension is inevitable in the budgeting process as there will always be conflicting demands in the allocation of limited resources. However, early engagement can help to speed up the process. This was not possible in the case of the 2016 Budget as we had little, or no time, for engagement with the various stakeholders before the budget had to be presented.

Given the  furore  that attended the budget, what is the Ministry of Budget and National Planning likely going to do differently this time around?

Early engagement with stakeholders.

You came with the concept of Zero Base Budgeting (ZBB) system for Nigeria and this appears a new fiscal method. What does it really mean because the average Nigerian is conversant with the Envelop System Budgeting (ESB)?

The ZBB system is an approach to budgeting that requires all expenses to be justified for each new period. This contrasts with incremental budgeting in which you start with the previous year’s budget and make adjustments, usually upwards. With the ZBB approach, every project, whether new or existing, has to be justified afresh to assess whether it fits into the current priorities of the Government. The ZBB approach is a more difficult method of budgeting than the traditional envelope system, but it is more efficient and effective when properly implemented.

Perhaps, for the first time, do you want to educate Nigerians on what really happened when it was widely reported that the budget that was sent to the National Assembly was ‘missing’ and, later, a new version was ‘smuggled’ in. If I may ask, which version was eventually worked with?

That was just a communication problem which was cleared up when the President sent a formal letter to the National Assembly enclosing a copy of the corrected version of the budget which he asked them to work with, as representing his budget proposals. And it was this corrected version that the National Assembly worked with. I would also like to mention the fact that a few errors were later discovered in this corrected version but, working with the various committee Chairmen in the National Assembly, most of these additional errors were also corrected.

It is well known in Nigeria that budgets are hardly implemented up to 30 percent because of late passage and delayed fund release by government. How are you going to overcome these challenges in order to make the desired change?

Luckily, the National Assembly has made provisions in the Act for us to be able to implement the capital budget for up to one year from the date it came into force. That means we can continue to implement the 2016 Budget till the 5th  of May 2017.

We are also optimistic that we will be able to raise sufficient funds to implement the budget. Hopefully, if the current upward trend in crude oil prices continues, and we are able to overcome the current production disruptions caused by renewed militant activity, we should be able to  realise  our crude oil revenue projections. The Minister of Finance is also negotiating for some offshore loans on concessionary basis. With all these coming through, and given our commitment to transparency and anti-corruption, we should be able to achieve a much better performance record than previous administrations.

Given the challenges of forex scarcity and the recent increase in the pump price of petrol, inflation has risen sharply. What measures are being put in place to stabilise  the economy and reduce inflation?

Let me correct something. The liberalization of the refined products market, which happened, only, recently, is not the cause of the recent rise in inflation, which trend started in January. In any case, outside of the major cities, many Nigerians had been buying PMS at prices ranging from N150 to N200, and above. So there might not be any significant additional spike in inflation resulting from this recent action taken by government to increase supply and remove the daily struggles that many Nigerians have been going through to get petrol. One can only imagine the reduction in productivity that was caused by these petrol shortages.

Having said that, the government is quite concerned about  the difficulties Nigerians are going through and we are exploring both short term and long term measures that can be taken to ease the hardship that many of our people are experiencing. As an immediate measure, we are looking at ways to fast track budget releases, particularly, some of the N500 billion Naira social intervention fund, so as to bring immediate  succour  to Nigerians.

Nigeria’s Gross Domestic Product (GDP), though said to have been ‘rebased’ and considered as one of the largest in Africa and perhaps 26th  in the world, is still small compared to what some smaller countries have recorded. What can be done to increase the GDP?

Since 2014, all economic indices in Nigeria have been going south. The country has been experiencing a serious decline in our revenues caused by the collapse of crude oil prices. This has led to declining foreign exchange reserves, weakening balance of payments, rising public debt, declining GDP growth, weak capital market and rising unemployment. This trend is very worrying and, upon being sworn-in as a cabinet, our priority has been to put together measures to stop this downward trajectory, in the short term, and reverse it, in the medium term. That has been our main focus as a government, and all the policy measures we have taken, so far, have been aimed at this.

This was why we took a deliberate decision to pursue an expansionary fiscal policy in the 2016 Budget. Unfortunately, because of the delay in getting the budget through the National Assembly, we can only expect to see the impact of this stimulus on our GDP numbers in the third quarter. It is against this background that Nigerians must also understand and appreciate the decision to deregulate the downstream sector of the petroleum industry. The Central Bank is also reviewing monetary policy to try to provide more support to the fiscal stimulus which the implementation of the budget will supply. Our aim is to stabilize the economy by putting a halt to the economic slide, and ultimately reversing it and getting the economy back on the path of sustainable growth.

One of the major forces working against the smooth implementation of budgets in the country seems to be the absence of a well-structured Monitoring and Evaluation mechanism and the negative tendency of corruption. Is there any measure to strictly monitor the performance of the budget this year and in the future to ensure its success?

I agree with you that budget implementation has been hampered in the past by the high level of corruption. The President’s prioritization of the fight against corruption is anchored on the belief that you cannot change the trajectory of Nigeria’s economic development without fighting corruption. I believe that all will agree that this Administration’s determined fight against corruption has started yielding results. Limiting the pervasiveness of corruption will go a long way to improve budget performance. In addition, we in the Ministry of Budget and Planning are  strengthening  our monitoring and evaluation capability. This will be directly supervised and monitored by the Minister of State, who comes from a background of monitoring as a former Director General of NEITI.

Is it possible to further reduce recurrent expenditure and boost capital vote up to 40 per cent in Nigeria under the present administration?

That will be our aim. In order to do this we have to raise revenues and cut costs. Unfortunately, our highest recurrent expenditure item is our payroll, which is currently over N1.8 trillion, and moving rapidly towards N2 trillion.   In the short term it will be difficult to bring this down as we do not intend to embark on any mass retrenchment exercise. However, we are trying by better auditing and full computerization of the payroll by extending IPPIS coverage to all MDAs to bring this down by removing all ghost workers from our payroll.

It is also important that we do not make the mistakes of the past. As we grow our revenues through all the steps we are taking to grow the economy, we must have the discipline not to grow our workforce. Instead, we should encourage our civil servants, through various schemes to move to the private sector and set up their own businesses to take advantage of the opportunities that a growing economy will present.

What is your vision of Nigeria in the next four years?

My vision for Nigeria is to have a country, whose economy has been fundamentally restructured. A country with a diversified economy that is no longer dependent on one commodity, crude oil. A country that is no longer principally a consuming country, but that has become, principally, a producing country. A country where most of its able- bodied citizens are in gainful employment; a country that can grow enough food to feed its growing population; a country that is self-sufficient in refined petroleum products; a country that generates enough electricity to power the nation; a country with a sophisticated transport infrastructure such that you can travel from any major city to another by road, rail and air, depending on your choice. I also desire for a caring country that makes adequate provision for the vulnerable, and those that economic growth may have left behind. I know that not all of these that can be achieved in four years. But we should be able to lay a solid foundation for all of these, and a plan of action for succeeding administrations to build upon.

When the name Udoma Udo Udoma is mentioned, many people would say he has seen it all, having been a key player in the private and public sectors, the judiciary as a lawyer, the legislature where he played a strategic role as the Chairman of the Finance and Appropriation Committee and now a Minister. Can you now say that you have really seen it all?

I see myself simply as a lawyer, who has been able to build a successful law practice. With all modesty, it is one of the largest commercial law firms in Nigeria. I have taken advantage of the legal skills I developed in the firm, the people management experience and the understanding of the economy I picked up in advising major commercial players, to give something back to society by engaging in extensive public service assignments, including representing my people in the Senate. My father, the late Justice Egbert Udo Udoma, always used to say that no matter how successful you are in your profession, or business, your life cannot be considered complete unless you have given something back to society. I have a similar belief.

In all the roles you’ve so far played, which would you say has been the most challenging?

Clearly being the Minister of Budget and National Planning at a time the economy is in a very bad shape has to be the most challenging. However, I am not discouraged. I believe in the capacity of Nigerians to turn anything around. My role is, to work with my colleagues in the cabinet, under the inspired, firm and resolute leadership of our President, Muhammadu Buhari, to restore hope to Nigerians, and to create a climate and environment where Nigerians can, once again, believe in their country and work together to bring prosperity to our country. I have, no doubt, that we can do it.


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