Revenue shortfalls pose fear before incoming Governors, Osinbajo offers focus on ICT
…Governors-elect brainstorm on scramble for revenue
…VP offers rescue blueprint
…Target ICT sector for IGR — VP tells incoming Governors
…Capitalise ICT infrastructures in first 100 days, multiplier effect on economy is unimaginable, he says
…Charges Governors-elect to leverage FinTech, give opportunities to youths
By Moses Adeniyi
While the ceremonial inauguration of newly and re-elected Governors draws closer, the concern of stakeholders have continued to place demands of expectations before the incoming Governors of the 36 States of the Federation to deliver on their mandates, particularly on the challenges of the general pitfalls of the economy and security, among other common and peculiar problems.
Stakeholders have lamented the economic challenges of the Country worsened by over 22.2 per cent hyper-inflation and public debt burden of over N46.25trillion, amidst dwindling revenue shortfalls.
They have placed calls on Governors on the need to device creative and strategic measures to augment their revenue base through internal sources away from the norm of relying on the monthly allocation from the Federation Account which recently have suffered depletion amidst dwindling oil revenue and global economic challenges.
Apart from Lagos, Ogun and other oil producing States, the internally generated revenue (IGR) profile of majority of the 36 States of the Federation have been at a low ebb, with heavy reliance on the monthly Federal Allocation.
It is feared Governors from States with low revenue may fall into financial struggles as projections have shown the heavy burden of debt servicing may worsen to 100 per cent of revenue going into servicing debt, a development that may further shrink Federal allocations to States.
According to stakeholders, it is feared the condition may further trap states with low IGR sliding into debt net in attempt to borrow for finance.
Forming part of their preparations ahead of their inauguration on May 29, the incoming Governors who apparently are worried by the dangers ahead have begun to brainstorm on matters relating to how to handle the challenges of revenue.
The newly elected governors are Alex Otti of Abia State; Umo Eno of Akwa Ibom State; Hyacinth Alia of Benue State; Bassey Otu of Cross River State; Sheriff Oborevwori of Delta State; Francis Nwifuru of Ebonyi State; Peter Mbah of Enugu State; Umar Namadi of Jigawa and Uba Sani of Kaduna State.
Others are Abba Kabir Yusuf of Kano State; Dikko Umar Radda, Katsina; Nasiru Idris of Kebbi; Mohammed Umar Bago of Niger State; Caleb Mutfwang of Plateau State; Siminialayi Fubara of Rivers; Ahmed Aliyu of Sokoto; Kefas Agbu of Taraba and Dauda Lawal of Zamfara.
On the list of re-elected Governors are Ahmadu Umaru Fintiri of Adamawa State; Bala Mohammed of Bauchi State; Babagana Zulum of Borno State; Muhammad Inuwa Yahaya of Gombe; Abdulrahman Abdulrazaq of Kwara State; Babajide Sanwo- Olu of Lagos State; Abdullahi Sule of Nasarawa State; Seyi Makinde of Oto State and Dapo Abiodun of Ogun State.
At their ongoing induction programme, the Vice President, Prof Yemi Osinbajo in his speech offered a hint to the Governors-elect to capitalise on optimising the opportunities of the Information and Communication Technology (ICT) sector for IGR.
Speaking in Abuja at the ongoing induction programme for returning and newly elected Governors of the various States, Osinbajo said that the Federal Government on its part had in the past few years, leveraged the digital economy to record an increase in broadband coverage nationwide “from 33.7 per cent in 2019 to 100 per cent in 2022.”
In what seems like a rescue blueprint out of revenue challenges, Osinbajo who noted that of the total N21.04 trillion real Gross Domestic Product figure, the ICT sector contributed 16.22 per cent in the fourth quarter of 2022 up from 14.07 per cent in the first quarter of 2022, told the incoming Governors to invest in broadband coverage and other ICT infrastructures within their first 100 days in office, affirming that the “multiplier effect on the economy is unimaginable.”
“This was achieved by the deployment of Starlink Internet Services across the country, which has helped bridge the existing internet connectivity gap across rural communities in Nigeria, where other network operators could not deploy their services. I encourage you as new governors to prioritise this and make it one of your achievements in the first 100 days of your administration. The multiplier effect on the economy is unimaginable.
“Of the total N21.04 trillion real Gross Domestic Product figure, the ICT sector contributed 16.22 per cent in the fourth quarter of 2022 up from 14.07 per cent in the first quarter of 2020.
“4G penetrations across the country have also increased from 23 per cent in 2019 to 80.86 per cent and this has been attributed to the increase in the number of users of the 4G technology in most States in the Country,” the Vice President who was represented at the induction by the Secretary to the Government of the Federation, Mr Boss Mustapha, said.
The Vice President offered the newly elected governors to approach his office for study visit to learn a thing or two about the Central Delivery Coordination Unit established last year for replication in their respective States, assuring them reception.
Osinbajo who averred that there is nothing more gratifying for the Governors-elect “than having verifiable evidence to show at the end of your tenure,” said “how you have delivered on your mandate and the delivery unit will be your most reliable vehicle towards achieving that goal.”
“In a bid to strengthen the culture of performance management and sustain the enormous gains achieved, the Federal Government issued Executive Order No 013 of 2022, to institutionalise the Central Delivery and Coordination Unit.
“It will be a great honour to welcome members of your team to my office where the CDCU is located, for a study visit, to receive first-hand information on how this great initiative can be replicated in your States,” he said.
The Vice President told the Governors to focus their attention on giving opportunities to the youths in their respective States and Local Governments.
He submitted that with the right incentives, the youth population can help contribute significantly to the growth of the sub-nationals.
“It is imperative to unleash the potentials that lie in our youths. It is no longer news that over 75 per cent of our population is under the age of 35. More decisive actions are needed to turn this demographic asset into an economic dividend.
“A young, productive, youthful population, with access to education, skills, social protection, affordable housing, and medical care, will power Nigeria’s economy, now and well into the future,” he said.
Advising them against spending on programmes that have little or nothing to do with wealth creation, he called for a paradigm shift.
“We must move away from so-called youth empowerment programmes. The youths do not need handouts. They need investments that will propel them to wealth creators.
“One of the industries that will dominate the future is FinTech. Nigeria’s FinTech is surging as one of the leaders in Africa today. International Firms like Google see the demographic and mobile tech growth and how this will rapidly change the future of e-commerce, trade, health, and finance and are willing to bring their resources given the potential returns. Subnational governments must invest in this sector if they are to match up with current and future trends.
“A Nigeria that is resurgent economically must also be a Nigeria that is more at peace with itself and more secure.
“Today, more than ever, several States are spending a considerable share of their budgets on security, displacing the resources that are needed for development. This trend is expected to continue for the foreseeable future if nothing is done to drastically reverse it.
“The amount of investable territory available in Nigeria is decreasing as a direct result of the Country’s high incidence of violent conflict and we need all the investments we can muscle in to bridge the revenue gap that is currently biting us all and very hard at that,” he said.
There have been fears over revenue shortfalls and the burden of debt servicing putting governments in the Federation on red alert.
Recall that upon the heels of seeking the approval of the Senate for another loan to the tune of $800million from the World Bank, a request placed by President Muhammadu Buhari before the upper chamber last week, the Budget Office of the Federation had said trouble looms for the Country, pointing to a “limited borrowing space” amidst poor debt-to-revenue ratio.
The Director-General, Budget Office, Ben Akabueze, while addressing members-elect of the 10th National Assembly at their week-long induction ceremony in Abuja last Wednesday, pointed out that while Nigeria remains healthy with its debt-to-GDP ratio, the Country is not with its debt-to-revenue ratio.
Akabueze whose address to the newly elected and returning members of the National Assembly, who upon inauguration will be responsible for the consideration, amendment and passage of annual budgets of the Federal Government as well as approval of loan request, coincided with the time the Buhari’s loan request was read on the floor of the Assembly last Wednesday, had said: “You may have heard that we have one of the lowest Gross Domestic Products-to-debt ratios in the world. While the size of the FG budget for 2023 created some excitement, the aggregate budget of all the governments in the country amounted to about N30trillion. That is less than 15 per cent in terms of ratio to GDP.
“Even on the African continent, the ratio of spending is about 20 per cent. South Africa is about 30 per cent; Morocco is about 40 per cent. And at 15 per cent, that is too small for our needs. That is why there is fierce competition for the limited resources.
“That can determine how much we can relatively borrow. We now have very limited borrowing space; not because our debt to GDP is high, but because our revenue is too small to sustain the size of our debt. That explains our high debt service ratio. Once a country’s debt service ratio exceeds 30 per cent, that country is in trouble and we are pushing towards 100 per cent, and that tells you how much trouble we are in.
“We have limited space to borrow. When you take how much you can generate in terms of revenue and what you can reasonably borrow, that establishes the size of the budget. The next thing would be to pay attention to the government’s priority regarding what project gets what.
“We are not even an oil-rich economy. To classify oil-rich economies, you talk of countries like Saudi Arabia where there are 34 million of them and pump 10 million barrels of crude per day, or Kuwait where there are 3 million of them and pump 3 million barrels per day.”
He had noted that for Nigeria, while it has a population of over 200 million, it is currently pumping about 1.9 million barrels per day.
“So, we are not a rich economy and must resist the temptation we are an oil-rich economy. Let me make it clear that we are potentially rich countries, but we are not,” he had argued.
Recall the duo of the Senate and House of Representatives had barely two weeks ago respectively on Wednesday, 3rd May, and Thursday, 4th May, approved the President Buhari Ways and Means N22.7 trillion loan request to be sourced from the Central Bank of Nigeria (CBN).
The N22.7 trillion Ways and Means credit facility which authorises the Federal Government to borrow money from the (CBN), would be adding to the huge debt profile of the Country which has become a burden with lamentations from stakeholders who fear the Country may become trapped in debt with the risk of using 100 per cent of her revenue to service debt.
