When It’s Not a Good Idea to Be Finance Minister

If, as some have suggested, facial expressions and body movements account for 60 to 65 percent of all communication, Mrs Zainab Ahmed’s plain public face says nothing about her current position as Minister of Finance, Budget, and National Planning.

The portfolio, as prestigious as it is, carries with it delicate responsibilities and high public expectations.

With the current economic challenges, the occupant of that office is the immediate recipient of blame for an economy gone wrong, and the seat must be hot enough to leave traces on her.

People with the gift of description, on the other hand, can only describe Ahmed’s public face as plain, serious, and emotionless at best.

Even though she was dubbed “Obirin Metta” in Yoruba, which means “powerful woman with a three-in-one portfolio,” she showed no signs of pride or exhaustion.

“You would have heard lawmakers accuse her of arrogance or even threaten her with arrest if she wears pride because of her important ministry,” one observer said.

Another test of her humility came when Godwin Obaseki, the governor of Edo State, accused the government of “economic rascality” for allegedly printing money for the Federation Account Allocation Committee to distribute among the government tiers.

Her response was cool and collected. “The issue raised by the Edo State Governor is very, very sad for me because it is not a fact,” she said. What we distribute at FAAC is generated revenue, and the distribution of that revenue is, in fact, public information. We publish and distribute revenue generated by FIRS, Customs, and the NNPC at FAAC. It is untrue to say that we printed money to distribute at FAAC.

Her portfolio’s weight, as well as the constant flow of high-level meetings she attends on a regular basis, should leave stress marks on her face, but none are visible. Even the national debt hasn’t been able to leave an imprint, and neither have her signature glasses.

She appeared to be unconcerned about her job for a long time, until she admitted she does, including one that causes her sleepless nights.

Asked by Poju Oyemade, senior pastor of Covenant Christian Centre, during “The Platform,” (an annual conference organised to mark Nigeria’s Independence anniversary), to list three things that keep her awake at night, the minister replied: “Number one is revenue, number two is revenue and three – I would say, is revenue.”

Ahmed’s availability for the event also attests to the modesty and accessibility of a minister who has also granted lengthy interviews to many mainstream newspapers.

Knowledge of the complexities of her portfolio should also equip her with the understanding that Nigeria’s lean revenue base, which has been further eroded by the socio-economic impact of the COVID-19 pandemic, offers scary scenarios to anybody who understands basic economics.

Even if one agrees with the minister that recent increases in oil prices are welcome, the joy is quickly overshadowed by the Federal Government’s burden of fuel subsidies.

One observer was recently ecstatic for her because oil prices had risen to over $70 per barrel, until the Group General Manager of the Nigerian National Petroleum Corporation, NNPC, Mele Kyari deflated him by explaining that higher oil prices were ironically bad news for the economy.

He compared the rising price of crude oil to a “chicken and egg” situation, expressing concern that prices had begun to stray from the NNPC’s “comfort zone” and had become a burden.

The global comfort zone, according to Kyari, is $58-$60 per barrel, with anything above that causing major distortions in the NNPC’s projections and adding to its problems.

Clearly an embarrassing irony, but a finance minister can only add the search for a balance to her job as a top member of a government that chooses socio-political stability at a high economic opportunity cost.

Ahmed also recognizes the country’s poor revenue match, despite her insistence that the country’s increasing debt burden is manageable.

“The Nigerian debt is still within sustainable limits,” she claims. What we need to do, as I’ve said several times, is improve our revenue in order to increase our capacity to service not only our debt, but also the day-to-day needs of running government. So, if you look at all the reports that you see from multilateral institutions, our debt, which is currently around 23 percent of GDP, is at a very sustainable level.”

Similarly, the Debt Management Office (DMO) reacted quickly to news that Nigeria had been classified as a high-risk debtor country by the World Bank.

Denying that Nigeria is a high-risk country, the DMO stated that Nigeria’s IDA debt stock was $11.7 billion as of June 30, 2021, explaining that IDA loans are one of the most advantageous borrowing options for countries like Nigeria and are also consistent with the Federal Government’s Medium Term Debt Management Strategy. The current debt-servicing burden, on the other hand, may be intimidating.

While it is comforting that a portion of the borrowed funds is used to fund infrastructure, one can only hope that the next government will not be wasteful or have a poor maintenance habit. The debt will continue to exist.

Ben Akabueze, the Director-General of the Federation Budget Office, recently added to the revenue debate by admitting that Nigeria’s federal budget, at 4.6 percent of GDP, is “too low in terms of number and socio-economic challenges.”

According to him, the country’s revenue to GDP is currently around 8%, just a percentage higher than Sudan, which is ranked last in the region. South Africa has 29% and Algeria has 33%, respectively, compared to a regional average of 22%.

The macro-economic indicators look promising, but could be better for a country in need of rapid development, with an inflation rate of 17.38 percent, down for three months; 82.9 million Nigerians adjudged to be living in poverty; a Gross Domestic Product of 152,32 trillion Naira in 2020; and an annual growth rate of 0.51 percent as of March, 2021.

The issue stems from the country’s low revenue base combined with an expanding expenditure profile.

An observer recently stated that whenever she hears of new payment approvals by the Federal Government, particularly for unions that should be aware of the state of the economy, she feels sorry for the Finance Minister and wonders if “Nigeria’s cloth is being cut according to size or material.”

“We have been trying to block and also enhance the cohesion of our people, especially within the revenue ecosystem,” Ahmed said, concerned about the trickling revenue stream. We’ve put money into an IT system and are attempting to collaborate and bring everything together,” Ahmed explained.

“Every month, we sit down and reconcile our revenues and tally the numbers,” she says. We’re working on connecting all of the IT systems so that we can see revenue in real time or near real time.

“The biggest challenge for me is generating revenue,” she said. “As a result, I’m directing my team to put in place some revenue growth strategies aimed at improving revenue performance by launching new initiatives.”

In addition, the minister established Tax Appeal Tribunals across the country to expedite the resolution of over 209 pending cases involving tax revenues totaling approximately $18.804 billion, N205.654 billion, and €0.821 million.

The expenditure plans of revenue-generating entities were reviewed for the introduction of more proactive revenue tracking and monitoring mechanisms in order to improve accountability and ultimately improve the performance of Government-owned Enterprises (GOEs).

The country has also restored its more business-friendly January-December budget year, thanks to better planning and a harmonious relationship with the legislature.

The African Banker Awards’ Finance Minister Prize winner for 2020 has been praised for “pushing through a series of difficult reforms as well as successfully engaging international partners to help the country navigate an extremely difficult economic environment.”

“The year 2020 was unlike any other year, particularly due to the impact of the COVID-19 pandemic,” she admitted last week. “Our three-year streak of GDP growth was halted in the second quarter of 2020 by the harsh economic impact of the global pandemic.”

The Ministry aided in guiding the economy through the tumultuous months of COVID-19, as well as putting it on a path of steady growth.

The Finance Act of 2019 was passed in record time before the 2020 budget under her watch. “Through the Finance Act, we have achieved the following:” she said, counting the benefits. Increase in the value added tax (VAT) rate from 5% to 7.5 percent, which took effect in February 2020; introduction of a N25 million threshold for SMEs to be eligible for VAT collection; reduction in tax rates for SMEs (0 percent and 20% respectively); administration of the Finance Act 2019; automation of the import duty exemption certificate (IDEC) and vehicle registration system

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Since 2015, the government has repaid inherited debts and liabilities, including the $5.4 billion Paris Club debt over deductions, the $6.8 billion Joint Venture (JV) Cash Call arrears, the N1.9 trillion contractor/Export Expansion Grant, and the N488 billion road refund to states.

Despite her accomplishments, she still faces challenges, some as significant as the need to increase revenue streams and grow the economy quickly enough to effectively address poverty.