…Terrible, consistent under-investment in capital projects is unacceptable
Mrs Kemi Adeosun, the Finance Minister on Monday said there was need to embrace private sector capital investments to provide additional impact for government spending to bridge the infrastructure gap.
Consequently, the government is reforming the Public-Private Partnerships (PPPs) processes to attract more private insvestors who would bring financial resources, discipline and best practices and create a benchmark against which public spending could be measured in the provision of more infrastructure efficiently.
Mr Festus Akanbi, her Special Assistant (Media), in a statement quoted the minister as explaining that the PPP reforms would provide a seamless pathway to attract much-needed private finance and operational inputs to service delivery.
Moreover, private capital will bring more than financial resources, discipline and best practices.
Adeosun said it would also create a benchmark against which the utilisation of public money could be measured.
She added that it is important to link the fiscal housekeeping initiatives that the country had for a wider economic strategy.
The minister said questions around the focus on corruption and the elimination of ghost workers, controlling inefficient spending and preventing revenue leakages needed to be evaluated.
But this should be in the context of how it impacts on Nigerians’ ability to stimulate the economy.
“We have been increasing our level of borrowing annually, and much of that is used to fund recurrent spending.
“Indeed in 2015 just 10 per cent of spending went to capital items. We spent more on travel, training and stationery than on roads.
“No nation has ever developed with such consistent underinvestment in capital.”
On global commodities’ downturn, she said the manner in which governments had intervened to protect their economies had been diverse and innovative.
The minister said what was abundantly clear was the fact that the previous consensus about what was best for the global economy was rapidly changing.
“There is a concerted move towards individualism rather than collectivism.
“The new global economy is that each nation must painstakingly work out the best path to follow.
“For Nigeria, we believe that the best path to follow is to invest in infrastructure that will unlock the potential in the non oil sectors.”
According to her, the country can transit from being a commodity economy to an industrialised and regionally dominant one.
She said that oil was important but clearly not enough citing Iran as recent and relevant example of a country living without oil.
“The sanctions that embargoed Iran’s oil led to the development of robust petrochemical and other export industries that enabled the country to survive.
“Iran survived without oil, made tough decisions and is now being feted by investors as the next growth economy.
“The focus of our economic policy is to redress the infrastructure deficit, unlock the rich diversity in the economy with a determined and focused turnaround programme.
“For us it would be a tragedy to have endured so much pain and not emerge better and stronger,” she said.
Adeosun said that growing the economy at a rate that would address the employment needs of our huge population required fundamental change in how government collected and spent its revenues.
She said that the government would ensure fiscal housekeeping aimed at ensuring that borrowed funds were channeled into capital projects rather than having an inefficient financial management system.
Adeosun said that this was not only prudent economics, but a moral necessity since those borrowings would be repaid by future generations.
The minister, therefore, said that as the nation focused fully on the macroeconomic indicators, it must and should continue to focus on the micro factors which collectively shaped and determined the larger picture.
“The road map to attaining our objectives is a tough one, and we may endure the financial pain for longer than we would prefer, but the upside is that we have actually already endured the worst part of the adjustment cycle.
“The outlook for oil prices is looking more positive, but we are fundamentally determined to ignore oil. One word that will resonate across all that we do in government is ‘discipline’.
“Nigeria stands on the threshold, daring to move into previously uncharted territory through identifying and embracing novel economic and fiscal policy stratagems that will release our considerable upside.
“We are for innovation to create a new workable path, courage, and discipline to implement and build a resilient economy that is not controlled by the oil price,” she said.
-NAN