Nigeria’s next finance minister needs to grab the economy by the scruff of the neck to deliver big wins that don’t require reinventing the wheel.
The minister also needs to make close friends with the Indonesian counterpart, Sri Mulyani Indrawati and Egypt’s Mohamed Maait, seeing that both ministers could have a thing or two to share about economic reforms.
Abuja’s many economic struggles mean it wouldn’t require too much for the finance minister to make global waves. That’s assuming the minister can dodge the overbearing influence of President Muhammadu Buhari.
For starters, the minister could unlock quick economic wins by pulling the plugs on crippling power and petrol subsidies that have hobbled the economy and deterred investment.
The minister can lead the charge on privatisation of redundant government assets, effectively providing more opportunities for investors to invest in and seeking ways to replicate the successful and profitable NLNG model with other government assets.
This way the Minister opens up other sources of revenue for the government, thereby cutting down on a fastgrowing public debt stock and
lowering the budget deficit.
If the budget deficit is lower and the government can borrow less, that would free up credit to the private sector while also reducing the borrowing costs of the government.
In 2018, the federal government spent 66 kobo of every naira earned to service debt. In the 2019 budget, recurrent expenditure to revenue ratio of 150 percent implies that the government will spend every naira earned as well as an extra 50 kobo borrowed on only recurrent expenditure this year.
The Minister needs to enforce a breakaway from the government’s spending on recurrent expenditure and debt servicing by pushing for reforms that reduce the cost of governance and spur spending on infrastructure.
Cutting corporate taxes for businesses to compete effectively against other countries amid the global hunt for capital, while ensuring higher compliance rates for taxpayers, would also bode well not only for the economy but even her reputation.
For the first time, there’s a good chance of Nigeria’s finance minister bagging the prestigious Bankers global finance minister of the year award that was last won by Indonesia’s Sri Mulyani Indrawati for her mark on SouthEast Asia’s largest economy.
Mulyani gained global acclaim for a cocktail of tax reforms that entailed lowering income tax for small businesses and achieving higher taxpayer compliance which stimulated economic growth, created jobs and led to higher government revenues.
Taxpayer compliance hit 82.5 percent in 2019, a sizeable increase from the 74 percent recorded in 2014.
These changes to the tax system are integral to the finance minister’s aims of boosting state revenues by 12.9 percent to $146.5 billion in 2019, with the increased income from tax predicted to represent 80 percent of the target.
For the regional awards, it was Mohamed Maait of Egypt who clinched best finance minister in Africa.
Egypt’s ambitious programme of economic reform continues to win plaudits from around the world, with good reason.
In the space of four years, the country has enacted some of the most wide-reaching structural reforms in its recent history.
Admittedly, this has led to a high degree of short-term pain for Egyptian consumers – high inflation has emerged, for instance, as a result of the free float of the pound – but these reforms are undoubtedly paving the way for a brighter future for the country. And at the forefront of this reform story is Egypt’s finance ministry.