Director-general of the West African Institute for Financial and Economic Management (WAIFEM) Baba Musa has said it was an unacceptable situation for Nigeria to remain at the current low level of revenue to Gross Domestic Product (GDP) put at 6.5 per cent, which he said the new administration at the centre should strive hard to reduce to cut borrowing.
“If it can raise it to a little bit above 10 percent I think the need to borrow will drastically reduce and he will be able to have enough resources to invest in the country and of course service, the existing debt,” Dr Musa remarked on a podcast: Sovereign Debt with Jill Dauchy.
Musa said Nigeria must also find a way of reducing domestic debt because the current debt service of paying N2trn as domestic interest payments is unacceptable. He said the government would need to have a strategy to reduce that amount of domestic payments to give the government some fiscal relief.
He expressed hope of improved revenue mobilisation and infrastructure provision under the new administration of President Bola Ahmed Tinubu.
Although the new government is coming in to face a situation of physical constraint, the WAIFEM DG said the new president appears to be someone that has a history of using technocrats that have prerequisite experience in his cabinet and he is known as someone who actually focuses on domestic revenue mobilization, at the same time also is keen on building infrastructure. “He has an excellent track record as a state governor in Lagos, he has had two terms,” he said of Tinubu.
Musa recalled that Tinubu’s history of infrastructure provision made Lagos to be the highest revenue mobiliser in terms of domestic revenue mobilisation which has been a very serious and critical issue for Nigeria.
“If we have had state governors like him in the 36 states of the federation, the level of infrastructure in Nigeria would have been far above what we are experiencing. So, we do hope that he is going to repeat that kind of governance at the federal level,” Musa stated while pointing to President Tinubu’s good track record that would be replicated for economic growth.
“So, I believe that with a good cabinet, they will support him and we will move Nigeria forward. We see a bright future coming for the country, I do hope also the fiscal situation will improve,” Dr Musa stated.
On the continent front, Musa said African countries are challenged by lack of fiscal space for investment. “So the number one issue that is facing almost all the countries is lack of fiscal space. Fiscal space for investment, fiscal space to spend more money.” He said African countries will have to find a way of mobilizing more resources to be able to fund their budget.
Dr Musa said the ongoing Russian/Ukraine crisis brought about lots of food shortages in the region, worsening the inflationary position in almost all the countries, also causing uncertainty of food security in the region, aside the pressure of climate change. Floods in many African countries caused havoc last year, causing a lot of building collapse, farmlands washed away. That worsened the food situation and created desertification because people moved.
“And when some people move it creates some tension and when the government intervenes it causes some kind of financial stress on the government. You see refugees now moving all around West African countries. All these add to fiscal pressure,” he explained.
Dr Musa said WAIFEM is unique in West Africa because of the partnership arrangements it has with world class institutions, international institutions like the IMF, World Bank, The Commonwealth Secretariat, the United Nations Institute for Training and Research and many other capacity building institutions around the world.
Dr Musa said WAIFEM is unique in West Africa because of the partnership arrangements it has with world class institutions, international institutions like the IMF, World Bank, The Commonwealth Secretariat, the United Nations Institute for Training and Research and many other capacity building institutions around the world.
He said the challenges that are facing the globe now have also increased the call for an increase in capacity building.
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