High Poverty Rate in Nigeria Unacceptable-Aganga
- By Simeon Ogoegbulem
- Published July 11th, 2011
- News
- Unrated
Olusegun Aganga, immediate past minister of finance, has decried the high incidence of poverty in the country. Aganga, who scaled the screening by the Senate for a cabinet position, following his re-nomination by President Goodluck Jonathan, blamed the poverty level to high unemployment in the country.
Aganga explained that it was in realisation of this that he had, with the support of the president, started work on inclusive growth as the finance minister. He further explained that inclusive growth is that economic growth that comes with job creation.
Defending his role as former finance minister in tackling poverty, Aganga disclosed that his efforts have impacted the Small Medium Enterprises and focus on pro jobs/pro growth sectors like agriculture, housing, business outsourcing, meat and leather, entertainment/tourism, construction and automobiles. He also stated that government has introduced a policy that every new contract approved by federal executive council (FEC) must show its job-creation value before being passed by the FEC.
The realisation of the fact that the dearth of basic infrastructure is a major challenge to businesses and hence job creation in Nigeria, Aganga said, was a major driver for the establishment of the Sovereign Wealth Fund (SWF) which he successfully championed as finance minister.
He said the infrastructure deficit is so huge and cannot be funded from the budget. The SWF has three pockets - the inter-generational fund which keeps some of the oil earnings for future generations; the stabilisation pocket which keeps some money for budgetary support in the event that oil prices fall to a level that puts the budget in danger; and the infrastructure fund which is the largest packet.
Aganga said besides being the largest of the three sub funds, the infrastructure fund will leverage other infrastructure funds from the international market for investments in Nigeria, such as power, roads and rails. Addressing issues of budgetary imbalance, he pointed out that Nigeria’s budget had been in deficit for the past 10 years and often expansionary. Unfortunately, most of the funds had been directed at the recurrent end of budget, leaving just under 30 per cent for capital expenditure.
Indeed, over the last two years, he said the government revenue has not been enough to cover the recurrent expenditure, meaning that the government had been borrowing for direct consumption.
On the revenue side, he said that revenue grew about 47 per cent in 2010. Giving some details, he said that Customs revenue leapt from about N24 billion monthly to an average of about N60 billion monthly in 2010 due to measures taken to block leakages and maximise revenue in 2010. He informed the Senate that he was equally working to block revenue leakages with the gathering of biometric data from all the ministries, departments and agencies of the government (MDA) and 36 of them have been covered so far. Already, about N12 billion in leakages had been blocked as at the time 16 MDAs was covered.
Aganga further explained that he had put in place performance-based budgeting, which takes into cognizance what had been done with previous funds before the release of new funds. He said that he has introduced capital project monitors of international repute who assess jobs done to make sure that Nigerians get value for every naira of public expenditure.
On the issue of whether Nigeria could achieve its Vision 20-2020, he said it was possible if the nation makes the appropriate sacrifices. He noted that Goldman Sachs which he worked for had projected in 2005 that Nigeria could be among the 20 leading world economies by 2025. When he presented this report to the former President Olusegun Obasanjo, the president said the nation was in a hurry to get there and that was how Vision 20-2020 came into being.
Aganga explained that it was in realisation of this that he had, with the support of the president, started work on inclusive growth as the finance minister. He further explained that inclusive growth is that economic growth that comes with job creation.
Defending his role as former finance minister in tackling poverty, Aganga disclosed that his efforts have impacted the Small Medium Enterprises and focus on pro jobs/pro growth sectors like agriculture, housing, business outsourcing, meat and leather, entertainment/tourism, construction and automobiles. He also stated that government has introduced a policy that every new contract approved by federal executive council (FEC) must show its job-creation value before being passed by the FEC.
The realisation of the fact that the dearth of basic infrastructure is a major challenge to businesses and hence job creation in Nigeria, Aganga said, was a major driver for the establishment of the Sovereign Wealth Fund (SWF) which he successfully championed as finance minister.
He said the infrastructure deficit is so huge and cannot be funded from the budget. The SWF has three pockets - the inter-generational fund which keeps some of the oil earnings for future generations; the stabilisation pocket which keeps some money for budgetary support in the event that oil prices fall to a level that puts the budget in danger; and the infrastructure fund which is the largest packet.
Aganga said besides being the largest of the three sub funds, the infrastructure fund will leverage other infrastructure funds from the international market for investments in Nigeria, such as power, roads and rails. Addressing issues of budgetary imbalance, he pointed out that Nigeria’s budget had been in deficit for the past 10 years and often expansionary. Unfortunately, most of the funds had been directed at the recurrent end of budget, leaving just under 30 per cent for capital expenditure.
Indeed, over the last two years, he said the government revenue has not been enough to cover the recurrent expenditure, meaning that the government had been borrowing for direct consumption.
On the revenue side, he said that revenue grew about 47 per cent in 2010. Giving some details, he said that Customs revenue leapt from about N24 billion monthly to an average of about N60 billion monthly in 2010 due to measures taken to block leakages and maximise revenue in 2010. He informed the Senate that he was equally working to block revenue leakages with the gathering of biometric data from all the ministries, departments and agencies of the government (MDA) and 36 of them have been covered so far. Already, about N12 billion in leakages had been blocked as at the time 16 MDAs was covered.
Aganga further explained that he had put in place performance-based budgeting, which takes into cognizance what had been done with previous funds before the release of new funds. He said that he has introduced capital project monitors of international repute who assess jobs done to make sure that Nigerians get value for every naira of public expenditure.
On the issue of whether Nigeria could achieve its Vision 20-2020, he said it was possible if the nation makes the appropriate sacrifices. He noted that Goldman Sachs which he worked for had projected in 2005 that Nigeria could be among the 20 leading world economies by 2025. When he presented this report to the former President Olusegun Obasanjo, the president said the nation was in a hurry to get there and that was how Vision 20-2020 came into being.
