are the 50 questions that the House of Representatives Finance
Committee want Ngozi to answer.......I think he should......indeed,
constitutionally she must.......
will recall that the Committee on Finance had invited you to appear and
make a comprehensive presentation on the state of the economy.
This invitation has become imperative because the Committee has come to
the conclusion that what senior officers from the executive discuss with
us in private regarding the sad situation of our economy and the so
called dwindling revenue base is not in tandem with positions they hold
in the public arena.
More so, what you consistently try to make
the Country believe as the true situation of our economy is at sharp
variance with the reality on ground. In light of the above, and
after careful deliberation, the Committee has itemized key issues that
will require answers and clarifications from you.
Below are the 50 questions kindly provide written answers and clarifications and submit to the Committee within two weeks:
Questions for the HMF/CME on the State of the Economy
1. What should you consider as the major economic achievements of this
government in the 2013 fiscal year and why? In your explanation, we will
need facts and figures in demonstrating such achievements.
2. You have been credited with many announcements regarding Nigeria's
economy as one of the fastest growing economies in Africa. If the
economy is one of the fast growing economies, what is exactly growing
the economy? What role does government play in the said economic growth,
especially given that as high as 80 percent of the country's total
annual budget spending still goes into recurrent expenditure?
3. Since your arrival as minister of finance in 2011, you have publicly
announced the need to reduce the recurrent expenditure so that more
money would be made available to capital spending which is critical to
growing and diversifying the country's economy. How far has government
succeeded in making these necessary cuts; and where exactly have these
cuts been made in this effort to reduce recurrent expenditure? In other
words, based on real amount spent on capital expenditure, how much
reduction was made in 2011 against 2010, in 2012 against 2011 and in
2013 against 2012?
4. You are known to be celebrating a
single-digit GDP growth. But speaking recently at a breakfast dialogue
with some members of the organized private sector in Lagos, organized by
the Nigerian Economic Summit Group (NESG), you were quoted as saying:
“We are growing, but not creating enough jobs. That is a very big
challenge…We need to grow faster. I think it needs to grow at least 9
to 10 percent to drive job growth the way we want.” Don't you agree that
a good finance minister managing an economy like ours should be
celebrating a GDP growth as high as 20 percent annually? Why is it that
our economy cannot grow beyond a single digit? How many jobs are being
created as a result of these said growths? In which sectors of the
economy are these jobs created? If in private sector, what contributions
is government making to further assist these private sector firms?
5. In the presence of Nigeria’s huge infrastructure deficit, why is it
that the country's debt-to-GDP at about 19 percent in 2012 remains one
of the lowest in the world when compared to nations already with
world-class infrastructure and industrial economies such as America’s
105 percent, Brazil’s 65.49 percent, India’s 67.60 percent, and South
Africa’s 40.9 percent?
6. Since facts don't lie, have you any
disagreements with the September 4, 2013 Global Competitiveness Report
of the World Economic Forum for 2013-2014, which ranked Nigeria 120th
out of 148 countries ranked in the Global Competitiveness Index,
including being ranked far behind some African countries such as
Mauritius 45th, South Africa 53rd, and Kenya 96th?
7. ''For the
first time in Nigeria’s 53rd year history, we have successfully
privatized the electric power industry,’’ so said the President at a
recent meeting in London with some foreign investors. As minister of
finance should you agree that the recent privatization of the country's
power infrastructure is worth celebrating as a major economic
achievement in 2013, when in reality there is little or nothing to show
as an improvement in the country power supply? Also why our rush to
wholesale privatization of the power sector when countries like South
Africa, generating as high as 42,000MW still have their power sector
mostly in public hands?
8. What was your reaction to the
November 12, 2013 statement credited to the World Bank Country Director
for Nigeria, Marie-Francoise Marie-Nelly, who said that over 100 million
Nigerians are today living in absolute destitution, representing an
unheard-of 8.33 percent of the world’s total number of people living in
9. Nigerians are increasingly perplexed that these
days nothing happens without government borrowing. And for most
Nigerians, it is frightening how those managing the economy are just
dragging us into excessively unproductive debts. More worrisome is the
fact that every effort is being made to hide the details of the
country's debt stock from Nigerians. Where are the facts that the
country's current high rate of borrowing is productive, let alone have
the ability to be repaid without having to resort to more borrowings?
10. Is prudence in our borrowing simply reduction in borrowing or
simply constructive borrowing with government putting necessary measures
in place to ensure that domestic debt profile is properly supervised
and utilized by curbing corruption?
11. From Debt Management
Office (DMO) 2012 Annual Report, the total public debt outstanding
between 2008 and 2012 for external stock rose from $3.72bn to $6.53bn,
while domestic stock rose from $17.68bn to $41.97bn. The total debt
service the same period saw the percentage of external debt service
drastically reduced from 11.46 per cent to 5.96 per cent while the
percentage of domestic debt servicing grew from 88.54 per cent in 2008
to 94.04 per cent in 2012, drastically increasing the cost of the total
debt service since the cost of domestic borrowing is atrociously higher
than the cost of external borrowing. How could your debt sustainability
analysis rationalize this without seeing some narrow interests being the
overriding reason? Could this be the explanation why commercial banks
in the country are declaring unheard-of three digit profits and the high
Foreign Portfolio Investment and low Foreign Direct Investment?
12. It's an established fact that the willingness and ability to borrow
do not automatically translate into economic growth. If you agree with
this fact, how productive are the country's recent borrowings?
13. Why should our internal debts continue to represent more than
two-thirds of Nigeria's external debt profile, when the cost of
servicing domestic debts is ridiculously far more expensive than
servicing external debts? Why should government continue to borrow
internally when in so doing results in insufficient funds, skyrockets
the cost of borrowing and above all, crowds out the real sector from the
money market? Shouldn't the high cost of domestic borrowing override
whatever are the assumed benefits? Since both London Interbank Offer
Rates (LIBOR) and the US Treasury Bonds rates offer far better interest
rates for sovereign borrowings, why have we continued not to take
advantage of cheaper interest rates?
14. Your references to the
country's economic growth profile have always been based on Fitch,
Standard and Poor's, and Moody’s ratings. Are you aware that these same
rating agencies are being sued in New York (with case # 652410/2013) by
two Bear Stearns hedge funds for fraudulently assigning inflated ratings
to securities in the run-up to the 2008 financial crisis? If you do,
why do you insist on accepting the rating as reliable.
much exactly has been the amount of money lost in government revenue as a
result of import duty waivers in 2011, 2012 and 2013? Provide the names
and beneficiaries and justification for same. In your opinion as the
minister of finance who oversees the economy, what are the implications
to the country's economy? What efforts have you have made to stop this
waiver policy, which is distorting the economy? Our non oil income has
dropped in 2013. A case where increased tariffs on various items
effectively reduced importation to zero in some sectors. However, those
items now find their way into Nigeria through our borders. Does it make
any sense to increase these tariffs when we have such porous borders? As
an example, officially, Benin Republic imported more rice this year
16. It was reported that the FIRS is to engage
foreign consultants for tax collection in 2014. Could the Minister
clarify this position and what Nigeria stands to gain? Have the FIRS not
been working effectively?
17. Do you really believe that
Nigeria needs a 'Sovereign Wealth Fund' at this critical juncture of
budgetary deficits, and having to be borrowing extensively in an effort
to address government revenue gaps? Shouldn't the presence of Nigerian
Sovereign Investment Authority (NSIA) simply mean spreading government's
scarce resources thinly? Why will you insist that no matter what we
still need to operate a sovereign wealth fund? Sincerely speaking, how
sustainable are the objectives of Nigeria's Sovereign Wealth Fund,
particularly in the long-term?
18. You should agree that a lot
of Nigerians are interested in the link between NSIA and the government.
Since there is no doubt that Nigerian Sovereign Investment Authority is
an agent of government — or is it not? The question is: How should we
think about the management structure in so far as major decisions are
concerned? Where is the line between NSIA, as a commercially minded
entity, and the government, especially given government's policy of
having no business doing business? If, for example, government does not
get involved in specific investments, then, who appoints the external
managers involved in managing some parts of the NSIA funds?
19. Who determines the investment objective and who establishes the risk
parameter for the NSIA's portfolio? In providing answer to this
question, it is also important to understand and explain why NSIA
recently hired a Swiss national as its chief portfolio investor?
Answering this question is important since it should help us to know who
determines the maximum draw-down that the government would be
comfortable with in extremely negative market environments.
What should be your explanations for awarding MasterCard a multimillion
dollar National Identity Smart Cards, when there are indigenous ICT
companies that not only have what it takes but would have done it
cheaper and create local jobs at the same time?
21. Have you
taken into considerations how foreign company could use such information
available to it to invade the privacy of Nigerians?
are reasons for SURE-P to give preference to Chevrolet cars for SURE-P
taxis, when it is known that not only are such cars very expensive to
maintain compared with Asian and European cars, but also are also not
fuel efficient and not durable on our roads?
Minister of Finance, you will agree that SURE-P is very important to the
people of this country, taking into cognizance that it is the only
thing they stand to gain from the increase on petroleum product pump
prices almost 2 years ago. Who is in charge of the management of SURE-P
and who takes responsibility for its successes and failures?
24. You will agree that inasmuch as the interest rate regime is critical
to the real sector borrowing decisions, most principal factor in making
borrowing decisions is the business's expected rate of return on
investing borrowed money? The question, without efforts to protect local
businesses from their foreign counterparts, the high cost of doing
business in Nigeria, puts them at such a disadvantaged position that it
makes no economic sense borrowing to invest in their local businesses,
why should we expect private sector firms to be investing in the
25. You are quoted as saying, '' Very soon, the US
would become a net exporter of oil…So, it would be disingenuous for
anyone to say that just because the price of oil has hovered at around
$100 per barrel, it cannot crash…Lest we forget, as recently as 2008,
oil prices crashed from a peak of $147 per barrel to $35 per barrel ina
space of months triggered by the global financial crisis. Is the
minority leader saying he has forgotten that?” This forces one to wonder
from which source should the US become that net exporter of oil, given
that the US daily oil consumption was 18.7 million barrels with (10.6
million of which was imported daily) in 2012? Or, should it be from the
shale oil which the International Energy Agency (IEA) demonstrates to be
at two million barrels daily? In other words, given the IEA global oil
price trajectory, can’t we agree that “There are many constraints on
supply keeping pace with demand’’ which means that within this decade,
oil prices should always hover around $125 per barrel? Answering this
question will help us understand why you insist on benchmarking the oil
price for the 2014 appropriation at below $79 per barrel? In answering
this question, would you also agree that as the global economy shifts
from West to Asia, so will the appetite for global oil consumption shift
from the West to Asia?
As crude oil continues to sell at
$100-$110, how low will production have to fall for us to record a net
loss or at what production level can we break even at a 2013 benchmark
26. Do you agree that the Excess Crude Account as being
operated by government is illegal and unconstitutional, especially
given how it has been managed?
27. Can you explain with clarity
how the ECA is being operated? Also provide a statement of account of
the ECA from 2011 to 2013? Also how much have we made in excess of the
benchmark price from January 2013 till date.
28. If there is
nothing like Excess Crude Account, would you have been demanding lower
oil price benchmark for the budget, especially when the executive arm of
government around world is known for demanding more money from
lawmakers in order to be able to meet government spending obligations,
particularly capital spending. Why is the reverse the case in Nigeria
only, notably since 2011?
29. With respect to the Excess crude
account and our Sovereign wealth fund again, there have been allegations
and counter allegations on its legality. Assuming, for the sake of the
committee’s enlightenment, the FGN alone saved its own excess in its
ECA/SWF (which is about 52% of the Federation account) and the states
and LGs get their funds in full compliance with the constitution, what
would be the effect on the economy?
30. Do you believe in the
fight against corruption? If you do why has EFCC not been proper funded?
Without properly funding the commission, how should it be expected to
carry out its duties effectively?
31. Can you confirm with
figures if we have met our cumulative revenue projections for 2011,
2012, 2013, and if we have, how and if we have not, why? Also provide
backup performance information under the various revenue generating
agencies—NNPC (Oil and Gas), DPR, FIRS, Customs, Independent Revenue and
other anticipated and unanticipated revenues e.g. privatization and
sales of government properties etc.
32. As Minister of Finance,
are you familiar and comfortable with all the present business
arrangements of the NNPC? Why were these business arrangements excluded
from the MTEF which used to be the practice? Provide all the present
business arrangements, the parties involved, the share of each party,
and justifications for such.
33. Provide details of government
stake in NLNG. All categories of revenue under the NLNG and total amount
generated so far and evidence of remittances.
34. Why do you
always prefer a lower benchmark which leaves government with wider
deficits and your attitude of no qualms with domestic borrowings at
excessively high interest rates to balance deficit as against our
position of increasing benchmark to reduce deficit which consequently
reduces domestic borrowing, that frees up funds for the real sector of
the economy, thereby bringing down the interest rate, increased private
sector investments and creating jobs.
35. What is the total
amount expended by certain statutory agencies of government without
appropriation for 2011, 2012, and 2013? Also provide aggregate
appropriated expenditure for the same period. As the Coordinating
Minister of the Economy, do you feel comfortable with allegations that
almost equal amount of our yearly aggregate expenditure is being spent
without appropriation, yet we are crying that the country is running
short of revenue?
36. Between May 7 and 9, 2014, it is expected
that Nigeria will be hosting World Economic Forum on Africa. Who will
finance this event and why? In concrete terms, what are the expected
tangible benefits to the country in return to justify hosting such
expensive event that will require lots of money for logistics,
accommodations, security, especially given that South Africa that
recently hosted the event has nothing to show for it.
you should for any reason say it will attract foreign investors, the
question, then becomes, what kind of foreign investors are we talking
about here because as we all know, no serious foreign investor needs to
attend such a forum in Nigeria in order to recognize that our country
should have been one of the world's favored investment destinations had
our perennial infrastructure deficit been addressed head-on?
38. Most of the developing economies like China, India, and Brazil that
the world is today celebrating as economic success wouldn't have become
this successful without adopting multi-year development plans. Why after
knowing that their successes are as a result of carefully designed
multi-year economic planning, we are yet to adopt such a multi-year
development model? In other words, why wouldn’t you agree that Nigeria
too needs that in order to move faster and more sustainably in its quest
for industrialization and economic diversification and job creation for
millions of the country's unemployed young men and women. Specifically,
what concrete, visible strategic efforts and action are you taken to
diversify our economy
39. As the Coordinating Minister of the
Economy, can you precisely clarify how much is AMCON's debt exposure
and what will its defaulting mean to the country's economy?
Why are we using the 10 to 15 years moving average to arrive at your
2014 proposed benchmark as against the traditional 5 to 10 years moving
average we have always used? Is it because using the 5 -10 year average
will not give you the benchmark price you desire?
41. This time
last year you informed this committee that our external reserve
position was about $48 billion and the balance on our excess crude
account was about $9 billion. You also said that the plan was to grow
these balances to about $50 billion and $10 billion respectively.
However we are hearing that the balances have dropped to $43 billion and
$3 billion respectively. And you are saying all is well?
Crude oil projections for 2013 were 2.53 million barrels per day while
actual figures as supplied by the NNPC/DPR/MTEF have averaged about 2.3
million barrels per day giving a shortfall of about 9%. Could this alone
have caused such a drastic reduction in our reserves and savings
43. Is any money missing from our anticipated
revenue from the NNPC in particular and oil industry in general. If
there is, how much? If not, how come such issues emanate from high
offices in the executive arm of Government? However, if the
reconciliation figures is the issue, how long will Nigerians wait for
the reconciliation to be completed. In other words, how long will the
reconciliation last and the outcome announced?
to the pre-shipment inspection of exports act of 1996 and the Federal
ministry of Finance export guidelines. If any good (oil, gas or non oil)
is exported from Nigeria the exporter is compelled to repatriate these
proceeds through the domiciliary account of a Nigerian bank. What has
been the effectiveness of these laws? Is there full compliance.
45. If there has not been compliance, would it not make it difficult for us to build up our foreign reserves?
Could we not say that the main thrust of the CBN letter was that our
foreign reserves are not growing even though there has been a consistent
high selling price of crude due to the fact that huge funds are not
being repatriated at all or are repatriated through the black market?
46. Could we say that the issue is not so much that money is missing
(which is yet to be determined) but that proceeds that should have found
their way back to the Nigerian economy have grown wings or they fly in
through the black market, allowing oil industry players have a field day
making spreads of up to N7 per dollar in some cases.
is the Minister’s take on the apparent stagnation of the economy as
there seems to be very little job creation and growth in small
businesses. Even though the Minister has read out growth figures before
it is not telling on the average man on the street.
the Minister say that the various Government initiatives at job creation
have not lived up to expectation as they affect only a very small part
of the population?
49. Wouldn’t the Minister think that the
private sector should be the main driver of job and wealth creation
through natural growth of business and start ups being financed by the
50. If so, what does the Minister think it
would do for the local banking industry if this same pre-shipment
inspection law and your own export guidelines are enforced to the
letter. The oil industry in Nigeria is worth about $50 billion per
annum. If even $10 billion of this passes through our local banks
wouldn’t that give the economy a boost with banks now able to fund
longer term and bigger projects?
Signed: Hon. Abdulmumin Jibrin, Ph.D Chairman House of Representatives Committee on Finance