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2025 budget: Nigeria plans spending on critical infrastructure projects
Guardian Nigeria
Follow
2/17/2025
Category
🗞
News
Transcript
Display full video transcript
00:00
As Nigeria's parliament passes the $54.9 trillion budget for the 2025 fiscal year,
00:07
the government says the additional spend will fund critical infrastructure projects.
00:12
How much impact will this have in spurring economic activities for businesses in the
00:16
country?
00:17
Shegum Adjaye-Kadir, the Director General of the Manufacturers Association of Nigeria
00:22
joins me for this discussion.
00:24
Thank you, Shegum, for taking the time out to join us today.
00:27
Thank you for having me.
00:28
It's always a pleasure.
00:29
All right.
00:30
Now, upon hearing this news, the budget being expanded and the government focusing on spending
00:36
big on infrastructure this year, what is going through your mind in terms of how this move
00:42
could potentially support businesses?
00:45
Okay, I think that the issue of expanding capital expenditure of government has always
00:53
been what economic actors and those who run commentary on the economy have always spoken
01:01
about, that there's need for us to strike a balance and to prioritize the spend, government
01:09
spend on infrastructure so that we'll be able to overcome those challenges that have continued
01:15
to limit the performance of the productive sector.
01:19
Before now, we knew that we were almost striking unequal numbers between recurrent and capital
01:26
expenditure.
01:27
But when it was announced that there would be some uptick in terms of what government
01:35
intends to spend during the year and that it was going to focus on infrastructure, it
01:40
came as a relief for the manufacturing sector.
01:44
Because if we really dissect the challenges that have bedevilled the sector, the debt
01:51
and inadequacy of infrastructure has always ranked the highest.
01:56
In terms of our manufacturer CO confidence index, the absence of optimism due to the
02:04
perennial lack of adequate infrastructure support has been the most debilitating factor.
02:13
So I think it's a welcome development that we are having an uptick in that, and that
02:18
the spend will prioritize capital expenditure.
02:22
What we just need to worry about should be that government should ensure that we actually
02:27
have the spend and that we do not have a situation where funds have been allocated for specific
02:33
infrastructure.
02:34
And during the course of the year, there is impairment or there is lack of implementation
02:41
or execution of the identified projects.
02:44
Right.
02:45
And let's talk about how the funds will be raised.
02:49
As you know, the National Assembly can also increase the budget.
02:53
This they have done.
02:55
And just listening to one of the lawmakers, they did say that they've had conversations
02:59
because the question did arise as to, okay, this is a 54.99 trillion.
03:04
This is a significant increase from what it was previously.
03:07
How is this or where is this money?
03:09
And the additional funds, where will they come from?
03:12
And the lawmakers have said that they've had, they've spoken to the Ministry of Finance,
03:15
the Federal Inland Revenue Service, and the Nigeria Customs Service, and their assurance
03:19
is that this money, additional sums can be raised.
03:23
And now this takes me to, into the conversation, of course, news headlines earlier this week
03:30
where, even from last week, where the customs, Nigeria Customs Service increased tariffs
03:36
on imported goods by 4%.
03:40
Just linking those two stories together, I wanted to get your thoughts on this because
03:44
the federal government is confident, says it's optimistic, that it's revenue-generating
03:48
agencies, particularly the FRS and the Nigeria Customs Service, can and will bring in additional
03:54
revenues.
03:55
So talk to us, because we did see negative reactions from Nasima, from the LCCI, I believe
04:01
also Man, in terms of how this will impact the unintended consequences on businesses.
04:09
Yes, okay.
04:10
I think the starting point has always been, and by the way, Man actively participated
04:16
in the runoff to the suspension of the 4% increase on FOB, but what we have always said
04:25
is that it is always better to bake a bigger cake so that you'll be able to have a lot
04:32
to share.
04:34
Another thing we have said is that it's good for you to expand the tax base and not for
04:40
you to increase existing taxes, levies, and fees that are collected by government.
04:47
We identify very much so with increase in spend on infrastructure, as we have mentioned,
04:54
but we have also said that we needed to be able to look at why we are not baking a bigger
05:00
cake, or why is it difficult for the country to grow.
05:04
There's a university in America that their annual budget is $69 billion.
05:12
Nigeria's budget is just about $30 billion.
05:16
And I think there is need for us to intentionally support governments to raise revenue, but
05:21
the question has always been, how?
05:24
How do you raise government revenue?
05:27
Is it by increasing taxes or ensuring that you increase facilities?
05:32
In the specific case you have mentioned, our ports are not attractive.
05:37
The services of the Nigeria Customs Service needed to be improved upon so that we have
05:43
more people using our ports to import their products and also to export.
05:49
We shouldn't have trade diversions that make people to prefer to import from Togo and then
05:54
truck their vehicles, or to engage in smuggling.
05:58
So if we improve the infrastructure, we felt that it will still be possible for governments
06:03
to meet its revenue aspiration without necessarily increasing the duty on imports.
06:11
We should also know that in more recent times, we have had increase in the rate at which
06:17
import duties are calculated.
06:19
So it means that we have more inflow of Naira as meeting the target of customs.
06:25
So we need that to ensure a situation where we incentivize trade-facilitating measures.
06:33
We facilitate trade so that we have greater volumes and realize more revenue, rather than
06:38
making the fewer than expected people to participate in trade activities pay much higher.
06:46
So I believe that the two are not mutually exclusive.
06:49
We hail government efforts by listening to stakeholders and suspending the implementation
06:54
of the 4%.
06:55
We do not think that is going to in any way jeopardize the aspiration of government to
07:03
make more revenue, to earn more revenue.
07:06
And on this suspension, the customs services said, look, they're suspending to further
07:12
engage with stakeholders.
07:13
I believe, probably, Man, you're going to be part of that conversation, too.
07:16
But they've said that upon enlightening the stakeholders on why this 4% is necessary,
07:22
there is a likelihood that they will go back and implement that 4%.
07:26
They say they needed to buy new equipment and use new technology to make their services
07:32
a lot more efficient, like you've talked about, a bit of a catch-22 situation here.
07:37
But what are your thoughts if the customs service decides to go back to that 4%?
07:42
Yes, we are hopeful that by the time we have the conversation, customs will not have to
07:47
go back to implementing.
07:49
As a matter of fact, we are hopeful that the conversation is going to help customs to look
07:54
to other sources of making the revenue.
07:57
And I believe a point in that direction will be to improve our efficiency, remove leakages,
08:03
ensure that we allow our ports to be more efficiently used, the fact that we reduce
08:10
smuggling, and the fact that we incentivize production so that we'll have greater volumes
08:17
and many more people that are importing raw materials, spare parts, and machines that
08:23
are needed locally.
08:26
We are confident that an engagement will allow us to bring the expertise in the private sector
08:31
to bear on government decisions.
08:34
So I believe that at the end of the day, customs will not have to go back to increasing, because
08:40
this is bad timing and is certainly going to impact on the prices at which domestic
08:47
products are made.
08:49
Already, the average Nigerian disposable income has dwindled.
08:53
We shouldn't do anything that will find inflation and make life more miserable for the people.
08:58
I thank you so much for talking to us today.
08:59
We really appreciate your time on the show with us.
09:01
Shegma Joye-Kadir, the Director General of the Manufacturers Association of Nigeria.
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