Generating more revenue for economic growth

I am highly honoured and delighted to be here and to give a goodwill message at this summit which is being organized by the Vanguard Newspapers in association with the Central Bank of Nigeria (CBN) and the Bankers committee.

I wish to commend the organizers for gathering top policy makers and operators in the banking and finance industry here today for this all-important summit which is focused on the banking sector in Nigeria.

The theme of this summit “Bankers Initiative for Economic Growth” is indeed topical, and couldn’t have come at a better time, considering that the banking sector in Nigeria is passing through a critical and decisive path in terms of reforms to reposition it to effectively impact on different sectors of the economy and the need to generate a more revenue for economic growth.

Let me, at this juncture, specially appreciate the presence of the Vice president of the Federal Republic of Nigeria, Professor Yemi Osinbajo, I also acknowledge the Governor of the Central Bank of Nigeria Mr. Godwin Emefiele. Likewise, I appreciate the leadership of the Chartered Institute of Bankers of Nigeria led by its President, Mr. Bayo Williams Olugbemi. Special thanks also go to the Editor-In-Chief of Vanguard Newspaper Mr. Gbenga Adefaye and other senior management of the Bank who are present here today. And to everyone at this event whether in person or virtually, I acknowledge you.

Economic Growth

Bankers play a crucial role in economic development. However, the impact of the banking system on the rest of the economy depends on how it mobilizes savings, allocates the savings, monitors the use of the funds by firms and individuals, pools and diversifies risk, including liquidity risk, and eases the exchange of goods and services. When the banking system performs well, it tends to promote growth and expand economic opportunities. Economic growth is about enhancing the productive capacity of an economy by using available resources to reduce risks, remove impediments which otherwise could increase costs of doing business and hinder investment.

Ladies and Gentlemen, highlighting the central role that bankers play in the growth of every economy by mobilizing resources for productive investments and being the channel for the enactment of monetary policy. On account of the critical nature of these roles, and the fact that the ability of bankers to effectively impact on economic development hinges largely on their initiatives and efficiency.

Intervention programmes

Ladies and Gentlemen recall that after the outbreak of the novel coronavirus, the Federal Government of Nigeria introduced a Fiscal Stimulus Package to address the economic challenges orchestrated by COVID-19 (The Pandemic) and the slump in crude oil prices. It would be recalled that the Central Bank of Nigeria (CBN), as well as other regulatory agencies, had earlier introduced various intervention measures, ranging from welfare packages to the interest rate reduction, amongst others. The Fiscal Stimulus Package was to ensure that the country’s economy, fiscal position and healthcare systems are sufficiently supported to withstand the impact of both COVID-19 and the declining oil price. The Fiscal Stimulus Package comprised various measures such as:

N500billion COVID-19 Crisis Intervention Fund (The Fund).

Access to the USD90 million Regional Disease Surveillance Systems (‘REDISSE’) facility

Availability of the sum of N102.5billion for direct interventions in the healthcare sector

Planned release and enhancement (where necessary) of hazard allowances to Federal health workers

USD150 million intervention fund from Nigeria Sovereign Investment Authority Stabilization Fund

Debt and Interest Moratorium for States

Restructuring of Treasury Single Account (TSA)

Amendment of the 2020 Appropriation Act

Strategic Revenue Growth Initiative (SRGI)

Ladies and Gentlemen, you will recall also that prior to the outbreak of the coronavirus pandemic in late December 2019, the Nigerian economy was already fragile and vulnerable as the nation strived to address different challenges ranging from insecurity in some parts of the country, dwindling crude oil prices amongst others. The fragility and vulnerability of the Nigerian economy necessitated the revision of the Strategic Revenue Growth Initiative (SRGI) which aimed at strengthening revenue generating agencies to enable them live up to expectations of increasing revenues to fund the budget.

As a government, one of the proactive measures taken immediately after the outbreak of the COVID-19 pandemic was to reposition the economy and cushion the ripple effects was to revise the 2020 budget, slashing revenue projection by about forty percent (40%) and seeking emergency support from development partners such as the International Monetary Fund (IMF), the World Bank and the African Development Bank to be able to execute the 2020 budget.

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Furthermore, the 2021 Budget of the Federal Government christened Budget of “Economic Recovery & Resilience” gives top priority to Security, Human Capital Development, and Infrastructure in the nation. The aggregate revenue for the 2021 budget was N7.99trn (36.9% higher than 2020 which was N5.84trn). Seventy percent (70%) of the revenues would come from the non-oil sector while the oil sector is estimated to provide the remaining thirty percent(30%).This represents one of the efforts towards reducing government’s dependence on oil as her major source of revenue.

Ladies and Gentlemen, in all of these, the country needs more revenue to finance its obligations to the citizens in the areas of critical infrastructure, and other socioeconomic programmes. There is no doubt that the country cannot longer rely on oil as the major source of revenue generation. Hence, there is an urgent need to focus more attention on non-oil revenue sources.

Conclusion

In conclusion, as managers of the economy, we have a collective responsibility to come up with strategies on how to steadily grow the nation’s revenue base amidst the current global challenges orchestrated by the COVID-19 pandemic. Maintaining a safe and sound banking sector is essential, given the key role that banks play in facilitating economic growth and financing developmental projects, particularly infrastructure, agriculture and other sectors. Most emerging market economies have been known to use the domestic financial institutions to execute real sector big ticket projects and financial institutions in Nigeria should not be an exception if we hope to achieve our developmental objectives.

While COVID-19 has brought on a handful of challenges to our economy not excluding the banking sector, it however provides a unique opportunity for us to build a more resilient economy that is better positioned to withstand external shocks, whilst supporting economic growth and wealth creation in key sectors of the Nigeria economy.

I urge you all to examine the issues dispassionately in the best interest of the economy. I am confident that given the array of professionals gathered here today, implementable recommendations will emerge from your deliberations on strategies for strengthening the economy of our great Nation.

Ahmed, Minister of Finance, Budget And National Planning, gave this as Goodwill Message on Bankers Initiative For Economic Growth at the Banks’ CEO Summit last Friday in Lagos