FG: Success of Eurobond is Proof the Economy is Recovering

Yemi Osinbajo

•  Starts review of TSA guidelines as inflows hit N5.2tn

Tobi Soniyi and Ndubuisi Francis in Abuja

The federal government has said that the massive demand for its $1 billion Eurobond, which was oversubscribed by 780 per cent, was a demonstration of the strong market appetite for Nigeria and indicative of the confidence by the international investment community in Nigeria’s economic reform agenda.

In the current editions of the Presidential Villa’s newsletter called ‘Government at Work’, released tuesday, the government also gave 11 reasons it felt that the economy was on its way out of the recession.

It stated that after two consecutive quarters of negative growth, the non-oil economy showed, in Q3 2016, a modest return to positive territory at 0.03 per cent.

The newsletter attributed the marginal growth to the performance of the agriculture and the solid minerals sectors, both prioritised by the federal government.

It said agriculture grew by 4.54 per cent in the quarter under review, of which growth in crop production at nearly 5 per cent was at its highest since the first quarter of 2014.
Growth in the solid mineral sector was said to have averaged about 7 per cent.

The second reason given by government was the Anchor Borrowers’ Programme (ABP) of the Central Bank of Nigeria (CBN), which it said substantially raised local rice production in 2016 – yields improved from 2 tonnes per hectare to as much as 7 tonnes per hectare in some states – and produced a model agriculture collaboration between Lagos and Kebbi States.

Thirdly, it said the Fertilizer Intervention Project, involving a partnership with the Government of Morocco for the supply of phosphate, was on course to significantly raise local production and bring the retail price of fertilizer down by about 30 per cent.
Another reason given by government was the newly established Development Bank of Nigeria (DBN).
Government said the bank was finally taking off, with initial funding of US$1.3 billion provided by the World Bank, German Development Bank, the African Development Bank and Agence Française de Development, to provide medium and long-term loans to MSMEs.

One of the newsletters stated: “A new Social Housing Programme is kicking off in 2017. The Family Homes Fund will take off with a N100 billion provision in the 2017 Budget. (The rest of the funding will come from the private sector).
“More than N800 billion has been released for capital expenditure in the 2016 budget, since implementation started in June 2016.

“This is the largest ever capital spend within a single budget year in the history of Nigeria. These monies have enabled the resumption of work on several stalled projects – roads, rail and power projects – across the country.”
Another factor the government pointed was the implementation of the Social Investment and Empowerment Programme (SIP).

According to the newsletter, all the four components of the SIP had taken off.
It described the SIP as the largest and most ambitious social safety net programme in the history of Nigeria, with more than 1 million beneficiaries so far.

They comprise 200,000 N-Power beneficiaries; 23,400 Government Enterprise and Empowerment (GEEP) Scheme beneficiaries; 1,000,000 Homegrown School Feeding Programme (HGSFP) beneficiaries; and the ongoing Conditional Cash Transfer (CCT) payments across nine pilot states.
“Strategic engagements with OPEC and in the Niger Delta have played an important part in raising our expected oil revenues.

“Already, Nigeria’s external reserves have grown by more than $4 billion in the last three months.
“Collaboration with China, proceeding from President Buhari’s April 2016 visit, has unlocked billions of dollars in infrastructure funding.

“Construction will begin on the first product of that collaboration – a 150km/hour rail line between Lagos and Ibadan, in Q1 2017.

“The National Economic Recovery and Growth Plan (NERGP), the federal government’s medium-term economic plan, launched this February will chart a course for the Nigerian economy over the next four years (2017 – 2020),” the presidency added in its newsletters.

In a related development, the government announced yesterday that the Treasury Single Account (TSA) has recorded a total inflow of
N5.244 trillion through mop-ups and direct debits by the central bank, since the government commenced full implementation of the scheme in August 2015.

It made the revelation just as acting President Yemi Osinbajo canvassed for a more active cash management regime that is better aligned with debt management, as well as the development of new capital market instruments.

The Account-General of the Federation, Mr. Ahmed Idris, who gave the update at a two-day retreat on the review of the implementation of the TSA, said the inflows bringing the amount in the TSA to N5.244 trillion was recorded on February 10, 2017.
The retreat with the theme, “One Year Anniversary of Treasury Single

Account: Benefits, Challenges and Way Forward,” had in attendance the Governors of Anambra and Kaduna States, Chief Willie Obiano and Mallam Nasir el-Rufai, respectively; the Secretary to the Government of the Federation, Mr. Bbachir David Lawal; Minister of Finance, Mrs. Kemi Adeosun; and Managing Director of SystemSpecs, providers of the payment platform, Mr. John Obaro, among others.

The TSA is a unified structure of government bank accounts, which gives a consolidated view of the cash balances of the treasury at any point in time and provides a window through which the government transacts all its receipts and payments.

It is configured with a framework, which provides for multiple sets of linked accounts domiciled at the CBN.
Giving a synopsis of the scheme, Idris acknowledged that the TSA was introduced in April 2012, noting however that it was not fully implemented largely due to the lack of political will on the part of the past administration.

“However, the issuance of the TSA circular in August, 2015 coupled with the political will and enforcement, enabled us to achieve considerable progress on TSA implementation.

“As of 10th of February, 2017, the total inflow of funds through mop-ups and direct debits by the Central Bank of Nigeria amounted to N5.244 trillion,” the accountant-general said.
According to him, implementation of the TSA had brought considerable gains to the federal government and the Nigerian economy, adding that the scheme succeeded in eliminating multiple banking arrangements with the attendant consolidation of 20,000 bank accounts spread over all the deposit money banks across the country.

“This has further brought about transparency and effective tracking of government revenues. It has also led to blocking of leakages and abuse, which characterised public finance management before implementation.

“The TSA has taken us out of the era of indiscriminate borrowings by MDAs and saved government charges associated with those borrowings, which amounted to an average of N4.7 billion monthly prior to the full implementation of TSA,” Idris said.
The accountant-general noted that though the TSA has recorded considerable gains, there was need to evaluate the programme and identify more feasible ways to take it to the desired level.

He said the scheme should also go beyond mere cash management, canvassing that “we should explore the inherent potential of the TSA and identify the most economically viable options of resource utilisation and deployment, particularly under the present economic recession”.
In his remarks, Osinbajo, who was represented by the Economic Adviser to the President, Dr. Adeyemi Dipeolu said with the implementation of the TSA, there was improved visibility of government revenues and cash flows.
According to him, before the TSA’s implementation, it was difficult for relevant institutions to determine the federal government’s cash position in a timely manner.

“Now the position is clear, with an average of N13 billion accruing to all government agencies every single working day. This improves decision-making and engenders efficiency in public financial management.
“Another key outcome has been the elimination of the revenue and expenditure float.

“Before TSA, it took an average of 28 days to access cash after the revenue had been collected through commercial banks and about 21 days for MDAs to access their budgetary allocations after release from the treasury.

“The differences in timing, which adversely affected budget implementation, have now been eliminated,” Osinbajo said.
He noted that another significant success story of the TSA “is the removal of ways and means financing costs that were depleting resources available for service delivery through budget implementation”.
The economy, Osinbajo added, is set to reap the full benefits of blocking the leakages in revenue collection that hitherto fuelled corruption and impaired growth.

According to him, this improved transparency also discourages would-be offenders, as the information technology solutions deployed as a result of the TSA meant that there were no more hiding places.

These achievements, notwithstanding, Osinbajo said: “We can be under no illusion that the implementation of the Treasury Single Account is complete.
“We need to take account of challenges that have emerged in the process with a view to addressing them.”

The acting president said that there was need for a more active cash management regime that is better aligned with debt management and the development of new capital market instruments.
“Moreover, it is important to consolidate on the gains so far and to align the process with present day realities. There remains more to be done to harness the benefits of the TSA’s implementation.

“For instance, the reforms we have started with regards to the budget preparation must continue to completion. Ideally, the budget should be comprehensive and transparent and as much as possible enacted before the beginning of the financial year.

“Moreover, since most of the cash resources moved into the TSA are extra budgetary, harvesting the fruits of the TSA’s implementation would entail that public resources be allocated in a manner that would enable total fungibility of cash.
“We also have to fast-track measures around budget execution, using automated systems that support better public financial management.

“A lot has been achieved through the Integrated Payroll and Personnel System (IPPIS), and unprecedented success has been realised through implementation of the Government Integrated Financial Management Information System (GIFMIS).
“Nevertheless, the pace of implementation needs to be sustained.

“I am aware that the Federal Ministry of Finance along with the Ministry of Budget and National Planning and other stakeholders are rolling out GIFMIS to support budget preparation and the entire commitment management processes of all federal MDAs.
“When completed, GIFMIS will better support the TSA’s implementation and enable full realisation of its benefits.”

In an interview with journalists on the sidelines of the retreat, the Managing Director of SystemSpecs described the TSA as a good development, which has added value to the economy.

He admitted, however, that there were initial teething problems, which are already giving way.
Obaro, whose company provides the platform for the implementation of TSA said: “For this kind of project, like I said, there would be the initial settling down issues, which was exactly what happened. Now things are reasonably settling down.

“We can begin to speak to the real issues. Before now, there were a lot of peripheral issues. Now, we can begin to speak of how to improve operational processes and the utilisation of massive data that is now readily available to the government.

“This can be used for economic planning and a lot of other things can be derived from what is readily available.”
Responding to questions on the unresolved issues, Obaro said: “Issues on the fees have been reasonably resolved but not completely resolved. We have effectively not been paid since May last year – almost a year.

“We have not been paid but we believe in what we are doing. We have good co-operation from senior officials of government but we are assured that with the passage of time, these problems would be resolved.

“And that is why we really don’t want to see it as a big problem. We believe the people are seeing the benefits of the platform we have provided, we would ensure that these issues are resolved in a fair manner.”