News Detail KEYNOTE ADDRESS BY THE HONOURABLE MINISTER OF STATE FOR FINANCE, REMI BABALOLA AT THE MONTHLY MEETING OF THE FEDERATION ACCOUNTS ALLOCATION COMMITTEE HELD AT THE ROCK VIEW HOTEL, ABUJA ON FRIDAY, 21ST SEPTEMBER 2007 POLICY CHOICES TO DELIVER NV2020 PROTOCOL It is with great pleasure that I join you at this month’s Federation Accounts Allocation Committee Meeting. Before I proceed, let me reiterate once again our intention to ensure that this meeting is interactive and value-based. We should let the regular interactions between the members of this important group, form the basis for value enhancement for harmonious national development. We are primed for enhanced spending efficiency, higher level of internal revenue generation and superior leadership in economic governance. 2. As you are all aware, in line with numerous policy statements at different levels of governance, the great challenge for this administration is to ensure that Nigeria rapidly commences taking the necessary steps towards attaining the required 13% annual GDP growth rate; which is the non-negotiable growth rate that will place Nigeria amongst the top 20 economies in the world by the year 2020, under the NV2020 agenda. 3. Undeniably, this is a challenging possibility for all the federating units to deliver this vision into reality. It is with this background in mind that I would like to engage you all, State Commissioners of Finance and Accountants General, to innovate in your own circle of influence in delivering this agenda that will ensure continuous Wealth Creation, Poverty Reduction and Gainful Employment for all. GOVERNANCE 4. The challenge confronting all of us at Federal, State and Local Government levels has been the need to improve governance, towards impacting positively the lives of ordinary Nigerians. In adequately resolving this challenge, we will continue to request that each federating unit take thorough, transparent and careful steps in the execution of its agenda. There is the urgent need for State Assemblies that have not enacted their respective Fiscal Responsibility Bills into laws to do so without further delay. It is with such laws that citizens of this great country can be guaranteed good governance, focused on value for money, economy and efficient management of state resources. 5. Our challenge is how to evolve a framework of fiscal federalism that brings out the best of our people and resources. This should be based on fiscal discipline, fiscal policy coordination, equity and transparency. 6. For quite some time now at the Federal level, we have been publishing the Monthly Statutory Allocation data in national newspapers and on the Ministry’s website. The main reason for this is to further reflect the transparent nature of governance. This helps to bridge the communication gap between the government and the people, thereby improving accountability. As we do this at the Federal level, we enjoin states and Local Governments to partner with us by publicising the states and Local Governments allocations through various media; local newspapers in local languages, local government offices, health centres, websites, etc. Let our people challenge us on whether the allocation is reaching the intended beneficiaries. 7. Furthermore, we solicit inputs from members in agreeing the benchmark performance index vis-à-vis revenue available. What this means is that there would be healthy competition among the tiers of government through benchmarking. Comparative analysis between states and local governments could be engaging and rewarding. DEBT MANAGEMENT 8. I would like to use this opportunity to commend the Debt Management Office (DMO) for a job well done to date. However, we expect more developments in the area of Debt Management, most especially at the sub-national level. We expect DMO to embark on a sub-national debt strategy programme, which will provide the regulatory framework for borrowing by sub-national entities. Such regulatory framework must fit into the existing framework as provided for under the Investment and Securities Act and the Rules and Regulations of the Securities and Exchange Commission. 9. This regulatory framework will also help develop appropriate mechanisms for prudent, sustainable and justifiable on-lending to State and Local Governments, as we build a suitable database of details of all sub-national debts. It is in this regard, that I encourage all State and Local Governments as well as Financial Institutions not to carry out any lending transactions without the express approval of the Debt Management Office. For us to achieve this, the continued and rapid response from State Governments in establishing Debt Management Units is required. PUBLIC PROCUREMENT 10. The first Act President Umaru Musa Yar’adua, GCFR signed into law on assumption of office was the Public Procurement Act 2007 which became law on June 4 2007. This Act institutionalised the establishment of the Budget Monitoring and Price Intelligence Unit (BMPIU). It provides the legal/institutional framework for the enthronement of transparency, accountability, value for money and efficiency in the procurement of works, goods and services within Ministries, Departments and Agencies (MDAs) of the Federal Government. With this, Due Process became formally institutionalised within the framework of the Federal Government budgetary system. It is our hope that this system will cascade to other tiers of government, thereby enthroning transparency and efficiency into our public expenditure system. With competitive costing and public tenders, there is hope that there will be less patronage in government contracts. THE CAPITAL MARKET AS A FUNDING AVENUE 11. State and Local Governments are hereby encouraged to raise additional financing (where needed) through the capital markets for projects which will achieve economic diversification and infrastructural development in their areas. Such fundraising must be in line with the existing Investment and Securities Act and Rules and Regulations of the Securities and Exchange Commission. In achieving this, State Governments should explore the possibility of raising capital market financing from the securitisation of the cash flows from the investments they are about to embark on, or use Internally Generated Revenues, rather than deductions from statutory allocations, or raise funding via public private partnerships. 12. In our effort to continue the development of the Bond Market, we will be calling upon the Securities and Exchange Commission, the Debt Management Office and the Bond Steering Committee to render assistance. There must be a conscious attempt to review the constraints in the existing Capital Market Laws, Rules and Regulations of SEC and other tax and regulatory hitches that may serve as impediments for the growth of the Bond Market. DECENTRALISATION OF TAX ADMINISTRATION 13. In recent times, there has been a lot of debate about the decentralisation of administration of Value Added Tax and Withholding Tax. Please be assured, that this administration is a listening one and is currently taking the necessary steps to put in place legislations that will be in the best interest of the country and all Nigerians. These steps will involve carrying along the State Governments and taking their opinions into consideration at all times. 14. As I make my closing remarks, please allow me to stress once again your very important role in the sustainability of the NV2020. We look forward to your unflinching support in your various constituencies. Lastly, let me put on record that I appreciate receiving the minutes of the last meeting in good time for prior review before this meeting, and to encourage that we continue in this direction by providing hard and soft copies to all members for perusal before the meeting. 15. As we continue our deliberations, I thank you all for listening. This speech was presented on FRIDAY, 21ST SEPTEMBER 2007