Former Permanent Secretary, Federal Ministry of Finance, Alhaji Aliyu Ahmed, in this interview with  provides perspectives on contemporary issues relating to the economy. Excerpts:

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I helped to spearhead the development of the Strategic Revenue Growth Initiatives (SRGI), a cross-agency suite of interventions aimed at boosting revenues in Nigeria, by closing tax loopholes, reviewing tax incentives, broadening the tax base, and bringing in more people and corporations into the tax net. This initiative led to the complete turnaround of our fiscal situation from being heavily dependent on oil revenue (70 per cent) to about 30 per cent non-oil revenue. The SRGI helped to flip this ratio from 70 per cent non-oil revenue to 30  per cent oil revenue from July/August. So the massive shift in non-oil revenue started way back in 2022, and the current administration is to be commended for sustaining this upward trajectory. This is a more sustainable form of financing for our budget and development. 

Also, we were able to bring back the January to December budget cycle from 2021 -2023, This helped in no small measure in the planning and implementation of the budget and fiscal operation of the federal government.

We introduced the Road Infrastructure Tax Credit Scheme (RITCS) through Executive Order No. 007, 2019, by providing tax credits to private entities to finance the construction of critical roads and bridges infrastructure through an innovative PPP mechanism that incentivises private sector participation. Dangote Industries Ltd was the pioneer contractor who did the first three of the following roads among several others: Apapa-Oshodi-Oworonshoki-Ojota Road in Lagos State (34 km); Ajaokuta-Obajana Expressway (43 km) in Kogi State; DeepSea Port Access Road (74 km).

Other projects are the 110 km Enugu-Onitsha Expressway by MTN; and the Bonny-Bodo Road and Bridges Project across the Opobo Channel in Rivers State (38km)  by LNG Ltd.

We introduced the reform at the ports and procured state-of-the-art Mobile X-ray scanners for use at the Apapa, Tin Can Island, and Port Harcourt ports to hasten and fasten the scanning and processing of imported goods, leading to improved revenue.

We procured major bilateral loans from China to construct the Lagos-Ibadan Railway Project and Wagons used for the Abuja-Kaduna Railway. The Lagos-Ibadan Expressway reconstruction was substantially advanced. 

There was also the establishment of the Ministry of Finance Incorporated (MOFI)  as a state-owned asset management firm to better manage federal government investments and for long-term wealth creation. :

The challenges encountered were numerous, including navigating the various committees of the National Assembly; relationship with the Nigeria Governors Forum (NGF) and sub-nationals, relationship with Ministries, Departments, and Agencies, relationship with staff, and relationship with security agencies

Yes, like I told you, this SRGI that we introduced closed tax loopholes and was able to raise a lot of revenue in the past. That initiative introduced the fact that they pay 50 per cent of their revenue, which is automatically deducted because of the automated platform. We have TSA, we were able to reach their revenue directly and just deduct 50 per cent compared to the past. 

So when we introduced that initiative,  that was part of it and the automation also helped because we were able to see their revenue inflow in real-time, and the tax return is almost instantaneous, and most of the banks in the past, when they collected VAT and all these transactions cost they didn’t remit.  It was at when due but with the automation system, we were able to wrap up revenue collection. 

Well, borrowing is a very complex issue because sometimes you know this tax revenue trickles in; they don’t come in at once. Take, for instance, you want a project that you will probably spend at least N77 billion. You won’t get it immediately. So, sometimes you need to borrow, but you plan that when the tax return comes in, then you can pay conveniently because you don’t get that kind of huge resources. It’s like you as an individual, if you want to buy a car and want to use your salary, you can’t.  You may now have to seek out a loan for a house, or you may have to go for a mortgage so that you can pay down your mortgage gradually. So, if you want to do a huge infrastructure project, you would have to borrow to do that because tax revenue takes time to accumulate. 

It was also part of an effort to close the loopholes because, if you recall, it’s like a voluntary asset and income declaration. So many people were not declaring their income properly, so there are a lot of people who are in default. So, with the VAIDS, it came in with the notion that, look,  we know your past sins have been forgiven, but going forward, we need you to declare. Certain deadlines were given for people to comply, and by a, so many people were brought into the tax net. If you heard me, I said that with SRGI, more people were brought into the tax net– people who were not there before because they were now afraid that if you are caught, then the punishment and sanction would be heavy. So, a lot of people voluntarily declared because the government overlooked past infractions, so that rate also contributed quite a great deal to that effort.

That is a totally wrong impression and an unfair characterisation. Like every sector we know, it has a few bad eggs and lots of decent and hardworking people who are extremely hardworking and generally keep their heads down. You won’t see them on TV and pages of newspapers giving interviews and offering rebuttals to claims and counterclaims. By the nature of their jobs, they are supposed to be seen and not heard.  

But like every sector no exceptions; you have a few bad eggs giving the profession a very bad name.

At a recent high-level interactive session between the executive and legislature on how to strengthen collaboration for sustainable financial management and development, what came to the fore is that many Government-owned Enterprises (GOEs) and agencies are not under the control of their supervising ministries. Going forward, what do you prescribe to change the narrative and make the public finance management system foolproof?

First and foremost, ministers must take control of their Ministries, Departments, and Agencies. It’s not enough to complain. Ahead of budget preparations, honourable ministers should hold meetings with all the CEOs of parastatals and agencies under their ministries, and tell them their expectations in terms of deliverables, because as a minister, you also have your deliverables which you have to report to the Presidential Delivery Unit (PDU) of the Office of the Secretary to the Government of the Federation (OSGF) and their inputs feed into your deliverables.  Do this early enough by holding a retreat with them. After the meeting, write them letters as a follow-up to the meeting and request their budgets, fix a deadline for submission of the budgets, and for a mini-budget interaction with all the departments and agencies under your ministries. Once you have examined and scrutinised the budget, then, if you are satisfied, pass the budget to the Budget Office of the Federation (BOF) for further scrutiny and onward transmission to the FEC and subsequently to the National Assembly. Always respond to letters from agencies under your ministries promptly and guide them. However, if agencies write to you and their letters stay on your desk or in the ministries for months on end, it’s natural that they will find a way of circumventing you or your ministry and go directly either to the State House or OSGF.  Once they get that window in the State House or OSGF, you have lost them,  sometimes for good. 

It’s probably time to hit the pause button on our borrowing programme, especially borrowing not tied to educational, health, and physical infrastructure. And even for these, we need to scrutinise the conditions surrounding disbursements of the loans, such as social, environmental, and governance arrangements. Even though most of the loans from Multilateral Development Banks (MDBs) and institutions come with standard loan terms, you must be careful in negotiating conditions around social, environmental, and governance safeguards attached to the various MDB loans. We should go for fewer high-impact loans and not spread ourselves thin over numerous loans whose impact might be very low or trivial.  If the loans are too many loans, you will have difficulties monitoring them. The Sub-nationals easily fall into the traps of MDBs’ Staff who approach them directly and push loans that are sometimes not properly designed. Once they convince the Governors of States about certain loans that they could benefit from, they will now allow the Governors to do the rest by approaching the Federal Ministry of Finance and the Debt Management Office to convince them. Every effort by FMF and DMO to convince the States that some of the Loans are not properly designed or contain onerous conditions would be seen as time-wasting on the part of FMF. 

For other bilateral loans and loans from Export Credit Agencies(ECA), we must do thorough and diligent work scrutinizing the loan terms and associated loan conditions. 

Part of the advice I would offer is the fact that if you limit your loan to huge, economically viable projects like roads, rail, and airports, you should create a dedicated account and reinforce this account. Then, revenue generated from these should go in directly. It should be dedicated and shouldn’t be seen as a source of revenue to go and spend–instead, dedicated to the servicing of the loan. That way, there will be a reduction in the debt servicing burden.

You see it can’t service itself 100 pèr cent because the rail system is a highly capital-intensive infrastructure product. They are high-ticket items all over the world. If you look at it, it’s impossible to say that you can repay the huge amount of funds you spent to put the infrastructure in place but what I’m saying is that whatever you are collecting, you make the collection more efficient, you reduce sharp practices which you just cited and reduce any incentive for corruption as much as possible. People should be able to go online to buy their tickets instead of a physical administration in the rail system. 

So by that, we would have to reduce the influence of the human element, the interaction of human beings with our purchase of tickets and all. If we can improve our collection, then at least, the revenue we realise would help in paying back but may not be able to pay back 100 per cent certainly.

The choice of AFREXIMBANK is deliberate for several reasons. First, over the years, AFREXIMBANK has evolved as a Financial Institution that is Afrocentric! The Bank focuses on Africa as a continent and now the African Diaspora. When AFREXIMBANK confronts challenges in Africa, it sees these as opportunities to engage and help African countries navigate these challenges. Other International Banks and Institutions see the challenges as risks instead, and their first reaction is either to retrench from the continent, downgrade our sovereign ratings, and slam us with additional premiums over and above the reference rates on the loans. For the World Bank and the IMF, who are in the business of development, they will tighten their conditions and conditionalities and insist on your meeting these conditions before they approve loans to our countries. Sometimes, these conditions will further worsen your situation. Second, in the case of AFREXIMBANK, even if the risks are high, AFREXIMBANK will engage with you to mitigate those risks and help you to come out of the very difficult situation. 

Another example is the intervention of AFREXIMBANK to bail out Nigeria by supporting the CBN with US$ 1 billion to shore up the external reserve during the 2008 Global Economic and Financial Crisis which started in the US and triggered the recession of 2007. 

During the crisis of the COVID-19 Pandemic, AFREXIMBANK also stepped up with the US$ 3 billion Pandemic Trade Impact Mitigation Facility (PATIMFA) to help African countries deal with the economic and health impacts of the COVID-19 pandemic. The essence of the PATIMFA was to help member Central Banks and other FIs to meet trade debt payments that fell due to avoid payment defaults and to help members cope with a fall in revenue earned from their mineral resources. The World Bank did not provide any new money; all they did was restructure existing loans to the country and take away funds from existing projects to support COVID mitigation efforts in the country.  

There was also a US$3 billion oil for Cash deal to support CBN reserves, as well as support for CBN reserves and fiscal operation for the Reform Agenda.

AFREXIMBANK put in place the Africa Vaccine Acquisition Task Team (AVATT) in conjunction with AU and World Bank to aggregate and procure COVID-19 vaccines and kits at scale and cheaper for AU member countries at the time that Africa was not finding it easy to procure COVID-19 Vaccine.  

Yes, I spoke about Afreximbank deliberately because, given the system they have established from inception to date, I think I can describe that bank as being Afrocentric. The first thing that comes to people who work in Afreximbank when they want to intervene in any African country is what programmes they have, and how we can help.  But for foreign banks, especially the international financial institutions, the first thing they see is risk, while African institutions see those risks as challenges.  So, once the international financial institutions see investment in Africa as a risky venture, at the slightest discomfort, once they see that those risks have exceeded a certain threshold that they put in place, they run, but Afreximbank knows that they are dealing with governments, sovereign or institutions facing challenges. The first thing that comes to their mind is How can we work with you to mitigate those risks and then solve the problem?

I think the government is trying with some of the policies being put in place and contemplated. I will cite the example of the Tax Reform Bills 2024. When the Tax reform takes effect, it will potentially transform the fiscal and development landscape of the government’s fiscal operation as we know it.

Probably, if I were to mention one thing that the government should do differently to fix the economy faster, I think we should look at why manufacturing firms are leaving our shores in droves. It is not good and healthy for the economy. If we continue to allow firms to leave at this rate, naturally, it will shrink our GDP, impact jobs negatively, and cause national income to decline. We should find out why these firms are leaving and address the problems squarely.

My response to this question is linked to the previous response. We know the reason for the decline. Forex depreciation is a huge part of it. And the departure of firms is further shrinking the economy. We need to create an enabling environment to bring them back and to attract other players to grow the economy. Continue to grow other sectors like the Aviation and Services sector.

Nigerians should remain steadfast and explore other sources of income to supplement their current earnings. In the past, agriculture used to provide such supplementary income, but due to insecurity, this has become a serious challenge. Every little bit of any endeavour by way of an alternative income stream to support the incomes of the masses to help them weather the storm is vital. 

 The subnationals are receiving more monthly allocations from the Federation Account under the current administration following the removal of fuel subsidy. Yet, the standard of living of the citizens has not improved. Do you think the governments at the centre and state levels have managed the post-subsidy policy well?

Again, I think the current government is doing its best at the federal level. However, the implementation differs from state to state, and it would be difficult to make a sweeping generalisation. From a few states, I visited including mine- Niger State, a lot of infrastructure work is ongoing. Roads are being constructed; schools and hospitals are being built/renovated. Maybe, the states should do more by way of direct intervention through social programmes to ensure that the lives of the citizens are impacted directly, in addition to relying on spending on infrastructure that would trickle down.