 We'll stay clear of more borrowing that is from the debt management office to the federal government. The debt management office has issued a stern warning to the federal government against additional borrowing, citing that 73.5% of this year's budget will be used to service debt, and this high debt service to revenue ratio is unsustainable and poses a threat to debt sustainability. Well this morning we have been joined by Mukta Mohamed, who is a financial analyst, to take a look at this and understand it better. Good morning Mr. Mohamed. Good morning. I was joining us via a phone. We wish you were here live in person, but we cannot understand the difficulties of navigating the legal route. Now Mr. Mukta, Nigeria has been running a deficit budget for many years, many years, with an increased level of borrowing. Nigerians kicked last year and this year against the borrowings of this last administration, to the point that Nigerians were worried that the country would suffer so much from the kind of borrowings that we saw in the last administration engaged in. But the night assembly then increased from the central bank from 5% to 15% limit. Now talk to us about how this message has hit you and the questions they raise. Well thank you. I think when it comes to borrowing, they are doing an administration like you said started where? In terms of borrowing, they were borrowing from specific projects, but later on it went a really weird way of what they're supposed to do. And at that time the debt management office kept saying that the debt to GDP was hokey. But remember people like us kept saying that it's not GDP you used to pay your debts, you actually use revenue and they kept using the GDP to deceive Nigeria. I'm surprised that the debt management office is now coming out to say we cannot borrow any longer because up till the time President Buhari was living, for my president Buhari was living, this debt management office kept saying that we're not at any risk. So for the first time they are now beginning to check the incoming administration, which is good. But I think it's coming too late because like you rightly pointed out the ways and the means is already increased and even before the outgoing administration, there have been some borrowing through the ways and the means that we shout that was too much on the high side. So definitely I don't think borrowing on itself or running a budget on deficit, even American budget on deficits, but then they are looking at their ability to be able to use those deficits to cover up in terms of projects that are revenue driven. But what we have in Nigeria is proven that they are politically driven, not projects that are revenue driven to pay off for some of these debts. Alright so when we're talking about these debts that the federal government borrowed, especially hurriedly towards determination of the last administrations, Nigerian kept asking what were these monies borrowed for? Where are they? Where are the things that they were borrowed for? Now in warning the federal government not to borrow anymore, they are advising for revenue to be increased, that they should target revenue increase. But then they are also talking about tax. They are looking to tax Nigerians more for that. How do you respond to that? Well, I don't think it's right for them to begin to tax Nigerians so much. They've started already with diesel, they said now if you buy diesel, you're going to pay 7.5 fat, which is, you know that diesel is mostly used by manufacturers and most of the industries in Nigeria. So definitely they are beginning to raise the cost of living. So goods and services that diesel dribbings are high and you know that almost every business in Nigeria is being run through diesel, even if you have the banks, if you have companies are so definitely that also is going to show like you rightly pointed out. But when it comes to tax, I still believe that the government need to come up with an innovative way of collecting tax because what we have now, the informal sector, which is the largest employer of labour in Nigeria, is still not taxed. What I mean the informal sector, you're talking about small businesses, you're talking about SMEs, you're talking about day-to-day businesses like the market for man. So those are the type of people that we should be looking at, how can we bring them into the tax next? If you can bring them into the tax next, you won't tax already tax. And to bring them into the tax next, there must be results that is showing as impacting on their businesses. They can be paying you tax and they are still providing power for themselves, they are still providing a lot of amenities for themselves. So definitely government need to come up with a way not to tax the already taxed. I always believe that government ways should be, how can we get the informal sector to pay tax? And the only way you can get that sector to pay tax is also by you beginning to do something for that sector so that they will be able to see the impact of what government is doing. They naturally want to pay tax so that they can see more development in those areas so that their businesses can improve. But what we have now is a government that is revenue-driven. And again, I keep saying in developed economy, tax has gone beyond for revenue. Tax is not being used as a means to grow the economy. So why are we not looking at that also to use tax to grow our economy? By bringing in multinationals, by bringing in service companies into this land and giving them tax bracket and by that they will provide employment and those people that provide employment for those people will pay tax and after sometime that same business will be into pay tax. So it will be a win-win situation for the government but as it stands now, I think government is more revenue-driven than tax to world. Still talking about revenue, improving revenue because they have no other way to go than to do that and also look into plugging some holes that should be plugged. Issues of personnel overload and capital expenditure, if not properly addressed, government may continue to borrow. And also talking about SMAs, you touched in a very, SMAs I discussed with a member of their association and they raised alarm over the fact that they are not receiving any kind of support from the government and I asked what about the bank of industry and he enumerated the challenges that they faced in getting any kind of loans from the bank of industry. Also there are some captains of industry who have complained that Monopoly has been given to some selected or anointed individual group which has killed a lot of the industries in this country. So if we're talking about improving revenue, what are the dynamics that must change? What are the dynamics that this federal government, this new sheriff in town, must change if revenue can be improved? You've said one thing, I think the first thing you need to look at the overhead cost, a bloated government civil service, they need to go back to the unauthorized reports, that report is still there. The former president said that we implement the unauthorized reports in detail and they never did anything about it. I think they should go back to the unauthorized reports and begin to look at agencies that are overlapping in each other and begin to see how they can bring those agencies together and then they do what we call right size and again but you know when it comes to right sizing we'll still come back to this revenue. If you are doing right sizing you must make sure you have the funds to be able to pay bloating order. You're saying they should leave the system, not keeping them out of the system for so long without paying, giving them their gratuity or what is to reduce them. Then when you talked about that they need to look at political appointees and the president were presently not seeing that yet. All previous presidents have had two senior special assistants, they are senior special assistants. I hope the current president will decide to just use one personal assistant whether I call it senior personal assistant or personal assistant or I'm talking about that of media and also they need to look at political appointees. How many special assistants do you have? I think the president has said in the right way by making you're just having 20 senior special assistants. So that is they need to look at that political appointees not using appointing so much of them and those when we talk about a special assistant, a special assistant, when a special assistant they now overbloat the civil service. Then in terms of revenue drive, I think the government should also look at look at the information sector and then also begin to cut the assesses in terms of look for, in terms of revenue drainage because a lot of revenue that are due to government are not coming to government because of the system that are in place so government need to improve upon their system in revenue drive so that we don't have somebody like what we have in the previous administration where they can general can be able to steal up to 120 years over 80 billion and yet there was no system to track it down until you finish stealing all this money. Those are revenue that are included to government and also government should also begin to look at what are they bringing to the table. What are they bringing to the table because again you need to bring something to the table to be able to attract revenue. Like I said, if the SMEs are complaining, why are you not looking at the SMEs? Why are you not giving some SMEs tax bracket because of the type of technology or because of the type of the type of product that they are selling? On the area of monopoly, I think sometimes I tend to, when people say some have been given monopoly. Let me give you an example. If you say dangutie have been given monopoly in the area of refined petroleum products. Remember that in a lot of companies, a lot of individuals, a lot of companies have been giving this license for years and none of them had the courage to even start a refinery. Yes, you might say that dangutie started the refinery and the federal government in turn supported him. So others should try and start their own and see whether the federal government will support them or not. Remember the only support that the federal government gave to dangutie has to do with the supply of effects at official rate for him because of the critical nature of what the project he was doing to the Nigerian economy. So other, you stop thinking about, oh in monopolize cement, we came to that at the point, but now people are not saying that again because there are other players and even in the refining of petroleum products. Remember that the governments still have other players now. Guwah refinery will still become on steam anytime soon. We have the modular refineries that have been giving license. They are now encouraged to begin to build the refinery because they realize that the government has finally deregulated that sector. Remember when dangutie was even building the refinery government was not even thinking of deregulation. What he was thinking of, look, if I bring my product, I know fully that some Nigerians will still buy from me and also if I'm not buying from Niger, I can export. He wasn't just thinking of Nigeria alone. So when they think of monopoly, sometimes I have a different view about that. Thank you. Well, clearly you do have a different view because those who do not share your view have their reasons also. But that's a matter for another day. But those, as I said, I am guessing and I believe beyond guessing that the new sheriff in town would have to do something to create the enabling environment for all investors to play fairly and win squarely so that if we're going to improve our revenue, the tax burden on Nigerians will not be so much because Nigerians are already crying to the high heavens. Well, what about the extant law, the latest legislation on government borrowing, especially the fiscal responsibility act 2007 as it relates to means and ways, advances in order to moderate the growth rate of public debt. I'm going back to this because this is one of the things that was raised by the DMO saying that this federal government should respect that. But we didn't see that respected by the last administration. Do you think that the last administration may have laid a very bad precedent that this administration may follow or do you see this administration respecting the law? The last administration laid a very bad precedent. We all know they did that and we all know why they did that. And again, remember, they also went through the legislations. So increased the ways and means by 15%. Even if it's yet to be signed into the law, we don't know whether that was passed. That was signed into law by President Buhari before he left office. So they've set a bad precedent. And it's good that institutions appeal to protect the nation. But what we had last time, we saw a CBM that was more or less like a like a parastatum under the presidency. And then we saw a debt management office that was toothless. Yeah, this is the first time that the debt management office seems to be having his voice heard in the area of borrowing because it seems to support every aspect of what the government said as regard borrowing up to yesterday that they made those statements. So for me, maybe we are going into a new dispensation whereby they're beginning to look at that and beginning to say, look, we don't have to go this route any longer. We have to just think differently. Maybe, maybe. But outside of that, I think the previous administration were copyable in the way they borrowed, especially like I said, they started well. I must give it to them initially. They were borrowing for infrastructures. They were, every borrowing was tied to specific projects, especially the Chinese, the loans that were coming from China. But after some time, they just saw that as one of the most convenient way of borrowing and getting money. And they just kept borrowing until the Chinese loan dried up. Because for three years now, the Chinese government refused to give us any loan. And that is why they set up. Okay, so just before we go, why do you think the DMO finally found your voice? I mean, I don't know. Maybe it's because of the policy of the current administration. It seems to be driving a policy of growing the economy. And the DMO wants to be part of that group. So they need to advise the president accordingly. For me, that's the way I think. Because outside of that, I don't see anything. Because the current, why the DMO is saying that President Polatini is in Paris at the moment in a financial summit. And what he's trying to do there is to attract investors into Nigeria. He should tell them, but look, these are the policies that have been made with that driving towards this. And that's so you can come into Nigeria. So, but the dead management of the map is saying that in case they're offering you because of your reform, please reject it. I'm sure that's why they are raising their voice at the moment. Outside of that, I don't see any reason for them raising their voice. All right. Thank you so much, Mr. Muhtar Mohammed. Thank you for your time and insight. My pleasure. Thank you. The breakfast continues. We'll be back in a moment with a very second hot topic. Stay with us.