 Welcome back. It's still business inside and plus TV Africa and right now we turn our focus on Nigeria's fiscal policy and of course the issue of debt and debt servicing and all of that. Nigeria country director of the one campaign Stanley Achanu joins me now to discuss on their recently released report, Tag Fiscal Reform in Nigeria, Navigating Nigeria's Debt Burden whilst protecting social spending. Thank you so much Stanley for joining me on Business Insight. Thank you for everything. Okay before I get into my bullet per bullet question let me just get an overview of the reports that you just released. Also as you know Nigeria is facing fiscal crisis as it were. The finances are in really very bad shape and we thought that the new government was coming and it was very important for us to to critically look at what the government would be heriting in terms of fiscal space and the ability to navigate and meet all of the concrete promises that were made. A lot of times in the government's self-hope especially in the government self-hope and I make a lot of assumptions when they're assuming office and wanted to be sure that there was clarity in terms of the crisis that they were going to face and how they were going to be managed how they were going to finance some of the campaign promises. So with Debt in Nigeria's fiscal space our revenue is a tatters we have not our revenue growth has been very terrible. Our borrowing has been over the roof. You know borrowing is not the problem it's how we have utilized that borrowing to improve our ability to generate more resources hasn't been very progressive and we thought that there were three components of things that we wanted the government to bear well. One is that the cost of our borrowing was very high. The sources of our borrowing was trying of our ability to attract those was trying. Our utilization of the internal mechanisms to borrow in Nigeria was also being abused. Things like the ways and means by the CBN was who were completely ignoring the law or breaking the law as it were and wanted the government to be aware of these challenges and not one problem to repeat the same mistake they are going governments made in terms of managing our books. So broadly this is what we hope to capture but also to then make specific recommendations on what we think can be done differently and new approaches that the government can use. It wasn't just about highlighting the problem but what also we need to do differently to tackle this challenge. That would probably what we wanted to do with this report. All right fine let's just try and get to the specifics and see who can just push out some of the highlights that you actually represented there. Now from the report just released it states that 91% of Nigeria's 4.6 trillion revenues in 2021 went towards servicing its debt up from 29% in 2014. That left just 9% or about 278 billion to finance the entire budget. I want you to break this down for us and what it actually means. So first of all you must understand that our debt has tripled between 2014 and 2021. And we use 2021 because that's where we can find the existing data. The situation is even more that when you look at 2022 but we stopped 2021 because there was a complete information with respect to that. And one of the numbers true was that for every 100 Naira different governments and they spend 91 Naira servicing debt that's in simple terms. So if your salary is 100 Naira you call it 100 Naira at the end of the month you use that to pay people that you are owed to service the cost of the money you have borrowed. Then you have Naira to pay rent, to eat, to transport yourself to work, to pay your staff, to take care of all of this and as you can see that is not possible. So what I meant was that while the cost of servicing our debt has grown, our ability to meet obligations in Nigeria the basic thing that the government is charged to do, our ability to meet those obligations went to zero. What did the government do? You let our community know that to meet your obligations to speak to them. Pay a civil servant, run government, and then deliver public visa services things like investing in education, health, transportation, infrastructure. So think about the space to meet that investment was completely narrowed out because the cost of borrowing was quite high. So debt servicing was eating up government revenue completely. Okay let's talk about revenue growth, specifically what you reported between 20 voting and 2021. You said Nigeria's revenue growth has not kept pace with the amount of debt being taken on. Between those years, that's in that seven years, Nigeria's revenue grew by 7% per year on average from about 3.2 trillion Naira to 4.6 trillion Naira. Now debt stocks rose by 20% per year on average and debt service increased by 24%. I can actually see the margin per year on average but how do we actually re-go out of this? How do we begin to drive our revenue generation in the country? So one of the critical things to understand is that all you said that our major revenue source for the long rest of time, there was a lot of conversation around diversification. But that diversification has not in real terms amounted to growth in revenue. So I'll give you a good example. Our oil revenue in 2014 was in 2014 was about 12 billion dollars. We earned about 12 billion dollars in 2014 from oil and oil. In 2021, we earned 2.5 billion dollars, right? In terms of our budget, you need to see the budget has gone to 9 trillion Naira in 2021. So our revenue compared to our expenditure wasn't much enough and it was growing in the opposite direction and debt was growing, our revenue was growing in the opposite direction. So one of the key challenges is that our domestic revenue mobilization strategy hasn't just been at pace with our needs, it hasn't been at pace with our borrowing as well. So we were borrowing money, we were not making the right investment to generate a new wealth revenue. But how do you generate revenue? You need Nigerians, you need Nigerians to work and it is Nigerians you put to work and they pay taxes that amount to revenue. So it was a lose-go zone situation for everyone because we were not making the right investment, we were not making the job opportunities for Nigerians. We were raising enough revenue, we were bringing more people into the fast bracket and we were not in a real sense a diversifying our source of revenue. All you remain is a quick source of revenue from Nigeria and as you can see from the report, going from 12 billion in 2014 for oil revenue to 2.5 billion in 2021 is a drastic reduction. It's almost a 75% reduction in what you end. Why did we find ourselves in this situation? Yes, oil prices were fluctuating. When you compare oil prices in 2014 versus in 2021, what's the most part of the last four, five years? Average oil price has been between 60 and 70 dollars per barrel. So what was the challenge with our oil revenue? It was that our production level had permitted because the investing environment for the oil companies was due to make investments. There was a huge amount of oil tax that was going on. Some days we were losing over a billion dollars of revenue from oil and I know at some point some of the oil companies cried out in terms of the oil and we could secure our pipeline, we could secure our major revenue source which was oil. So we left a lot of things to chance under in the last eight years that have now resulted in the drastic fall in our revenue. How did the government end up with this challenge? They fell into borrowing, if I will use the word, this is not heavily on borrowing and when the source of borrowing dried up, government then resorted to CBA financing. That was why oil was very pronounced. CBA was willing to pay money to how to government to bridge the oil prices earlier than now. Let me just translate in two more questions so we can quickly wrap up. Nigeria consistently generates less actual revenue and pays more actual debt service than projected. I want to understand why this is. Is it that we have issues with our budget processing or what exactly is the issue? So our budget has not been very realistic. It has not matched the actual revenue with the expect that other enormous circumstance, you look at the numbers from the previous year, especially in terms of how much you earn and use that to make projection of what you should spend following year. I think that the budget has been brought into review by need, not by what is available. So government continued to project based on what is needed without considering what was available to be spent. So that was a major challenge with our budget. So what I meant is that deficit continued to grow. Our budget, our fiscal deficit grew from $800 billion in 2014 to $6.4 trillion in 2021. And it is higher in 2021 than what is available. I am almost certain that we will be hitting $7 trillion in budget deficit. For the budget of $10 trillion, we are only able to finance $3 trillion. So it was really a question of matching your revenue with your budget projections. Okay, Stanley, very quickly now, I just, let me just see if I can do a double-barreled one. In the wake of a high interest rate and recent Naira float, what hole has it taken on our debt stock? And what should we be doing right now on our social spending? Of course, our debt will continue to rise because most of them are dollar dominated debt. So we're expected to pay even higher costs for debt. What that means is that our already terrible social spending, it will be worse if government is not very strategic. And it's important to look at the normal. In 2021, our spending on things like agriculture was 2.6% of our total budget. Education was 6% of the total budget we spent on education. Things like health got about 4% or 5% there about. So our spending on critical sectors that directly impact Nigeria is already low in under the current situation. So by the devaluation of Naira, it means that our ability to move with investments in these sectors will take a bit of creativity on the part of government to find a way to continue to make this sort of investment. I will admit, especially the recommendation that the government needs to give the immediate feedback with financing these bills, using an innovative approach to find sources of borrowing that does not limit the ability to tackle this challenge. All right. We must say a very big thank you to you. I happen to speak with Stanley Achondo, Nigeria Country Director of the One Campaign. I would do appreciate your time looking at Nigeria's fiscal reforms and navigating through all of our debt burden and all. Thank you so much, Stanley. Thank you for having me. It is indeed my pleasure. All right. As we go on the show this morning, I will just leave you with some useful tips on how to write an informal business proposal if you're actually looking at writing once. And I'm sure this will help out. I'll see you again tomorrow. My name is Justin Acadonia. Many thanks for watching. Writing an informal proposal. The thought of writing a proposal overwhelms many people. But the task does not have to be daunting. Even my proposals are written when people need to ask permission to make a purchase, undertake a project, or write a paper. This type of proposal is a way of persuasively putting forth an idea and asking for action to be taking on that idea. When writing a proposal, consider who will read the proposal and what that person may or may not already know about what you are proposing. Follow these steps when writing a proposal. 1. State your purpose. Do this clearly and concisely so that the reader knows immediately why you are writing. 2. Give some background information. Explain why you are proposing your suggestion so that the reader has a better understanding of the problem. 3. State a solution to the problem. This is where you give specifics about your suggestion. 4. Show costs. Lay out any costs that will be involved. 5. Conclusion. Wrap it up by restating the problem and the proposed solution.