THE NEW ROAD MAP TO ECONOMIC

REFORMS
Protocol

It is my pleasure to welcome you today to this briefing on the New

Road Map.
You are aware that economic reforms were recently carried out in
Nigeria to improve and strengthen our growth potentials. This has
resulted in achieving some level of macroeconomic stability and
confidence in the economy. We, however, intend to accelerate the
economic transformation by sustaining the macroeconomic
stability, based on the framework of our key economic reform
values.

These values underlying the reforms are the same ones

espoused by Mr. President as the guiding principles of his
Administration, namely:
• Upholding the Constitution and the rule of law and
• Respect for due process and
• Integrity, Accountability and Transparency
1. Accelerating the Institutional Reforms
While it is acknowledged that the Federal Ministry of Finance is
one of the pilot ministries under the first phase of the public sector
reforms implementation, the evidence on the ground suggests the
need to broaden and intensify the reform and restructuring, both
within the Ministry and in a number of its agencies.

1.1 In a number of its Departments and Agencies there is a

fundamental lack of focus and strategic direction. A few examples
will help to illustrate the point.
• the Economic Research and Project Management (ERPM)
Department seems to have drifted from its core mandate of
research and planning to supervision of the Ministry’s capital
projects, a function for which it lacks the necessary
expertise. As a result, the quality of the research reports
produced by the Department leaves much to be desired.

• the Home Finance Department (HFD), in addition to its

many critical functions, is still granting approvals to
government MDAs for foreign exchange transactions. In an
era where foreign exchange transactions have been virtually

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 fully deregulated, such approvals are completely
anachronistic and, therefore unnecessary.

• the National Board for Community Banks is still around,

somewhere under the Ministry, ostensibly supervising the
Community Banks, long after the CBN, where such
responsibility squarely rests, has replaced community banks
with microfinance banks.

• A Budget Monitoring Department exists in the Ministry. It

currently, however, has only one functional Division, which
is somehow, still performing the functions of debt servicing
and monitoring, which have since been effectively taken
over by the Debt Management Office (DMO), itself being
supervised by the Ministry. There is the need, furthermore,
to reconcile the functions of the Budget Monitoring
Department with similar functions performed by other MDAs
of government, such as the BMPIU (now Bureau for Public
Procurement), the National Planning Commission and NEIC,
so as to avoid unnecessary duplication.

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1.2 Thus, we intend to undertake a major restructuring of the
Ministry, in order to avoid the overlapping of functions across
Departments, eliminate outdated functions and redundancies and
refocus the Departments and Agencies towards their core
functions. The reform will also address the glaring problem of
inadequate IT infrastructure knowledge and functionality. We also
intend to resolve the serious delay in the completion of the
second phase of the Ministry’s Headquarters project. The
construction is already about 18 months behind schedule due,
essentially to serious disagreement between the main contractor
and the consultants to the project.
Working with other relevant agencies in the reform agenda also,
such as the Public Sector Reform Bureau, we intend to champion
reforms not only in our Ministry but also in the wider, public sector
as well.

2.0 Budget and Debt Management

We are all aware of the role and great achievements of the DMO,
in not only the recent exit of Nigeria from its Paris and London
Clubs debts, but also in the restructuring of the country’s internal
debts. In the latter regard, the secondary market for FGN bonds,

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which was reactivated about 18 months ago, is now very active,
and helping to power the rapid development of the Nigerian
capital market. We intend to take the reforms to a higher level
here by
a) taking advantage of the bond market in particular, and the
capital market in general, to raise the required funding for
many key infrastructural projects, such as roads, railways,
etc.

b) encouraging the States to initiate and pass their own Fiscal

Responsibility laws.

c) giving the states technical advice and assistance in setting

up their own debt management offices

d) setting up of a standard, IT, platform for effective and timely

linkage with all the relevant agencies on the Federal, States
and Local Governments loans. In this connection, the DMO
will work closely with the Federal Ministry of Finance (FMF)
and the CBN, to develop a concrete data base for the
management of the subnational debt. A situation where

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 some of the newly elected State Governors are running to
the FMF and DMO to find out the details of why deductions
are being made from their statutory allocations, emphasizes
the need for such a data base and better record keeping by
the subnational governments.

We are also taking urgent steps, working jointly with the Revenue
Mobilisation Allocation and Fiscal Commission (RMAFC) to sort
out, once and for all, the unresolved issue of the share of each
state in the repaid Paris Club debt owed by Nigeria and

2.1 Another critical area requiring urgent attention is the

submission of both the 2007 Revised Budget and the proposed
2008 Budget to the National Assembly (NA) for its approval. You
would recall that the 2007 Federal Government Budget had to be
reviewed, largely as a result of the implementation of the
consolidated salary structure by the Executive, the Judiciary and
the Legislature. Two bills have therefore been forwarded by Mr.
President to the NA for its consideration and approval as follows
the:
i. 2007 Budget Amendment Bill, and

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 ii. 2007 Supplementary Appropriation Bill

Simultaneously, work on the 2008 Federal Government Budget is

at an advanced stage, in spite of the fact that the work started
about five months behind that of the 2007 Budget, due to the
change of Administration and the late appointment of Ministers. In
spite of the late start, however, we have a very ambitious 2008
Budget Programme that proposes to submit the Budget to the
National Assembly for its consideration by October 8, 2007, a few
days earlier than the October 14, 2006 date when the 2007
Budget was submitted to the National Assembly.

2.2 We have also introduced a number of innovations in the

Budget process that are designed to create greater participation
and buy-in by the key stakeholders, especially the National
Assembly and the States and Local Governments, in addition to
the wider, Nigerian public. One such key innovation is greater
consultation with the key stakeholders in the earlier, critical,
planning stages of the Budget. You would recall that, in the past,
both the National Assembly and the other tiers of government
have complained often that the Budget the Federal Government

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presents to them is almost a “fait accompli”, with most of the key
elements of the Budget, such as the Benchmark crude oil price
already determined.

2.3 For the 2008 Budget the new, improved process of

consultation involves presenting an exposure draft of the fiscal
strategy paper for 2008 – 2010, first to the Federal Executive
Council, then to the National Assembly, then to the States and
Local Governments for their information and inputs, before its
presentation to the wider Nigerian public. The draft fiscal strategy
paper has been prepared and presented already to the Federal
Executive Council at its meeting on August 15, 2007. We are
awaiting the resumption of the National Assembly from its recess,
for us to take the consultation and participation to their next stage.

2.4 A critical issue here also is the periodic preparation and

submission to the OAGF of their accounts by all Ministries,
Departments and Agencies (MDAs) of Government, especially at
the end of each financial year. Current regulations require that
such final accounts should be prepared and submitted to the
OAGF, not later than March 31, following the end of each financial

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year. The current situation is that most MDAs are at least six
months behind. While it is an improvement over the past, when
some of the MDAs were several years behind, we intend to
ensure that all MDAs comply with the statutory requirement of
submitting their final accounts within three months of the end of
each financial year. This, along with other periodic (quarterly)
reporting, will ensure greater accountability in Government
accounts and assist the Office of the Auditor General of the
Federation in performing its audit function better and reporting to
the National Assembly to enable the latter discharge its oversight
responsibility.

2.5 In order to undertake the above functions and its other, more
routine, functions more properly also, a comprehensive
programme of equipping the OAGF with the appropriate IT
infrastructure is being put in place.

3.0 Enhancing Revenue Collection

3.1 There will be continued reform of the Nigerian tax system in
order to ensure that it is at par with the best in the world. In this
regard a number of specific and general reform measures will be

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adopted. Efforts will continue also, to get the National Assembly
to encapsulate such reforms by reviewing existing legislation or
enacting new ones, where such legislation is not existent.

3.2 Steps are being taken also to improve the coordination

between the FIRS and the relevant Departments of the Ministry,
especially the Revenue and Fiscal Departments. This will help to
avoid the seeming confusion where one arm of the Ministry is
taking some fundamental action that has great potential to
embarrass, not only the Ministry alone but the Federal
Government as a whole, without the other arm even knowing
about it. Such recent, uncoordinated actions include the increase
in the VAT, from 5% to 10%, which had to be reversed, and the
frequent waivers and tax exemptions being granted, of which we
say more below. Other important strategic issues under the radar
of the FIRS include:

i. the need for a central agency for tax collection

ii. improving the structure and administration of the
property tax in Nigeria
iii. review of the VAT, in line with ECOWAS protocols and

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 iv. the need for an overall, simpler tax structure for
Nigeria

3.3 The NCS will receive great attention, in order to reform it for
greater efficiency and accountability. The reform agenda currently
being pursued by the NCS will be reviewed and overhauled. In
addition the following issues have been identified for action or
greater attention.
a) the need to develop clearer policies and guidelines on Free
Trade Zones (FTZs) and Export Processing Zones (EPZs).
Much of the current confusion is clearly avoidable. For
example many of the companies that set up operations in
the Calabar EPZ are reported to have relocated out of the
zone, while only one company is currently in operation in the
Tinapa FTZ, due to the problem of interpretation of the
concession granted under the Zone. There are also many
other EPZs and FTZs across the country at various stages
of development, whose progress will be accelerated by a
clearer definition of policy and operational guidelines.

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b) Another area receiving urgent attention is the publication
and dissemination of a comprehensive tariff document,
within the context of the overall reform of the NCS. This is
especially important, for greater transparency and
accountability in the operations of the NCS. It is very
essential that all participants in the assessment and
payment of customs and excise tariffs know clearly and
transparently what the rates and any exceptions are. This
will avoid unnecessary delays and the creation of toll gates
for corruption and other abuses.

c) The most critical objective in the reform of the NCS,

however, is the reduction of the delay in the clearing of
goods through the Nigerian ports of entry. Currently it takes
an average of two weeks to clear goods through the
Nigerian ports. The procedure is so cumbersome and
frustrating that it engenders two events: The first is that it
forces even the legitimate importer either to divert his
imports to neighboring countries’ ports, or to succumb to
unholy corrupt practices, in order to clear his goods. The
second is that it creates a fertile ground for the illegitimate

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 and or corrupt importer to undertake brisk business, at great
cost to the Nigerian economy.

3.4 Arrangements are therefore on, in consultation and

conjunction with other key stakeholders engaged in the Nigerian
ports of entry, to reduce this delay considerably. The target is to
reduce the average clearing period from two weeks to two days. It
is tough, but with the support and cooperation of all other
stakeholders, it can be done. If other countries can get goods
cleared through their ports in as little as six hours, Nigeria should
be able to do it in 48 hours.

3.5 It is a well accepted fact that a good tax system can be a

major pillar of support for democracy. It can be posited, for
example that one reason why the electorate has been so
non-chalant in the face of the apparent fiscal mismanagement by
some public officials, is the weakness in the personal income tax
system, where the electorate does not directly feel the pinch of
such transgressions. Considerable attention will be paid therefore
to a broad range of efforts to improve tax administration all over
the country, including the establishment of an efficient,

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computerized system of tax payer registration, working with other
relevant agencies.

4. Sustaining the Capital Market Reforms

It is important to acknowledge the growing confidence in the
Nigerian capital market arising from the recent reforms
undertaken by Nigeria, including the banking sector consolidation
and the repayment of the London and Paris Clubs debts. This has
led to a substantial portfolio investment inflow into the Nigerian
capital market. In 2000, the foreign portfolio investment inflow into
the market stood at N51.1 billion compared with N1.0 billion in
1999. Since then the market has witnessed a tremendous
increase in the inflow of funds from overseas, with a record high
of N375.9 billion in 2005 and N117.2 billion in 2006. In this regard,
it is very important to continue with measures that will strengthen
and sustain confidence in the market. It is equally important to
provide safeguards that will minimize the risk of the kind of
meltdowns that have happened in the capital markets of some
emerging market countries and the markets of some more
developed countries. Such strengthening will be assisted by the
following measures:

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 a) the plan to broaden and deepen the market by, among
others, the use of more instruments. In this regard the SEC
will work closely with the DMO in the development of the
bond market and its greater use by the Federal, States and
Local Governments, as well as by corporates.

b) Developing stronger mechanisms to check insider dealings

and other forms of market abuse

c) Creating greater public awareness and utilization, of the

capital market, especially the Abuja Commodities and
Securities Exchange and

d) The SEC will to liaise with other key stakeholders to try to

reduce further the cost of doing business in the Nigerian
capital market

4.1 The main focus of Ministerial intervention for the IST is to

assist it to access sources of funding other than annual grants
through the Federal Government Budget. This is in recognition of

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the great potential for the IST in resolving disputes within the
capital market and, therefore, enhancing investor and other
stakeholders confidence in, and development of the market.

4.2 Another area of attention already broached upon is the

effort that we will
make to encourage the greater use of the capital market by the
Federal, States and Local Governments for long-term projects
financing. This avenue has a number of key advantages,
including:
• helping to expand the depth and breadth of the market
• achieving greater transparency in public spending
• reducing avenues for the flouting of limits set for
borrowing by the State and Local Governments from the
money market and
• being less inflationary

5. Insurance Sector Reform

Urgent steps are being taken to sort out the mess that was
created, as a result of the mishandling of the recapitalization and
consolidation programme for the Nigerian insurance industry. In

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the next few weeks details will be released of the companies in
the industry that have met successfully the requirements of the
recapitalization and consolidation programme. Details of the
reorganization of NAICOM and other far reaching reforms to do
with the industry are being worked on with the newly-appointed
Commissioner for Insurance (NAICOM) and will be released in
the next few weeks.

6. Economic Management Team (EMT)

You are probably aware that the EMT has been reconstituted by
Mr. President with the following membership
1. Minister of Finance -Chairman
2. Minister of National Planning -Vice Chairman
3. Minister of State, Finance -Member
4. Minister of State, Petroleum -Member
5. Honorary Strategic Adviser to the President on Energy -
Member
6. Economic Adviser to the President -Member
7. Deputy Governor (Economic Policy, CBN) -Member
8. Special Assistant to the President (Power) -Member
9. Special Assistant to the President (Petroleum) -Member

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 10. Chairman FIRS -Member
11. Director of Research & Statistics (CBN)-Member
Technical Support
1. Group Managing Director, NNPC
2. Director-General, DMO
3. Accountant –General of the Federation
The President has also approved that the membership of the EMT
be boosted by the inclusion of the private sector. I am therefore
happy to announce the inclusion of the Nigeria Economic Summit
Group and the Nigerian Economic Society in the EMT.

The EMT is being refocused into essentially a think tank, as the

President does not want himself, or anybody else, dabbling into
the day to day management of the MDAs. An immediate
assignment of the EMT is to take the President’s 7-point Agenda
and turn it into a specific, measurable, actionable and time bound
programme, which will be sold to all the key stakeholders in the
Nigerian Project. This will be pursued, working with other key
stakeholders in the cntext of the Vision20.20.20 which, ultimately,
after appropriate consultation, participation and buy-in by all the

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relevant stakeholders will become Nigeria’s, rather than Umar
Musa Yar’adua’s, Programme.

7. Another key objective is the pursuit of the establishment of a

strategic Oil Revenue Reserve Fund aimed at reducing the
volatility of government revenues and expenditure and encourage
saving for the rainy day. Efforts will be made to develop an
appropriate framework and work with all other key stakeholders to
get the necessary legislation passed.

8. Efforts are on also, to see to the signing by Mr. President of

the Fiscal Responsibility Bill, recently passed by the National
Assembly. This is being delayed by the need for Mr. President to
undertake some necessary consultation with the States
Governors. The President, in consulting the States Governors, will
urge them to endeavour to get their State Assemblies pass similar
legislation, so as to prevent the kind of scandals that are being
revealed by the EFCC’s investigation of some of the retired State
Governors. Such a passage will greatly enhance overall fiscal
responsibility in the federation and enhance the management of
the economy.

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9. We will also, working with other relevant stakeholders such
as the RMAFC, and the other tiers of government, embark on a
major overhaul of the monthly revenue allocation mechanism. It is
obvious that the current arrangement is flawed in many respects.
It has bred a lot of suspicion among the federating units. What
should be a highly technical problem and fairly easy to resolve
has been highly politicized. We plan to demonstrate greater
transparency in the way the accounts are kept and reported.
There will also be greater consultation and confidence building
among not only the three tiers of government, but also with the
RMAFC. We hope to turn the process, using IT and other
technical support, from a political jamboree to a very efficient,
transparent and timeous process that all the key stakeholders will
have great confidence and trust in.

10. In the area of relationship with multilateral and other

international organizations, we continue to thrive to ensure
outcomes that are in the best interest of Nigeria. More specifically,
• An IMF delegation is, infact, currently in the country on
the fourth and final evaluation of the country’s

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 implementation of its own reform programme, under the
Policy Support Instrument (PSI). It is envisaged that the
fourth review of the PSI will go fairly well.

• We are working closely also with other countries

especially those in the African Consultative Group of the
IMF, to ensure that developing countries generally and
African countries in particular have greater voice, voting
power and role to play in the affairs of the IMF.

• We also plan to enter into a more constructive

engagements with other development partners, such as
the World Bank, African Development Bank,
Afreximbank, Islamic Development Bank, etc, in order to
pursue projects, on behalf of the Federal and State
governments geared towards poverty elimination,
improving literacy, reducing child mortality and other
similar socio-economic objectives.

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11. While efforts will be made to improve tax collection, even
more urgent attention will be paid to plugging a number of
sources of revenue leakages that seem to have become of
recent, a great source of corruption, especially the large number
of waivers and exemptions that were granted, especially over the
last three years. The issue has raised such great concern,
moreover, that the President, Alhaji Umar Musa Yar’adua has
directed that the issuance of any waivers or exemptions from the
payment of any taxes, duties or other tariffs be suspended. The
granting of any such new waivers is therefore suspended, with
effect from today until further notice. Furthermore the President
has approved the appointment of credible accounting firms to
audit all the waivers and exemptions issued so far, to ascertain
their validity and the extent to which the beneficiaries of such
waivers and exemptions are complying with the terms of the
waivers. All individuals, companies or any other organizations that
are the beneficiaries of these exemptions and waivers are
therefore expected to respond promptly to the public
announcement that will soon be made by the appointed
accounting firms.

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12. I will like to conclude this press briefing by reiterating the
readiness of the Federal Ministry of Finance to continue to
provide prompt, efficient and effective service to our numerous
stakeholders, namely the MDAs under the Federal Government,
the National Assembly, the Judiciary, the State and Local
Governments, the multilateral institutions and other international
organizations and the wider Nigerian public.

13. We also give you our commitment that we will continue to

do so in the spirit of service, humility, transparency, accountability
and cooperation as amply demonstrated by Mr. President, Alhaji
Umar Musa Yar’adua.

14. It is precisely in that spirit that the Minister of State and I

hereby make public our assets declaration as submitted to the
Code of Conduct Bureau prior to our confirmation as Ministers of
the Federal Republic

I thank you very much for your kind attention.

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