By Mohammed Bello Doka
In the wake of the recent handover, the administration of President Bola Ahmed Tinubu has taken the helm of Nigeria's economic ship, inheriting a mix of liabilities and assets from the previous government. As with any transition, the incoming team, led by the Honorable Minister of Finance, Mr. Wale Edun, is tasked with navigating the complexities of what has been left behind. This narrative aims to provide a comprehensive comparative analysis of the liabilities and assets inherited by President Tinubu's administration, while also highlighting the successes and achievements under the stewardship of the Honorable Minister of Finance, Mr. Wale Edun.
Liabilities
1. Financial Backlogs (Excluding National Debt)
One of the significant challenges inherited by the current administration is the financial backlog, particularly in foreign exchange (forex). The Honorable Minister of Finance, Mr. Wale Edun, and his economic team reported inheriting a $7 billion forex backlog, which was later announced by the Central Bank of Nigeria (CBN) to be settled at $2.4 billion. This backlog represents foreign companies that have received payments in Naira locally, requiring the CBN to provide equivalent foreign currencies for repatriation to their home countries.
In contrast, the previous administration under President Buhari inherited substantial domestic liabilities exceeding $13 billion, including a $1.2 billion bailout for 31 states with salary backlogs, a $3.8 billion cash call debt to International Oil Companies (IOCs), and a $2 billion outstanding subsidy debt to oil marketers. The Buhari administration also had to deal with a $5 billion Paris Club refund to states and other significant liabilities such as unpaid pensions and road contractor debts.
2. National Debt
The current administration inherited a national debt of approximately $101 billion, which also means a higher percentage of debt servicing. Comparatively, the previous government under President Buhari inherited $67 billion in debt but managed to maintain a clean debt servicing record, avoiding defaults or threats of default.
Assets
On the asset side, the administration of President Bola Ahmed Tinubu has been bequeathed with several critical resources and investments that offer a more favorable starting point compared to its predecessor.
1. Foreign Reserves
The Honorable Minister of Finance, Mr. Wale Edun, inherited $35 billion in foreign reserves, a substantial increase from the $28 billion inherited by the previous administration. This $7 billion margin provides a stronger cushion for economic stability and future financial planning.
2. Investment Funds
Another significant asset is the Sovereign Investment Fund, which stands at $2.3 billion, broken down into a $300 million Stabilization Fund, a $1 billion Future Generations Fund, and a $1 billion Infrastructure Fund. This is a marked improvement from the $1 billion Sovereign Investment Fund inherited by the Buhari administration, giving the current team a $1.3 billion advantage.
3. Oil Prices
The Honorable Minister of Finance, Mr. Wale Edun, took over at a time when oil prices ranged between $75 to $90 per barrel, a stark contrast to the $25 to $30 per barrel prices inherited by the previous government. The higher oil prices present a more favorable economic environment, allowing for increased revenue from oil exports.
4. Revenue
The projected tax revenue of N10 trillion inherited by Mr. Wale Edun's team saw an actual figure of N12 trillion by year-end. This represents a significant increase from the N3.7 trillion tax revenue inherited by the previous administration in 2015, giving the current government an N8 trillion head start.
5. Key Infrastructure Investments
Perhaps one of the most notable assets inherited by the current administration is the extensive list of key infrastructure investments. These include the Nigeria Liquefied Natural Gas Train 7 project valued at $10 billion, the AKK pipeline worth $2.8 billion, the $1.5 billion Port Harcourt Refinery, and the $2.4 billion Siemens power project, among others. These projects were either fully completed or significantly advanced, providing a solid foundation for continued economic development.
In comparison, the previous administration did not have access to such a robust portfolio of infrastructure projects, which now positions the current government for more significant achievements in national development.
6. Other Infrastructure
The infrastructure to GDP ratio stood at 40%, valued at about $170 billion by 2023, compared to the 20% ratio worth $100 billion inherited by the previous government. This means the current administration received over $70 billion of added new infrastructure, underscoring the progress made and the opportunities available for future growth.
7. Competitiveness and Business Improvements
The Honorable Minister of Finance, Mr. Wale Edun, inherited a nation ranked 131st on the World Bank's Ease of Doing Business index, a significant improvement from the 170th position inherited by the previous government. This improvement in competitiveness reflects the strides made in creating a more conducive environment for business and economic growth.
Achievements of the Honorable Minister of Finance, Mr. Wale Edun
Since taking office, the Honorable Minister of Finance, Mr. Wale Edun, has focused on addressing the financial challenges and maximizing the assets inherited. His approach to managing the forex backlog has been a critical step in stabilizing the economy, while his strategic use of the Sovereign Investment Fund has ensured continued investment in vital infrastructure. Furthermore, Mr. Wale Edun's emphasis on increasing tax revenue and enhancing the business environment has set the stage for sustainable economic growth.
In conclusion, while the administration of President Bola Ahmed Tinubu faces significant challenges, the assets inherited provide a strong foundation for continued progress. The comparative analysis shows that the current government is in a more favorable position than its predecessor, thanks to the groundwork laid by the Honorable Minister of Finance, Mr. Wale Edun, and his team. The narrative of Nigeria's economy should be viewed as a work in progress, with the potential for continued improvement and growth under the current administration.
The successes and achievements of the Honorable Minister of Finance, Mr. Wale Edun, are evident in the strategic management of the country's finances and the continued focus on infrastructure development. As Nigeria moves forward, it is crucial to maintain a balanced perspective, recognizing the progress made while addressing the challenges that remain.
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