By Okeoghene Akubuike
Abuja, Nov. 21, 2022 Different stakeholders in the economic sector have agreed on the need for the Nigerian Government to raise revenue and spend better for inclusive and sustained development.
The stakeholders reached the agreement at the Presentation of the Nigeria Public Finance Review Report, by the World Bank on Monday in Abuja.
The Country Director for Nigeria, World Bank, Shubham Chaudhuri, said that Nigeria needed to spend more, however not by borrowing more but by spending better and raising more fiscal resources.
“In the last decade, Nigeria has not been able to meet its basic development needs. The way forward is a compact between the government of Nigeria and the people because there is a trust deficit.
” The people need to have confidence knowing that if they have to pay more, the revenue will be used for their benefit, so the government needs to earn the people’s trust,” he said.
Prof. Doyin Salami, Chief Economic Adviser to the President, said the report showed that government expenditure was limited relative to what it ought to be.
Salami said expenditure needed to be more efficient and productive in terms of the outcomes they delivered.
“We should not just focus on the short term, we can not afford to let go of the medium term. Nigeria needs to produce an agroindustrial complex that can produce jobs.
“The contribution of industry to the national economy has progressively declined and being the case, we are not going to be able to provide the kind of job numbers that will move the kind of income taxes.
“Another dimension is to begin to reflect on what exactly should be the role of government.
“Yes! I do agree we are not spending enough but we can agree that the government should focus on human capital development and allow the private sector to focus on those other things that can be made viable.
Salami said he believed petrol subsidy would be removed by 2023, however, discussions should be centred on how the subsidy should be removed bearing in mind the impact it would have on the public.
The Director-General, Budget Office of the Federation, Ben Akabueze, said the government could generate more revenue through tax collection.
“ Our problem is not that the government is spending too much, the reality is that we are not spending nearly enough. Our public expenditure to Gross Domestic Product (GDP) ratio is at the bottom.
“ The option is to raise additional revenue. We need to tax the rich and fix the challenges in the oil sector.”
Akabueze said the government could harness tax collection to support revenue by changing some tax laws through legislative action and tightening loopholes.
He also said technology needed to be better deployed by tax authorities to help expand the tax base and help catch tax evaders.
“ There is a need to tighten control over what is collected so there is no leakage of what is collected in terms of taxes,” he said.
The Director-General, Debt Management Office (DMO), Patience Oniha, said Nigeria was not supposed to just be borrowing, but also raising revenues to service the debt.
“ For all the borrowing, we need to be more deliberate about the spending to achieve the benefits of infrastructure to develop the economy, and continuous borrowing is not the solution.
“Somehow we have to hit revenue and we still need to look at expenditures because at this time we may not be able to finance all of them through borrowing,” she said.
Alex Sienaert, Lead Economist for Nigeria, World Bank, who earlier gave a presentation of the report said the report revealed that Nigeria had enormous development challenges and needed to spend more to address them.
“According to the report, Nigeria’s development outcomes are among the lowest globally, spending on social sectors is particularly low and spending is insufficient to close the infrastructure gap.
“At the current rate of spending it would take 300 years to close the country’s current infrastructure gap
“For years, a large share of Nigeria’s resources have financed inefficient and regressive subsidies for petrol, electricity, and foreign exchange.”
Sienaert said the report showed that borrowing more was not the solution, because debt costs were rising rapidly, squeezing non-interest spending.
He said the report recommended that the pathway for a higher and sustained reform included increase in revenues, spending more effectively on human and physical capital and strengthening institutions for better spending efficiency.
“Increase the VAT rate and improve collection, raise pre-health excise rates to regional averages, introduce green taxes, require oil and gas payments in cash, close legal tax loopholes and strengthen tax administration.”
Naija247news reports that the Nigeria Public Finance Review was conducted at the request of the Federal Ministry of Finance, Budget, and National Planning.
It was prepared in collaboration with the Budget Office of the Federation, the National Bureau of Statistics, the Office of the Accountant General of the Federation, and the Debt Management Office.