Fayemi, World Bank, DFID task state actors on improve revenue generation
By Henry Umoru
ABUJA- THE Federal Government yesterday raised the alarm that the Economic Growth and Recovery Plan, ERGP, and other development plans were at risk of underfunding.
According to the government, Nigeria requires a lot of resources to actualize the ERGP and other development plans.
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Minister of Finance, Budget and National Planning, Ahmed Zainab, who disclosed this at the Nigeria Governors Forum (NGF) peer learning Programme in Abuja, said Nigeria required about $3 trillion over the next 30 years to sufficiently address its infrastructure deficit.
She added that if these must be achieved, the country needed fiscal sufficiency and buoyancy, which must come through domestic revenues for it to be sustainable.
Zainab, who spoke through a director in the Ministry, Dr. Israel Igwe, said: “Regarding the 2019 Budget, as at June 30, the actual aggregate revenue as per our fiscal accounts was N2.04 trillion, indicating a revenue shortfall of 42 percent, to underperformance of both oil and non-oil revenue targets.
‘’Similar revenue shortfalls have been experienced since 2017, when the ERGP was launched, resulting in serious deviations from our targeted revenue and expenditure projections.
“We currently have a pervasive revenue generation problem that must change to successfully finance our development plans.
“Speaking to the facts, our current revenue-to-GDP of 8 percent is sub-optimal and a comparison of oil revenue to oil GDP and non-oil revenue to non-oil GDP performance reveals the significant area that requires immediate and dire intervention as the non-oii sector.”
Zainab, who disclosed that the performance attested to the realities the country’s inability to efficiently and to a reasonable degree, completely collect taxes from its non-oil economic activities, said: “Nigeria, when compared with peers, shows that we are lagging on most revenue streams, including VAT and excise revenues, as we not only by far have one of the lowest VAT rates in the world but weak collection efficiency.
“So also do we have a lot of incentives and deductions that further constrain the fiscal space that are given in the hope of stimulating growth of our industries and to reduce hardship for the poor and vuInerable.
“The key question is why do we keep performing poorly? And what can we do differently this time to effectively turnaround without any relapse, even in successive governments? Simply put, we have very low effective tax rates, archaic tax laws that are not evolving at commensurate pace with businesses, leakages in our revenue collection systems, low tax compliance rates and poor tax moral to mention a few.
‘’ With numerous complex issues at hand, Nigeria must do things differently which requires robust, tough, weII coordinated and multi-faceted reforms.”
In his remarks, NGF Chairman and governor of Ekiti State, Dr. Kayode Fayemi, charged state commissioners of finance on the need to expand the revenue base as that would enable governors provide for citizens quality healthcare and education, world class infrastructure, in addition to providing social safety to the underprivileged.
Fayemi, who noted that the recent fiscal crises of 2015 and 2016 proved that over the years, the country has not done enough to reduce dependence on oil, said: “We must work towards closing the wide revenue gap in order to position the country to meet the growing development needs
“This responsibility lies in the capacity of our revenue authorities to improve tax administration capacity and governance, especially in the non-oil sectors of the economy.”
In his remarks, World Bank Director, Shubham Chaudhuri, who decried the low level of revenue mobilisation in Nigeria, said raising GDP would ultimately lift Nigerians out of poverty, and urged government to invest in both human and infrastructural development.
Chaudhuri noted that the investments would require a lot of revenue, adding that Nigeria does not have enough revenue to do that.
“Raising Nigeria GDP is important because it ultimately lifts Nigerians out of poverty. We will require private investment for job creation, but the role of government is to do two things: invest in Nigerian people, that is the youths, the children, health care, education, social protection and two is to invest in infrastructure which requires revenue.
“But right now, Nigeria does not have enough of it, most of the investments will come at the state level. the best measure of development of a country is not per capita GDP, but the quality of the services that the sub-national government provides.
“You need revenues, our programme have been designed to support you in this regard. The World Bank programme for result is specifically a performance-based form of support. We will work with you to identify ambitious but achievable target and based on your achieving those targets, we, through the federal government, will help to provide some finances
that ease and create fiscal space for you.”