“A hero is judged by his or her performance and by the positive impacts achieved” …Professor Ali Mazrui.
Dimensioning some of economic the challenges:
President Bola Ahmed Tinubu’s administration is inheriting the following situation:
•Debt stock of over N77 Trillion; Debt to GDP ratio of over 23%; Interest rate of over 20% and rising; Economic growth rate is currently at about 3.1% but projected to contract to about 2.9% next year (according to IMF); 41% unemployment rate; over 133 million (about 65% of the national population) of Nigerians multidimensionally poor, etc.
•Additionally, according to the President of Africa Development Bank, Mr. Akinwumi Adesina, Nigeria now spends about 96% of its revenue servicing debt, with the debt-to-revenue ratio rising from 83.2 percent in 2021 to 96.3 percent by 2022. It is also worthy of note that out of the entire Nigeria’s 2023 budget; only 30% of total expenditure will be spent on critical capital projects. The non-debt recurrent expenditure (NDRE) of over N8 trillion is the largest expense in the budget (amounting to about 40%), i.e,16% higher than the 2022 revised budget of N7.11 trillion. This includes overhead cost of N4.99 trillion, which accounts for over 60% of non-debt recurrent expenditure, etc.
The above-stated statistics amongst other negative indices paint a gory situation. Therefore, urgent and drastic institutional reforms which hitherto could not be done by previous administrations of the past 10 years must be undertaken as a matter of priority, for any meaningful progress to be achieved in this dispensation. The commendable decisive actions taken so far by President Bola Ahmed Tinubu such as; the setup of the Presidential Committee on Fiscal Policy and Tax Reforms, the appointment of the Minister of Finance and Coordinating Minister of the Economy of Nigeria, appointment of a new Acting Governor of the Central Bank of Nigeria and the appointment of the new Acting Chairman of the FIRS are part of the steps to institutional reforms in the right direction, that could ensure that we get out of this socio-economic logjam and the best way forward for Nigeria.
Dr. Zacchaeus Adedeji’s appointment as the Acting Chairman of the Federal Inland Revenue Service (FIRS)by President Bola Ahmed Tinubu came at a critical time in the history of Nigeria.
Upon his appointment, Dr. Adedeji was very succinct, further reiterating what almost all Nigerians know; that we are facing the vagaries of having to use about 96% of national income on payment of a rising debt stock of over the past 10 years culminating in where we are today which largely due to corruption, lack of fiscal discipline and wasteful style of government which leads to our inability to manage our resources and budgets and spending. Therefore, Dr. Adedeji has his job cut out for him to bring in a significant increase in tax collections considering the fact that only about 40% of Nigerians and Nigerian businesses are taxed. I wish you success in your tenure.
However, in my opinion, Nigeria’s revenue and debt doldrums are beyond increasing tax collections. According to the Debt Management Office (DMO) of Nigeria, Nigeria’s total public debt could rise to 37.1% of its gross domestic product (GDP) this year, nearing the government’s self-imposed 40% limit. If the current debt-to-GDP trajectory continues unchecked the consequences will be dire because the Government is almost at a standstill. Running the Government with 4% of total revenue while consistently in debt is a disaster about to happen.
So far so much has been said about the dwindling revenue and rising debt profile in Nigeria. I think all Nigerians (leaders and other citizens alike) should start talking about solutions.
Dr. Adedeji has rolled out an action plan for his administration at FIRS, which includes the following:
•Key into the Presidential Committee on Fiscal Policy and Tax Reforms mandate
•FIRS to embrace efforts being made to design a tidy fiscal landscape
•address some of the obstacles impeding the effective operations of the FIRS
•Innovate and build operations on foolproof technology
•Block leakages, we need to strengthen internal processes and control mechanisms
•To surpass Africa’s average tax-to-GDP ratio of 16.5% and achieve an impressive 18% within three years.
•To reduce our nation’s reliance on borrowing and ensure financial sustainability,”
•To go after tax defaulters in his resolve to aggressively drive compliance. “For those who deviate from their tax obligations, rest assured, we will enforce our responsibilities judiciously,”
•Implement a robust enforcement model that effectively defers tax evaders while maintaining fairness and transparency in the processes of the service.
•Simplifying Nigeria’s tax system, making it accessible and comprehensible, with a focus on facilitating voluntary tax payments and fostering a sense of civic responsibility.
The above action plan looks good, though, I reckon that the above action plan could be expanded as the Acting Chairman settles down and things become clearer and more practical to him from inside the FIRS.
Tax collection will not be enough
It is worthy of note that the issues of revenue, debt, and resource management are beyond the FIRS. Therefore, to my mind, the issue of revenue collection and management should be expanded beyond tax. This is because when we focus so much on tax, it will appear that in the end the downtrodden citizens of this Country will be made to pay more. The strategy should be all-compassing. Some of my thoughts as follows:
•Apart from increasing tax collections, the entire fiscal discipline framework must change going forward.
•Quintessential leadership at the top
•Cutting/ containing the cost of governance
•Prudence in government spending at the top, across, and to be cascaded down the structure and system of governance
•Blockage of leakages and wastages in government
•Blockage of leakages in the entire government (Federal and State levels). Because the more you get money and throw it into a bottomless purse, you cannot retain anything. Therefore, if we do not take seriously the issues of leakages/ wastages and prudence and Government behavior with regard to governance.
•Sincere, objective, result-oriented, and transparent fight against corruption. Because if we do not deal with these fundamental issues, all the efforts of Dr. Adedeji and his likes in this Government will be insignificant.
•I would also like to see creativity by the revenue-generating government agencies and departments with regard to reigning in more revenue for Nigeria
•Zero tolerance by Mr. President for non-performance by the regulatory agencies/ agents that are found to be in cahoots with the culprits that allow our revenues or incomes to leak away which is a form of economic sabotage.
•Zero tolerance to non-performance across all MDAs
•Total stoppage of budget padding between the Executive arm and the legislative arms of government at federal and sub-national levels, whereby, according to the Independent Corrupt Practices and Other Related Offences Commission (ICPC); in the 2021 budget, a budget padding of about N300 Billion was inserted in the Budget, while a budget padding of about 100 Billion was inserted in the 2022 budget by MDAs.
•In the case of the Private Sector, for the Government to ensure that those in Government who play with operators in the private sector circumvent the system to help “big businesses”, including the multinationals who do not pay tax or undercut the tax they pay and rein-in our revenue.
•Zero tolerance to all forms of economic sabotage
•The regulatory and law enforcement agencies like the EFCC and ICPC should be more result-oriented so that they move from the days of continuous prosecutions without tangible outcomes due to defective investigation, case-building, and prosecution strategy and operations. The fight against corruption should no longer be lip service but actionable and more impactful.
•Increasing the tax net to go beyond the current 40% of the population, but by applying the principle of equity, fairness, and justice in considering the informal sector which constitutes almost 80% of Nigerians, albeit they are constrained by the current global and national insecurity and socio-economic headwinds. And to also note the over 133 multidimensionally poor Nigerians.
Expectations
Dividends of Democracy: People need to see that the Government is actually using the taxes collected and other national and state incomes to add value to the quality of life and properties of citizens, add value to governance, and to and for the progress of and for the growth and development of Nigeria.
The Communication Strategy of Mr. President and the MDAs in this case the FIRS should be transparent, show clarity, and be concise on what they are doing with revenues collected., That will engender confidence and trust in the citizens which will encourage citizens to see reasons why they should pay taxes
Deployment of Technology. Dr. Adedeji was on point with regard to leveraging technology to ensure total collection, monitoring, and evaluation. Technology will also capture and block leakages. I do hope that there will be robust integration of the relevant platforms of ALL the agencies of government so that we will be able to harmonize and have a common-user platform that will ensure that we capture all the people who should pay taxes, track their activities, effectively value and tax and collect accordingly.
Transparency and Accountability: Here again, transparency is critical, impactful projects and initiatives are critical and constructive engagements with the citizens are key. If the big businesses and corporations pay the appropriate taxes people know that they are paying, and the government is delivering dividends or democracy, it is easier to make individuals, Nano, small, and medium-scale enterprises (NSME) pay taxes.
