Improved government revenue generation and a better relationship between the private and public sectors are some of the pieces of advice that economists have offered for speedy economic growth.
The Nigerian economy has gradually recovered from the damage wrought by the COVID-19 pandemic.
This was discussed during the launch of the Nigeria Development Update (NDU) for June 2021 themed “Resilience through Reforms” compiled by the World Bank, which provides an assessment and outlook of the economy.
Marco Hernandez, lead economist, WorldBank, Nigeria in his presentation said that the country is already indicating growth rebound with the performance of some metrics like the exchange rate premium, manufacturing purchasing managers’ index (PMI), and oil price.
He however noted that some factors like low revenue generation on the part of the government and a decline in investment inflow, are dragging the growth which constrains the possibility of a speedy recovery.
Hernandez revealed that Nigeria has a ranking of 115 in revenue generation out of 115 countries while its expenditure is ranked 114, thus the country swaddles among low revenue-generating countries globally.
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“Between 2015 and 2019, Nigeria’s revenue as a percentage of GDP was 7.9 percent while expenditure stood at 12.6 percent which signifies an imbalance, the implication of which is low spending and fiscal risks for the country,” he said.
He added that the imbalance between economic growth and population growth, per capita income, will continue to decline, the impact of this will be aggravated as high inflation continues to reduce the purchasing power of Nigerians while high unemployment aggravates macroeconomic risks.
Kayode Fayemi, Governor, Ekiti State said the Nigerian economy despite its enormous opportunities is poor, noting that if necessary measures particularly reforms are not employed, there will be consequences going forward.
“Governance needs to improve and we need to ensure full utilisation of our resources. We also need to know how we can get the Nigerian population committed to activities focused on changing the negative narrative,” he said.
Clem Agba, Nigeria, minister of state, Budget, and National Planning said the imbalance between the country’s revenue generation and expenditure raises concerns, as it has induced the continuous need to borrow.
With an already heavy debt burden of N33 trillion, Agba said there is a limit to which the country can continue to borrow, hence the need to increase the revenue generation drive for the country through enabling policy reforms.
Asue Ighodalo, chairman, Nigerian Economic Summit Group (NESG) said the distrust between the country’s private sector and public sector has caused a lot of things to work ineffectively including the economy.
He added that the distrust also forms part of the hesitance of the private sector to contribute to the government’s purse via tax payment; in addition, the impact of unfriendly policies from the government on businesses has worsened the relationship between both parties.
Ighodalo recommended that whatever reforms will be carried, the trust issues between both sectors need to work must be addressed. “The public sector needs to support the private sector for them to thrive and impact the economy significantly,” he said.
Ben Akabueze, director-general, Budget office, Nigeria said in boosting the country’s revenue generation, taxation is an important part of this drive. This means that Nigerians need to imbibe the tax payment culture and commit to it.
Giving recommendations to boost revenue, Hernandez said “it is necessary to improve tax compliance and reform key tax statutes at the federal level. Furthermore, there is a need to enhance internally generated revenue at the state level, and improve revenue from cross border transactions and other international tax measures.”
