As oil revenues shrink, Nigeria needs to transform its revenue by reaching a point where its tax to Gross Domestic Product (GDP) ratio is 15 percent to 18 percent or even higher to fund its fiscal obligations, analysts have said.
Taiwo Oyedele, fiscal policy partner and West Africa tax leader at PwC, made this known on Thursday during the February breakfast meeting of the Nigeria-South Africa Chamber of Commerce, themed “The 2023 Elections, Political Economy, and Nigeria’s Business Environment Outlook”.
According to a statement, the February breakfast meeting held virtually was sponsored by PwC, the professional services firm. PwC is a passionate community of solvers coming together unexpectedly to build trust in society and deliver sustained outcomes for all stakeholders.
Oyedele began with an overview of the economic events of 2022, both on an international and national scale, highlighting the huge economic disruptions and big market failures experienced.
He listed the five factors that will shape the economy in 2023: geopolitics, economy, social conflicts, de-globalisation and technology, along with the challenges and opportunities they present.
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In response to a question on turning the tide on the budget deficit and rising public debt, Oyedele said: “We need to get to a point where we can do something transformational to our revenue, not just the incremental progress that we are celebrating. We need to reach a point where our tax to GDP ratio is 15 percent – 18 percent or even higher.”
He also discussed some ongoing economic issues, including a huge budget deficit and the naira redesign crisis, and presented the main manifesto points of the three leading presidential candidates. Concluding with a quote from Abraham Lincoln, “The best way to predict the future is to create it.”
According to Oyedele, regardless of who emerged in the presidential elections, Nigeria’s challenges will not go away in 2023, but it can safely be predicted that things will gradually improve.
“What was needed was for all to be mindful of likely challenges but still be open to opportunities while challenging the status quo with a solution mindset,” he said.
On an introductory note, the session’s moderator, Oluwaseyi Adegoke Adeyemo, Publisher of Inside Watch Africa (IWA), emphasised that the Chamber’s engagements are focused on strengthening the bilateral trade relationship between Nigeria and South Africa, and he reiterated their immense appreciation to PwC for the sponsorship of the February breakfast meeting.
During the panel session, Oyedele featured Andrew Nevin, partner and chief economist PwC Nigeria, and Olusegun Zacchaeus, partner & West Africa lead, Strategy& which offered a robust discussion on some of the key issues around Nigeria’s business environment outlook for the year.
Responding to a question around his assertion that Nigeria neither has a debt nor revenue problem but a growth problem, Nevin said: “This narrative that we are a low tax country is just simply incorrect, we are a high tax country, but the basic problem with this is, we don’t grow.”
On a question about the need for technology adoption and digital transformation, Zacchaeus said adopting technology becomes an important factor in creating efficiency within the economic system.
“Technology will be critical as we navigate these changes within a quality environment. I believe it is impacting all angles. Companies need to accelerate their digital transformation to ensure they can offer users the right services and build trust,” he said.
Based on the recently released PwC Annual CEO Survey, in which over 4000 CEOs from 103 countries, including Nigeria, the firm surveyed, some of the greatest short-term fears of these CEOs include inflation, economic volatility and geopolitical risks, the statement said.
Almost 40 percent of these CEOs believe their organisation will no longer be economically viable in a decade if it continues on its current course, it said.
Speaking to this data, Zacchaeus said: “For me, this is a very interesting message because, beyond the short-term economic inflation challenges, you need to pay attention to megatrends and ask ‘, will my business still be here in a decade?’”
Also, Delia Asuzu, associate director and regional lead for clients and marketing development, PwC West and East Africa, in a remark on the firm’s capabilities, reiterated the importance of sustainability, which is key to PwC’s global strategy.
She said: “PwC is known for delivering quality assurance, tax and advisory services, and Environmental Social and Governance (ESG) is one of the areas in which we are investing. So for clients, implementing a coherent strategy is perhaps one of the more visible ways of focusing on long-term value.
“Our investments are in areas where our clients face the most significant challenges and opportunities.”
