…To reduce corporate taxes, provide 25-year mortgages
…No domestic investment, no foreign investment – Dangote
The Federal Government of Nigeria has unveiled key initiatives aimed at driving economic growth by reducing corporate taxes, offering single-digit interest rates, and funding local manufacturing.
Wale Edun, minister of finance and coordinating minister of the economy, disclosed this on Thursday at Access Bank’s 2024 ‘Corporate Customer Forum’ held in Lagos.
He emphasised that the government is committed to creating an enabling environment for the private sector through long-term low interest rates and 25-year mortgages, including manufacturing support.
Edun explained that consumer credit schemes will facilitate the purchase of durable goods, thereby stimulating the manufacturing sector. He also outlined plans to reduce corporate income tax, aimed at freeing up capital for businesses and encouraging investments.
According to him, the government will shift the tax burden to high-end consumption, increasing taxes on luxury goods while exempting essential items like food and pharmaceuticals from the value added tax (VAT). This, according to Edun, will drive local production, create jobs, and stimulate demand across key sectors such as agriculture, health, power, and oil and gas.
Read also: Here are 10 sectors that paid most taxes in Q2
Aliko Dangote, Africa’s richest man, praised the government’s efforts but stressed the need for stronger domestic investments.
“No domestic investment, no foreign investment,” Dangote said, pointing out that local industries must be supported to create jobs at home and reduce reliance on imports.
He expressed concern about Nigeria’s current dependence on foreign goods, citing an example of biscuits being imported from China, which he described as “creating jobs in China and poverty here.”
Dangote further emphasised the importance of protecting local industries, particularly small and medium-scale enterprises (SMEs), from unfair competition with foreign manufacturers who benefit from subsidised loans. He urged the government to continue its work in creating a ‘circular economy’ where all sectors, from manufacturers to bankers, can benefit and ensure that local industries thrive.
In addition, Edun acknowledged the role of SMEs in Nigeria’s economy, highlighting government interventions such as N50,000 grants for small businesses and nine percent loans for larger SMEs.
Read also: Corporate tax revenue jumps 151% on FG’s drive
He reiterated the government’s commitment to reducing production costs and boosting output as a means to fight inflation.
The government’s economic strategy has been developed in consultation with key stakeholders, including the Manufacturers Association of Nigeria (MAN), the Nigerian Economic Summit Group (NESG), and state governments.
Roosevelt Ogbonna, managing director and chief executive of Access Bank Plc, stressed the need to confront the significant economic challenges facing Nigeria. Speaking on the global impact of these challenges, Ogbonna noted that Nigeria is not alone, as many emerging and global markets are also grappling with economic difficulties.
Reflecting on last year’s focus on fiscal and tax reforms, he pointed out that the bank aimed to ensure its corporate customers understand the implications of new government policies under President Bola Tinubu.
Ogbonna highlighted the importance of building a collective pathway to determine Nigeria’s economic rebirth and revitalisation.
Read also: How Nigeria can boost revenues without raising taxes
In his keynote speech, Bismarck Rewane, managing director and CEO of Financial Derivatives Company Limited, painted a comprehensive picture of Nigeria’s economic landscape by 2026. He projected that the Nigerian economy will grow at 3.5 percent, reaching approximately $400 billion, positioning the country as the second-largest economy in Sub-Saharan Africa.
Despite this growth, the outlook for key sectors reflects a mixed bag of challenges and opportunities.
Electricity tariffs will remain high, exceeding 200 kWh for consumers in bands A and B, while telecom tariffs are expected to rise substantially. On the positive side, the foreign exchange market will see an efficient auction system, and unencumbered foreign reserves will stabilise at $20 billion. Inflation, currently a major concern, is forecast to decline to 22 percent, allowing the Monetary Policy Rate, which is the benchmark interest rate, to drop to 20 percent per annum. This reduction is expected to lower the level of non-performing loans in the banking sector.
However, the naira is projected to trade at N1,550 per U.S. dollar on the parallel market. This exchange rate, though depreciated, will be part of a more stable and functioning foreign exchange system, aided by policies such as intervention funds, diaspora remittances, and adjustments in exchange rates. Notably, creative industries like arts and tourism are also expected to contribute to inflows into the forex market, supporting the economy further.
Speaking during the panel session on how to deepen the capital market, Uche Uwaleke, director of the institute of capital market studies at Nasarawa State University, said with the market’s GDP contribution currently below 20 percent, there is need for rapid growth to meet the Capital Market Master Plan’s target of 25 percent by 2025.
One key area highlighted by Uwaleke was government borrowing. He criticised the heavy reliance on federal government bonds, which make up over 78 percent of domestic debt, while infrastructure bonds, such as Sukuk, account for less than 2 percent.
Uwaleke recommended that the government focus more on infrastructure bonds to ensure that borrowed funds are directed toward critical projects. He argued that this shift would not only enhance infrastructure but also reduce the country’s rising debt burden.
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