Nigeria’s federal government annual budgets will now be accompanied by finance bills to ensure expenditure plans are adequately implemented, Minister of Finance, Budget and National Planning, Zainab Ahmed has said.
Ahmed announced this during her opening speech at the ongoing Nigerian Economic Summit (NES#25) which began Monday in Abuja.
Already, the government has produced a single draft Finance Bill 2019 to support its 2020 budget after reconstituting the National Tax Policy Implementation Committee (NTPIC) to review various tax laws.
“We plan that going forward, the annual budget will always be accompanied by finance bills to enable the realization of revenue projections,” Ahmed told summiteers.
According to her, this is critical because of the need for a significant push towards mobilizing domestic revenues and the prudent management of emerging fiscal risks which is central to achieving goals under the Eleven priority of government.
She said the ministry of finance, budget and planning is now focused on five priority areas, including Enhancing Revenue Generation, Collection & Monitoring, particularly through continued implementation of the Strategic Revenue Growth Initiatives (SRGI); ongoing reconciliation and monitoring of revenues by the Presidential Revenue Monitoring and Reconciliation Committee.
Others are the review of current tax laws and development targeted of fiscal policy reforms to coincide with the annual budget cycle; as well as the deployment of innovative ICT solutions (such as the Ministry’s Project Lighthouse) aimed at leveraging and mining big data to enhance revenue tracking for informed decision-making.
She said against this backdrop of government aspirations to fund minimum wage, invest in health and education, improve human capital development indices, as well as fund capital expenditure to at least 30 percent of Federal budgeted expenditure, that government has proposed 7.5 percent VAThike.
She said Nigeria’s VAT as a share of GDP in Nigeria has declined from 1 percent in 2010-2013 to 0.8 percent in the last four years – between 2015 and 2018.
“This is significantly below the median of 5 percent of GDP in other comparable African countries.”
She attributed the low VAT-to-GDP to low nominal VAT rate, which at 5 percent is the lowest in the African region -which averages at about 16 percent).
Also, the efficiency of VAT collection, at 0.2, is well below the African regional average of 0.33,” Ahmed explained.
She said the proposed VAT increase is likely to impact more on consumption by the urban communities and the wealthier sections of the population, than on the poor.
“The Ministry of Finance, Budget and National Planning plans to closely coordinate its fiscal policies with the Central Bank’s current tight monetary policy stance, to ensure that the appropriate outturns are achieved in terms of growth, consumption and inflation,” Ahmed explained.
According to her, the theme of this year’s Summit, “Nigeria 2050: Shifting Gears”is imperative for Nigeria to move to a more robust competitive private sector economy with focus on the implications of the projected population of the country hitting over 400 million, making Nigeria the third most populous country in the world by 2050.
She said the structure of the population shows that majority will be under the age of 35, representing a large percentage of Africa’s young working-age population.
“The opportunities are endless, as are the risks, however, if we do not accelerate our efforts towards sustainable and inclusive growth, and improved human capital.”
Ahmed saw an urgent need to design policies that will not only address the rising population but ensure paradigm shift to a competitive private sector led economic growth and development.
The Agenda for this Summit is therefore, to provide strategic and innovative ways of getting the maximum benefits from the expected demographic dividends.
She urged the summiteers to project into the country’s future and come up with how best to sustainably finance it.
She however, noted that the better future she sees for Nigeria will not be created by luck, or by governments alone but, will require collective action by all stakeholders including citizens and the private sector, which has a crucial role to play.
“This future will require comprehensive targeted reforms, tough decisions, a radical shift in the current culture, including attitudes towards taxes and public finance. Just as the saying goes ‘no pain no gain’.
“I must say, the journey will be a painstakingly tough and will require sacrifices on all sides- including Government, the private sector, citizens and other stakeholders.”
“The future requires huge financial investments on multi-faceted physical and social areas by both the Federal, State and Local Governments to be able to provide quality, useful, accessible and affordable education, healthcare, transportation, housing, electricity, water.
She called on Government representatives, private sector, civil society, and most importantly and Nigerians, join hands to co-create a future Nigeria in which: “no one is left behind; growth is not only competitive but is also inclusive and sustainable; and in which we as the “Giant of Africa” will lead the way in terms of innovation, industrialization, and human capital on the Continent and beyond.”
Onyinye Nwachukwu, Abuja
