Nigeria is targeting to increase revenue as a percentage of GDP to 15 percent by 2023 from the current levels of 6 percent, in a new growth plan, according to Zainab Ahmed, minister of finance, budget and national planning.
This is as the government is looking to grow its income stream and diversify the country’s revenue sources away from the oil sector, the minister said.
Known as the Strategic Growth Revenue Initiative (SGRI) 2.0, the new plan will serve as the blueprint and mechanism for mobilising and maximising sustainable revenue sources that will look beyond oil by 2025.
This would be achieved through a host of 47 different initiatives including improving revenue collections, identifying new taxes, broadening of the tax base, expansion and improvements of value-added taxes, closing of legal loopholes, collaborating trading partners, data collection and analytics, targeting of High Networth Individuals (HNIs), and improving tax compliance amongst others.
“Through the new initiative, we will strengthen sustainable revenue generation systems through the application of the right incentives, safeguards and performance management systems,” the minister said.
Ahmed, who spoke to hundreds of participants, Thursday, at an economic outlook organised by Deloitte, an accounting/auditing firm, with the theme: Building a resilient economy for the future,” noted that the new strategic and growth initiatives alongside the Finance Act, 2020, will aid the recovery process of the Nigerian economy, which suffered its worst recession since the 80s after being hard-hit by the double whammy of oil volatility, and the economic and health impact of Covid-19.
The government is looking to exit recession this year with an optimistic growth of 3 percent.
According to Ahmed, although still in the works, the new SRGI – having reviewed past government strategies, identified the challenges and re-assessed the prospects and opportunities that will supplement the Finance Act in aiding the economic process of the Nigerian economy. This will be through initiatives and strategies that will grow fiscal revenues, improve the ease of doing business, counteract the impact of oil price fluctuations and integrate fiscal, monetary and trade policies.
“The SRGI is a bottom-down approach that is driven by enhanced data and technology to complement a bottom-up approach aimed at improving operational efficiencies.
“Each area of the new initiative will be monitored with clear deliverables, KPIs, targets and timelines assigned to the relevant ministries departments and agencies for the implementation of results,” the minister said.
Although the 15 percent revenue-to-GDP ratio by 2023 will be a huge improvement from current levels, Nigeria would still lag compared to peers, she noted.
As of 2018, South Africa, Kenya and Ghana had 29 percent, 18 percent and 14 percent revenue to GDP, respectively.
With revenue outlook still grim, the minister explained that the state would also need to be involved for the country to achieve the desired result.
She however ruled out speculations of a further increase in VAT, noting that although, Nigeria’s value-added taxes were still one of the lowest in the world, but the government plan was not to further put a strain on businesses and individuals reeling from the impact of the Covid-19 pandemic.
“We have a plan to support small businesses and manufacturers, as such our initiatives are centred around improving tax administration and tax compliance and not introducing new taxes,” she said.
With more than 70 percent of government revenue coming from oil, Ari Aisen, resident representative of the International Monetary Funds (IMF), stated that a resilience economy is one that doesn’t depend on one commodity to build its buffers.
While recommending some positive gains for Nigeria in cushioning the effect of the pandemic, like subsidising credit to the private sector and giving forbearance to the private sector, Aisen noted that Nigeria needs to pay closer attention to rising inflation as well as solving balance of payment problems.
Yomi Olugbenro, West Africa Tax leader, Deloitte, said the government must direct its focus to the optimisation of revenue collection and also leverage technology to collect more tax at state and federal levels.
This, he said, will make it easier to broaden the tax base and ensure more efficiency in tackling evasion.
