Nigeria needs to encourage private sector to boost revenue growth – Doyin Salami

For cash-strapped Nigeria to grow its revenue and fund its budget implementation to boost growth and economic development, the largest economy in Africa would need to create an incentive to attract the private sector interest, Doyin Salami, chairman, Presidential Advisory Committee on Nigeria’s economy has said at the ongoing 27th Nigerian Economic Summit.

Giving an address at the summit with the theme ‘Securing Our Future: The Fierce Urgency of Now’, Salami said the biggest wealth of resources lies with the private sector and Nigeria needs to tap into it.

“One of the fundamental things that need to happen is that as a nation we need to begin to understand the dynamics of the private sector; trust and encourage the private sector so that the resources that they bring to the table becomes available,” the Chairman of the Presidential Advisory Committee said.

Since 2016, Nigeria has attained an average of 55 percent revenue performance, (the actual revenue generated compared to revenue projections), the reason why analysts have criticized the government for raising the bar each year despite obvious challenges in attaining revenue targets.

The Federal Government is targeting revenues of N10.13 trillion and a deficit of N6.258 trillion in 2022.

The shortfall between actual revenue receipt by the Federal Government and projected revenue worsened when a global collapse in oil prices happened in 2014.

The Federal Government’s actual retained revenues stood at N3.727 trillion in 2014, as analyzed from data by the Budget office of the federation. This value represented a shortfall of N4 billion from the N3.731 trillion projected in the 2014 budget.

The same trend followed in 2016, 2017, 2018, and 2019 when variations between actual and budgeted revenue stood at N2.03 trillion, 3.5 trillion N3.2 trillion, and N5.58 trillion, respectively.

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After the pandemic spurred a budget revision in 2020, the revenue shortfall hit N1.42 trillion with revised revenue of N5.365 trillion and actual revenue at N3.937 trillion.

If the case is the same next year, Nigeria could be looking at a revenue of about N5.57 trillion and a budget deficit of about N10.82 trillion at the end of the fiscal year, almost the size of the country’s entire budget in 2020.

Pointing at 30years ago, Salami said the private sector companies did not build infrastructure but “now there are incentives that make the private sector bring money to the table for infrastructure.”

“Nigeria needs to have a clear appreciation of what the government can do and what the private sector can do,” Salami said, adding that for too long Nigeria has lived with the notion that “Nigeria is a wealthy country and the government can provide everything, it cannot and so we need to begin to think of what needs to be done.”

Like in the past five years, if Nigeria’s unrealistic revenue trend persists next year, the cash-strapped largest economy in Africa would need to increase its debt profile, more burden for a country that spends over 70 percent of its revenue on debt servicing.