The move by the House of Representatives to pass into law a bill that would mandate the federal ministry of finance to deduct 15% from the monthly VAT (Value Added Tax) collections for the purpose of funding the Federal Government’s Social Investment Programmes (SIPs) is uncalled for and should be jettisoned.
We already have so many deductions from the meagre revenue returns. With existing total public debt stock at N32.22trillion, any further deduction from the consolidated revenue fund would put this country in great jeopardy.
Already, many of the states are finding it difficult to meet their statutory obligations to the citizens including payment of workers’ salaries. With poor IGR and reduction in crude oil receipts, attention has shifted to VAT which in itself has been recording low collections due to COVID-19 pandemic. Therefore, touching it will definitely cause more problems.
Early this month, the House of Representatives passed for the second reading, a bill seeking for the establishment of a Social Investment Trust Fund (SITF) to sustain federal government’s social investment programmes (SIPs). Sponsored by the Speaker, Femi Gbajabiamila and 34 others, section 14 of the bill provides for direct deduction of 15% aggregate of VAT collected monthly for the purpose of funding the SIPs such as N POWER, Conditional cash transfer, school feeding program, Trader moni, Market Moni etc. Laudable as they are, SIPs have failed to achieve the intended objective of lifting Nigerians out of poverty.
The NSIP is a social welfare initiative created by the Federal government of Nigeria in 2015 under the direction of the National Social Investment Office (NSIO). One of the schemes is the N-Power scheme which provides young Nigerians with job training and education, as well as a monthly stipend of N30,000 (around $62.5). There is also the Conditional cash transfer program, which directly supports the most vulnerable by providing no-strings-attached cash to those in the lowest income group, helping reduce poverty, improve nutrition and self-sustainability, and supporting development through increased consumption; the Government Enterprise and Empowerment Program (GEEP), a micro-lending investment program targeting entrepreneurs with a focus on young people and women. Then the Home Grown School Feeding Program (HGSF), which is one way that government is attempting to increase school enrolment by providing meals to school children, particularly those in poor and food-insecure regions.
The programmes were initially under the office of the Vice President, Prof. Yemi Osinbajo but later moved to the Ministry of Humanitarian Affairs, Disaster Management and Social Development in 2019.
As good as the SIPs may be, Peter should not be robbed to pay Paul. This is because many states contribute little or nothing to VAT collection. For instance, whereas eighty seven (87) percent of the VAT comes from four (4) states and the Federal Capital Territory (FCT), 13% comes from the rest 32 states of the federation. Lagos state accounts for 55% of the monthly VAT collections (the highest), followed by FCT with 20%, Rivers 6%, Kano 5% and Kaduna 1% respectively. What this means is that 32 states contribute less than 1% to VAT.
It is not just job creation initiatives that are required to be pursued by government, but structural pillars for a thriving economy should be put in place. Pick a path for growth, follow through and everything else will fall in place, in the end, states should do more to wean themselves from the centre.
And rather than create a new agency at a time government is thinking of cutting down cost, the existing social intervention institutions such as the National Directorate of Employment (NDE) and Small, Medium Enterprises Development Agency of Nigeria (SMEDAN) should be empowered to discharge their duties more efficiently.
Equally important is the need to streamline the conditions and guidelines for the intervention programmes which are specifically directed at the most vulnerable Nigerians. It is wrong to insist that those who will benefit must have to go online, through the Internet or BVN whereas majority of the target beneficiaries have no access to power, Internet, bank account or BVN. In fact, many of them don’t even have phones and these are the poorest of the poor.
The time has come for us as a nation to review the way and manner we deliver services under the SIP to Nigerians. We need to do better in terms of strategy for delivery and definitely, what the government has done so far cannot deliver exactly what will solve the challenges of the most ordinary and most vulnerable Nigerians. And rather than adopt half measure approach, Nigeria should choose a sustainable investment path for national growth.
