In this interview with journalists, Special Adviser to the President on Revenue, Zaccheus Adedeji, speaks on how President Bola Tinubu’s administration plans to diversify the economy from reliance on oil for most of its revenue, efforts to cushion the impact of fuel subsidy removal as well as on-going reforms to end Nigeria’s dependence on debt for public finance by raising the country’s revenue profile. BusinessDay’s Isaac Anyaogu brings excerpts:
The last 100 days have been turbulent, to say the least, following the reforms launched by President Tinubu. While international investors have hailed these reforms, Nigerians have felt the negative impact the most, causing many of them to question the President’s effort to revamp the economy. As his SA on revenue, do you think the president is on track to fulfill his election campaign?
Thank you very much for this question. I know it is symbolic to assess the performance of a new administration within the first 100 days, sometimes even for a shorter period. However for this government, it is not simply about the present moment or what the President has done within the short term of being in office, it is more about the medium to long-term vision of how he wants to reposition the economy and make life better for Nigerians.
We are laying the foundation for a prosperous future. You will agree with me that even though the foundation is the most important structure of a building, it is not always the prettiest. Once the house begins to take shape the beauty will not only be apparent for all to behold but also it will provide the much-needed shelter to shield the occupants from bad weather and other unfavourable external conditions.
We have done a lot that I am proud of within the short period. These include addressing some critical concerns of the private sector regarding pressing tax issues, removal of wasteful subsidies on PMS to create fiscal headroom and limit excessive borrowing, and forex reforms to address market distortions, just to mention a few.
So, overall I can say that we are on track and moving in the right direction.
What approach is the government taking to help Nigerians who are bearing the pain of the high cost of living as a result of the fuel subsidy removal?
You will recall that Mr. President signed some executive orders on the 6th of July, which reversed the tax increases on manufacturers and suspended the excise tax imposed on Single Use Plastics which would have affected mostly SMEs and potentially trigger higher prices and further inflation.
The Orders also deferred the commencement date of various changes introduced via the Fiscal Measures and Finance Act 2023 in order to give individuals and businesses reasonable time to adapt to the changes without major disruptions to their operations and livelihoods.
The removal of wasteful subsidies on PMS and forex have stopped the hemorrhage on our treasury and will ensure that government is on the path to sustainable financing with less dependence on CBN overdraft for public finance. While some of these measures have unfortunately created short-term pains for many people, we are confident that Nigerians will start to reap the benefits sooner rather than later.
By removing the subsidies, the government at all levels will have less need to keep borrowing to fund public spending while the savings will be channeled towards infrastructure and social services to reduce multidimensional poverty and build a competitive economy
In addition to the various interventions by the federal and subnational governments, more initiatives are being worked on in consultation with key stakeholders which are expected to have positive and more fundamental impacts on the people.
What steps are being taken to diversify Nigeria’s revenue sources and reduce dependency on a single sector for income generation?
We believe that Nigeria is blessed if only we can improve our policy environment and enhance the efficiency of both the private and public sectors. This is one of the reasons why Mr. President recently approved the setting up of a Presidential Fiscal Policy and Tax Reforms Committee with eminent Nigerians from all spheres of the society to not only advise the government on the necessary reforms but also support the implementation.
Ultimately the outcome of the committee’s work along with other policy actions of the government will result in productive diversification of the economy, government revenue sources and foreign exchange earnings.
Read also: Does it matter who Tinubu really is?
The president during his last address to the nation talked about how the government would be injecting the monies saved from the subsidy back into the economy. Can you please expand on the ways in which the country can gain economic stability through subsidy removal?
PMS and forex subsidies were not only wasteful, they promoted inefficiencies in our resource management and created economic distortions making it difficult to attract both domestic and foreign investments. By removing the subsidies, the government at all levels will have less need to keep borrowing to fund public spending while the savings will be channeled towards infrastructure and social services to reduce multidimensional poverty and build a competitive economy.
For any economy to be productive you need critical infrastructure that supports business growth and improve quality of life, especially roads, power, rail, broadband, pipelines etc. These are heavy and capital projects that only the government can mostly provide. Investors will go to a place where they don’t have to worry about all of these. For ease of doing business and to make our economy more competitive, the government will need to spend more on these areas.
The government will re-invest the money saved from fuel subsidy to grow the infrastructure stock of the country and fund social services in education and healthcare. We want to make sure our public schools and public hospitals are up to standard and can meet the needs of Nigerians and affordable too as against the more expensive services they get from patronising private schools and hospitals.
What strategies are in place to attract foreign direct investment and ensure a conducive environment for investors in Nigeria and what are the long-term benefits to Nigerians?
Mr. President’s philosophy is that we should not tax investment but return on investment. We should not tax production but consumption. We should not tax poverty but facilitate prosperity and share it by way of fair and progressive taxation. This is the reasoning behind Mr. President’s recent remark that this government will tax fruits, not seeds.
The market-friendly disposition of this administration is already creating excitement in the capital market with over 20 percent growth this year to date and the best performance in 15 years. We are also working on reforms to create more jobs and entrepreneurship opportunities in the digital economy, especially for our teeming youth.
Read also: Inside Tinubu’s first 40 days
We recognise that Nigeria can not continue to rely on the oil and gas sector as the mainstay of the economy, especially with the uncertainties around global oil prices which usually creates shocks in the economy whenever the price crashes like we experienced from 2014 to 2018 when the price started rising again above $50.
President Tinubu promised to build a more vibrant and more prosperous economy and he is set to achieve this by ensuring other sectors of the economy like agriculture, solid minerals, maritime, retail, hospitality, tourism, and professional services, and others perform optimally.
You said earlier that the government of President Tinubu is laying a foundation for a prosperous economy. From your point of view as a government official, how is the process going and why do you think Nigerians should trust Mr. President and the team he has put together to work with him on his renewed hope agenda?
The crux of the agenda of this government is economic prosperity which is inclusive and sustainable. Nigerians trust Mr. President based on his pedigree which was the main reason they voted for him as president. You will also agree with me that Mr. President has made his appointments based on competence with a good number of technocrats appointed to manage various aspects of the economy. Even the politicians that have been appointed by Mr. President are those with proven records of performance.
So I can say that we are moving in the right direction and making progress. I am confident that Nigerians will begin to see the benefits of this administration’s policies sooner rather than later. The future is very bright. President Tinubu is guiding us through a challenging time and in the last 100 days in office, he has demonstrated that the confidence Nigerians reposed in him has not been misplaced.