There is no doubt that the government has invested in and created countless channels to facilitate and boost IGR generation in Nigeria, but the main issue is the people who have built a pipeline to divert what’s for the citizenry into their own pockets!
With the passage of the 2023 National Budget, the Nigerian debt will reach N77 trillion, according to the Debt Management Office of the Nigerian ministry of Finance.
Assuming President Buhari’s request for a N22.7 trillion loan from the National Legislature is approved, this figure will be true. As Patience Oniha, Director-General of the Debt Management Office, pointed out, Nigeria’s revenue generation is vastly different from its debt profile.
A combination of this revelation and the unfavorable global economic reality predicted by the IMF means Nigeria will incur 160 percent of its revenue in debt servicing. Considering the reality of the situation on the ground, the Nigerian government has adopted active methods to generate revenue from all sectors of the economy and is looking for ways to close the revenue loop.
Due to the dip in oil revenues and the slow growth in non-oil revenue, Nigeria’s economy is in trouble. As a result of the budget deficit and the debt that has risen beyond the revenues generated, the government is desperately seeking ways to diversify revenue generation.
In order to meet the revenue required to keep the country running, governments at all levels will be adopting alternatives and more effective ways of revenue generation, one that would be devoid of leakages and waste. Government will be looking out to ensure the revenue assurance breakthrough at all levels.
The following trends are predicted to be adopted by the Government to ensure that public institutions maximize their revenue-generating potential.
Widen tax net – Expect to pay more tax!
In recent times, the Federal government and some state governments have been making efforts to widen the tax net to ensure that many Nigerians and businesses pay tax as much as possible, as much as they can, via various channels. The government has created multiple tax policies that ensure that revenue is generated. For instance, the federal government introduced excise duty on telecoms services, alcoholic, sugar-sweetened beverages, cigarettes, and tobacco products. The tax regime is expected to take an even more stringent effect in 2023.
To make payment of taxes easy for Nigerians, the federal government introduced the Integrated Tax Administration System (ITAS), an initiative that makes it easy to file tax returns and pay taxes online.
More investments in indigenous digital revenue assurance technology – More opportunities for tech players in the public sector!
With the introduction of monetary policy by the Central Bank of Nigeria, which restricts cash withdrawal to N100,000 and N500,000 for individuals and corporate organizations respectively and other policies that are out to restrict the flow of cash and encourage digital payment, there is no doubt, that 2023 will witness massive investment in digital payment infrastructure, both by the government and private organisations, especially the banks.
Investments in cyber security, AI, Big Data, Data Analytics, software applications, digital infrastructures and other innovative initiatives that make it easy, safe and seamless for customers to make payments online and offline and receive payment will be the focus of banks, channel integrators and fintech companies.
More offline and less online fintechs solutions to emerge to solve these revenue collection problems especially in unstructured spaces.
With the data coming out of NBISS pointing to the increase in online payment from N271.9 trillion in 2021 to N345 trillion in the last 11 months in 2022, it is obvious that the government at all levels will be looking out for Fintech solutions to help digitalise cash payments across their revenue-generating assets. Billions of Naira is still untapped in the informal and unstructured settings such as public markets, public transport unions, land use charge payments etc. Technologies that can function irrespective of internet availability and work in all terrains will be mostly utilised to capture and digitalise such payments.
Dynamic QR payment method – Well let’s hope!
One tech feature i feel is getting matured and can take centre stage in 2023 is the QR Payment feature. These features will allow users of public institutions and services to swiftly make payments by just scanning a QR code.
According to reports the dynamic QR codes generated by global users reached 6.8 million scans, an over 400% increase from 2021. This feature has so far been adopted by top fintech companies in Nigeria including Paystack and Flitterwaves
QR code payment will be helpful in revenue generation as, for instance, patients will be able to scan QR Codes to pay for bills while receiving treatment, like payment for drugs instead of moving from the pharmacy to the cashier to make payment.
Read also: Commuters shift to digital payments as naira scarcity bites
TeleCommunication companies will further diversify!
Telecommunication companies will be playing a huge role in driving the adoption of digital payment systems and also the adoption of digital revenue collection systems. The government will be employing these companies to help collect revenue, just as they are helping generate revenue for the government via VAT. MTN for instance has ventured into retail banking and will be valuable in the plans of the government to increase its tax revenue drive.
Retail banking will continue to be the rescue in a rural community.
There will be, no doubt, an explosion in digital banking and payments across different digital channels will be made possible, with the recent policies by the CBN. These restrictions on cash withdrawal will cause customers to embrace mobile payment. Couple with this adoption will be the huge role retail banking will be playing in the adoption of digital banking in rural communities. In view of this, public institutions and government will collaborate with agents of retail banking to help facilitate payment for public services and taxes. This is most viable in rural communities where access to banks and fintech solutions and other financial services is almost nonexistent.
More government parastatals will embrace digital revenue assurance systems.
Just as Pay1One is working to make payment seamless in public hospitals around the country and Cowry is doing the same for public transportation in Lagos. Governments across boards that seek to reduce leakages, corruption and inefficiencies will be looking out for digital revenue assurance systems to help increase the revenue potentials of their public institutions and services.
Demand for self-funding public Institutions – MDAs will only have their IGR to spend!
In 2023, there will be a high demand For Payment Transparency and self-reliance in Public Institutions from Nigerians and the government. Public institutions will be required to maximise their revenue generation potential and judiciously use these revenues to cater to their basic needs while the government see to other pressing needs.
.Oluyemi is a Co-Founder and Tech Leader keen on leveraging tech to redefine the entire public sector in Nigeria.
