Economic recovery plan: Government must frontally face issues of revenue generation, mobilisation, says Adeosun

Finance Minister, Kemi Adeosun

The Minister of Finance, Mrs Kemi Adeosun, has said that the best road map to economic recovery for Nigeria is to frontally and finally face other sources of revenue generation and mobilization from taxes and by encouraging local production, instead of relying on oil and borrowings.

“The problem is not that our debt service is too high, but our revenue is too low and the manner in which the imbalance between our debt service and revenue will be corrected, apart from re-balancing our borrowings in favour of longer tenure loans and external sources, is by finally and frontally facing the issue of revenue.”

Adeosun gave the advice while delivering a keynote address at the NSE-Bloomberg CEO Round Table in Lagos on yesterday, stressing that revenue mobilization is critical to the success of Nigeria’s economic reform agenda in these critical times.

Recall that on Thursday, the Ministry announced plans to recruit and train 7,500 Community Tax Liaison Officers under the N-Power scheme where young people will be subjected to a rigorous and intensive education on the tax system, sales, communication skills and civic education before being deployed to their communities to provide tax education and enroll new tax payers.

A statement signed yesterday by the Director of Information, Ministry of Finance, Salisu Na’inna Dambata and made available to journalist in Abuja, also quoted the Minister as saying: “For the size of our Government, the size of our economy and the size of our needs, government revenue is simply just too low. We see increasing revenue as the long-term strategic solution for sustainable and inclusive growth. Revenue is required in the short-term for investments and in the medium to long-term for our debt service.”

The Minister explained that government’s acceptance that her ambitions cannot be financed by oil revenue is an equal acceptance that there is a finite limit to how much can, and should be financed by debt. If we don’t want to borrow, we need more revenue.

She noted: ‘‘The problem is not that our debt service is too high, but our revenue is too low and the manner in which the imbalance between our debt service and revenue will be corrected, apart from rebalancing our borrowings in favour of longer tenure loans and external sources, is by finally and frontally facing the issue of revenue.”

Commenting on the limitation of relying on oil, she stated:  “We believe that Nigeria is an ‘oil-plus’ economy and we should model ourselves after countries that have similar profiles like Egypt with a population of 91 Million and 490,000 barrels of oil per day (185 people to a barrel of oil) and has a highly diversified revenue base.”

She further explained that we cannot model ourselves after Saudi Arabia, with their 30 million population and 10 million barrels of oil per day (three people to a barrel of oil). In Nigeria, we have a population of close to 180 million people and about 2 million barrels of oil per day (90 people to a barrel of oil). We must, therefore, diversify our revenue base.

Adeosun added that revenue mobilisation, is therefore, critical to our success. “Revenue mobilisation is critical to the success of Nigeria’s economic reform agenda and we are working on strategies to drive non-oil revenue growth. To do this, we must amend Nigeria’s low level of tax compliance. A tax to GDP ratio of just 6 per cent, is just too low and we are working to amend this,” she said.

According to her, Nigeria is doing more with less and we will continue to do so. Growth is returning, investor confidence is reawakening and that confidence is based on an economic blueprint, which, if followed doggedly, would take us from the rough road, onto a path of sustainable and inclusive growth.

Other speakers at the Round Table included Dr. Doyin Salami of Lagos Business School, Mr. Andrew Alli, the President/Chief Executive Officer, Africa Finance Corporation and Mr. Oscar Onyema, the Chief Executive Officer, Nigerian Stock Exchange, among others.