By Bimbola Oyesola
The incoming government must develop strategies to diversify Nigeria’s revenue base through the revival of the country’s lagging non-oil sectors, the Nigeria Employers Consultative (NECA) has said.
Proffering policy options for government in the face of dwindling revenue and myriads of economic challenges and with seeming confusion on how to arrest the economy’s slide into deeper challenges, NECA noted that returning the economy to the path of sustainable growth demands that certain fundamentals must be gotten noright.
Director-general of NECA, Adewale-Smatt Oyerinde, stated that without these fundamentals, the economy will continue in circles.
Among these fundamentals, according to NECA, are a stable and highly predictable revenue streams, growth-focused monetary and fiscal policies, a secure and business-friendly environment and a legal, regulatory and legislative system that promotes equity, justice and enables enterprise competitiveness.
“These fundamentals are currently either lacking or are highly compromised,” NECA boss said.
Shedding more light on the issues, Oyerinde said, “at the last count, the nation is neck-deep in debts hovering around N44.06trillion in September 2022. However, if the N23.7 trillion CBN loan is securitized, our debt stock could amount to about N77 trillion in June 2023; Crude oil production grew in the month of December, 2022 by 4.2 percent month-on-month to 1.23million barrel per day, but remained significantly short of the 1.8million barrel per day allocated by OPEC to the nation, amounting to about $2.5billion loss monthly at an average of $100pb; oil theft seems to continue unabated and the unsustainable subsidy on petroleum products have all conspired to reduce Government’s revenue, leading to absurd debt accumulation.”
He reasoned that the obvious misalignments between the fiscal and monetary policies, is deflating investors confidence and made the country unattractive for Foreign Direct Investment (FDI).
He reiterated the need for government, especially the incoming one to demonstrate the political will by implementing policies that will drive the economy back on growth trajectory. According to the Director-General, “deliberate efforts must be made to reverse some of the current policies and implement new ones. All leakages associated with government revenue must be blocked (oil theft, skewed concessions, fuel subsidy etc), a wholesome review of the Tax administration to make it more equitable and investor-friendly should be initiated.” He stated that while governments in other climes are either reducing tax rates in order to enhance economic activities, promote sustainable consumption and attract investors, Nigeria cannot continue to over-tax its businesses and citizens.
“With over 50 different taxes, levies and fees and Company Income Tax hovering around 35%, raising taxes in order to increase revenue will be counterproductive,” he warned.
Oyerinde harped that while there has been projections for global recession in 2023, the time for a major paradigm shift in the nation’s economic philosophy must be now.
He said, “Over the last decade, the country has spent over 10 trillion Naira on fuel subsidy, about 15.5 trillion on Capital Expenditure, 2.5 trillion on Health and about 3.9 trillion on Education”.
This, he said is a misplacement of priority and shows that critical developmental items such as education, health and infrastructure have suffered due to crass misplacement of the economic priorities.
“The nation seems to be behind in all economic growth fundamentals, except a large market, which if not harnessed might become a curse as the implementation of the AfCFTA takes off,” he said.
He condemned the call to increase TETFUND from the current 2.5% to 10% warning that government should not kill a sector to feed another as businesses are overburdened with taxes already, making the country’s taxes one of the highest in the world.
“We are of the view that there is need to design a long-term funding mechanism for tertiary education and contributors to the fund must be assigned to supervise its spending,” he said.