Amaechi Ogbonna and Juliana Taiwo-Obalonye, Washington DC
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, has said the temporary closure of Nigeria’s land borders with her neigbours is not to induce revenue generation.
According to the Minister, even though government is realizing revenue from the closure, the main objective of the action is to compel bordering countries to commit to bilateral agreements which they have long failed to honour.
Ahmed said this in an interview with reporters at the sidelines of the ongoing IMF/World Bank Annual Meetings in Washington DC.
The Minister was responding to a question on whether the border closure was part of revenue generation measures the Federal Government is looking at.
“No. We needed to close the borders because we are not getting cooperation from our neigbouring countries. We have over the years committed to some alliances, bilateral agreements; but our neigbours are not respecting those bilateral agreements, and at this time when the President has signed Nigeria up to the African Continental Free Trade Agreement (AfCFTA) it becomes more important for us to make sure that everybody compiles with the commitments that are made,” Ahmed said.
“The practices that our neigbours are engaged in are hurting our economy, hurting our local businesses and we have to make sure that that stops. That is the purpose for the closure of the border and not generating revenue.
“That revenues that are generated is the consequence, but that is not the objective. It is just to ensure compliance of the commitments that we made between ourselves and our neigbouring countries,” the Minister emphasised.
Asked if there was a timeline on when the border will be reopened, she said: “The timeline will be when the neigbouring countries commit to comply with the commitments that we signed. We hope that at some point there will be discussions at the level of presidents where we will extract some commitments from our neigbours.”
On budget planning, the Minister described as an anomaly basing the federal budget on revenue from oil and gas, saying budgeting is supposed to be based on taxes that a country is able to generate.
“It is an anomaly for us in Nigeria that our budgets have not been focusing on revenue. What we are trying to do in 2020 is to harness the full potential of revenue mobilisation. The only increase in taxes in 2020 budget is just VAT,” she said.
“Everything else is just maximising the potential of existing tax streams that we have and we hope that we will be able to do this to be able to move our tax to GDP ratio from the current seven to eight percent of GDP to 15 percent.
“We can only develop in a manner that is sustainable when we are using tax revenues to fund our national and sub-national budgets.
“It is an anomaly that we are depending largely on oil and gas revenue, which is a resource that is finite. It is going to go out of existence before you know it,” she explained.
“So, we have to develop the domestic tax base. The main focus will be on expanding the tax base ensuring enforcement of the existing laws and then blocking leakages.”