Zainab Ahmed, minister of finance, budget and national planning, says the implementation and targets of the economic and recovery growth plan (ERGP) has been at risk since 2017 because of underfunding.
Speaking on Tuesday at the Nigeria Governors Forum (NGF) peer-learning event, Ahmed said the federal government had recorded 42% revenue shortfall as at June 30.
“Regarding the 2019 budget, as at 30th June, the actual aggregate revenue as per our fiscal accounts was N2.04 trillion, indicating a revenue shortfall of 42%, due to underperformance of both oil and non-oil revenue targets,” Ahmed, represented by Israel Igwe, a director in the ministry, said.
“Similar revenue shortfalls have been experienced since 2017, when the ERGP was launched, resulting in serious deviations from our targeted revenue and expenditure projections.
“We currently have a pervasive revenue generation problem that must change to successfully finance our development plans.
“Speaking to the facts, our current revenue to GDP of 8% is sub-optimal and a comparison of oil revenue to oil GDP and non-oil revenue to non-oil GDP performance reveals the significant area that requires immediate and dire intervention as the non-oil sector.”
Although the minister said there is a need to build fiscal buoyancy through domestic revenue, she admitted that the incentives given to companies are constraining the fiscal space.
“Nigeria, when compared with peers, shows that we are lagging on most revenue streams including VAT and excise revenues as we not only by far have, one of the lowest VAT rates in the world but weak collection efficiencies”
“So also, do we have a lot of incentives and deductions that further constrain the fiscal space that is given in the hope of stimulating the growth of our industries and to reduce hardship for the poor and vuInerable”
“The key question is why do we keep performing poorly? And what can we do differently this time to effectively turnaround without any relapse even in successive governments?
“Simply put, we have very low effective tax rates, archaic tax laws that are not evolving at commensurate pace with businesses, leakages in our revenue collection systems, low tax compliance rates and poor tax morale to mention a few
“With numerous complex issues at hand, Nigeria must do things differently which requires robust, tough, well-coordinated and multi-faceted reforms.”
Also speaking at the event, Shubham Chaudhuri, World Bank country director, urged the government to invest in both human and infrastructural development, noting that the investments would require a lot of revenue that Nigeria does not have enough of.
“Raising Nigeria’s GDP is important because it will ultimately lift Nigerians out of poverty,” Chaudhuri said.
“The role of government is to do two things, invest in Nigeria people, that is the youths, the children, health care, education, social protection and two is to invest in infrastructure which requires revenue.
“But right now, Nigeria does not have enough of it, most of the investments will come at the state level. the best measure of development is of a country is not per capita GDP, but the quality of the services that the sub national government provide.”
Chaudhuri stressed the need for sub-national government to deliver on its promises and expectations of citizens.
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