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 IMF MD tasks Nigeria on non oil revenue, diversification, war on corruption

by Business News Report

International Monetary Fund has urged Nigeria to focus more on non oil revenue drive, economic diversification and intensifying war on corruption. Speaking at the opening press briefing in Washington, IMF Managing Director Kristalina Georgieva in response to a question on Nigeria said “you bring up a question about the country that matters not only to the citizens of this country, Nigeria, it matters to the whole of Africa. When Nigeria does well, Africa does well. What we see, however, is that the economic recovery remains still too slow to reduce vulnerabilities, and most importantly, to reduce poverty in the country. What we experience is some good thoughts around shaking up economic policy now that a government is being constituted in Nigeria.

“We have been quite consistent to talk about three issues in Nigeria that need to be tackled. One is the question of fiscal capacity. As you know, the tax collection levels in Nigeria leave quite a lot of room for improvement, and without strengthening the fiscal position of government, the expenditure side, of course, would suffer; so the recommendation that we always give is that countries should aim for 15 per cent of GDP in terms of collection to fund responsibilities of the government, and in Nigeria this is quite far. If I am not wrong, Nigeria is still in the single digit territory.

“Secondly we have been consistently recommending that the country to diversify the economy because reliance on oil does not serve very well, and that means to continue with structural reforms that would make that possible. Last but not the least, to fight corruption and to make sure that the richness of Nigeria serves Nigerians inside the country; and in this regard, as you know, last year the Fund adopted a very clear, strong policy on anti-corruption, and we engaged with governments to build their capacity to make that serving the citizens of the country with the money of the country possible”

Minister of Finance Mrs Zainab Usman had said that “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 are given in hope of stimulating growth of our industries and to reduce hardship for the poor and vulnerable. 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. 

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