The Minister of Finance and Coordinating Minister of the Economy, Wale Edun has said that President Bola Tinubu has directed the implementation of an executive order that will ensure that all foreign exchange held in private hands across the care paid into the banks.

He also disclosed that the president directed the implementation of an executive order that allows the issuance of foreign currency financial instruments in the domestic economy so that as people bring that cash into the banking system, they can have investments.

The minister was responding to questions from members of the House of Representatives Committee on Finance when he appeared to defend the Ministry’s 2024 budget estimate.

He also said that the government was working on the possibility of replacing the waiver which has cost the country huge revenue losses with a rebate.

He said: “Essentially, there is the need to increase our foreign reserve given the import dependency and given the fact that we want to produce more locally which requires importing machines and, in many cases, raw materials so that value can be added, jobs can be created and we can give people incomes and reduce poverty.

“There is a need for foreign exchange. The primary source is oil revenue and if we look at what has gone on at the concluding COP28 in Dubai, UAE, the conversation there is that there is no clear agreement that you should suddenly phase out fossil fuels.

“We are a fossil fuel nation and we still have oil revenues to rely on and they are a veritable source, not just of government revenue, but foreign exchange.

“We need to emphasise that we better maximise the revenues and foreign exchange revenues from oil production and sales. That is the primary source for Nigeria as of this time.

“But in addition, we need to encourage and we have committed ourselves as a government and as the key priority of Mr President to attract investments, domestic investments and foreign direction investments. That too is a source of liquidity in foreign exchange.

“I must say that included in the sources of foreign exchange available, is foreign exchange held by Nigerians in cash outside the banking system which is in the billions.

“Mr President has authorized an executive order to facilitate the payment of that cash into the banking system, so it can form part of the money supply which can be of use to the Nigerian economy.

“Similarly, there is also an executive order that allows the issuance of foreign currency financial instruments in the domestic economy, so that as people bring in that cash into the banking system, they can have investments.

“Also by the time we have foreign currency dominated investments in Nigeria, then Nigerians with huge financial savings in banks abroad can bring it back home and save it in their own economy and not feel that they are going to suffer foreign exchange losses.

“These are some of the measures, some of the initiatives aimed at shoring up foreign exchange. They are being implemented imminently even though I think it is unwise and in fact even unnecessary to quote specific figures or timetables, but we can be optimistic that the foreign exchange liquidity would improve in the short term”.

The minister also said that the government was looking at the possibility of replacing the annual waivers with a more manageable rebate system.

He said: “In terms of tax waivers, exemptions are basically incentives. There is a set of incentives which effectively is government expenditure. What that means is that the government is spending on encouraging, manufacturing, encouraging exports and others.

“It is worth approximately as you rightly said about one percent of GDP and I know the Fiscal Policy and Tax Reform Committee is looking very closely at this and the Ministry of Finance will do so as well.

“But the arrowhead for a comprehensive analysis and cost-benefit analysis of those incentives and the spending on incentives, tax exemptions, duty waivers, and so forth, is being done right now and we expect tremendous savings from there.

“In particular, we feel that a policy of rebate is probably better than upfront allocation of incentives. When the transaction is carried out, it is entirely feasible and practical and possible to immediately give somebody a rebate on funding that they have spent.

“It can be done seamlessly and with the technology these days, what could have been cumbersome in the past and taken too long and be self-defeating can now be done simultaneously, so that if you pay your duty and you claim the rebate, immediately the transaction is consummated and we see that you have actually imported the machinery you said you would import, you get your funds back. So that is the direction in which that is moving.”

Responding to a question on the possibility of merging the Federal Inland Revenue Services (FIRS) and the Nigeria Customs Service to form one revenue-generating agency, the Minister said revenue collection should be the focal point for the government.

He said: “In terms of the merger, what you are really indicating and speaking to is the fact that revenue collection should be through a focal point.

“There is no reason why, just because you are a revenue generating agency, you give out assessments which people pay. It does not mean they should pay to that agency.

“They can pay to a centralized point. The Federal Inland Revenue Service can collect on behalf of all the agencies. So, these are the types of innovations, these are types of efficiencies and improvements that we must look at.

“I am just agreeing wholeheartedly with you that given this day and age, given the technological advancement, given the digital tools available, we really should be doing better in terms of revenue generation, collection, and monitoring.” (The Nation)

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