Recession: Oil revenue not enough to finance economic reform agenda — Finance Minister

Posted by Mayowa Okekale, Abuja. | 17 June 2017 | 1,536 times

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•Finance Minister Kemi Adeosun.

Minister of Finance, Mrs. Kemi Adeosun, has said that revenue mobilisation is critical to the success of Nigeria’s economic reform agenda.

She disclosed this while delivering the keynote address at the NSE-Bloomberg CEO Round Table held in Lagos on Friday.

Adeosun said: “For the size of our government, the size of our economy and the size of our needs, government revenue is simply just too low.”

Continuing, she said: “We see increasing revenue as the long-term strategic solution for sustainable and inclusive growth but revenue is required in the short-term for investments and in the medium to long-term for our debt service.

“Our acceptance that our ambitions cannot be financed by oil revenue is an equal acceptance that there is a finite limit to how much can, and should be financed by debt. If we don’t want to borrow, we need more revenue.

“The problem is not that our debt service is too high but our revenue is too low and the manner in which the imbalance between our debt service and revenue will be corrected, apart from rebalancing our borrowings in favour of longer tenure loans and external sources, is by finally and frontally facing the issue of revenue,” Adeosun added.

Mrs. Adeosun emphasised the limitation of relying on oil, saying: “We believe that Nigeria is an ‘oil-plus’ economy and we should model ourselves after countries that have similar profiles like Egypt with a population of 91 million and 490,000 barrels of oil per day (185 people to a barrel of oil) and has a highly diversified revenue base.

“We cannot model ourselves after Saudi Arabia, with their 30 million population and 10 million barrels of oil per day (3 people to a barrel of oil). In Nigeria, we have a population of close to 180 million people and about 2 million barrels of oil per day (90 people to a barrel of oil). We must therefore, diversify our revenue base.”

In the circumstances, “revenue mobilisation is critical to the success of Nigeria’s economic reform agenda and we are working on strategies to drive non-oil revenue growth. To do this, we must amend Nigeria’s low level of tax compliance. A tax to GDP ratio of just 6%, is just too low and we are working to amend this,” Adeosun said.

She spoke a day after the Ministry of Finance announced plans to recruit and train 7,500 Community Tax Liaison Officers under the N-Power scheme. “These young people will be subjected to a rigorous and intensive education on the tax system, sales, communication skills and civic education before being deployed to their communities to provide tax education and enroll new tax payers. We have just 14 million tax payers out of an estimated 69.9 million people who are economically active,” Adesoun said.

Other speakers at the Round Table included Dr. Doyin Salami of Lagos Business School, Mr. Andrew Alli, President/Chief Executive Officer, Africa Finance Corporation, Mr. Oscar Onyema, Chief Executive Officer, Nigerian Stock Exchange, among others.

Source: News Express

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