ABUJA (Sundiata Post) – The Federal Government has indicated that continuous borrowing was not in the best interest of the country hence the plan to cut down on borrowing as the nation’s debt profile balloons.
This is even as Acting President Yemi Osinbajo had assured that despite the many problems experienced in the power sector and other sectors, it is still possible to make progress. According to him, the country must keep on moving while the problems are being solved.
The Minister of Finance, Kemi Adeosun on Tuesday gave the hint at the Quarterly Presidential Business Forum held at the State House, Abuja with members of the organised private sector especially those from the power sector.
The quarterly meeting which is the fourth in the series focused on two key areas – tax policy and power.
Nigeria’s total debt profile stands at N5.4 trillion and the country plans to borrow to fund the deficit of N2.36 trillion in the 2017 budget.
She said the government needed to improve on its revenue generation as it could no longer depend on borrowing to fund its annual spending plan which is not even big enough.
“We cannot borrow anymore. We just have to generate enough to fund our budget”, Adeosun said, adding that the government needs to “mobilise revenue to fund the necessary budget increase” and this would be mostly drawn from tax.
According to the finance minister, Nigeria’s dependency on oil, forgetting other sources of revenue including tax resulting in an abysmal six percent tax ratio to the Gross Domestic Product (GDP).
“We need to mobilise additional revenue to fund our budget. We have got to get our budget bigger and to do that we cannot borrow anymore. We simply have to generate more revenue, we have to plug the leakages, we have to improve tax collection so that we can manage our borrowing,” she said.
Adeosun lamented that Nigeria’s budget is one of the lowest amongst her peers in the world and to join the league of global big players, Nigeria has to do what they do. She said this necessitated the Voluntary Assets and
Income Declaration Scheme (VAIDS), which is aimed at improving revenue collection rate and generally improving domestic revenue mobilisation so that “we can fund our budget sustainably.”
She added: “Our budget is significantly lower when attached to GDP, we are currently at six percent. It is lower than all our peers. We are currently at six percent and that is the lowest in Sub Saharan Africa and one of the lowest in the world. Our budget size is too small and that means we can only pay salaries in some cases and we don’t have money to deliver essential services.
“There simply isn’t enough money in government to do what government want’s to do. Am sure you will say that is because people are stealing or because you are wasting money but I am saying even if you plug all the stealing and all the waste, the budget size is not big enough and that is because we are not paying enough in terms of tax or we are not collecting enough in terms of tax.
“Statistics show our tax to GDP at six per cent, sub-Saharan Africa average 17 per cent, Asia 26 per cent, most of the emerging markets and the advanced countries are at 30-35 percent.”
Adeosun added that there is no poor country that has a high tax to GDP ratio and there is no rich country with a lower one. “So if we want to move with the prosperous countries we have to do what they do. We will not achieve prosperity for Nigeria if we continue on the tax to GDP ratio that is in the peer group of Afghanistan. I’m sure none of us aspire for Nigeria to become like Afghanistan, we are trying to benchmark ourselves against more developed countries and we must have to address these problems in a more fundamental sense.”
In his remarks, the Acting President told members of the private sector in attendance that though the government is not perfect it would deal with the problems they currently face.
“And all I will just want to say to the private sector is be sure that we have enough willing and able partners. There is no way we can ever be perfect. I mean government is a behemoth, where there are so many problems and issues.
“But, do not doubt for one moment at all, our commitment to ensuring that we are able to deliver on the promises that we have made.
“I believe very strongly that Nigeria will turn around. I have no doubt in my mind that if we are focussed even in the next 12 to 18 months, if we are focussed we will certainly see a turn-around. And I really would want you to join us in being able to ensure that this happens to the Nigerian economy”, he said.
The Minister of Power, Works and Housing, Babatunde Fashola, who also spoke at the forum, said 70 percent of the power sector is in the hands of the private sector.
He explained that power sector recovery programme is a five-year programme geared towards restoring viability to the sector and reset the industry for growth.
“One of the things we are trying to do is to re-evaluate the tariff regime. We have set a minimum generation of 4,000 mega watts. We also want to reduce the loses: electricity theft, vandalism etc. Government shouldn’t interfere with tariff. It created huge debt for the government. Solar is the new power. We want to plug our power supply challenges.”
He noted that though complex at the moment, the government was trying to re-evaluate the tariff regime. “This is one of the issues that the power sector reform programme seeks to address.
“There are issues about whether they are cost reflective. Tariff increases have also been subject to the vicissitudes of the larger economy. What should have been the tariff gains has been wiped out by the exchange rate depreciations”, he said
The minister of state for petroleum, Ibe Kachikwu spoke on the challenges of and opportunities of Gas-To-Power in Nigeria. According to him power is the main demand sector for natural gas in Nigeria and a stronger interface and coordination is required between gas and power sectors.
