The Nigerian Economic Summit Group (NESG) have raised concerns over Nigeria’s rising debt despite N18.23 trillion FAAC disbursements in one year.
Chairman of NESG, Niyi Yusuf made the disclosure in Abuja on Monday at the opening session of the 30th edition of the Nigeria Economic Summit organised by the NESG with the theme “Collaborative Action for Growth, Competitiveness and Stability,”
He said “The removal of fuel subsidies and the liberalisation of the exchange rate contributed to a trade surplus of N12.1 trillion in the first half of 2024— double that of 2023. Government revenues surged, with FAAC allocations reaching N18.23 trillion, an increase of 82 percent over the previous year. Foreign investment inflows have also tripled, boosting our foreign reserves.
“Yet, these gains are tempered by macroeconomic instability. The naira has depreciated by over 72 percent against the dollar, and inflation remains elevated at 32.2 percent, placing immense pressure on citizens and the economy.
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“Our fiscal situation remains a significant concern. Public debt reached N121.67 trillion by the first quarter of 2024, pushing our debt-to-GDP ratio to 52.9 percent. The debt service-to-revenue ratio is still high at 68 percent – underscoring the urgent need for fiscal reforms to put our nation back on a sustainable path,” Yusuf highlighted
Speaking further, he noted that “The Global Hunger Index score of 28.3 points reflects our deepening food insecurity, and unemployment remains a daunting challenge, with 92.3 percent of the workforce in the informal sector. Many citizens have become poor, the poor are getting poorer and the average Nigerian is facing very difficult times,”
He however noted that “The outcomes of last year’s Summit focused on igniting growth, ensuring sustainable investments, and reviving national dignity as NESG have seen positive developments, such as the establishment of the Presidential Economic Coordination Council (PECC) and the Economic Management Team Emergency Taskforce (EET) as well as the recent approval by the Federal Executive Council of the Economic Stabilisation Bills from the Presidential Committee on Fiscal Policy & Tax Reforms which is a testament to the government’s commitment to enhancing fiscal sustainability and economic governance.”
He concluded by announcing that The NESG has set up a Live Policy Tracker to monitor the implementation of past Summit recommendations, and to ensure alignment between Summit recommendations and national outcomes.
Also in his remarks, Indermit Gill; Senior Vice President, The World Bank Group advised the federal government ,”To allow markets determine exchange, make allocation of oil revenues transparent and also devise a public investment mechanism to attract foreign direct investments.”
Tax gap stands at 75% – Oyedele
Commenting as a panelist, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele said the committee is coming up with reforms to ensure that Nigerians who are supposed to pay tax fulfill the obligation as the tax gap stands at about 75 per cent.
He said a survey conducted by NESG showed that “Only 17 per cent of Nigerians pay taxes as well as 30 per cent of businesses, and one of the reasons is because they don’t trust the government.
“Therefore, what we want to do is to have a national portal, just like South Africa, where tax payment is seamless and transparent because our current tax gap is about 70-75 per cent but if we correct that and everyone pays, our revenues will be four times that.
“Another issue is policy gaps where we grant unnecessary waivers to some people who don’t even deserve it. But the main issue remains the compliance issue.”
On the incentives for businesses, Oyedele stated “That currently before the National Assembly is a policy document that is targeted at reducing the tax burden on businesses and once our reforms are implemented, corporate income tax rate will reduce from 30 to 25 per cent. We are hopeful it comes on board in January 2025.”
He added that the lowest hanging fruits that his committee wants to tackle included removing disincentives as contained in the Economic Stabilization Bill which is currently in the National Assembly, adding that the document has also harmonised over 60 official taxes being paid by Nigerians
He also stated that the government was working to ensure that personal income tax reduces for Nigerians earning below N1.5 million monthly after the Economic Stabilization Bill is passed, adding “However the rich people earning N1.5 million and above will see their personal income tax rise by up to 25 per cent.”
Nigeria’s power issues not in generation but evacuation – Experts
Also speaking at the summit, experts in the power value chain have stated that unlike popular opinion, Nigeria’s energy sector’s challenges are not in power generation but rather in energy distribution.
They made the submission yesterday in Abuja during a panel session at the ongoing Nigeria Economic Summit #NES30 tagged ‘Power Sector Dynamics, Building a state-level energy system’.
In his submission, Joshua Yari Garba, Head of Component Enabling Environment and Renewable Energy Investments at GIZ, noted that “Currently Nigeria is generating only 4,000 out of the about 12,000 or 13,000 megawatts available for evacuation
“However, nobody has bothered to ask what is happening to the remaining 8,000 or 9,000 megawatts that are not evacuated. Therefore, in the real sense it shows that the real problem in the power sector is actually in the evacuation and not generation,” he stated.
Another player in the sector, Ifeanyi Ike, noted that there is a need for reassessment of Nigeria’s foreign exchange exposure in the sector to explore areas where the country can utilise its local capacity.
He said, “Power is critical to industrialisation and when we talk about all that and we don’t ensure that the industrial sector is efficient, then we are not ready to address the high cost because once there are no efficient operations, we transfer the cost to the end user. As such efficiency in the evacuation of power is critical.”
He also said that there is a need to review the “agreements with Distribution Companies (DisCos) to ensure efficiency, especially at the distribution end which is too large and we have too many independent players.”
In his response, the acting managing director of the Nigeria Bulk Electricity Trading Company (NBET), Johnson Akinnawo, said although there are challenges in generation, there are policies that need to be adjusted to ensure efficiency
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