Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, has revealed that the Nigerian government has undertaken a comprehensive restructuring of its revenue streams in a bid to boost revenue and economic growth.
This overhaul, he disclosed during a podcast hosted by Bruit Costaud in collaboration with Ballard Partners of the United States of America, aims to address longstanding challenges of leakages and inefficiencies in revenue collection.
“We no longer wait for reconciliation with revenue generating agencies and Government Owned Enterprises (GOEs) as was the practice in the past. Instead, we now deduct automatically from source to plug leakages,” Edun said, outlining the government’s proactive approach.
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
Drawing parallels with President Tinubu’s successful revenue reforms in Lagos, Edun emphasized the application of digitalization and advanced technology to enhance monitoring and collection efficiency at the federal level. He highlighted the seamless, automated, and digital process implemented by the government to ensure timely revenue capture without the need for subsequent reconciliation.
“There has been an application of technology to make sure that what is due to the federal government, particularly from its various revenue-earning agencies and companies and enterprises is now not taken based on compliance or not taken at the end of the year.
“Each day now, a federal government enterprise earns revenue, government checks, and immediately it takes it seamlessly, automatically, and digitally. So there is no issue of there may be a discussion later as to let us reconcile and so forth.
“But what we did is we looked at the rules, the regulations, the guidelines, the Fiscal Responsibility Act and so forth. And then we looked at the percentage exactly due to government without waiting for whether there is a surplus or not, and so forth.
He explained that “This transformative approach ensures that the federal government receives its due revenue from agencies and enterprises on a daily basis, without reliance on year-end reconciliations. By adhering to existing rules, regulations, and guidelines, we have streamlined revenue collection, promoting fiscal responsibility and accountability.”
The minister’s revelations mark a departure from previous perceptions of revenue generation practices, debunking notions of widespread malpractice and non-compliance with the provisions of the Fiscal Responsibility Act (FRA, 2007) as well as the subsequent amendment in the 2020 Finance Act.
Furthermore, Edun outlined efforts to revolutionize tax administration in Nigeria, emphasizing the importance of enhancing efficiency and eliminating wastage without resorting to tax hikes. He underscored the significance of two key policies—removing petroleum subsidies and unifying the exchange rate of the Naira—as integral components of the government’s economic stabilization program.
Highlighting tangible progress, Edun cited an increase in daily oil production and the cessation of unsustainable petroleum subsidies, which had previously posed significant financial challenges.
He stated that before the current reforms by Tinubu’s administration, “there was no longer revenue coming from the all-important oil company, NNPCL.
“Rather, there was a payment of the unsustainable petroleum subsidy that was costing $10 billion a year.
“That was costing two per cent of GDP. That threatened the very finances of the federal government, and linked to that was the foreign exchange subsidy where the arrangements for putting foreign exchange into the economy were lopsided and were inefficient and lacked transparency and created tremendous arbitage and rent-seeking.”
He commended President Tinubu’s decisive actions in restoring government revenues and curbing illicit practices in the petroleum sector.
“So, Mr. President removed those two subsidies and by taking those steps, he saved the Nigerian economy because you now have a recovery of government revenues and has also stopped the incentive, for instance, the flight of petroleum products across the borders.
“We have sluggish growth than the population growth of 3 percent in recent years which has shown up in increasing poverty, human development index and unemployment figures.
“But that was then. There has been a programme to stabilize the economy which is having positive effects,” he said.
Addressing concerns about economic stability and investor confidence, Edun applauded the growth of the All-Share Index (ASI) and increased portfolio investment in Nigerian securities. While acknowledging the benefits of portfolio investments, he stressed the government’s commitment to attracting foreign direct investment (FDI) in real sectors of the economy.
Edun emphasized the need for a stable exchange rate regime, low-interest rates, and moderate inflation rates to foster a conducive investment climate. He outlined ongoing reforms in the National Social Investment Programme (NSIP) to ensure accountability and integrity in the disbursement of benefits to vulnerable Nigerians and small enterprises.
In a bid to curb abuses in duty waivers, Edun announced a shift towards post-import grant of waivers, aiming to prevent misuse of incentives. Additionally, he reassured Nigerians of the government’s commitment to alleviating economic hardships through targeted palliative measures, including wage awards and strategic grain releases.
Looking ahead, Edun affirmed the government’s determination to address youth unemployment through innovative schemes and initiatives. He underscored President Tinubu’s unwavering commitment to empowering Nigerian youth and fostering inclusive economic growth.