BY SAM OTUONYE
The Nigerian Economic 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 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.
“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 bemoaned.
Speaking further, he noted: “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 has 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 announced the setting up of a Live Policy Tracker by NESG 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 rates, make allocation of oil revenues transparent and also devise a public investment mechanism to attract foreign direct investments.
Commenting as a panelist, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele said the committee was 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.”