The International Monetary Fund, an arm of the World Bank Group tells Nigeria to double her tax compliance to GDP ratio from 25 per cent to 50 per cent.
Amine Mati, head of IMF in Nigeria, said this in Lagos, at the presentation of the IMF Regional Economic Outlook for Africa titled: “Domestic Revenue Mobilisation and Private Investment.”
“If you look at all the various forms of taxation, you can take another look of property tax, then you can have tax administration and improving compliance. You know, in Nigeria, complying with many of the taxes is still very low”.
“We think that for the region, there needs to be three to five per cent GDP growth. How do you get there? In Nigeria you can remove a lot of exemptions and expand income taxes.
“Those are the types of measures that, as part of a comprehensive package, can make the difference in increasing revenue mobilisation”, Mati said.
He said Nigeria’s growth rate really needs to surpass its population growth to make a difference. “Raising growth is really key for the challenges ahead in Nigeria and Sub-Saharan Africa. for the region as a whole, we can say the average growth rate on a per capita base is low. And a third of African countries, in 2017, with Nigeria as one of them, has seen a decline per capita GDP level. And we expect some of that to continue. To really make a difference, that trend needs to be reversed”, Mati added.
IMF said Private investments, at about 13 per cent in the region, remains too low. The interesting characteristics is that non-resource countries have higher private investments.
Oil prices have gone up and this is an opportunity for these countries to really use the opportunity provided by the pick up in Oil price to initiate some reforms that would encourage more private sector investments.
Speaking at the event, Patience Oniha, Director General, Debt Management Office (DMO), explained that the decline in interest rate means that there are about N200 Billion out there in the market for private sector to invest in.
“You will also notice that we are retiring some of the treasury bills as they mature. The main challenge I am giving to the private sector is that why are all these money still sitting where it shouldn’t be? Why has it not reached the private sector because that was the key objective of our strategy”.
“We borrow because there is revenue shortfall. The National Assembly passed the budget last week and we know it was higher than what the executive presented. So, as a debt manager what I am looking for is to see where the funding of that incremental size may come in from. Am I supposed to be borrowing to make up for that shortfall”, Oniha said.
Also speaking, Laoye Jaiyeola, Nigerian Economic Summit Group (NESG) Director General said there is need to properly aggregate and scale up the operations of the private sector. “There is need to support them so as to grow the entire value chain”.