Group Urges N/Assembly To Guide Nigeria Out Of Economic Turmoil *…Proposes Recovery Roadmap
5 min read
Edith CHUKU
Dismayed by the hardship in the country, the Rivers State Tax Justice and Governance Platform TJGP, has charged the National Assembly to acknowledge the critical importance of exercising their mandate towards steering the nation back on the path of economic recovery, stability and prosperity.
TJGP in collaboration with her partners, Christian Aid CA and the Civil Society Legislative Advocacy Center CISLAC, also recommended recovery roadmaps that would strengthen debt management, enhance revenue mobilization, plug leakages and prioritize government spending in critical sectors.
Speaking during a media briefing in Port Harcourt on Friday, with the theme “Nigeria’s Economic Challenges and Public Debt Management”, the Executive Director of the group, Mr. Amaechi Kelechi Justin, said that the country is in dire revenue situation and appears to be short of ideas on the approach to fiscal management.
He explained that the trajectory of revenue from the federal government shows a continuous decline in the past five years with a 45% revenue shortfall in 2018, a 45% shortfall in 2019, 31% in 2020 and 45%, 41% and 50% in 2021, 2022 and 2023, respectively.
According to him, these revenue shortfalls have created budget deficits that have precipitated Nigeria’s debt crisis and has grown the country’s external debt by 1,333% from the level it was after the Paris Debt buy-back-deal in 2005/06.
Amaechi noted that as of June 2023, Nigeria’s total debt portfolio stood at N87.9trillion ($114.3billion) and expressed the regret that it might climb to N107.38 trillion in 2024, following recent approvals by the National Assembly.
He said, “worrisomely, 37% of Nigeria’s total external debt figure is owed to private creditors whose loans attract between 6-9% and shorter repayment period in comparison to loans from multilateral and bilateral sources with interest rates of between 1-3% and longer repayment period of 10-30years.
“The result is that debt servicing will cost 98% of our budget, and the government will spend six times more on servicing debts than on building new schools and hospitals in 2024. This unsustainable level of public debt highlights the need for a reassessment of government spending and revenue generation.
“As advocates of economic justice, the Tax Justice and Governance Platform (TJGP), with subnational platforms across eighteen (18) states in the country and a National Secretariat coordinated by Civil Society Legislative Advocacy Centre and steered by ActionAid, Christian Aid, Centre for Democracy and Development, International Budget Partnership, the and the Nigeria Labour Congress and Oxfam wishes to lend its voice once again to these growing concerns in demonstration of its civic responsibility.
“The escalating debt burden has profound implications for the well-being of Nigerian citizens, and failure to act quickly could result in an additional 23 million Nigerians living in poverty and 80 million working-age citizens without a full-time job by 2030. These concerning trends underscore the need for the National Assembly to urgently commit to sound reforms and balanced resource allocation, thereby paving the way for significant investment in critical sectors that directly impact the lives of vulnerable Nigerians.
“In response to these multifaceted challenges, the National Assembly, as stewards of the nation’s economic well-being, should acknowledge the critical importance of exercising their mandate towards steering the nation back on the path of economic recovery, stability and prosperity.”
In their recommendations, the Rivers State Tax Justice and Governance Platform urged the National Assembly to as a matter of urgency commit to:
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- Investigating the movement and spending of loans received by the Federal Government in the past and present administrations, including but not limited to the $3.4 billion loan obtained from the International Monetary Fund (IMF) as reported in the 2020 annual audited report published last week by the Auditor-General of the Federation.
- Revising legal and institutional frameworks related to debt management, emphasizing transparency and accountability. This includes accelerating the amendment of the Fiscal Responsibility Act (FRA) 2007.
- Redefining the purpose of incurring debts in clear terms of debts being for projects that will promote value chain development, improve the macroeconomic framework, develop infrastructure, and build strategic human capital. This will imply a deletion of the amendment in the 2021 Finance Act which introduced an omnibus new term called “national interest” as a justification for borrowing.
- Stopping borrowing for recurrent expenditure (personnel and overheads) and dilatory capital expenditure that adds no value to economic growth, wealth creation and development.
- Strengthening debt sustainability assessments through public debt review mechanisms to assess the affordability and risks associated with new borrowing initiatives.
- Harmonizing tax laws and rates to reduce overlaps and inconsistencies, eliminate multiple taxation and improve tax revenue mobilization. Nigeria should adopt a comprehensive approach to taxation which categorizes taxes to income, consumption and property tax. Every tax should fall under these three categories rather than having all manners of taxes all over the place which are set out to extort business owners rather than generate revenue for the Government.
- Establishing a Tax Committee empowered to approve Double Tax Agreements rather than the general floor of the National Assembly. The Committee should be empowered to monitor and evaluate existing tax treaties and agreements between jurisdictions to make data available for government decisions.
- Revising and harmonizing tax incentive frameworks that provide for clarity of policy goals of incentives, the periodic assessment and monitoring of tax incentives using a monitoring and evaluation framework, assessment of cost-benefit and distributional impact, and guidelines for timely reporting of tax expenditures.
- Reducing discretionary powers of executive institutions with statutory mandates and powers to regulate tax incentives and ensuring that granting of major incentives go through parliament.
- Introducing appraisal mechanisms that ensure budget performance is a reflection of the value created and not indication of funds released to MDAs.
- Prioritizing spending on policies and programs that will directly affect the general public, especially the low-income earners, such as investing heavily in education, health care, agriculture and future-proof empowerment programmes in a transparent, accountable and sustainable manner.
- With 27% of the country’s average household budgets dedicated to fuel-related expenses (petrol-powered generators and vehicles and heavy reliance on the poor public transport system), appropriation of revenue and reallocation of subsidy savings should also prioritize fixing the power and transport sectors.
- Demanding accountability for petrol subsidy savings and sincerity of purpose in fulfilling the government’s “promises of renewed hope” to the millions of Nigerians who no longer have belts to tighten.”
Amaechi further called on “the senators and members of the Federal House of Representatives NASS from Rivers State to mobilize support for these recommendations as bastion of the people.
“It is our hope that our recommendations will be given the careful consideration they deserve as we remain committed to contributing to more inclusive nation-building opportunities that protect the interests of Nigerian citizens. Thank you and God bless the Federal Republic of Nigeria.”
