Nigeria Targets Non-debt Revenue, Introduces New Reforms

The minister of Finance and coordinating minister of the Economy, Wale Edun has said the government under president Bola Ahmed Tinubu, will focus more on internal resources rather than resorting to increasing its debt burden as concerns over debt sustainability continue to rise.

Edun, at the end of the G24 Meeting at the ongoing 2023 Annual Meetings of the World Bank and the International Monetary Fund (IMF) holding in Marrakech, Morocco also revealed that the government will, in the coming days, announce new reforms that will ensure increased revenue generation from taxation with focus on tax collections.

Noting that debt sustainability is an issue, he said: “clearly, with interest rates going up around the world, there is the talk and there is the issue that debt servicing is taking a larger share than is feasible, than is practical that is warranted of resources in developing countries around the world.

“In Nigeria, the answer that we are focusing on as an administration is to increase the flow of funds that are non-debt. So rather than focusing on borrowing, there will be a focus on encouraging investment, domestic investment and foreign. There will shortly be announcements of measures that rationalize and improve efficiency, which consolidates the issue of tax revenue and domestic resource mobilisation.

“The managing director of the World Bank did say, it’s really simple, the money is in the rich countries. The investments, the opportunity, and the scope for investment as a whole and expansion of business ideas are in poor countries. So, bridging the two is important, and in Nigeria, the focus will be on creating an environment for domestic and foreign investors to thrive.”

He added that, currently, there is inadequate concessional financing, rising interest rates even within multilateral institutions, and that there is a pressing concern of escalating global interest rates contributing to a prominent debt issue and a substantial financing gap for the developmental needs of developing nations.

“Basically, what we have at the moment is not meeting the expectations and the requirements of developing countries, such as Nigeria. There is not enough concessional financing, interest rates are going up even within the multilateral institutions. Interest rates are so high around the world that the issue of debt is, is one that is high on the agenda. And of course, there’s a financing gap, there is not enough funding to fund the developing requirements of the poorer countries,” he stressed.

The minister noted that the ongoing meetings centered on addressing the financing deficit faced by both Nigeria and other developing nations, advocating Nigeria to assume a more significant role in decision-making, and raising crucial concerns related to Nigeria’s inclusive growth.

To him, “the need for reform, the need for change, the need for improvement. In fact, they talked about a bigger, better, and bolder World Bank Group that would also mobilise the private sector funding and of course, for Nigeria, one of the high points was that something that the government of President Bola Ahmed Tinubu has emphasized also came to the fore here, and that is domestic resource mobilisation.

“The fact that we have to depend on our own resources, our own savings to a larger extent. We must be efficient in collecting taxes and fees and payments that are due, we must be more efficient and cost-effective with our expenditure and we must create a bigger base of financing from our own resources. We must rely on ourselves and we must pull ourselves up much more than relying on others. I think that was an important message that came out.”

On inclusiveness in decision making, he said: “on one hand, as far as the international, multilateral development banks and institutions are concerned, we along with other Africans are calling for a bigger voice, a third seat in the governance of the World Bank and IMF, and for Sub-Saharan Africa, and at the end of the day for Nigeria.

“So, we are saying we want greater representation at the table in which some of these decisions are taken and of course coming back home, it’s all about what is being done and there are major steps being taken to reform the tax environment.”