Why revenue focus will not burden Nigerians

KemiAdeosun-cover

Mrs Kemi Adeosun, Minister of Finance

The Minister of Finance, Mrs Kemi Adeosun has assured that the Federal Government’s drive for enhanced revenue generation would not be a burden to Nigerians.

Adeosun, who spoke at the opening of the two-day National Revenue Retreat 2016 in Kano recently, said the Muhammadu Buhari administration is firmly committed to turning the economy around by mobilising capital for investment in the essential infrastructure which drive the country’s economic growth.

The retreat entitled “Enhancing Revenue Generation for Sustainable National Development”, according to her, came up at a pivotal period in the nation’s economic history.

The minister said the revenue focus will not burden Nigerians but will ensure that all revenue due to the Federal Government, irrespective of the source, is collected with a high degree of efficiency, fully receipted and properly accounted for.

Governor Abdullahi Umar Ganduje of Kano State disclosed that the state government has identified about 106 dormant revenue lines which it was working assiduously to activate.

Similarly, Adeosun said the Federal Government has also identified over 1000 dormant revenue lines and promised that such huge dormant revenue opportunities will be maximised. She expressed the determination of the Federal Government to work with the private sector where required to maximise the nation’s revenue potential.

She said the days when revenue generating agencies acted as autonomous entities outside of the budget cannot be allowed to continue, adding that whether the funds are from fees and fines, from taxes or from projects, the law is clear that every naira must be paid into the Consolidated Revenue Fund. “The administration has started the process of maximising our revenues with a number of initiatives. The most important change introduced is a reorientation in the thinking about public money.  Discipline and accountability in the spending of public money is a trademark of the President Buhari-led administration. Making every naira count is a commitment and a policy focus and not a slogan. Citizens will not willingly pay revenues if the funds are seen to be leaking or being wasted,” Adeosun said.

According to her, all spending must start with revenue, hence, the ministry is now plugging revenue leakages. Such leakages can arise from a number of factors including inefficient collection systems, evasion of payments due, collusion and other malpractices, as well as obsolete tariffs.

Adeosun also stated that the first step required is the preparation of a detailed revenue map which identifies the specific lines of revenue and understands how such revenues are generated. “Disaggregating revenue into line items is an important first step. The triggers in our various processes that result in a revenue transaction must be clearly understood and well documented.  To maximise revenue collection, the task of plugging these leakages must be undertaken. It is also important to understand the costs of collection. That is the essential equipment, technology and resources that are required to support revenue. The administration is committed to ensuring budgetary provision for these costs. We currently hold daily bilateral revenue meetings with revenue generating agencies to define targets and agree strategies,” the minister stated.

She disclosed that the Federal Government has commenced the review and revision of the cost profiles of revenue generating agencies to ensure that maximum operating surpluses are declared and remitted in compliance with the Fiscal Responsibility Act. “In this regard, we have recently commenced a number of audits of a range of agencies that will give us improved visibility into the revenue and cost profiles. This will enable us to generate an indicative cost profile that can be used to establish reasonable budget targets going forward,” she said.

The minister said the need for investment in infrastructure is well documented as there are benefits for so doing. “Given our low debt to GDP ratio, we could have succumbed to the temptation to fund our needs purely by raising debt. However, our approach to debt is a prudent one and we are firm believers in the critical role that revenue plays in mobilising funds. Thus the importance of today’s gathering in planning and developing attainable strategies for revenue mobilisation,” she said.

She explained that revenue mobilisation provides a sustainable and predictable flow of funds that is not as vulnerable to external shocks as we have seen with the oil price, adding that the Ministry of Finance has committed itself to a total revenue focus, which will reengineer revenue collection.

The responsibility for revenue generation, the minister noted, must be vested at the highest level within every organisation. “Revenue is not the responsibility of the Finance Team, it is a collective and indeed a patriotic responsibility of every public servant. The accounting officers must see themselves as the Chief Revenue Officers of the organisation. As we begin to streamline our public finances, we expect those organisations with high revenue generating capacity to fulfil their responsibilities,” Adeosun said.

She observed that in other countries, agencies such as Passport Offices and Vehicle Licencing Centres, Airport Authorities and Ports are cash cows, whereas in Nigeria their historical contribution has been sub-optimal. This, she emphasised, is going to change.

According to her, the focus of this conference was on non-oil revenue generation, noting that oil represents only 13 percent of GDP but contributes over 70 percent of government revenue. She said that this trend cannot continue, adding that as the nation moves toward exploiting its solid minerals and agricultural endowments, government must build robust revenue platforms to ensure that Nigerians take full advantage of the value opportunities. “We must begin to see revenue maximisation as ‘the business of government,’ that is, government operating commercially where required and this will require a new mind-set. Optimisation of revenue generation requires targets, incentives and penalties as part of the performance management framework. Thus in some cases partnership and risk sharing with private sector operators must and will be considered,” Adeosun said.

She noted that the ease of doing business has been cited as one of the key drivers of economic growth and Nigeria has already set targets for improvement in this regard. “Accordingly in our drive for revenue we must look for opportunities for cooperation and synergy through the three tiers of government. Single collection of multiple levies must be pursued where possible to maximise the convenience and efficiency of our collections. The responsibility for collection of revenue must reflect the fact that there is ‘one Nigeria’ and there are no Federal, State or Local Government Nigerians. There are just Nigerians and therefore we must have a collaborative approach rather than a confrontational approach. Where there is a need to review and update obsolete laws, this must be embraced by our legislators,” she said.

Adeosun was emphatic that Nigeria can and must improve its revenue collection efforts. “Our revenue to GDP ratio is far lower than that of our peers. Nigeria’s Tax to GDP is only 6 percent versus 26 percent in South Africa and 21 percent in Tunisia. This is actually good news as it reflects the opportunity for growth,” she said.

About The Author

Related posts

Please wait, while your subscription is progressing...

Subscribe to TheEconomy Newsletters & Notifications

Want to be notified when our article and news are published? Enter your email address and name below to be the first to know.