A new revenue drive is being championed by Nigerian lawmakers. At plenary this week, President of the Senate Ahmad Lawan said that revenue-generating agencies of the federal government were capable of generating three trillion naira annually if efforts were made to ensure prudent spending. He said this at a meeting between the leadership of the Senate, members of the Senate committees on finance and revenue-generating agencies. On Business Edge for Wednesday, Lekan Onabanjo engaged Gospel Obele, Chief Economist at Streetnomics Limited in a conversation to discuss the ramifications of this revenue drive and if past efforts to increase internally generated revenue have paid off at all.
Gospel Obele doesn’t think this revenue drive is a new phenomenon at all and that agencies have always directed attention to the sourcing of funds. “MDAs through their efforts, actions and inaction are much more about the revenue they’re getting from economic agents than the support they’re providing or the ease of doing business.” What the populace is seeing now is the government making a formal case for these agencies to focus on revenue growth. “The government just put a stamp on it saying that it’s open for revenue generation. But in saner climes, the conversation should be of supporting institutions and economic agents.” When this happens, Obele says a natural result would be the pulling-in of said revenue.
Whilst Senate President Lawan has put the figure at three trillion naira, the ability of these agencies to generate the revenue is another matter entirely, given Nigeria’s larger picture of not simply having enough money coming in into its coffers. “Nigeria has a deep revenue crisis and it’s quite worrisome… A lot of these MDAs do not have the capacity to either inspire compliance and capacity to generate revenue and they’ll probably increase levies and licenses in order to meet up this shortfall.”
Furthermore, the country experienced a shortfall of 1.4 trillion naira in 2021’s drive to generate revenue. Does this not mean the planned legislation is ineffective anyway? Obele says previous moves have been ineffective because it doesn’t address the real issues that are being posed. “The policy as a tool for revenue generation has been focused on the wrong thing and the wrong priorities… There are no clear cut policies to enable the non-oil sector position into more competitive news.”
Watch the full episode of Business Edge above.