Business experts and manufacturers are pleading with government authorities to alleviate their financial burden by diminishing or even waiving the taxes and levies imposed on them. These experts highlight that the current taxation system contributes minimally to government revenue while disproportionately weighing down entrepreneurs. Bismarck Rewane, CEO of Financial Derivatives Company, confidently stated during the economic outlook and budget analysis conference, theme, ‘Building Economic Resilience in 2024: Strategies for a Sustainable Future’, that the economy successfully averted a recession in the previous year and forecasted to expand by 3.3 percent in the current year.
According to him, there has been a decent increase in the financial institutions, telecommunications, and construction sectors, surpassing the national average. However, sectors such as crude petroleum and natural gas, oil refining, and textile and apparel are currently experiencing a recessionary period. The annual economic forecast and fiscal analysis convenes to assess policy developments and the prior year’s economic performance. It offers a platform to examine future prospects and potential risks. Rewane addressed Nigeria’s macroeconomic challenges, emphasising issues like inadequate economic growth, rising income inequality, heightened poverty and unemployment, increasing inflation, growing fiscal imbalances, and worsening foreign exchange.
Government should control foreign exchange in the country.
He supported various measures to rescue businesses and the economy this year, including rearranging debts, raising domestic interest, effectively managing the money supply, improving the foreign exchange market, implementing electricity tariffs in line with costs, reducing petrol subsidies, and reconsidering wage rates. The government must take control of the foreign exchange situation and enhance transparency in the FX market. The actual condition of the national foreign reserve must be known. Furthermore, it is imperative for the government to strategically and gradually adjust interest rates, along with enhancing transparency in revenue and tax generation.
However, the government’s claim of saving N8 trillion through subsidy removal and boosting revenue has not translated into tangible benefits for the people. The lack of productivity is hindering economic growth, so it is vital to address the obstacles that are holding it back. Every sector of the economy plays a crucial role, and by introducing incentives for micro, small, and medium enterprises (MSMEs), they can spark transformative changes and enhance the GDP. Also, Ben Akabueze, the Head of the Budget Office of the Federation, conveyed profound regret regarding the longstanding challenge of inadequate public revenue generation spanning three decades.
Substantial growth wasn’t recorded despite the increase in budget.
The continuous reliance on deficit budgets funded by accumulating debts is disheartening and unsustainable. The current budget, with a deficit of around 3.88 percent of the national output, exacerbates inflationary pressures. Despite calls for Nigeria to cut spending, the focus should be on maximising expenditure efficiency rather than mere reduction. While a deficit budget is regrettable temporarily, the solution lies in boosting revenue. Even with a recent budget increase, the sector still lacks substantial growth. Each remedy isn’t merely allocating more funds but attracting private sector investment.
Chairman Taiwo Oyedele of the Presidential Fiscal Policy and Tax Reforms Committee assures that inflation won’t worsen this year. He underscores the urgency of reducing systemic inefficiencies to lower prices of crucial commodities like food and petroleum products. He proposed a set of suggestions that included a temporary halt on certain taxes and fees, endorsing exemptions on diesel and LPG, and emphasising the boost of services and intellectual property exports over physical goods. Additionally, they must enhance the availability of digital employment options for the youth.
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Moreover, the government should allocate the saved N8 trillion to combat multidimensional poverty among the population. The initial focus should be on supporting micro and nano businesses. An ongoing challenge is FX, with exchange rate inconsistencies. Surprisingly, $20 billion in diaspora remittances bypass Nigeria, as fintech companies receive dollars while credit receivers are issued naira. Exporters opt to externalise FX due to CBN processes, avoiding depreciation. Immediate convergence of the official and black markets is imperative for rescuing the economy.