Nigeria and other West African countries should move away from reliance on foreign assistance on finance developmental projects in the region, financial experts have advised.
According to them, over-dependency on financial aid and external loans might affect long-term prosperity for the entire region.
The experts raised the concern on the sidelines of a workshop on tax expenditure organised by the Economic Community of West African States’ Commission under the Context of the Implementation of the Support Programme for Tax Transition in West Africa in Abuja.
The three-day workshop, which began on Tuesday and ended on Thursday was aimed at examining directives on harmonisation of tax expenditure management practices and the monitoring and evaluation of tax transition in ECOWAS member-states.
The Special Advisor to the Director (Custom Union and Taxation in ECOWAS), Gbenga Falana, said that the outbreak of the COVID-19 pandemic had affected world economies and limited foreign assistance to developing nations.
While emphasising that debt profile of most of the countries in the sub-region was mounting, he stressed the need for West African countries to look inward and finance local projects through effective domestic resource mobilisation.
Falana said, “Donors themselves have come to realise that they can’t continue to provide fund to finance our development because of the pandemic.
“Foreign aid is no longer sustainable and with the disruption that we have seen due to the likes of COVID-19 and the issue around the Ukraine, Russia war, it shows that further disruptions are inevitable. But one way to actually leave above further disruption is to begin to see how we can generate resource to finance that growth.
“Though, taking loan itself is not bad, however, loans are sourced for a reason and the purpose for which a loan is sourced should be applied. Loans should be sourced to finance development and if used appropriately, the loan has capacity to generate further funds for the country.
“You can’t begin to access facility, then apply wrongly, which is the issue that has actually been the trend. But all the anomalies are now going to be corrected with the implementation of the fiscal expenditure.
“So, I’m not saying that sourcing loan from abroad is completely removed, but it’s not sustainable. I think the the donors themselves have come to the realise that they can’t continue to provide fund to finance our development because COVID-19 is a global thing, and it has transcend all economy and they know that they can’t continue to do this, because most developed economies today are challenged and you can see that the the extension of those foreign fund is getting thinner.
“So, the best way for us is to re-engineer the process, to think inward, which is why the issue of domestic resource mobilisation is very pertinent to not just to the sub region, but globally.”
He observed that the workshop would trigger ECOWAS members towards the journey of liberation from reliance on foreign aid, adding that it would also address the gap that had been created by deficit revenue generation capacity in member states.
The Technical Assistant to ECOWAS Support Programme for Tax Transition in West Africa, Jules Tapsoba, lamented the poor management of Value Added Tax by many countries in the sub-region.
While also describing the region’s internal revenue mobilisation system as very weak, and not enough to finance public expenditure, he regretted that external revenue had also become less available.
He said, “ECOWAS member-states have now decided to see how to work together and demand tools to improve the capacity to mobilise more and more internal revenue. We know that since more than 10 years, the Internal Revenue Mobilisation is very weak and not enough to be sufficient to finance public expenditures.
“Why? Because first, VAT management is not so good. We also noticed that tax expenditure management is not so good to make these countries able to mobilise internal revenue service and that’s why they decided to develop their own tools on VAT management and tax expense management.
“I can say that we have finished the work and all the countries agreed to work on these main directives to see how to better manage tax expenditures and to mobilise more internal revenue for member-states.”
