The Special Adviser to President Bola Tinubu on Revenue, Mr Zaccheus Adedeji, speaks with TUNDE AJAJA on how the administration plans to eliminate dependence on borrowing for public financing, moves to raise the revenue profile and ongoing reforms expected change the economic fortunes of the county
The President has said several times that his administration will no longer depend on borrowing, what steps are being taken to diversify Nigeria’s revenue sources?
Thank you for that important question. One of the biggest ways the country is making sure that we improve revenue in the country is elimination of waste in several sectors and we are achieving that through the elimination of an expensive and unsustainable fuel subsidy that has cost the country at least N21tn per year, which is the size of at least two per cent of our Gross Domestic Product. The President has also removed subsidy in the foreign exchange market by removing arbitrage in the market, which means that more money is accruing into the government’s coffers. These are some of the ways we are improving the country’s revenue. But beyond that, Nigeria is blessed with diverse resources that could bring in money to the country aside from crude oil. We have mineral resources aside from our abundant gas, for instance. So, what we are focusing on right now is improving our policy environment and enhancing its efficiency for optimal and profitable participation of both the private and public sectors. This is one of the reasons why the President recently approved the setting up of a Presidential Fiscal Policy and Tax Reforms Committee with eminent Nigerians from all spheres of the society as members, to not only advise the government on the necessary reforms but also support the implementation. We are also working on bringing more Nigerians under that tax net without increasing taxes in the country. What that means is that we are going to make sure that those who can pay taxes – whether businesses and individuals that have failed to pay their taxes – will now be required to pay up. As you may know, there is a N20tn tax gap from those who evaded tax payments and we have to close that gap. So, recouping that money also brings in revenue for the government and this is another aspect the tax committee is focusing on. Ultimately, the outcome of the committee’s work, along with other policy actions of the government, will result in productive diversification of the economy, government revenue sources and foreign exchange earnings.
What strategies are in place to attract foreign direct investment and ensure a conducive environment for investors?
Mr President’s philosophy is that we should not tax investment but returns on investment. We should not tax production, but consumption. We should not tax poverty but facilitate prosperity and share it by way of fair and progressive taxation. This is the reasoning behind Mr President’s recent remark that this government will tax fruits, not seeds. The market-friendly disposition of this administration is already creating excitement in the capital market with over 20 per cent growth since the President took office and the best performance in 15 years. We are also working on reforms to create more jobs and entrepreneurship opportunities in the digital economy, especially for our teeming youth. We also recognise that Nigeria cannot continue to rely on the oil and gas sector as the mainstay of the economy, especially with the uncertainties around global oil prices which usually create shocks in the economy whenever the price crashes like we experienced from 2014 till 2018 when the price started rising again above $50. This is why President Tinubu has promised to build a more vibrant and prosperous economy and he is set to achieve this by ensuring that other sectors of the economy like agriculture, solid minerals, maritime, retail, hospitality, tourism and professional services, and others perform optimally.
The President, during his last address to the nation, talked about how the government planned to inject part of the money saved from subsidies into the economy, what are the targeted outcomes?
Fuel and forex subsidies were not only wasteful, they promoted inefficiencies in our resource management and created economic distortions making it difficult to attract both domestic and foreign investments. By removing these subsidies, governments at all levels would have less need to keep borrowing to fund public spending while the savings will be channelled towards infrastructure and social services to reduce multidimensional poverty and build a competitive economy. For any economy to be productive, you need critical infrastructure that supports business growth and improves quality of life, especially roads, power, rail, broadband, pipelines etc. These are heavy and capital projects the government is focusing on to attract investors into the country. Once investors see that Nigeria is serious about creating a viable business environment, which is one of the key focus areas of President Tinubu, their confidence in the country improves, which will help bring more investments into the country. What is important to us at this time is creating an environment that promotes the ease of doing business and to make our economy more competitive. So, to answer your question, the government will reinvest the money saved from subsidies to grow infrastructure and fund social services in education and healthcare. We want to make sure our public schools and hospitals are up to standard and can meet the needs of Nigerians.
Some of the economic decisions and reforms made by the President in the past 100 days or thereabouts have been applauded by the international community while Nigerians have lamented the negative impact, causing many people to question the President’s approach. Is the President really on the right track?
Thank you very much for this question. I know it is symbolic to assess the performance of a new administration within the first 100 days, sometimes even for a shorter period. However, for this government, it is not simply about the present or what the President has done within the short term of being in office, it is more about the medium to long-term vision of how he wants to reposition the economy and make life better for Nigerians. We are laying the foundation for a prosperous future. You will agree with me that even though the foundation is the most important structure of a building, it is not always the finest. Once the house begins to take shape, the beauty will not only be apparent for all to behold but it will also provide the much-needed shelter to shield the occupants from bad weather and other unfavourable external conditions. We have done a lot that I am proud of within the short period. These include addressing some critical concerns of the private sector regarding pressing tax issues, removal of wasteful subsidies on petrol to create fiscal headroom and limit excessive borrowing, and forex reforms to address market distortions, just to mention a few. Overall, I can say that we are on track and moving in the right direction.
You mentioned that the Tinubu government is laying the foundation for a prosperous economy, are you saying Nigerians should continue to trust the President despite the worsening hardship?
The crux of the agenda of this government is economic prosperity, which is inclusive and sustainable. Nigerians trust Mr President based on his pedigree, which was the main reason they voted for him as President. You will also agree with me that Mr President has made his appointments based on competence with a good number of technocrats appointed to manage various aspects of the economy. Even the politicians that have been appointed by Mr President are those with proven records of performance. So, I can say that we are moving in the right direction and making progress. I am confident that Nigerians will begin to see the benefits of this administration’s policies sooner or later. The future is very bright. President Tinubu is guiding us through a challenging time and in the last 100 days in office, he has demonstrated that the confidence Nigerians reposed in him has not been misplaced.
