Nigeria is facing a severe revenue crisis that threatens its economic stability and public services, according to the new head of the Federal Inland Revenue Service (FIRS), Dr Zacch Adedeji.
He said that the situation was unsustainable and required urgent actions to increase the government’s income from taxes and other sources.
“We are in a revenue crisis, government revenue is low amid a huge public debt2. Last year, 96 per cent of government revenue went into debt servicing,” he said3.
He pledged to eliminate leakages in the system, strengthen internal processes and controls, and foster coordination and collaboration among staff and stakeholders.
“We must definitely plug leakages9. We need to strengthen our internal processes and control mechanisms10. We must put a high premium on effective coordination of assigned tasks and delegated responsibilities.”11
“We intend to come up with a menu of strategies that will stimulate voluntary payment of taxes and levies12. Yes, this is achievable because Nigerians acknowledge the need for the government to increase its revenue to be able to meet its obligations to them.”13
He commended his predecessor Nami for his achievements during his tenure, which saw the FIRS surpass its revenue targets in 2022 and 2023.
Nigeria’s tax-to-GDP ratio is one of the lowest in the world, according to the World Bank, which estimates it at 6.1 per cent in 2019.
The global average is 14.9 per cent, while the average for sub-Saharan Africa is 16.5 per cent.
Experts have urged Nigeria to diversify its revenue sources away from oil, which accounts for about half of its income but is subject to volatility and uncertainty.
They have also called for reforms in the tax system to broaden the tax base, improve compliance, reduce evasion and corruption, and enhance equity and fairness.
Adedeji said that he was optimistic that Nigeria could overcome its revenue challenges with collective efforts and commitment from all stakeholders.
He said that he was ready to work with the government, the private sector, civil society and international partners to achieve a sustainable fiscal future for Nigeria.
“I am confident that with God on our side and with our collective efforts, we will overcome our revenue challenges and build a prosperous nation for ourselves and generations yet unborn,” he said.
Source: Vanguard