The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has revealed that the Federal Government of Nigeria is poised to save an impressive N8 trillion annually through the removal of fuel subsidies and the unification of exchange rates.
Speaking during a panel session at the Lagos Chamber of Commerce and Industry’s 2024 Economic Outlook and Budget Analysis event, Oyedele emphasised the significance of utilising these savings for the benefit of the Nigerian population.
“The Nigerian people made sacrifices as a result of the fuel subsidy removal by the government, resulting in annual savings of N4 trillion. Additionally, the naira floatation has allowed us to save another N4 trillion. Consequently, we are witnessing the transfer of roughly N8 trillion from the private pockets of citizens to the government,” Oyedele stated.
He urged the government to be purposeful in its allocation of the N8 trillion savings to ensure a positive impact on the lives of Nigerians, particularly in addressing multidimensional poverty.
“In the committee, we tried to look at the most pressing issues we face as a country, including inflation, forex instability, and lack of investments. One of our recommendations is for the government to suspend some taxes, often referred to as nuisance taxes, as they frustrate people without yielding visible returns to the government treasury,” Oyedele explained.
Highlighting the potential of Nigeria’s technology sector, Oyedele stressed the urgent need to create digital opportunities for the country’s youthful population, with the capacity to generate an annual revenue of $20 billion.
The panel also made recommendations to promote exports, including services and intellectual property, as a viable strategy. Oyedele underlined the importance of services and intangibles as exportable assets, paving the way for growth and revenue generation.
Moreover, Oyedele revealed that over 90% of the $20 billion diaspora remittances recorded in 2023 did not reach Nigeria in foreign currencies due to existing loopholes allowing intermediaries to divert foreign currencies and compensate recipients in naira.
Addressing the issue of paying taxes in dollars, Oyedele suggested that Nigerian companies and businesses should not be burdened with sourcing scarce dollars in the local market to settle government taxes. Simple amendments to tax laws could alleviate this pressure.
Ben Akabueze, the Director General of the Budget Office, voiced concerns regarding Nigeria’s budgetary deficits over the past three decades, which have contributed to a mounting debt profile. Akabueze emphasised the need to raise public revenues and discontinue deficits to alleviate the strain on the nation’s debt.
While acknowledging the calls for reduced government expenditure, Akabueze argued that Nigeria’s challenge is insufficient spending rather than excessive spending. He urged a focus on efficient spending practices rather than austerity measures.
Bismarck Rewane, the CEO of Financial Derivatives, identified key economic challenges confronting Nigeria, including non-inclusive growth, income inequality, high poverty and unemployment rates, soaring inflation, fiscal imbalances, and currency pressures.
He attributed Nigeria’s persistent forex crisis to a lack of transparency, unclear policy direction, ineffective price discovery mechanisms, capital controls, inefficiency, and high speculation and arbitrage activities.
As Nigeria navigates these economic challenges, the effective allocation and utilisation of the N8 trillion savings from subsidy removal and exchange rate reform will be crucial in addressing pressing societal needs and fostering sustainable development.
