By Obinna Chima
The Director-General Debt Management Office (DMO), Dr. Abraham Nwankwo has said that efforts by the federal government to revitalising the agriculture, solid minerals and manufacturing sectors as well as widen the tax base would have massive impact on the economy in the next three to five years.
The DMO boss also expressed optimism the policy direction of the government would help strengthen the naira as well as the country’s foreign exchange.
Speaking at a breakfast meeting with members of Finance Correspondents Association of Nigeria (FICAN) in Lagos at the weekend, Nwankwo said with government’s diversification project in full gear, Nigeria’s economic growth and development will no longer be influenced by activities in the international crude oil market.
He said a lot of revenues would be derived from taxation going forward, adding that the country’s low comparative tax revenue to Gross Domestic Product (GDP) ratio, which stands at about seven per cent, as against 18 per cent average in most developing countries, would be improved on as the country begins to gain strength in production.
He said with individuals and corporate bodies paying taxes, government can secure the needed fund to fund major developmental projects.
“You can see that in the manufacturing sector, some factories are operating below capacity. But with the on-going implementation of President Muhammadu Buhari policy on diversification of the economy and revitalising the power infrastructure, the sector will pick up and create more jobs for the people,” he said.
Nwankwo said achieving self-sufficiency in power will enable government generate more income; companies will be able to pay more taxes, thereby helping government diversify its revenue bases.
“In the next five to seven years, solid minerals will be exported. It is possible that in the next five to seven years, the whole picture of Nigeria will be a complete turnaround because of government’s economy diversification plan. The difference between Nigerian and other countries facing similar economic challenges is that those countries do not have the same opportunities we have in Nigeria. Nigeria is near 100 per cent idle capacity, meaning the flexibility to grow the economy is high,” he said.
He urged Nigerians not to be depressed because of drop in crude oil prices, saying “we have no reason to be depressed just because crude oil price is down. We have to see the varieties of opportunities available for the country to grow the economy based on a well-diversified and sustainable manner. We as responsible stakeholders in the economy, should emphasise these opportunities.
“Indeed in other countries, the major source of revenue is taxation. Taxation should also be explored. Government should be able to sustain itself with taxation revenues. Now with the better tax compliance, and effective sanctions for defaulters, we have a room to boost public revenue from taxation,” Nwankwo stated.
The DMO boss said government has made significant progress in the agriculture sector, adding that in the next five to seven years, Nigeria would have reduced its reliance on imported foods, tackled unemployment and created huge jobs for the people because production is synonymous with job creation.
He said the focus of the 2016 budget is to address structural challenges in the economy while providing the enablement to create diversification and self-sufficiency growth.
“This is the first time that the budget specified that all borrowed funds will be for capital expenditure. The sharing of internal and international borrowing is almost 50/50. We have been borrowing locally, but we have to take advantage of the relatively low cost of funds externally. We do not want to borrow too much from the domestic economy, so that we do not crowd-out the domestic environment,” he said.