By Nume Ekeghe and Dike Onwuamaeze
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, has reiterated the federal government’s resolve to enhance revenue mobilisation as well as Nigeria’s competitiveness.
Ahmed said the government would achieve the target by encouraging domestic investors and enhancing overall macroeconomic stability and jobs creation in spite of the difficult challenges posed by the COVID-19 pandemic.
Ahmed, while delivering the keynote address at the PwC Nigeria’s virtual, “Executive Roundtable on the Finance Act 2020 and Economic Outlook for 2021,” said: “The administration is committed to enabling economic recovery and stimulating inclusive growth through policies and interventions designed to foster economic resilience and business sustainability.
“Thus, the Finance Act 2020 is aimed at supporting vulnerable households and businesses, improving fiscal discipline and procurement efficiency, enhancing economic competitiveness, encouraging domestic investors and enhancing macroeconomic stability amid the challenges posed by the COVID19 pandemic.”
In his opening remarks, the Country Senior Partner PwC Nigeria, Mr. Uyi Akpata, urged businesses to understand the forces that would shape Nigeria’s economy in 2021.
According to him the knowledge will help them to minimise potential risks and take advantage of the fiscal policies the government had enacted to stimulate economic recovery.
A Partner and Chief Economist of PwC Nigeria, Dr. Andrew S. Nevin, who presented the economic outlook for 202, outlined 10 themes that policymakers and businesses should consider in 2021.
These themes, according to him, are unlocking Nigeria’s vast dead assets to stimulate growth, harnessing the power of the Diaspora for economic development, driving export growth through services, moving thriving informal sector to the formal sector and ensuring that growth is spread across the country, and not restricted in a few urban centres.
He listed other themes to include improving the country’s low investment and gross capital formation, enhancing the business environment and ease of doing business in the country, addressing Nigeria’s big three distortions, which are exchange rate, power and subsidies, as well as shifting Nigeria’s focus from the Gross Domestic Product (GDP) lens to the Sustainable Development Goals lens and prioritising climate change.
He said: “Nigeria holds as much as $900 billion worth of dead capital in residential real estate and agricultural land. The value of the federal government’s abandoned property alone, according to the Nigerian Institute of Builders, is projected to be about N230 billion.
“And about a half of Nigeria’s population live in cities, of which almost 80 per cent of them are living in substandard conditions. Finding the political will to act and unlock Nigeria’s dead real estate assets will have a transformative impact on the lives of Nigerians.”
The Fiscal Policy Partner and West Africa Tax Leader PwC Nigeria, Mr. Taiwo Oyedele, said the Finance Act 2020 and other significant changes that have been made to existing tax laws would shape Nigeria’s tax environment in 2021.
Oyedele commended the government for not introducing new taxes or increasing the rates of existing taxes.
He also applauded the reduction in minimum tax rate and advocated the termination of taxing companies based on their turnover even when they are making losses.
Oyedele, who presented the results of the survey conducted by PwC on the 2020 Finance Act, noted that 59.7 per cent of the respondents did not agree with the idea of transferring unclaimed dividends and dormant account balances to a trust fund while 31.2 per cent disagreed with the plan to introduce excise duty on telecommunications services.
Meanwhile, the Special Advisor to the President on Finance and Economy, Dr. Sarah Alade, has said that blended financing has assisted the country in bridging investment gap in the country.
She added that the federal government would continue to work towards blended finance.
Alade, said this yesterday at the Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC) Blended Finance Guidance virtual launch.
“Blended finance has helped in Nigeria to bridge investment financing gap by attracting commercial capital towards projects that blended finance has been used.
“Before COVID-19, we had a number of projects in Nigeria that had benefited from the use of blended finance. We have the World Bank partial risk guarantee, which had come in support of a power plant that we have called Azura which was intended to provide electricity for 14 million people in Nigeria.
“We also have to use of blended finance in the infrastructure sector where it is being employed in roads and railway corridor between Nigeria and Niger republic. Although financing negotiations are still ongoing but we have a consortium of financing institutions which are the DFIs as well as the commercial,” she stated.
On how to enhance more blended financing, she stated that consistent reforms and macroeconomic stability is important.
She said: “Policy reforms is ongoing and is very important. First of all, macroeconomic stability is important in any country that attracts blended finance. If you don’t have macroeconomic stability or have issues with that, there would be problems attracting both DFIs as well as private sector funding.
“Finance plays an important role in ensuring that this reform comes in place and that they are able to attract both sides and then coordinate so that barriers are removed and they also need to be able to ensure that the portfolio of the investors aligns with the national priority of the country.
“Usually, it goes beyond making money or providing money; it must align with what you need and what is on your own front burner. So, we are able to then facilitate and then provide this kind of platform for the stakeholders to engage.”