Nigeria Banks on Finance Act for Quick Economic Recovery

Nigeria’s federal government has expressed optimism that the implementation of the Finance Act, 2020 and Strategic Revenue Growth Initiative (SRGI) will stimulate the economic recovery process through initiatives capable of growing fiscal revenues, improve Ease of Doing Business (EoDB), counteract the impact of oil price fluctuations and integrate fiscal, monetary and trade policies.

The Finance Act (2020) was passed into law by the National Assembly and assented to recently by President Muhammadu Buhari while the SRGI was launched in January 2020 as a blueprint for growing fiscal revenues from six per cent to 15 per cent.

Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, at the Deloitte Economic Outlook 2021 webinar held in Lagos on Thursday, said the federal government was upbeat that the implementation of the its fiscal and economic policies would bring the economy out of recession and stimulate growth.

The economy slipped into recession in the third quarter (Q3) of 2020 when the gross domestic product (GDP) contracted by 3.62 per cent (year-on-year), marking the second consecutive contraction from 6.10 per cent recorded in the previous quarter (Q2 2020).

While the federal government targets a three per cent GDP growth in the 2021 budget to exit recession before the end of the first quarter, the International Monetary Fund (IMF) projects the nation’s recovery to start with a subdued growth of 1.5 per cent and output recovering to its pre-pandemic level only in 2022.

Ahmed, who delivered a paper titled ‘Federal Government of Nigeria’s Economic Recovery Plan for 2021,” expressed optimism on the nation’s economic recovery efforts, noting that the SRGI is already yielding positive results in terms of growth and business activities.

The federal government, she stated, was targeting to grow its revenue-to-GDP at 15 per cent by 2023 and expressed confidence that the target is realistic.

She said: “Economic activities in the country are recovering, reflected by a reduced contraction of 3.6% in the third quarter of 2020, compared to the previous quarter.

“Against the backdrop of global pandemic and significant international economic disruptions, Nigeria has certainly faced its own share of economic turbulence.

“With respect to monetary aggregates, the federal government maintained an accommodative monetary policy stance for the major part of the year, reflecting concerns about the impact of the pandemic.”

She said considerable efforts were also made to ease the effects of the pandemic and the subsequent lockdowns on households and businesses.

The SRGI and Finance Act, 2020, she said, would aid the economic recovery process of the economy through initiatives and strategies that would grow fiscal revenues, improve the Ease of Doing Business (EoDB), counteract the impact of oil price fluctuations and integrate fiscal, monetary and trade policies.

On the SRGI and the government’s plan to boost its fiscal revenues to GDP from 6 per cent to 15 per cent, she said the target of the initiative was to enhance fiscal revenues from six per cent to 15 per cent of GDP by 2023.

According to her, the initiative seeks to achieve sustainability in revenue generation by identifying and enforcing new and existing revenue streams while achieving cohesion through people and tools.

She added that to achieve sustainability in revenue generation, the federal government will improve collections, close legal loopholes, collaborate with trading partners, manage performance, deregulate and provide funding for the energy sector.

The minister state that the federal government would identify new revenues and enforce existing streams.

“The federal government would identify new taxes, broaden the tax base, expand and improve Value Added Tax (VAT), target high net worth individuals (HNIs), revive key economic sectors, identify funding models for specific sectors, deploy a National Single Window (NSW) and enact laws and executive orders (EOs) to enhance liquidity management,” she said.

According to her, through the SRGI, the federal government is building and strengthening sustainable revenue generation systems through the application of the right incentives, safeguards and performance management systems.

She said: “There are several initiatives under the SRGI with revenue generation and enhancement potential, which are closely monitored using data-driven performance management to achieve the results and set targets. With the SRGI, we are partnering with interested state ministries of finance and state revenue generating agencies in achieving the set target of attaining revenue to GDP of 15 per cent by 2023.”

Ahmed noted that the federal government is working on the second phase of the SRGI, having reviewed its strategies, identified the challenges and re-assessed the prospects and opportunities.

“Subsequently, the SRGI 2.0 involves a top-down approach that is driven by enhanced data and technology to complement a bottom-up approach aimed at improving operational efficiencies.

“We are willing and available to partner with all state governments yet to join us on this transformative journey,” she said.

She assured stakeholders that the federal government remains focused on economic policies aimed at improving revenue generation, enhancing economic competitiveness, attracting foreign direct investments and ensuring the overall sustenance of macroeconomic stability.

According to her, this is evidenced by the efforts to return the economy on a sustainable growth path starting with early responses to the welfare implications of the COVID-19 pandemic on households, its targeted support to businesses via the launch of the Economic Sustainability Plan & Strategic Revenue Growth Initiative and timely passage of the 2021 Budget and the Finance Act (2020).

“We have significant headwinds to weather, including COVID-19, health and security challenges and volatility in oil and non-oil revenues.

“However, it is my hope, that by getting our processes, products and priorities right, we will be able to use this opportunity to bring the economy to a path of growth and sustainable development in 2021,” Ahmed stated.

Ndubuisi Francis, Nume Ekeghe

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