Nigeria’s new scheme to boost revenue by ₦4trn annually

Nigeria is embarking on a new initiative to boost revenue through innovative measures in both the non-oil and oil sectors. The Minister of Finance recently announced a plan to generate over three trillion additional revenue, aiming for a total of about four trillion-naira boost in the country's finances. Ola Oladele, the Vice President of Global Markets at Parthian Partners, shares insights on the feasibility of this ambitious scheme. Oladele expresses skepticism about the government's projection, highlighting the lack of details on the new revenue mobilization strategy. While the target appears daunting, especially against the backdrop of economic challenges, she emphasizes the need for creative solutions to enhance the effectiveness of the scheme. Without innovative approaches and clear implementation strategies, achieving such significant revenue targets within the proposed timeline may prove to be a formidable task. The discussion delves into the current fiscal response and challenges faced by businesses in Nigeria. Oladele points out that the increasing tax burden on companies amid a slowdown in business activities could hinder revenue generation. She underscores the importance of expanding the tax base and leveraging available data to identify potential taxpayers, rather than solely relying on taxing existing entities. Addressing these fundamental issues is essential to sustainably boost revenue in a struggling economy. Furthermore, the conversation explores the impact of recent fiscal policies, such as the introduction of the sugar tax and higher levies on products like cigarettes. While these initiatives aim to increase revenue, Oladele questions the extent to which such measures can contribute significantly to the overall target. She stresses the importance of enhancing ease of doing business and adopting policies that encourage compliance, particularly among small businesses and individuals operating informally. Regarding potential revenue sources, Oladele emphasizes the untapped opportunity of bringing more individuals into the formal tax net. By leveraging existing data infrastructure and technology, such as BVN (Bank Verification Number) and NIN (National Identification Number), the government can identify untaxed income earners and effectively communicate tax obligations to them. This 'low-hanging fruit' presents a practical and immediate solution to bolster revenue collection. In conclusion, as Nigeria embarks on its revenue mobilization reforms, the success of the initiative hinges on a holistic approach that combines innovative strategies, policy reforms, and targeted compliance measures. While the road ahead may be challenging, the potential for significant revenue growth exists through a concerted effort to broaden the tax base and streamline revenue collection processes.