FG proposes to tax cryptocurrency in 2022 finance bill
Zainab Ahmed

BY EMEKA EJERE

Former Minister of Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, have not been forgotten by many for facilitating the famous Nigeria debt cancellation. So also will the name of the current Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed will not be forgotten in a hurry.

But she may be remembered more as the minister under whose watch Nigeria Nigeria became officially a poor nation, and its debt servicing exceeded retained revenue by as much as N310 billion in the first four months of 2022, the first time the country’s debt service to revenue ratio would hit or exceed 100 per cent.

It is even more so as the development clearly fails to vindicate the Ahmadu Bello University-trained Accountant, who had consistently argued that Nigeria does not have a debt problem but how to generate revenue, reiterating the commitment of the fiscal authorities towards increasing revenue generation while ensuring sustainable deficit and debt levels.

Ensuring that the economy is in good state is a collective responsibility of the monetary and fiscal authorities. While the Central Bank of Nigeria (CBN) has always been seen active in search of solution to disturbing economic indicators of inflation, unemployment, exchange rate, interest rate among others, the fiscal authority headed by Ahmed has no such story to tell.

Analysts see as inexplicable how the nation’s debt rose from N12 trillion inherited by this administration in 2015, to the present debt profile of about N42 trillion as of April 2022, an amount which is 83.9 percent of the country’s real Gross Domestic Product (GDP) put at N72.39trillion last year.

Ironically, with one of the most influential ministerial portfolios in government, Ahmed faces the big task of how to jerk up government revenue in down time to be able to tame surging public debt.

Fiscal imbalance, due to persistent revenue shortages, is government’s biggest challenge and finding the solution is the job of Ahmed. She does not seem oblivious of the challenge, but the efficacy of lots of measures and innovations brought by her to bridge government revenue gap since she assumed responsibility as finance minister in 2018, remains an issue of debate.

She defined the roadmap for the job quite early in coming to office. “I am prioritising revenue generation as the biggest challenge. As a result, I am steering my team to implement some revenue growth strategies aimed at boosting revenue performance by deploying new initiatives,” she said.

Asked by Poju Oyemade, senior pastor of Covenant Christian Centre, during “The Platform,” (an annual conference organised to mark Nigeria’s Independence anniversary), to list three things that keep her awake at night, the minister replied: “Number one is revenue, number two is revenue and three – I would say, is revenue.”

A key element of the strategy has to do with removing hiccups in the tax administrative machinery where pending cases held back the inflow of huge tax revenues. There were in 2018 as much as over 209 pending cases relating to tax revenues amounting to N205.654 billion, $18.804 billion and €821 million.

Zainab moved decisively to constitute eight tax appeal tribunals across the country to accelerate the resolution of the pending cases. She claims to have used the tribunals not only to drive tax revenue inflow by expediting resolution of tax disputes but also to ensure that taxpayers get fair hearings on tax matters.
It is also said that she used the tax dispute resolution mechanism to reduce incidences of tax evasion and improve payers’ confidence whilst ensuring fairness and transparency of the tax administrative machinery.

She has embraced the use of innovative technologies through leveraging data, technology tools and platforms to foster collaboration, grow the revenue base and improve collections. The technology tools deployed include the national single window/trade platform, deployed at the ports to ease doing business and raise Customs’ revenue collection target from 40 percent to 90 percent.

“Under my tenure as the finance minister, I intend to continue championing such digitalization transformation initiatives that have proven to be a good way forward for our revenue generation drive,” she had hinted at the time of assuming office.

The minister has also ushered in collaboration among revenue collection agencies such as Federal Inland Revenue Service, the Nigerian Customs Service and other trade partners. By sharing information and intelligence in revenue collection, the minister’s initiative has made revenue collections more efficient than before.

The measures are paying off, according to Ahmed. “By automating many of our revenue collection processes, such as the deployment of health-pay in the health sector, edu-pay in education and e-collections by our revenue authorities, we have seen revenue shore up to record high levels,” she had said.

But more recent development show that the reality seems to be fast catching up with the minister. While reviewing the 2023-2025 Medium Term Expenditure Framework and Fiscal Strategic Paper (MTEF and FSP) Public Consultation recently, Ahmed warned that urgent action is needed to address the nation’s revenue challenge and expenditure efficiency at both the national and sub-national levels.

Sometime last year, Edo State Governor, Godwin Obaseki, accused the government of “economic rascality” for allegedly printing money for the Federation Account Allocation Committee to share among the tiers of government.

While responding to Obaseki, Ahmed said, “The issue that was raised by the Edo State Governor for me is very, very sad because it is not a fact.
What we distribute at FAAC is revenue that is generated and, in fact, distribution of the revenue is public information. We publish revenue generated by FIRS, the Customs and the NNPC, and we distribute at FAAC. It is not true to say we printed money to distribute at FAAC; it is not true.”

Global rating agencies, Fitch and the World Bank, have separately warned that the repeated financing of the budget deficit by the CBN through printing currency poses a great risk to macroeconomic stability. Though cautiously encouraged in a global economy ravaged by the COVID-19 pandemic, experts warn that this is not a sustainable measure in the long run.

The IMF and World Bank emphasise that central bank financing undermines investor and creditor confidence and hampers long-term investment.

The fragile state of the economy is exacerbated by the extremely poor power supply situation that features frequent grid collapse. There is often scarcity of petrol in many states, and escalating prices of diesel and lubricants.

Genuine producers cannot get foreign exchange from official sources and have to rely on the black market, where the exchange rate hovers between N650 and N710 to $1.

But rather than effective measures to stimulate production and job creation, government opts for tokenism, such as the plan to distribute N20 billion to two million people from June as ‘basic cash transfers’ and ‘conditional cash transfers’ under the National Cash Transfer Programme.
This, many see, as shallow, dubious and exclusionary. “It will not reach most of the estimated 90 million adjudged to be ‘extremely poor’, and also ignores the over 200 million other Nigerians”, someone said pleading anonymity.

“Moreover, Nigeria lacks the database and the institutional capacity to correctly identify and effectively disburse cash to its poorest effectively”, he added.

Yet, Ahmed believes that the country’s economy is performing better now under President Muhammadu Buhari than was the case under previous administrations, saying the Excess Crude Account (ECA) depleted because it has not been funded for some time.

“The last approval that was given by the council was the withdrawal of $1billion to enhance security. We have been utilizing that. The last tranche of that has been finally released because deployment to security agencies are based on the contracts executed and it’s been used strictly for that security purpose, Ahmed said, while speaking after the Federal Executive Council (FEC) meeting a fortnight ago

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