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FG to Impose Tax on Soft Drinks, Others

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In a bid to increase revenue generation, the Federal Government has started working on a plan to impose excise duties on carbonated drinks, soft drinks and Value Added Tax (VAT) on other important products, the Minister of Finance, Budget and National Planning, Zainab Ahmed stated.

The minister, who was in Washington DC, USA, for the 2019 Annual Meetings of the International Monetary Fund and World Bank, said Federal Government was working on increasing revenue by introducing excise duties on certain items like carbonated drinks as well as additional VAT on imported goods.

“We are also looking at introducing excise duties on some categories of products especially carbonated drinks and VAT on some categories of imports into the country. But it is not all taxes increases, there is also a proposal to build tax rates for SMEs we also increase the minimum tax level to make it easy for people to plan their taxes,” the minister explained.

She explained that the government needs to rebuild social contract between itself and the citizens, adding that in “Nigeria we don’t have adequate social contract. The government was not asking for or enforcing tax collection and therefore taxpayers also were not taking up their civic responsibilities. This is because we are largely dependent on oil revenue and people are not used to paying taxes.

“Very recently at the Nigeria economic summit they shared a citizens survey and 75 per cent of people that were surveyed said ‘we don’t think there is anything wrong in not paying taxes and it is not a problem’ and there a few that said ‘I don’t see what the taxes are used for so why should I pay tax.’ We have a very low tax morale, we are planning a strong strategic communications process to educate people on why they need to pay taxes. Because we rely heavily on oil and it is not going to be there forever.”

Therefore, Nigeria has to increase its domestic revenue generation through an improved and broad-based tax system.

“We currently have a pervasive revenue generation problem that must change to successfully finance our development plans. Speaking to the facts, our current revenue to GDP of eight per cent is sub-optimal and a comparison of oil revenue to oil GDP and non-oil revenue to non-oil GDP performance reveals the significant area that requires immediate and dire intervention as the non-oil sector. This performance attests to the realities of our inability to efficiently and to a reasonable degree, completely collect taxes from our non-oil economic activities.

“Nigeria when compared to peers shows that we are lagging on most revenue streams including VAT and excise revenues as we not only by far have, one of the lowest VAT rates in the world but weak collection efficiencies. So also, do we have a lot of incentives and deductions that further constrain the fiscal space that are given in hope of stimulating growth of our industries and to reduce hardship for the poor and vulnerable.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Economy

Federal Government Appeals to Electricity Union Amid Tariff Hike Tensions

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The Federal Government has made a direct appeal to the National Union of Electricity Employees (NUEE) amidst rising tensions over the recent hike in electricity tariffs.

The plea comes as the union continues to voice its dissatisfaction with the government’s decision to remove the subsidy on the tariff payable by Band A customers, warning of potential service withdrawal if the decision is not reversed.

In an interview with our correspondent, Adebiyi Adeyeye, the National President of the NUEE, reiterated the union’s stance against the increase, citing the impracticality of expecting their members to collect higher tariffs from customers without a proportional improvement in service.

Adeyeye emphasized the union’s concerns over the discrepancy between the promised 20 hours of daily power supply and the actual delivery, which he deemed “not feasible” due to existing infrastructural limitations.

The Federal Government, represented by Minister of Power Adebayo Adelabu, called for understanding and patience from the union. Speaking through his media aide, Bolaji Tunji, Adelabu assured that efforts were being made to improve electricity supply across the nation. He emphasized the necessity of these changes for the country’s long-term economic growth and job creation.

“We just want to appeal to the labor union to understand the context of these changes. It’s about working together to address the underlying issues within the power sector. It is not anybody’s joy that there are blackouts all the time,” Adelabu stated.

He added that the steps being taken would ultimately benefit the economy and urged the union to bear with the government during this transitional phase.

Adeyeye maintained that the union’s primary objective is to safeguard the well-being of its members, who are facing increased threats due to the tariff hike.

He stressed the need for immediate action from the government to resolve the issues, stating that the union would withdraw its services if necessary.

As the standoff continues, the public watches with interest, hoping for a resolution that will avoid disruptions to the country’s power supply and maintain a harmonious relationship between the government and electricity workers.

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Economy

Minister of Power Pledges 6,000 Megawatts Electricity Generation in Six Months

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Adebayo Adelabu has made a bold pledge to ramp up electricity generation to 6,000 megawatts (MW) within the next six months.

This announcement comes amidst ongoing efforts to tackle the longstanding issue of inadequate power supply that has plagued the country for years.

During an appearance on Channel Television’s Politics Today program, Adelabu said the government is committed to resolving the issues hindering the power sector’s efficiency.

He expressed confidence in the administration’s ability to overcome the challenges and deliver tangible results to the Nigerian populace.

Currently, Nigeria generates and transmits over 4,000MW of electricity with distribution bottlenecks being identified as a major obstacle.

Adelabu assured that steps are being taken to address these distribution challenges and ensure that the generated power reaches consumers across the country effectively.

The minister highlighted that the government has been proactive in seeking the expertise of professionals and engaging stakeholders to identify the root causes of the power sector’s problems and devise appropriate solutions.

Adelabu acknowledged the existing gap between Nigeria’s installed capacity of 13,000MW and the actual generation output, attributing it to various factors that have impeded optimal performance.

Despite these challenges, he expressed optimism that the government’s initiatives would lead to a substantial increase in electricity generation, marking a significant milestone in Nigeria’s energy sector.

Addressing concerns about the recent decline in power generation due to low gas supply, Adelabu assured Nigerians that measures are being taken to rectify the situation.

He acknowledged the impact of power outages on citizens’ daily lives and reiterated the government’s commitment to providing stable electricity supply within the stipulated timeframe.

The Minister’s assurance of achieving 6,000MW of electricity generation in the next six months comes as a ray of hope for millions of Nigerians who have long endured the consequences of inadequate power supply.

With ongoing reforms and targeted interventions, there is optimism that Nigeria’s power sector will witness a transformative change, ushering in an era of improved access to electricity for all citizens.

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Economy

Nigeria’s Economic Woes to Drag Down Sub-Saharan Growth, World Bank Forecasts

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The World Bank’s latest report on the economic outlook for Western and Central Africa has highlighted Nigeria’s sluggish economic growth as a significant factor impeding the sub-region’s overall performance.

According to the report, while economic activities in the region are expected to increase, Nigeria’s lower-than-average growth trajectory will act as a hindrance to broader economic expansion.

The report indicates that economic activity in Western and Central Africa is set to rise from 3.2 percent in 2023 to 3.7 percent in 2024 and further accelerate to 4.2 percent in 2025–2026.

However, Nigeria’s growth, projected at 3.3 percent in 2024 and 3.6 percent in 2025–2026, falls below the sub-region’s average.

The World Bank underscores the importance of macroeconomic and fiscal reforms in Nigeria, which it anticipates will gradually yield results.

It expects the oil sector to stabilize with a recovery in production and slightly lower prices, contributing to a more stable macroeconomic environment.

Despite these measures, the report emphasizes the need for structural reforms to foster higher growth rates.

In contrast, economic activities in the West African Economic and Monetary Union are projected to increase significantly, with growth rates of 5.9 percent in 2024 and 6.2 percent in 2025.

Solid performances from countries like Benin, Côte d’Ivoire, Niger, and Senegal are cited as key drivers of growth in the region.

The report also highlights the importance of monetary policy adjustments and reforms in supporting economic growth.

For instance, a more accommodative monetary policy by the Central Bank of West African States is expected to bolster private consumption in Côte d’Ivoire.

Also, investments in sectors such as agriculture, manufacturing, and telecommunications are anticipated to increase due to improvements in the business environment.

However, Nigeria continues to grapple with multidimensional poverty as highlighted by the National Bureau of Statistics.

Over half of Nigeria’s population is considered multidimensionally poor, with rural areas disproportionately affected. The World Bank underscores the need for concerted efforts to address poverty and inequality in the country.

Sub-Saharan Africa as a whole faces challenges in deepening and lengthening economic growth. Despite recent progress, growth remains volatile, and poverty rates remain high.

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