Nigeria is set to repatriate to the country taxes illegally taken out by multinational companies operating in the country.
The Federal Government had announced in August that multinational companies in the country had failed to remit over a trillion dollars in taxes which is what prompted the government to put in place a Multi-lateral Competence Agreement (MCA) and the Exchange of Country by Country Report (ECCR) so as to have a better grip on its tax laws and prevent any further tax evasion by multinational companies.
Speaking on Sunday, in Washington, at the end of the World Bank/IMF meetings, Finance Minister, Mrs Kemi Adeosun, who had a joint press conference with the governor of Central Bank of Nigeria, Mr Godwin Emefiele, said the Nigerian team to the meetings was able to reach agreements with the UK’s Dept for International Development, the US Treasury Department and others would reverse the trend of legitimate taxes flowing out of the country.
Her words, “We have reached some high level agreement on a number of initiatives which we believe will bring significant repatriation of money into the Nigerian economy, particularly money that has flown out as a result of tax evasion. I will brief Mr President with the specifics and will be providing more details later to the public when I have Mr President’s approval.”
Mrs Adeosun also said that an agreement had been reached with the World Bank Group and other multilateral agencies to find solutions to the funding challenges of the power sector in Nigeria.
She said, “An agreement was reached to host a workshop on assessing solutions to the financial challenges in the power sector in Nigeria. The workshop is expected to bring together all critical stakeholders including the Ministry of Power, NNPC, NBET, NERC, generation companies, distribution companies, CBN, banks and other key players in the sector.”
The Minister, who used the occasion to speak of efforts by the government to revamp the economy, said the team held a meeting with the IFC, the private sector investing window of the World Bank Group, to stimulate the economy.
She said, “Though IFC has significant investment in Nigeria, it is limited to a number of sectors. They significantly want to scale up and we’ve agreed with them.
Two things, one is that we’ll host a road show to showcase Nigerian indigenous companies that could be eligible for IFC inward investment and we’ve agreed with them also that we should try to develop a pipeline of products rather than waiting for IFC to look for companies, the Ministry of Finance should take a proactive role in showcasing some of our eligible companies for IFC which we believe will crowd in more private sector investment and the jobs and growth that we need.”
The Minister also spoke about the support of the World Bank Group as well as other development partners in the establishment of the Development Bank of Nigeria.
According to her, “The Development Bank will serve as a conduit for intervention for small and medium sized enterprises (SMEs) as part of our effort to achieve inclusive growth.”
Speaking on the economic outlook presented by both the World Bank and the IMF, Adeosun said, “The outlook was that the global economy and growth prospects will remain subdued. This outlook has some implications for us Africa generally and particularly in Nigeria specifically. There is therefore the need to apply a full combination of monetary, fiscal and structural tools to ensure that we are able to return to growth.
“We had a validation of our economic strategy, that is, our strategy to transform Nigeria from a consumption-driven to an investment-driven module.
And whilst in the short-term, there has been some pain and dislocation, the long-term outlook for Nigeria remains confident. One of our key objectives at the meetings was to see how Nigeria could better take advantage of our relationships with multilateral agencies and with our friends and supporters in the ministry of finance and the treasury department of the various countries.”
On why the government is taking foreign loans, the minister said, “The Eurobond issue is an issue of pricing, not volume, but on the top of that and back to the issue that I talked on interest rates, we are going to look at how we can refinance some of our existing naira debt into the international market, to take advantage of the fact that there are negative interest rates in a lot of markets, and we think we can significantly lower our cost of funds.
“We think that is also important, working closely with the CBN, because it takes pressure off the domestic market.
We would be borrowing less in the domestic market and then bringing in some much needed foreign exchange. We have spoken to a number of lenders because the markets are really very attractive right now.
With the macroeconomics framework that we have put together and that we would continue to refine, we think we have a very credible story and we should be able to refinance some naira debts at very attractive interest rate, which of course will create more fiscal space for us to spend more on capital. We would spend less on interest and more on capital.”
The Minister said there was no disharmony between the Ministry of Finance and the CBN.
She explained that while the Ministry handled the fiscal aspect which is long term, the CBN’s focus is monetary, which is short term, so there would be times that there would be differences but the two are poised to get good results for the country.
She said, “When you are doing expansion, you need low interest rate and that is the general economics. What I said was that the Monetary Policy Committee is independent, they know what they are seeing on the monetary supply side.
“So, do I still need lower interest rate now, yes! And for as long as I am running a deficit financing, I need. But does that mean that they should lower interest rate at once, no. There was never a call on my part that they should lower interest rate.
They asked me what I want and I said I need lower interest rates. Remember that I am borrowing externally and internally, so one of the things that we have always said is that we need to come out of the Naira and borrow internationally because it is now very low.”
Many countries have even negative interest rate. So that is an opportunity for us. Just because the MPC finds itself in a situation where they are looking at their indicators like inflation and money supply among others, they make their decisions based on that and that is always respected. I don’t see a disharmony.
I am not a member of the committee and I don’t see what they do. We are all working together with one objective, which is to get the economy growing.
There would be times of dislocation in any economy but overtime these will working together in harmony on a number of fronts.”