Nigeria’s Minister of Finance, Mrs Kemi Adeosun has explained the
reason the International Monetary Fund IMF was concerned over the
debt service ratio to revenue of the country.
Mrs Adeosun said this at a news conference after the launching of the
International Monetary Fund’s Regional Economic Outlook report on
Sub-Saharan Africa, in Abuja, Nigeria’s capital.
The IMF in its latest economic report, put the country’s external debt
service to revenue at about 66 per cent.
Mrs Adeosun said that the country’s debt profile to GDP remained low;
however, the cost of servicing loans had gone up due to fall in
“The problem is not that our debt is too high, but that our revenue is
too low. It is revenue you use to pay debt and our revenue in Nigeria
right now is very low.”
“Most of our debt matures between two years. That means that the
actual amount of interest we are paying is significant.”
“What we are doing right now is refinancing most of that debt,
especially those maturing within the next two years.”
“We are also working on improving government revenue through tax. Our
tax to GDP is six per cent; we are one of the lowest in the world.
Ghana is 15 per cent, South Africa, 24 per cent.”
“So what we are doing is working very hard to see how we can get more
people into the tax net and how to get those who are already in the
tax net to pay the right taxes,’’ she said.
Mrs. Adeosun also said the government was devising a means to ensure
that multiple streams of income of an individual were taxed.
For instance, she said a civil servant might also have other
businesses such as boutiques or salons and is only paying income tax
on salary gotten from working for the government.
She said that government would ensure that everybody paid tax on each
of the income streams.
The minister said also that the government was working on harmonising
tax collection for federal, states and local government areas.
She said it would be more efficient for one entity to collect, which
would simultaneously eliminate issues of double taxation faced by many
businesses in the country.
In another development, a guest speaker at the event, Proff Adebayo
Salami who is of the Lagos Business School, Pan Atlantic University
advocates that government must join forces with the private sector to
grow the economy.
‘The role of markets is very important in going forward because
Markets is very important in the build of resourses’
‘Governments in Sub Sahara Africa should resolve to become less of a
risk to the economies over which they supridend’.
‘They have to understand that it is their responsibility to the
private sector to protect investments.’ He said.
He said that the challenge of inflation is one that African leaders
must be ready to meet headlong.