He pointed out that government’s efforts at revitalising the agriculture sector, solid minerals, manufacturing and expansion of taxation will have massive impact on the economy in the next three to five years, asserting that with the diversification project in full gear, Nigeria’s economic growth and development will no longer be determined by the volatility in the prices of crude oil.
Nwankwo, who disclosed this on Friday at a breakfast meeting with Finance Correspondents Association of Nigeria, FICAN, in Lagos, maintained that a lot of revenues will be derived with implementation of tax reforms, adding that by simply getting taxes from individuals and corporate bodies, government can secure the needed resources to fund major development projects.
He noted that the country’s low comparative tax revenue to Gross Domestic Product, GDP, ratio, which stands at about 7 per cent, against 18 per cent average in most developing countries, would improve as the country begins to gain strength in manufacturing and other economic activities.
“You can see that in the manufacturing sector, some factories are operating below capacity. But with the ongoing implementation of President Muhammadu Buhari’s diversification of the economy and revitalising the power infrastructure, the sector will pick up and create more jobs for the people,” he said.
The DMO boss argued that achieving self-sufficiency in power will enable government generate more income; companies will be able to pay more taxes, thereby helping to diversify government revenue base.
“In the next five to seven years, solid minerals will be exported. It is possible that in the next five to seven years, the whole picture of Nigeria will be a complete turnaround because of government’s economy diversification plan. The difference between Nigeria and other countries facing similar economic challenges is that those countries do not have the same opportunities we have in Nigeria. Nigeria is near 100 per cent idle capacity, meaning the flexibility to grow the economy is high,” he said.
Nwankwo, who urged Nigerians not to be depressed because of drop in crude oil prices, said, “We have no reason to be depressed just because crude oil price is down. We have to see the varieties of opportunities available to grow the economy based on a well-diversified and sustainable manner. We as responsible stakeholders in the economy should emphasise these opportunities.
“In other countries, the major source of revenue is taxation and therefore, taxation option should also be explored. Government should be able to sustain itself with taxation revenues and now, with better tax compliance, and effective sanctions for defaulters, we have a room to boost public revenue from taxation,” he added.
Stressing that government has made significant progress in agriculture, he expressed optimism that in the next five to seven years, Nigeria would have reduced its reliance on imported foods, tackled unemployment and created huge jobs for the people because production is synonymous with job creation.
Nwankwo said the 2016 budget focus is to address structural challenges in the economy while providing the enablement to economic diversification and self-sufficiency.
According to him, out of the N2.2 trillion budget deficit, N1.84 trillion will come from borrowing from both local and international markets.
“This is the first time the budget specified that all borrowed funds will be for capital expenditure. The sharing of internal and international borrowing is almost 50/50. We have been borrowing locally but we have to take advantage of the relatively low cost of funds externally and we do not want to borrow too much from the domestic economy so that we do not crowd-out the domestic environment,” he stated
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