Mrs. Zainab Shamsuna Ahmed, Honourable Minister of Finance, Budget and National Planning, has reassured us of the government’s intent to fix the economy and the taxation and spur growth. It won’t be easy, of course, but with expectations stirred, all eyes are now on the performance of the 2020 Budget that has just recently been signed into law by President Muhammadu Buhari.
After the President assured his government’s backing for bankers to fearlessly extend loans for genuine business needs, and for the organised private sector to get on board, Mrs. Ahmed has sought to reassure Nigerians nay the outside world of all possible efforts to get the economy going.
Speaking at different privately-organised fora within the country, Ahmed addressed a number of issues, ranging from prospects of an economic stimulus and the scope for fiscal expansion to how taxation should be simplified and its burden eased. With economic growth having slipped to an over eight-year low prior to this administration, the importance of what the President Buhari’s government has in mind cannot be overstated. The finance minister signaled a multi-pronged approach involving both local and international investors, noting that “we are very confident that once Dangote Refinery commences operations, it will save us over USD$10 billion that Nigeria has been spending on importing crude oil and it will also help us to build local capacity and create jobs.” According to her, the savings from such an investment would strengthen Nigeria’s macro economy to attract more investors, adding that the opportunities were good for Dangote Group but would be better for Nigerians who would enjoy several benefits.
As for the government’s outlook on the fiscal deficit, Nigerians have been all ears. She is spurred to brood over a government ready to take a pragmatic look at all options. Indeed, policymakers need to model and assess various scenarios that further fiscal loosening could result in, with all risks entailed taken into account. The Honourable Minister’s most salient message, perhaps, has been the promise of a purposeful tax administration. She stated that efforts were being made to rid Nigerian taxation of its ‘ifs and buts’, a reference to exemptions and other complexities, and that the country was moving towards an ‘illusive-free taxation structure’. These comments appear to be aimed squarely at easing and streamlining multiple taxation concerns. After all, even perceptions of harshness could end up spooking businesses and stifling commerce. Our complex laws need simplification if compliance is to be improved. In general, all taxation should go by the canon of simplicity. All this does not look easy to achieve right away, given the Federal Government’s stretched finances. But Mrs. Ahmed has stirred up expectations, the reason that her next budget is to be keenly watched.
Over the last fortnight or so, the finance minister has gone deep into the public grid as it were. While she has — as insiders reveal — diligently gone about her task of putting together the 2020 budget, she has at the same time been keeping imperturbable public profile. This is only natural as the Honourable Minister could hardly afford any distraction; not only is the government eager to bring to bear the needed change in the national budget cycle, given that the present administration took over merely feeble economy, it is also facing some economic headwinds that require urgent but deep-seated palliatives — which in turn has stoked major expectations from next year’s budget.
Separately, there has been a buzz in the government corridors that the President and the Finance Minister are also keeping busy seeking inputs, both formally and informally, on the economy and the budget from economists, at least from the recently constituted Economic Advisory Council. Now with the signing of the budget for the specifics, some broad trends, gleaned from the recent submissions by the Honourable Minister at various fora, are apparent.
The 2020 Budget tagged “Budget of Sustaining Growth and Job Creation”, echoes the target of Nigeria’s biggest budget ever, totalling N10.59 trillion. It is up from the N8.83 trillion budget for 2019 and tops the previous record spending plan, the N9.12 trillion budget for 2018. This is the 2020 Appropriation Bill that was laid before the Joint Session of the National Assembly on 8th October, 2019, and shortly thereafter the 2019 Finance Bill was also forwarded.
Corroborating the President’s budget speech in Abuja, Ahmed would reiterate the government’s resolve to make Nigeria a very economically strong nation in the comity of nations. While it will be silly to believe that the 2020 Budget performance target of N10.59 trillion can be achieved in the next few months, the resolve and the blueprint for medium term action are likely to find mention any time soon. A key to achieving the above is to address the perceptible slowdown in growth. The obvious options are revving it up either through export and consumption or stoking a revival in the investment cycle.
Mrs. Ahmed is very keen to see that Nigerians are indeed in for the best of days as President Buhari is walking his talk, more so with the signing of the Finance Bill 2019, which can safely be refered to as the Finance Act 2020. This is a landmark achievement worthy of recognition, being the first time this has been done in the last 20 years.
“The finance bill strategic objectives include the following: Promoting fiscal equity by mitigating instances of regressive taxation (such as tax reforms for the insurance sector); Reforming domestic tax laws to align with global best practices (such as taxes of digital business and e-commerce); Introducing tax incentives for investments in infrastructure and capital markets (such as targeted incentives for real estate investment trusts (REITs) and securities lending in the capital market); Supporting micro, small and medium Enterprises (MSMEs) in line with the ease of doing business reforms such as Value Added Tax (VAT) threshold and lower company income tax (CIT) rates for MSMEs; and raising revenues for government to fund the 2020 Budget. There is a VAT rate increase and excise duty on imported excisable goods.
Nigerians look forward with expectations on the implementation of the Act which will support the funding and implementation of the 2020 Budget. “We shall sustain this tradition by ensuring that subsequent budgets are also accompanied by a Finance Bill,” the President promised.
It is a peoples Bill considering the expansion of VAT exemption list which includes: basic food items (agro and aqua-based staple foods) such as additives, cereals, cooking oils, culinary herbs, fish of all kinds (other than ornamented), flour and starch, fruits, live or raw meat and poultry, milk, nuts, pulses, roots, salt, vegetables, and water; Locally manufactured sanitary towels, tuition (primary, secondary and tertiary education); and services rendered by Microfinance Banks.
In view of the Act, a large sum of money realised from the taxation would go to the people; the States and the Local Governments Areas (LGAs) are to get 50% and 35% respectively while 15% will go to the Federal Government. According to Ahmed, “The signing of the Bill into an Act is a landmark achievement for Nigerians as it sets the tone for our quest to run our annual budgets with revenue from non-oil sector rather than from the volatile oil sector.”
Considering all said and done, it is clear then that the stage is set for belly-sweet phase of economic growth, the moment the 2020 Budget implementation begins with Mrs. Ahmed. Till then, we will have to be content with what some professionals have said optimistically: “Wait and see what the Federal Government plans for next year.”