It’s been very difficult for me to comment on the VAT component of the tax reform bills because of lack of data. President Bola Tinubu has proposed to increase VAT derivation from 20 percent to 60 percent. This has led to political pushbacks and media war. Proponents argue that the bill is so good it will incentivise states to become more productive to benefit from derivation payments. That easy? Opponents, particularly from the north, say it will cripple every state, apart from Lagos. That bad? As with many things in Nigeria, many commentators and opinion leaders have automatically taken default positions, usually built on ethnic and regional sentiments as well as received wisdoms.

Dr Rabiu Musa Kwankwaso, former governor of Kano state, claimed that the reform is an attempt by Lagos state to colonise northern Nigeria using tax. “Today, as we have noticed, even the telephones that we make or register here in Kano, efforts are there to take all the taxes to Lagos,” he said. Ironically, this is the same anomaly proponents of the reform say they want to redress. Prof Babagana Zulum, governor of Borno state, told the BBC Hausa: “We reject the tax reform bill; it will bring backwardness to the north, and not only to the north, but also to the south-east, south-south, and south-west. Oyo, Osun, Ekiti, and Ondo will also have problems; it will only benefit Lagos.”

The North East Development Commission (NEDC) — of which Borno is the biggest beneficiary as a result of post-Boko Haram rehabilitation public works — receives 3 percent of VAT revenues as part of its funding. For the first 10 months of 2024, NEDC got about N156 billion from the VAT pool alone, in addition to other funding sources. Under the proposed reform, NEDC will no longer be funded from VAT. That is an average of about N15 billion per month, which will now be shared by the 36 states and FCT if the amendment passes. I do really understand why Zulum is unhappy and why Senator Ali Ndume (Borno south) has threatened to quit the APC. This is a huge amendment.

Not every northerner is against the bills, though. Mr Muhammad Nami, former chairman of the Federal Inland Revenue Service (FIRS), said the reform will put an end to VAT manipulation. “VAT returns by companies are not filed on the basis of the place of consumption but reported based on the head office locations of these companies,” he said. “This means that a whopping 20% of VAT returns are distributed back to states where these head offices are located — whether consumption took place there or not; it explains why Lagos, FCT and Rivers always take the largest chunk of VAT under the current regime.” The proposed reform will emphasise fairness and equity, he argued.

Hon Abdulmumin Jibrin, representing Kiru/Bebeji (Kano state) in the House of Reps, also countered the critics, suggesting that 99 percent of those against the reform have not even read the bills. He criticised northern pressure groups for their critical position. “When President Tinubu introduced the bills, there was initial excitement, but unfortunately, some people rushed to conclusions without properly reading the bills or seeking clarification,” he said, insisting that the advantages of the bills surpass “whatever you’re going to lose from the disadvantages”. He added: “I have never had any doubt about the consideration and passage of the tax reform bills. We will pass the tax reform bills.”

I will, however, still find it very difficult to take a position on the proposed derivation formula until I see the workings. Thanks to the boffins at Agora Policy, one of the nation’s leading policy think tanks, I am well informed about the aggregate figures of the current VAT distribution formula dating back to 10 months (January to October 2024). Contrary to the received wisdom that one part of the country is a parasite sucking the blood of the other, the data is damning. Of the 36 states of the federation, 32 got more from the VAT pool than they “contributed”. Let me say that again. Only four states got as much as they “contributed” to the pool — the rest are parasites in varying degrees. I love data.

Nevertheless, these data sets are based on the current formula which calculates derivation on the basis of where the companies are headquartered. But VAT, by nature, is supposed to be paid at the point goods or services are consumed. As things stand, if you buy a recharge card in Ilorin, the VAT derivation is attributed to Lagos where the telcos have their headquarters. If you do a banking transaction in Ibadan, the VAT derivation is attributed mostly to Lagos where almost all the banks have their head offices. Clearly, the biggest “contributors” to the VAT pool enjoy the “headquarters effect”. The data is in the public domain. I am delighted Agora Policy did an amazing work on that.

This, for me, is the problem to be tackled: by the time we move from VAT attribution “by headquarters” to the proposed attribution “by point of consumption”, what will the data look like? The proponents are presenting it as “Lagos will be the biggest losers”. The opponents are saying “Lagos will be the only beneficiaries”. Both cannot be right. The best way to settle this argument is to give us raw data on what VAT “by point of consumption” will look like. This should settle the argument. Can we use December 2024 and January 2025 as a test-run before we go ahead with the amendment? Let all VAT remitters disaggregate their reporting based on the point of consumption.

There is too much emotion on display on a matter that can be settled by mathematics. My sense is that many who think they will lose may gain and many who think they will gain may lose. Just a hunch. I do not believe the entire south will gain or the entire north will lose as the narratives out there suggest. I do not see, for instance, a state like Kano losing more than it will gain, despite Kwankwaso’s claim. The volume of economic transactions in Kano may actually favour the state but Borno may not benefit much. The same scenario may apply to Oyo and Osun in the south-west. But we are so wired to reason along sectional lines that we do not have time for science on any issue.

Despite the raging controversy over the reform bills because of the VAT part, there are many provisions worth looking at. There are four bills in all: the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service Establishment Bill and the Joint Revenue Board Establishment Bill. Together, they are called the tax reform bills. They seek to improve on the current tax laws. The stated objective is to provide uniform procedures for a “consistent and efficient” administration of tax laws in Nigeria “in order to facilitate tax compliance by taxpayers and optimise tax revenue”. Many of the provisions are actually worth the paper on which they are printed.

For one, the federal government is shaving off some percentage of its share and giving it to the states. The current formula gives federal government 15 percent; states and FCT, 50 percent; and LGAs, 35 percent. States share theirs on a ratio of 50:30:20 — 50 percent for equality, 30 percent for population and 20 percent for derivation. The proposal is 10 percent for federal government, 55 percent for states and 35 percent for LGAs. States, under the proposal, will use the sharing ratio of 20:20:60 — equality, population, derivation. VAT has become the biggest revenue earner, hopping above crude oil. That is why all eyes are now on the tax, introduced in 1993 by Gen Sani Abacha.

The new bills provide exemption for individuals earning N800,000 or less per annum. Those currently earning N800,000 pay over 10 percent of that as personal income tax (PIT). The proposal is good for low-income earners; N84,000 means a lot to them. But while raising the threshold to N800,000 may sound good to them, it is a big revenue loss to some states where the bulk of the PIT comes from salaries. Moreover, can the federal government unilaterally take a decision on PIT? After all, federal government is allowed to collect PIT only from the armed forces, police force, foreign service officers, FCT residents and persons not resident in Nigeria but who derive income or profit from the country.

Small businesses — defined as those with an annual turnover of less than N50 million (up from the current N25 million) — will not pay company income tax (CIT). This will benefit thousands of businesses. Meanwhile, companies that do not declare a profit will no longer be mandated to pay a flat charge of one percent on turnover. Only actual profit will be taxed. For the big companies, CIT rate will be reduced from 30 percent to 25 percent within two years. Some basic goods and services consumed by low-income earners are also to be VAT-exempt. However, VAT rate will be increased gradually from the current 7.5 percent to 10 percent and later to 15 percent in years to come.

All said and done, there are many aspects of the bills that are necessary, beneficial and long overdue, and should help businesses — and, invariably, the economy — grow. If properly implemented, this reform has the potential to reduce the tax burden on individuals and businesses, eliminate multiple taxation, bring more people into the tax net and increase our tax revenue at all levels. However, no matter how wonderful a policy is, it can die on the altar of politics. The fight over VAT derivation is purely political. Policy makers always have a duty to take care of the political side of things if they really want to succeed. That is why we talk about stakeholder management and consensus building.

I have my own reservations about VAT derivation jumping from 20 percent to 60 percent in one fell swoop, but at least I read the bills. Many are commenting furiously without reading. This is not uncommon with us. Only very few people make comments based on knowledge. Some just parrot others because it feeds their biases and prejudices. Sadly, negative comments can do irreparable damage. I heard a respected employer saying the bills will impose more taxes on poor Nigerians. A senator said the bill proposes VAT exemption for those earning less than N800,000 per annum. Except there are two versions in circulation, there are no such provisions in the bills that I have read.

Ultimately, this one is on Tinubu. No matter how fantastic a policy is, it still has to be sold to the stakeholders, not presented to them as “take it or leave it”. You cannot set up a committee to develop a major policy on revenue sharing without involving the stakeholders at every stage. They have to make inputs. They have to comment, object, negotiate and reach a compromise. They have to see the drafts before you start announcing the details on TV. Without their buy-in, it would amount to force-feeding them with a fait accompli. The best of policies can die because of poor engagement and poor communication. I want to see how Tinubu will wriggle his way out of this.

It is received wisdom that supportive, high-quality friends in good places are important in human relationships and in advancing personal and group progress. It is also the case in strengthening relationships among nations.

Since his assumption of office, President Bola Tinubu has activated the friendship he has built over time in his quest for Nigeria’s development. The President has embarked on reforms to reposition the economy and put the country on the right track for optimal development based on his Renewed Hope Agenda. To realise this lofty objective, he is leaving no stone unturned, including leveraging his friendship and international connections.

President Tinubu’s three-day state visit to France provided ample opportunity for this leverage. The visit was at the invitation of President Emmanuel Macron. During the visit, the French President demonstrated he is a true friend of President Tinubu and Nigeria. President Macron rolled out the proverbial red carpet for his friend. For instance, on arrival in Paris on Wednesday, November 27, officers of the elite Republican Guard welcomed President Tinubu with a parade with full honours at Orly Airport to begin the state visit, the first by a Nigerian leader in over two decades.

The next day, Thursday, President Macron and his wife, Brigitte, formally received President Tinubu and his wife, Senator Oluremi Tinubu, at the historic Invalides Memorial Complex in Paris, where another full parade was displayed. The two leaders then went to Elysee Palace, where their families exchanged gifts. Tinubu and Macron later had bilateral discussions on economic and political issues involving their two countries.

The two presidents and business leaders from their countries attended a business meeting organised by the Franco-Nigerian Business Council. Later in the evening, President Tinubu, his wife, and his entourage were treated to a sumptuous dinner.

By many accounts, President Tinubu’s state visit to France was hugely successful. The visit was unprecedented in the impressive way Macron hosted him, the issues discussed, and the benefits accruable from the trip. The French Ambassador to Nigeria, Marc Fonbaustier, said President Macron had received no other African leader in such a manner.

Two reasons could be adduced for this exceptional reception. The first is the friendship between President Tinubu and President Macron. The French President decided to give his friend the best reception possible. The other is the fact that Nigeria is pivotal in Macron’s new policy on Africa. With Paris’s waning influence in French-speaking African countries, the French President is making overtures to English-speaking African countries where Nigeria holds an important position.

What are the immediate, short and long-term gains of President Tinubu’s France visit?

In the immediate term, the visit helped to put issues about the challenges confronting Nigeria and Africa on the front burner, as evident from the editorial authored by the two presidents before the visit. The editorial was published in the media in Nigeria, France, and across the globe. In the article, the two leaders spoke of their readiness to collaborate as equals in addressing burning issues, which included a more robust health system, education for all, sustainable and legal migration pathways and just representation for Africa in the United Nations Security Council as well as in challenges like insecurity, climate change, security of the Gulf of Guinea and instability in the Sahel Region.

It is instructive that while emphasising their strategic autonomy, the two countries agreed to stay non-aligned with any bloc, opting to overcome these challenges by renewing global governance and backing uniform implementation of international humanitarian laws, whether in Gaza, Sudan, or Ukraine, in a way devoid of double standards.

The two presidents again discussed these issues, among others, in their bilateral talks, and reaffirmed their commitments. An elated President Macron later described President Tinubu’s state visit as a milestone, heralding deeper bilateral relationships.

There was a strategic engagement between Nigerian and French businessmen under the auspices of the Franco-Nigerian Business Council and a follow-up France-Nigeria Business Forum. At the meeting were top Nigerian business leaders such as Alhaji Aliko Dangote, Alhaji Samad Rabiu, Mr. Tony Elumelu, Mr. Jim Ovia and Mr. Aigboje Aig-Imoukuede, among others, as well as some state governors including the Chairman of the Nigerian Governors’ Forum and Governor of Kwara, Abdulrasaq Abdulrahman, Babajide Sanwo-olu (Lagos), Dapo Abiodun (Ogun) and Peter Mbah (Enugu).

Among the ministers at the session were the Minister of Finance and Coordinating Minister of the Economy Wale Edun, Dele Alake (Solid Minerals), Abubakar Kyari (Agriculture), Dave Umahi (Works), Jumoke Oduwole (Trade & Investment), Hannatu Musawa (Tourism, Culture & Creative Economy), Idris Mohammed Malagi (Information & National Orientation), Mohammed Badaru Abubakar (Defence), and Bosun Tijani (Communications & Digital Economy).

The France-Nigeria Business Forum was held on Friday morning and attended by business leaders from both countries. The critical takeaway from the forum is the resolve of the French business people to move away from trading and to engage in value additions in crucial sectors like agriculture, manufacturing, energy transition, and power.

Two interconnected developments during the visit are particularly noteworthy. Zenith Bank inaugurated its banking operations in Paris, while the United Bank for Africa also got approval for its operating license. President Tinubu and President Macron witnessed UBA Group Chairman Tony Elumelu and French Minister of Economy, Finance, and Industry Antoine Armand signing the agreements for the bank to commence full banking operations in Paris.

Two transformative agreements were also signed with the French government and its development agency, AFD (Agence Francaise de Development), during the visit. Minister of Finance Edun led the Federal Government in signing the agreements collectively valued at over €300 million euros and designed to strengthen vital sectors of Nigeria’s economy and drive sustainable development. The Minister of Economy, Finance and Industry of France, Armand, co-signed for the French Government.

During the visit, both presidents affirmed their strong commitment to enhancing investments in key sectors like food security, energy, solid minerals, education, and defence. President Macron had earlier assured of his commitment to encouraging more investments in the solid minerals sector, with the signing of an agreement at a bilateral meeting where the Minister of Solid Minerals Development, Alake, presented the sector’s potential.

Importantly, French investments in the creative industries, particularly Nollywood and youth-focused initiatives, are underway. President Macron, who had lived in Nigeria before when he worked at the French Embassy in Lagos, described Nigerians as hugely talented and resilient people. He paid special tributes to Nobel Laureate Prof. Wole Soyinka and famous Afrobeat musician Femi Kuti, both of whom he called global icons.

Looking back on the three-day visit, President Tinubu thanked President Macron for the warm reception and agreements reached by the two of them and expressed the hope that the relations between France and Nigeria would be brighter and better.

He said: “In addition to the economic prospects and what you mean to Europe, America, and the African continent, there is a good prospect that you will not forget who we are. You open your doors for investment for our friends and brothers here.

“It is a good time for all of us. I cannot be prouder than I am to be President of Nigeria at this challenging time. I have people who are very clearly inspired, who are determined to change the course of Africa by changing the rot of the past, blending a future that our children and grandchildren can be proud of.”

On his part, President Macron remarked: “We have confidence that you, Mr. President, will reinforce our relationship with Nigeria, and it will cover the West Coast region, with ECOWAS playing the leading role. I will seek your leadership to work as partners of progress. You are the great leader of the great country in Africa.”

There is no doubt that President Tinubu is deploying his friendship to advance his economic development agenda for Nigeria.

•Rahman is the Senior Special Assistant to the President on Media Matters.

All sides have mismanaged the discussion around the proposed change to the formula for sharing value added tax (VAT) among states. We are now smack in the middle of an ego-driven, political and polarising battle that could have been avoided or moderated if those involved had exercised good faith and put greater store in negotiation and consensus-building. It is not too late to step back, bring down the heat, and find common ground.   

To be sure, the Federal Government (FG), represented by the presidency, has the right to take the lead in developing fiscal policy for the country. But it also has the responsibility to pro-actively seek inputs from and actively facilitate discussion among and with the states especially on matters that will, for ill or good, directly impact states’ finances. However, the FG (perhaps fancying that the centre and the states exist in a master-subordinate relationship) chose to dictate how states’ portion of VAT should be shared. This is a haughty, paternalistic approach that is at odds with the principles and practice of the federal system that we operate. The president was once a governor, and it is unlikely he would have put up with such a treatment as a governor.

The Northern Governors’ Forum was wrong in outrightly framing the tax bills as being anti-north and urging legislators from the north to reject all the bills. This introduced a sectional dimension, fuelled conspiracy theories and awakened a toxic north-south divide. There is enough tension in the country. We don’t need to crank things up.

Then, the National Economic Council (NEC) was equally impolitic for openly asking the president to withdraw the bills from the National Assembly to allow for more consultations. NEC could have raised a team of six governors (representing the six geo-political zones and led by its chairman, the vice president) to share its concerns with the president and leave it to him to decide the next steps. But by going public first, the governors under the auspices of NEC threw down the gauntlet, and it is easy to see how the president and his handlers would have perceived that as an affront to the person and office of the president.

A major chunk of reform is political. Any reform that touches on revenue allocation among and within tiers of government in a federation will always be contentious and will be doubly political. The political actors have a plethora of official and unofficial channels for resolving such frictions or at least for moderating them. The politicians failed to play the good politics. In this instance, good politics will mean not trying to win every argument and at all costs.

It is not too late for those for and against the proposed VAT formula to put the obvious missteps behind them and to, with respect and open mind, listen to and hear each other, and to work out a compromise that may not be perfect but will not leave either party with a sense of losing out or losing face. Even when such one-sided victory is possible by fair or foul means (and there are aides and followers that will be pushing for such), it is not politically and strategically sustainable. Neither is it worth the current and future costs.

For a start, both sides will need to take it easy on the hyperboles and the misrepresentations. It is neither true that only northern states will be negatively affected by the proposed change in the formula for sharing VAT among states nor is it accurate that only Lagos and three other states will be worse off under the proposed order. Available data and simulations indicate that there will be winners and losers across the country, to different degrees. It is also not useful to offhandedly dismiss the concerns of the other party as motivated by hidden agenda, malice, politics or ignorance.

Agora Policy undertook a review of FAAC documents for all the months for which revenues have been shared this year to tease out the details of what the 36 states contributed to and received from the VAT pool. The think tank put the outcome in tables, charts and maps, which were shared in a series of threaded posts on social media. The data and analysis put a lot of things in perspective for me, including showing the strength and the flaws of the current formula.

So much has been made of the undue advantage that accrues to Lagos State based on how VAT is currently attributed. According to computations made by Agora Policy from the FAAC documents, the total non-import VAT in 10 months was N4.15 trillion, out of which N2.21 trillion or 53% was attributed to Lagos. It stands to reason that Lagos alone could not have been responsible for the consumption of more than half of the goods and services that attracted local VAT in the country within 10 months. Clearly, this is ‘Headquarters Effect,’ which arose simply because most of the big companies operating in the country have their head offices in Lagos and paid their  VAT from there.

This surely needs to be corrected because it unduly advantages Lagos, Rivers, Oyo, Delta, and Bayelsa at the expense of the other states. But this attribution advantage can be corrected without the current upheaval. We will return to this shortly. However, the special advantage that Lagos and the four other states enjoy in attribution is not proportionately reflected in what they received from the VAT pool. Lagos for instance did not receive 53% of what was available to the states. It received N371.09 billion in the period, clearly the highest, but that translates to only 16.76% of its contributions of N2.21 trillion, 14.6% of the N2.53 trillion shared by the states, and only 6.82% of the total of N5.07 trillion shared by the three tiers of government.

It is the same pattern for the four other states with possible headquarters effect. Interestingly, only four of the 36 states received less than what they contributed to the VAT pool. You guessed right. These are the states advantaged by the current way of attributing contribution to VAT: as stated earlier, Lagos received only 16.76% of what was attributed to it, while Rivers got 22.45%, Oyo received 42.7% and Bayelsa got 94.69% of their contributions.

However, 32 other states got much more than they put in the pot. Of these, 17 states received 101-300% of their contributions;11 states got 301-500% of what they put in; and four states received over 500% of their contributions—Kebbi, 723.77%; Cross River, 725.27%; Abia, 793.13%; and Imo, a whopping 1,715.98%. While data on contributions by states shows wide disparity (from N3.33b by Imo to N2.21 trillion by Lagos), the distribution is more evenly spread with 34 states receiving between N47.07 billion and N94.37 billion, while only two states received above N100 billion (Lagos, N371.09 billion and Rivers, N150.76 billion).

Distribution is more evenly spread between states and across zones and regions not only because almost all the states collected more than they put in, but also because the gap in what states received is very narrow. Also, the myth of one region benefiting more or less is not supported by the data for 10 months in 2024. Whatever most states lost in wrong attribution is compensated for by the current sharing formula, which allocated 50% to equality, 30% to population and 20% to derivation. This means that for equality alone each of the 36 states (irrespective of their contributions or attributions) received N35.19 billion from 50% of the N2.53 trillion available for states to share from the VAT pool. This evens things out to a large extent. The subsisting formula is thus not as thoughtless or as unfair as it is projected.

But the analysis by Agora Policy also reveals that current formula is not without challenges. An obvious one is that a high percentage assigned to equality of states creates a form of perverse incentive: irrespective of contributions, all states will always get a steady and hefty inflow from the VAT pool. There is no consequence for states not charging and remitting VAT on contracts they give out. This allows for freeloading and unfairly raises the cost of procurement for compliant states. Also, states with high populations have inbuilt advantage because of the 30% of the VAT pool assigned to population. So, a populous state is guaranteed a tidy sum from 80% of the VAT pool for states even if it contributes very little. Apart from providing incentives for some states to cheat others, this will also reduce the amount of revenues that can be generated from VAT and negatively impacts Nigeria’s total tax revenues and tax-to-GDP ratio.

A few examples will suffice, and by the way this is across the country. Imo State contributed N3.33 billion in 10 months to the VAT pool but received N57.22 billion within the same period, the clear outlier in terms of contribution against receipt. But within the same period, Ebonyi State contributed N21.98 billion which was 96% of the total of the N22.83 billion that Abia, Enugu and Imo states combined pitched in for the same period.

Meanwhile, each of these states received higher than the N49.97 billion that Ebonyi got during the same period. In the North West, the contribution by Zamfara (N14.30 billion) was almost double the N7.46 billion by Kebbi but the two states received about the same amount from the pool. In the North East, Bauchi’s contribution (N16.31 billion) was the lowest in the zone, yet what the state received (N62.80 billion) was the highest in its geo-political zone.

In the South South, Cross River contributed just N7.17 billion, which is a mere 13% of what Bayelsa put in but what Cross River received (N51.97 billion) was slightly higher than what Bayelsa got (N51.69 billion). In the South West, it is interesting that the contribution by Ekiti State (N25.40 billion) was higher than the total of what was put in by both Ondo (N11.92 billion) and Osun (N13.09 billion). Yet what the states received was as follows: Osun, N55.72 billion; Ondo, N55.62 billion; Ekiti, N51.59 billion. This means that despite that Ekiti contributed more than both Ondo and Osun combined, Ekiti received less than each of these two states. Clearly, there are issues with the formula, which need to be addressed.

But taking the derivation from 20% to 60% in one fell swoop (while allocating 20% apiece to equality and population) is not going to be as painless for most states as the proponents have made it to look. Saying that only Lagos and a few states will lose out is not exactly accurate. Re-allocating revenues is a zero-sum game: there will be losers and winners. VAT constitutes the bulk of the revenues that states get from FAAC, and not giving states that will be dislocated enough time to plan, not discussing how potential and sudden losses will be compensated in a federation, asking those who will lose a major source of revenues for the budgets that they have already proposed to just get on with it or be more creative is not only insensitive but a bit provocative.

So, how do we balance the necessity to stop some states (across the zones) from gaming the formula and the imperative of ramping up revenues with the need to address the potential losses to some states without unnecessarily heating up the system or laying the foundation for a future crisis? This is where technical sagacity should have a handshake with deft political management. The two sides in this dispute need to make their case to each other, devoid of emotion or threats. They will need to understand where each side is coming from and be ready to make concessions.

Without a doubt, certain things have to change but maybe not in the way or in the order they are proposed. For instance, the current VAT law did not specify how derivation should be attributed. It is most likely that, for administrative convenience, FIRS and the major companies decided that VAT should be paid from their headquarters and attributed to where the tax is paid. This can be corrected administratively by FIRS, without immediately changing the formula for sharing VAT due to states. This will also be easier to sell as a majority of the states will benefit from the change in attribution. For sure, there will be losses, but these will mainly be to states like Lagos and Rivers, states that depend the least on FAAC allocations. This change in attribution can commence soon without much hoopla.

The second option will be to change the percentage allocated to derivation, but not immediately, and not from 20% to 60% at once, and not without showing compelling evidence of how states will be impacted and how those that will incur major losses will be assisted to cope. Devoting 60% to derivation will definitely advantage not just states with high population and high disposable incomes but also states that have high economic activities that attract VAT. Food is excluded from VAT. So, agrarian states will lose out. Same with smaller states and even big states with mass of poor people. The states likely to be disadvantaged by shrinking equality and stretching derivation are likely to spread across all the zones.

In Section 40, the current VAT law says that “provided that the principle of derivation of not less than 20% shall be reflected in the distribution of the allocation amongst States and Local Governments as specified in paragraphs (b) and (c) of this section.” The current law mentioned only derivation and does not say that derivation should be only 20%. There is plenty room for manoeuvre here. Derivation can be more than 20% within the existing law, say 30% or 35% to start with. Other parameters not specified in the law can also be adjusted. But there will be a need for a proper discussion between the FG and the governors on one hand, and among the governors on the other, including how to ensure that all states pay VAT on the contracts they give.

Credible and compelling data will be necessary to drive this discussion. It will help if FIRS has actual data on consumption of VAT-able goods and services by location for all the states. If it does not have the actual data, FIRS can explore two options: request for change in attribution for some months and make the case or use proxy data to build a case. A good proxy will be the consumption expenditure pattern report by the NBS. According to the 2019 report, Lagos had the highest total consumption expenditure of 12.60% in the country while Taraba had the lowest with 0.74%.

This presents a fairer picture than the current VAT attribution pattern but it needs to be disaggregated along food and non-food expenditure (as food doesn’t attract VAT, and food constituted 56% of consumption expenditure). NBS recently released the Living Standard Survey for 2023/2024 where most recent consumption expenditure can be extrapolated. The proxy data can be used to model different scenarios and arrive at an agreeable adjustment of the derivation component of the formula.

There will be need for a phased transition and agreed transfers to those that will lose out. The changes to VAT and CIT rates are phased, all the way 2030. So, why is FG in a hurry to change how VAT is shared among states and especially to change derivation for the states from 20% to 60% by 2025? And why is FG carrying on as if this is the only thing in the tax bills or an area it is not ready to yield an inch of ground on? What is really at stake here beyond ego and powerplay? Finally, it will be unreasonable to expect states to easily plug sudden gaps of N10-30 billion in annual VAT revenues without some hand-holding. We need reasonableness and cool heads on all sides. The needless muscle-flexing and sabre-rattling should stop.

President Bola Ahmed Tinubu has approved the release of funds required for the immediate operationalization of the UNESCO Media and Information Literacy (MIL) Institute, whose hosting rights were awarded to Nigeria by the United Nations Educational, Scientific and Cultural Organisation (UNESCO), the Minister of Information and National Orientation, Mohammed Idris, has announced.

Idris stated this in Paris on Thursday during a meeting with the UNESCO Assistant Director-General for Communication and Information, Dr. Tawfik Jelassi, on the sidelines of President Tinubu’s State Visit to France.

“President Bola Ahmed Tinubu has been very supportive of the take-off process, and has approved the release of all funds required for the immediate operationalisation of the Institute, which will be located in the Federal Capital Territory,” Idris said.

Recalling his previous meeting with Dr. Jelassi, in 2023, the Minister conveyed Nigeria’s gratitude to UNESCO for the honour of hosting a Category 2 MIL Institute, the only one of its kind in the world.

In response, Dr. Jelassi expressed enthusiasm for the take-off of the Institute in Nigeria, emphasizing its relevance in addressing the global challenges of misinformation, disinformation, and hate speech. He also highlighted the importance of fostering a safer and more reliable internet, which aligns with UNESCO’s key priorities.

He explained that the goal of UNESCO’s new Guidelines for the Governance of Digital Platforms is to promote critical thinking and platform transparency, whilst also safeguarding freedom of expression.

Additionally, the Assistant Director-General informed the Minister about the UNESCO MIL Cities initiative, which seeks to integrate and embed the concept of Media and Information Literacy into the design and daily operations of cities around the world, including transport systems, community activities, culture, billboards, and so on.

Minister Idris welcomed the initiative and pledged to ensure that Nigeria takes prompt advantage of it, and presents a city that will be among the world's inaugural set of MIL Cities.

Discussions also touched on UNESCO’s new Guidelines for the Governance of Digital Platforms, published in 2023 following a multi-stakeholder consultation that assembled over 10,000 submissions from 134 countries. Dr. Jelassi presented copies of the document to Minister Idris, who assured that Nigeria will work with all relevant stakeholders to domesticate the guidelines and ensure a safer and more responsible internet for all Nigerians.

Minister Idris was accompanied to the meeting held at the UNESCO Headquarters by Nigeria’s Ambassador and Permanent Delegate to UNESCO, Dr. Hajo Sani OON.

Rabiu Ibrahim
Special Assistant (Media) to the Minister of Information and National Orientation.

How do you dance to the admiration of all Nigerians? Chief Commander Ebenezer Obey said it all in his song/story on “Ketekete” (horse) and its owner: There is nothing you can do to please the entire universe. No matter your efforts and regardless of the success achieved, some will still deride you and pull you down. They will find fault.

A man’s horse, the elders say, is never tall enough in the jaundiced eyes of his detractors. Even when it is all obvious for everyone to see, they will still say, “Ki ni?”. What is it? A saying of our people summarises the “Pull Him Down” syndrome by inveterate foes thus: “Winni-winni l’oju orogun; eji-woro l’oju iya e” While every good-natured person rejoices with the mother who just gave birth to twins, describing the new-born babies as “two-at-a-time” achievement; the detractor sees and describes them derisively and derogatively as “two tiny-tiny creatures”!

Let us start by talking about the Port-Harcourt refinery that reportedly came on stream after decades in the land of the dead. Last week, we were told that the refinery roared back to life and started trucking out products. But the detractors said “Ki ni? It is not producing but is only blending what-have-you!” Whether petrol, diesel, kerosene, aviation fuel or whatever - was it producing or blending anything before now?

This is the same refinery we have all given up as dead - dead as in dead; dead as dodo, as they say! This is the same refinery that we all said had gone the way of the Ajaokuta steel rolling mill - a multi-billion dollar investment that had become a bottomless pit and a source of national embarrassment. If only Ajaokuta can in the same manner roar back to life, even if minimally! And they began to say it is the old and not the new refinery! Whichever! And that it is operating at only xyz and not 100 percent capacity! Again, whichever!

To think that these were the same people who had pilloried the government for keeping workers of the refinery and spending billions on them for the lengthy period the refineries were comatose! Shouldn’t they now at least heave a sigh of relief, if not rejoice, that, at last, something is coming out of nothing?

Think of it: These are the same refineries that former President Olusegun Obasanjo told us Shell refused to take and manage. They are the same refineries that the same Obasanjo had sold at give-away price - as scraps. It took the wisdom and patriotism of his successor, the late President Umaru Musa Yar’Adua, to reverse Obasanjo’s decision and take back the national asset. Unfortunately, death cheated Yar’Adua to his vision for Nigeria.

Don’t get me wrong: I am not saying all is well right now at the Port Harcourt (old and new) and the other refineries; no! A lot of hard and serious work still needs to be done! I am also not by this eulogising the management of the place; no! I am one of those who canvassed a regime change there but it would appear President Bola Ahmed Tinubu has a different idea. He must have his reasons. I concede that those of them in government have access to information that is not readily available to those of us outside.

But, for now, kudos to the President and NNPC for this minimum achievement. Placed side-by-side with the monumental failure of the past decades spanning successive military and civilian leadership, it looks like cherry news but we must not rest on our oars. All the refineries must be made to work at full capacity. Importantly, Nigeria needs more refineries - be it government, private or a combination of both. The downstream oil sector is damn too critical to national survival and the well-being of Nigerians to be left in the vice-like grip of a monopolist.

If we say we operate a free market economy, we should know that monopoly distorts the market. That is why there are laws in free market economies frowning at unfair competition. Monopoly breeds and entrenches unfair competition. In fact, it eliminates competition altogether and imposes the economic equivalent of a political reign of terror. Let’s build more refineries!

But should the NNPC turnaround story turn out to be a hoax and another Nigeria Air swindle of monumental proportions - like some are alleging - then, not only must heads roll, some folks should cool their heels in jail. We must begin to ensure that there are consequences for bad behaviour!

CBN: The ‘Orisa’ that cannot help Nigerians

What do you think of the new interest rate imposed by the Central Bank of Nigeria (CBN)? The apex bank raised the rate from 27.25 percent to 27.50 percent. According to them, this is to fight inflation - but inflation keeps surging and raging. They may not know it because they are cut off from reality; fixated, as it were, on the textbooks and lecture notes their Harvard-trained “Oyinbo” lecturers poured into them in college.

Despite the CBN’s monthly MPR, inflationary surge has not abated; maybe it does in their books but the pockets of Nigerians and the market place say otherwise! We need a refreshingly different alternative to the Western-trained economists forcing IMF and World Bank bitter pills down our throat! There used to be one self-styled “motor park” economist on the Editorial Board, I think, of The Guardian newspapers. Where are you? What we need are economists like the late Professor Sam Aluko who have their legs firmly on the Nigerian ground, not floaters regurgitating economic models that deepen the country’s underdevelopment as well as exacerbate our people’s penury.

And do you blame the CBN fat cats? They are immune from the adverse effects of the policies they propound as they are ensconced in their air-conditioned offices feeding fat on our common patrimony. The scriptures describe some people as hypocrites and a brood of vipers who “bind heavy burdens and grievous to be borne, and lay them on men’s shoulders; but they themselves will not move them with one of their fingers”(Matthew 23: 4). Did we not hear, the other time, how the fat cats were still loading themselves with additional largesse at our collective expense?

Now, if the CBN’s Monetary Policy Rate (MPR) is as high as 27.50 percent, by the time the banks add their own administrative costs or charges and you factor in corruption, we may have to borrow from the banks at over 30 percent, if not up to 40 percent. What kind of business will still break even - especially small-scale enterprises, which are the bedrock of many thriving economies elsewhere? Is that not why businesses are folding up here and/or relocating elsewhere? By the time you add to the mix the cost of power supply and corruption at both ends of the regulatory authorities and ordinary Nigerian workers themselves, are we at all surprised that factories here are quitting their space for worship and events centres?

As at last week (November 24, 2024), the interest rate in China was 3.1%. And we want Nigerian products to compete favorably with Chinese products? Any surprise, then, that we have become a dumping ground for all manner of Chinese products? It is safer - in fact, the only profitable option available is to go to China and ask them to lower the quality of their products for the Nigerian market (because our people cannot pay for quality products due to the massive devaluation of the Naira). Unfortunately, medicines are not spared. Vehicle tyres are also not spared!

The other time we were warned by the regulatory authorities that over 50% of imported pharmaceutical certificates in Nigeria are fake. If the certificates are fake, it stands to reason that the products themselves are fake! Or can fake certificates be used to back up standard and quality products? And according to NAFDAC (National Agency for Food and Drug Administration and Control), substandard and falsified products threaten access to safe, efficacious and affordable medicines. Don’t mind their long-winding grammar; it is mere euphemism for just one word: Death! Slow, painfull, agonising death, after fortunes must have been spent procuring fake, adulterated and substandard drugs. May that not be our portion! I know you will shout “Amen”!

Only those engaged in illicit businesses such as drug peddling, yahoo-yahoo and money laundering can raise the funds needed to start or re-inflate businesses here. Any surprise, then, that crime is on the rise all over the place? Why are more and more of our people getting themselves into money rituals and cult-related activities? It is largely because legitimate channels to access funds for productive ventures are shut against them. Jobs are not available. Factor into that the quantum of disguised unemployment. Crime and desperation are on the rise. The legitimacy of the Government and of the political system itself is stridently being called into question, leading us to the real reason for this piece!

Tinubu: Delay is dangerous!

Despite the fact that there are many bus stops and traffic gridlocks in Lagos where I live and work, we still manage to get to our destination! Even though I made a brief stop-over at some bus stops, my actual destination here today is this: Tell President Tinubu that no matter how well he revamps the economy that was destroyed beyond imagination by his predecessor, if he fails to address the foundational problem of Nigeria, he would have achieved nothing in the real sense of the word.

It took Buhari just eight years to destroy all that three previous administrations achieved in 16 years. It will take a similar or lesser length of time to destroy Tinubu’s own achievements if the present Nigerian system remains the same. Under Obasanjo, Nigeria exited the debt trap; today, we are back in it real time. Obasanjo also once bemoaned that all the thriving national assets he left behind as military Head of State, he found none when he returned as a civilian President.

Tell Tinubu to quickly restructure the country! That is the greatest legacy he can bequathe to Nigerians. Time and tide waits for no man. Obasanjo learnt that too late and desperately sought for a third term in office, even though he bold-facedly denies today what was clear to even the blind.

Ask former President Goodluck Jonathan the cost of procrastination. When he could have implemented the resolutions of his Political Confab 2014, he waited to first win the 2015 presidential election.

Tinubu, you were one of those who did not let him! Learn from history! Others are waiting to give you a taste of your own bitter pill! What goes around comes around! Don’t wait to win a second term of office before you do the needful. They will distract you with challenges as well as with praises! They will obstruct you! They will ring you round with enemies pretending to be loyalists.

Be wise! Who knows, maybe you became the president of Nigeria at a time like this for an assignment such as this (Esther 4: 13 & 14)!

President Bola Tinubu extends his heartfelt congratulations to Alhassan Yahaya on his election as the President of the Nigerian Union of Journalists (NUJ) at the 8th Triennial National Delegates Conference in Owerri, on November 27, 2024.

The President also congratulates other newly elected members of the NUJ executive. He praises the Union for organising a rancour-free election at the conference.

President Tinubu says Yahaya's overwhelming victory was a testament to the NUJ members' confidence in his leadership qualities.

He expresses optimism that Yahaya's experience, particularly as the former deputy president of the Union, will be instrumental as he leads the Fourth Estate of the Realm.

The President emphasises the importance of the press taking on its constitutional roles with a renewed patriotic passion, aligned with the vision and efforts of the founding fathers of journalism in Nigeria.

Furthermore, the President encourages Yahaya and the new leadership to address malpractices within the industry.

He reiterates the administration's commitment to ensuring a free and independent media integral to deepening democracy and promoting national development.

President Tinubu expects Yahaya's tenure to reflect a strengthened commitment towards upholding journalism ethics while fostering a collaborative relationship with the government to build a just and equitable society.

He wishes Yahaya and his team a successful and impactful term in office.

Bayo Onanuga
Special Adviser to the President
(Information & Strategy)
November 30, 2024

The Central Bank of Nigeria (CBN) urges bank customers to report ATM and branch cash withdrawal difficulties starting December 1, 2024, through designated state-specific phone numbers and email addresses.

The CBN Governor Olayemi Cardoso announced this directive during the 2024 Annual Bankers Dinner organized by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos.

Cardoso acknowledges cash availability issues at ATMs, which impact ordinary Nigerians. To address this, the apex bank will conduct spot checks on Deposit Money Banks (DMBs) and penalize underperforming institutions

“We recognize the ongoing challenges with cash availability at ATMs, which disproportionately affect ordinary Nigerians. 

“To address this, we are conducting spot checks across Deposit Money Banks (DMBs) and will impose penalties on underperforming institutions. 

“Effective December 1, 2024, customers are encouraged to report any difficulties withdrawing cash from bank branches or ATMs directly to the CBN through designated phone numbers and email addresses for their respective states,” he stated 

He assured that guidelines with reporting procedures will be widely distributed to raise public awareness.

Regulatory compliance and penalties 

Cardoso emphasized the need for compliance from all stakeholders, including Deposit Money Banks (DMBs), Mobile Money Operators, and PoS agents, to enhance service delivery.

“I repeat, financial institutions found engaging in malpractices or deliberate sabotage will face stringent penalties,” he warned 

The governor added that the apex bank would maintain a robust cash buffer to meet demand during high-pressure periods like the festive season.

To foster digital transactions and trust, Cardoso reiterated CBN’s commitment to addressing payment delays, particularly for vulnerable populations.

He explained that trust is fundamental to fostering digital transactions, and the CBN must take every necessary step to preserve that trust in payment systems.

Cardoso assured that Payment gateways for financial transactions will become better in 2025. Key initiatives under the Payment System Vision 2025 include:

• Implementing an open banking framework.
• Advancing contactless payment systems.
• Expanding the regulatory sandbox.
• Issuing revised guidelines for agency banking.

“Additionally, we will issue revised guidelines for agency banking and continue to strengthen electronic payment channels,” he stated 

Anti-money laundering and financial system reforms 

• Cardoso disclosed that Nigeria aims to exit the Financial Action Task Force (FATF) grey list by Q2 2025.
• He outlined plans to combat money laundering, cybercrime, fraud, and corruption, ensuring a sound financial ecosystem.
• Prof. Pius Deji Olanrewaju, President/Chairman of CIBN, praised the resilience of Nigeria’s economy and banking sector despite macroeconomic challenges. He highlighted steady GDP growth from Q1 to Q3 of 2024, attributing it to government policies and CBN initiatives.

“For example, the Nigerian economy continues to be more resilient and agile as shown in the steady growth from 2.98 per cent in Q1 to 3.19 per cent in Q2 and now 3.46 per cent in Q3 of 2024. 

“The bank recapitalization exercise also attests to the fact that we are well on our way towards not only strengthening the financial sector but also supporting a $1 trillion economy envisaged by 2030,” he said. 

Olanrewaju noted that the Nigerian banking industry has demonstrated resilience this year despite macroeconomic challenges, including rising inflation and exchange rate fluctuations.

[Nairametrics]

Former Edo State Governor, Godwin Obaseki has claimed that the independent analysis by the Athena Centre for Policy and Leadership of the Edo State governorship election has thrown Governor Monday Okpebholo into a frenzy.

Recall that Osita Chidoka, the founder of the Centre, had claimed that the governorship election results shouldn’t have stood.

Chidoka, who presented the Athena Centre’s findings on the Edo State election on Channels Television’s Politics Today, stated that there was substantial evidence of systemic rigging.

But in a statement to Naija News on Saturday, Okpebholo’s Chief Press Secretary, Fred Itua, said in a well-orchestrated plot hatched by the PDP, in connivance with Chidoka, tried to bully and blackmail the judiciary into circumventing the will of Edo people.

He said the shameful display on Channels Television’s Politics Today reeled out numbers purchased from ‘Oluwole market,’ and impetuously concluded that the 21st September governorship election in Edo State was rigged.

In a swift reaction to Okpebholo’s comments, Obaseki’s Media Adviser, Crusoe Osagie, in a statement to Naija News, said the program on Channels TV showed overwhelming evidence and data exposing the systemic rigging and brazen subversion of the people’s will during the September 21 governorship election.

According to the former governor’s aide, the show must have been a difficult 30 minutes for even the most vile criminal.

He said the analysis revealed a widespread manipulation and substantial interference in the electoral process by the umpire, noting that the APC who is party to the robbery would rather the findings be dismissed, distorted, or buried under a barrage of propaganda and baseless accusations.

His statement read: “The independent analysis by the Athena Centre for Policy and Leadership, a non-partisan research institute, of the sham of an election that installed Monday Okpebholo as governor of Edo State clearly threw the governor-select and his godfathers into a frenzy yesterday.

“Channels TV, in their show, Politics Today, had the mindless and unprecedented transgressions of the Independent National Electoral Commission (INEC) and their conspirators, the Edo All Progressives Congress (APC) laid bare. The show must have been a difficult 30 minutes for even the most vile criminal.

“Taunted by overwhelming evidence and data exposing the systemic rigging and brazen subversion of the people’s will during the September 21 governorship election, the APC, rather than covering their faces in shame, resorted to smear campaign, lies and propaganda, in a last-ditch effort to distract from the daylight robbery, and undermine the integrity of revered institutions advocating for the judiciary to right the wrong of the electoral umpire and their conspirators.

“The independent analysis broadcast yesterday is the outcome of a forensic examination of data and documents made available to the research institute by the Independent National Electoral Commission (INEC). It revealed a widespread manipulation and substantial interference in the electoral process by the umpire. But the APC who is party to the robbery would rather the findings be dismissed, distorted, or buried under a barrage of propaganda and baseless accusations.

“Among other things, the centre uncovered shocking discrepancies in the election results, showing that INEC inflated the number of accredited voters by over 100,000 in 798 polling units. They also discovered that polling officers recorded 580,000 accredited voters, yet INEC’s backend mysteriously produced 687,000, which further buttressed the evidence that it deliberately tampered with the election.

“There were also glaring inconsistencies between INEC’s certified results and the data uploaded to its Result Viewing Portal (IReV). Specifically, the forensic analysis revealed that results of the Peoples Democratic Party (PDP) were slashed by 11,665 votes during collation, while 32,284 votes were illegally added to APC’s tally, showing the brazen manipulation and fraud perpetrated against the people of Edo State during the last governorship election.

“Unsurprisingly, as a party of electoral fraudsters, the APC would prefer that this fraud on a massive scale is upheld and normalized, seeking desperately to silence voices of dissent and attacking any institution or individual who dares to speak out against this barefaced theft of the people’s mandate.

“In their desperate quest for power at all costs, the APC has continued to undermine democratic processes, distort the truth, and manipulate the system to have a grip on power. This shows what the APC really represents – a party that values personal and political gain over the interest and will of the people, willing to subvert justice and erode the very foundations of democracy to achieve their selfish objectives.

“While we sympathize with the APC over their trauma from the public exposure of their electoral fraud in Edo State by the Athena Centre, we want to restate that we will not be distracted in our resolve to reclaim the mandate duly given by the good people of Edo State. We trust in the impartiality of the judiciary and are confident that they will rise above the distractions and intimidation tactics of the APC, ensuring that justice is served and the will of the people prevails.”

[NaijaNews]

Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr Taiwo Oyedele was at the House of Representatives to brief federal lawmakers on the need to pass the bills on tax reforms arguing that majority of Nigerians stand to gain from the proposed new system of tax administration.

Mr President set up the Presidential Fiscal Policy and Tax Reforms Committee in August, 2023 with three very clear mandates. The first one is on fiscal governance.

For this committee to look at our nation’s finances, revenue, how we spend our money, our borrowing, the terms of those borrowing, and how we coordinate policies amongst fiscal, monetary, and trade, not only at the federal government level alone, but also across sub-nationals so that one level of government is not pulling to the right and another one is pulling to the left, bearing in mind that at the end of the day, governance at all levels is about our people.

The second mandate is revenue transformation. How do we change the narrative for our country? And that includes taxation. That includes government assets. That includes government-owned enterprises. We want NFPs to give us tens of billions of dollars in profit, dividend every year, as well as natural resources, oil and gas, and solid minerals.

The last mandate is economic growth and competitiveness. We are given the mandate to look very closely at why is it that our businesses are struggling? Why is it that Nigeria today does not have like 50 multinational companies that are headquartered in Nigeria? That even when you are not selling crude oil, they are bringing money back home. We have a company in the world today, one of the largest companies, that their turnover alone is more than Nigeria’s GDP multiplied by two.

That’s one company. So why is it difficult for our small businesses to survive beyond five years? Why are they not growing? So those issues, why is it difficult for exporters to export? We spoke to people exporting and they said they have to go through more than 22 permits, approvals, clearance. That takes about two months and they have to pay for every single one of that.

By the time you are done, if you are lucky, your product is still fit for export. In putting the committee together, we’re very, very deliberate in ensuring that the committee is representative. We have over 80 members of eminent, qualified, experienced and patriotic Nigerians from all the geopolitical zones.

We have good representation of women and youths. We had 45 undergraduates from 22 universities across Nigeria working with us at the secretariat and they attend our meetings because we also want to get the views of the young people. We have over 20 government institutions represented.

Level of consultation

We have the organised private sector represented including trade associations, manufacturers, chambers of commerce, small businesses, professional bodies, large and small accounting firms and the civil society. In doing our work, we were very clear that it has to be national interest first, national interest next, national interest at all times. We said to ourselves that if we have a Nigeria that is working, everybody will find a space within a Nigeria that is working.

We were very, very particular about using data. Every single recommendation we have in those four views are driven by data. There was nothing we’re recommending that is emotional.

When we have meetings with our stakeholders, we say to them, give us data because it’s by using data that we can look back many years from now and say we did the best for our country. We also ensure that we have a clear philosophy for our tax system, which is that our tax system must be modern, it must be simple and it must be dynamic. It must enable growth and make Nigeria competitive.

If it cannot grow, it doesn’t matter what you want to do with revenue. Revenue cannot come because people cannot give what they don’t have. We came up with what we call the socioeconomic equation that says revenue and taxes are the consequences of economic activities.

Without economic activities, there can be no revenue. And where revenues have been collected, why are they collected? So that they can improve the lives, livelihood and the well-being of the people. That is the equation.

In our view, any policy we have, whether it’s tax policy, fiscal policy, trade policy, monetary policy, if they distort economic activities, those policies are not good enough. If they undermine the well-being of our people, those policies are also not good enough because we exist as a society for the interests of our people. So, with this background in mind, we did a lot of consultations and engagements.

Private sector: We had more than 40 sector groups. We met with them, individual sector per time. From farmers to small business owners to Nigerians with disabilities, to Nigerians in the Diaspora, to large businesses, to professional associations, FinTech, and the list goes on and on.

We also had public engagements with sub-nationals, finance commissioners, head of Internal Revenue Services under the Joint Task Force platform. We had meetings with the Governor’s Forum. We had meetings with the National Economic Council. We had meetings also with the National Assembly. We were privileged to be invited by the People’s House.

Even though it was a short interaction, but we had the opportunity to engage. We had a more elaborate engagement with the Senate. We had a two-day retreat as part of these processes.We’ve had meetings with many ministries and agencies that I cannot count. We’ve also had a lot of interactions with the international community, trying to learn from other countries, trying to learn from the books. We are trying to learn from ourselves.

Why past efforts failed

What is it that we have tried in the past that hasn’t worked? Why did it not work? What is it that we tried that worked? Because sometimes we don’t celebrate ourselves when we have done the right thing, we lose sight of them. We receive a lot of support from the international community, including the United Nations Development Program, African Development Bank, and so on and so forth.

We conducted surveys, and we asked for submissions from Nigerians. We were pleasantly surprised that we received submissions from every single state in Nigeria. We were not even expecting it.

There was no state in Nigeria where we did not get submissions from people. For this, we are grateful to the Nigerian people for the trust that they have in the work of the committee. Of course, we have a dedicated website, social media accounts, and we engage through the press, radio, TV, and other platforms.

But we know these engagements are never enough, so we are always very happy for the opportunity for further engagement. So, what did we find out from the work that we’re doing? Like Mr Speaker said, and also the Deputy Speaker, what are the mischief we are trying to correct? You don’t need to fix something if it’s not broken. In doing our work, we did a lot of findings.

The first one, I’ll just put it bluntly, Nigeria is running on a low budget. For 2024, the budget of the federal government including the amendment to the Appropriation Act that added about 6.2 trillion, it came up to about 35 trillion Naira. (21:59) For all the states combined, it was 15.9 trillion.

When you add up the entire budget for Nigeria, it comes to 51.1 trillion if you convert it to US dollars. It was only $32 billion for 2024. These $32 billion is the equivalent of the budget of Kenya.

Kenya has 54 million people, plenty of poor people as well. It is less than one quarter of the budget of South Africa. South Africa’s budget for 2024 is the equivalent of $130 billion.

South Africa has a little over 60 million people. How is it that Nigeria with all the potentials we have, with all the knowledge and the experience and human capital that God has blessed us with, how is it that we’re over 200 million people and our budget is barely the size of Kenya? That budget, if you dedicate it to just transportation infrastructure alone, roads, rail, flying, it will not be enough. If you do nothing else, that budget will not be enough.

The narrative for our country cannot be changed by increasing that amount by 5% or 10%. The base is just too small. It cannot fund our development.

The next slide shows our major revenue sources as a country, and there are eight of them. The eight major revenue sources for us as a country is personal income tax. The second one is property tax. The third one is stamp duties. The next one is value-added tax. And the next one is land.

These first five are mostly controlled by the states. And then now you have three that are shared amongst federal, state, and local governments. It’s corporate income tax, custom duties, and petroleum and solid minerals revenues. These are the eight major sources of revenue for our country. The sad news, or the bad news is that every single one of those eight is significantly underperforming. The good news is that every single one of those eight presents an opportunity for our country to change the narrative.

I just told you that our budget is small. What is even smaller is our revenue. On this next slide, the entire revenue that we generated from tax in 2023, because 2024 has not ended, so we are not done with the numbers yet, so we decided to use 2023 and it was only about N17.9 trillion.

Comparison with other countries  

If you convert this to dollar, it’s less than $20 billion, so which means that our small budget is even financed by borrowing. We can’t even raise enough revenue to finance a small budget. If you look at the breakdown of our major taxes, let me start with personal income tax.

In 2023, Nigeria, the whole 36 states, plus the FCT, collected 1.5 trillion Naira in personal income tax. In that same year, South Africa collected about 50.5 trillion naira equivalent in personal income tax alone. What South Africa collected from personal income tax alone is more than our entire revenue as a federation multiplied by two.

Even Kenya, that is a very small country compared to Nigeria, with a lot of poor people, I will continue to repeat that, they collected 5.8 trillion naira equivalent from personal income tax alone, almost four times what Nigeria collected, even though our population is four times their own population. I will not bore you with the other details because of our time, but I’ll just mention one more, and that’s to do with customs. In 2023, Nigeria collected 3.2 trillion naira from Customs.

In that same year, Kenya collected 8.9 trillion naira equivalent, almost three times. When we looked at the value of what Nigeria imported and the value of what Kenya imported, Kenya imported $23 billion worth of items. Nigeria imported $66 billion worth of items.

We imported almost three times what Kenya imported and collected about one-third of what Kenya collected. Something is not adding up, and those problems, we must fix them if we must make progress as a country. We know that the Nigeria Customs Service is doing its best.

We can do better

We are just seeing that we can do more and we can do better. Some of these issues are not isolated to any agencies. They are issues to do with the system and how the system can work. One other very important study I need to share with you, Your Excellencies, is we conducted a study about national tax perception and tax morale, and this was done by the Nigeria Economy Summit Group. I had the privilege to lead the round table that did the study. We were asking Nigerians whether they would like to pay their taxes and whether they think those who don’t pay their taxes should be punished.

We were alarmed at the result that we got. Only 17% of Nigerian adults, believed that they should pay their taxes and that evasion is wrong and punishable. 83% of Nigerians would do anything but pay their taxes.

When we asked them why, they said, number one, that they do not trust governments. Number two, they said even the little that they have paid, what are they getting in return? Many of them said after paying the taxes, they have to take care of everything government is supposed to take care of. Number three reason they gave is that even when they want to pay the tax, the process is complex and is corrupt.

Two in three adults said they were asked to pay a bribe in the process of wanting to pay their taxes. Bear in mind that this study covers all levels of government, so we’re not pointing fingers at anyone. We’re just being honest with ourselves because recognising the problems we have and acknowledging them is 50% of finding the solutions.

When we ask these Nigerian people, what can government do to make you change your mind and start paying your taxes. They want transparency so they can trust governments. And they said in terms of what government should spend money on, that the government should prioritise spending on number one, education; number two, health; number three, electricity; number four, security. Look at what Nigerians told us, four things.

Those four things align perfectly with the multidimensional poverty index. So, there’s perfect consistency as to what is putting our people into poverty and where they want government to spend money. Our view is that if government at any level, local, state, federal, is not prioritising spending in these four areas, then we have the wrong priorities. If we place our people first, these must be our priorities.

 [DailyTrust]

The Deputy President of the Senate, Senator Barau Jibrin has explained why the upper legislative chamber allowed the controversial tax reform bills to pass for second reading.

Jibrin, in an interview with BBC Hausa, said it was to allow experts and all Nigerians to provide their input on the bills.

Recall that President Bola Tinubu had transmitted four tax reform bills to the National Assembly for consideration last month.

The move generated controversy with the northern governors and other stakeholders kicking against the tax reforms.

However, the Red Chamber on Thursday passed the four tax bills for second reading through voice votes.

Speaking to BBC Hausa Service on Friday, the Deputy Senate President said the senators passed the tax reform bills to give room for contributions from experts and Nigerians.

[DailyPost]