…Says Govt should explore opportunities in taxation
For the Nigerian economy to achieve double-digit growth, the Executive Vice Chairman, Alpha African Advisory, Mr. Mustafa Chike-Obi, has said the Federal Government must do away with certain subsidies and pay greater attention to security and infrastructure.
According to him, the three subsidies are fuel, foreign exchange and electricity subsidies.
The former CEO of the Asset Management Corporation of Nigeria (AMCON), also, charged the government to look into several hidden economic opportunities in taxation which should be explored by bringing more people into the tax net.
Speaking at an agenda-setting forum for the Buhari’s second term organised by members of the Finance Correspondents Association of Nigeria (FICAN) in Lagos on Monday, he said the various forms of subsidies were hindering other sectors that need urgent attention.
He pointed out that rich Nigerians benefit more from fuel subsidy, maintaining that removing electricity subsidy would attract significant investments to the power sector and unlock other opportunities.
Speaking on the theme, “Repositioning the Nigerian Economy for sustainable growth”, Chike-Obi explained “that the best problem to our economy is the three subsidies that are added up to our total revenue”.
On fuel subsidy, he said, “the national economy is losing N1.2 trillion per year. There is a hidden figure in that fuel subsidy they do not allow you to see.
They allow buying foreign exchange at N325/dollar. Who gets the fuel subsidy? The rich people with six cars are those benefitting from fuel subsidy.
“The average rich person in Ikoyi is getting approximately 100 times a year fuel subsidy than the person in Shomolu in Lagos.”
He added: “Everybody deserves to have electricity but you charge electricity based on those who needed it the most in the market price. Most people that use generator pay N160/Kwh and pays comfortably.
“If you tell these power companies that they can sale power at N160/kwh, they will make sure much money that more power will be generated.”
He also expressed concern about Nigeria’s rising debt service ratio, which according to him could be about 70 per cent.
“It is almost a guarantee that Nigeria is going to be talking about debt rescheduling soon and we need to start putting our house in order ahead of that,” he said.
Chike-Obi stressed the need for coherent and forward-looking policies to address the myriad of problems confronting Nigeria.
“We are badly in need of a good leadership; we need a leader that would map out the strategy and roadmap for economic growth in this country.
“There is a need for coherent monetary and fiscal policies. For me, the position of a CBN Governor should be a cabinet position and the CBN Governor should always be meeting with the Minister of Finance and the Minister of Budget and Planning every two weeks,” he added.
According to the former AMCON CEO, revenue mobilisation is Nigeria’s biggest problem.
In addition, he proposed the creation of a Ministry of Infrastructure.
Meanwhile, he noted that Nigeria’s tax rate at 30 per cent is one of the highest in the world, adding that multiple-taxation should be discouraged.
“There must be access to capital at a reasonable price. With 26 per cent interest rate, you cannot do business successfully. So, we must find a way to provide interest rate to everybody at a reasonable rate.
We must have an interest rate that will support our economy. And it cannot be much higher to the borrower at 12 to 15 per cent. Every Nigerian should be able to borrow money at between 12 to 15 per cent, so, we must have capital available”, he said.