The Labour Party presidential candidate, Peter Obi has said Nigeria must look beyond oil, in order to grow the economy.
He said this in a series of tweets shared through Twitter on Sunday, November 27.
In his tweets, Obi emphasized moving Nigeria from a consuming nation to a producing one. He made reference to the Fourth Industrial Revolution, which is the development of economies through disruptive technologies. Obi wrote:
- “As a nation, Nigeria must look beyond oil. We, therefore, intend to leapfrog Nigeria from oil to the Fourth Industrial Revolution by expanding physical infrastructure through market-driven reforms that will unleash growth-enabling entrepreneurship and market-creating innovations.”
Diversifying Nigeria’s economy: Obi’s statement is a pointer to his commitment to ensuring that Nigeria has a diversified economy that can cater to its growing population. Last week, Godwin Emefiele, the governor of the Central Bank of Nigeria (CBN) said that the country’s foreign reserves no longer come from selling crude oil. According to Emefiele, the official foreign exchange receipt from crude oil sales into Nigeria’s official reserves has dried up steadily from above $3.0 billion monthly in 2014 to an absolute zero dollar today.
This statement hints at the importance of Nigeria shifting its attention from oil and growing other sectors of the economy.
Plugging leakages: Going further in his statements via Twitter, Peter Obi said that his plan is to refine Nigeria’s oil locally. This will come after focusing on other areas of economic development. According to him, putting an end to leakages like the petrol subsidy regime and improving the country’s tax regime, will also help move Nigeria from a consuming to a producing nation.
Ending all subsidy payments: In the November 2022 World Bank Public Finance Review report on Nigeria, it was noted that Nigeria’s petrol subsidy regime only benefits the wealthy in the country and should be stopped. The report suggested that the government should fully eliminate the petrol, electricity, and exchange rate subsidies. This will enable all tiers of government to use part of the savings to invest in much-needed human and physical capital and to protect the poor and vulnerable with targeted programs.
Nigeria’s taxation challenges: As Peter Obi has previously mentioned, he intends to improve the country’s tax regime. It is instructive to note that Nigeria’s tax gap is estimated at 14 to 15% of the gross domestic product (GDP). This is according to the World Bank Review report earlier cited. The report says that prior to the COVID-19 pandemic, the median non-oil tax-to-GDP ratio of Nigeria was only 4.5 percent between 2017 and 2019, positioning the country as the 167th out of 175.
For the record: The report says that all key tax inflows are significantly below their potential, with value-added tax (VAT) revenues hovering between 0.8 and 1% of GDP, corporate taxes at only 1% of GDP, and customs and excise duties varying between 0.4 and 0.6% of GDP.
- Meanwhile, other independent sources of non-oil revenue amount to about 1% of GDP. These include state-owned enterprise surpluses, personal income tax (PIT) collected at the state level, and local government-collected fees and charges.
