LE MERIDIAN HOTEL, Uyo , Akwa Ibom State 14 th – 18 th February, 2011

1. “THE IMPERATIVE OF CREATING NEW REVENUE SOURCES FOR NATION”byCasimir I. Anyanwu, PhDCommissioner, RMAFCBeing Paper Presented at a Retreat for Membersof the Revenue Mobilisation Allocation and FiscalCommission [RMAFC] LE MERIDIAN HOTEL, Uyo, AkwaIbom State 14th – 18th February, 2011

2. 2.0 INTRODUCTION • 2.2 Before/After Independence • Nigeria at the same level with the Asian Tigers e.g. Malaysia, Taiwan, Singapore, etc. • Agriculture and Mining were mainstay of economy then. • Economy provided opportunities for the middle class.

3. 2.3 Discovery of Oil in Nigeria • Oil boom and return of the mono-product economy. • Oil business subject to (a) International Political pressures (b) Market Forces. • Oil is exhaustible and non-renewable. • High dependability on crude oil revenues from Federation Account.

4. 2.4-6 Consequences of High Dependability on Crude Oil Revenues • Encourages laziness in competitiveness on the part of 3-Tiers of government. • No savings being made for rainy day. • Economy not diversified. • Absence of diversification of economy means no-achievement of Vision 20:2020

5. 2.7-8 What is the Business of RMAFC • Paragraph 32(c) Part 1 of Third Schedule for the 1999 Constitution of Federal Republic Nigeria directs RMAFC. • Advise Federal/State Governments on fiscal efficiency and methods of increasing revenue.

6. 3.0 TAX-RELATED REVENUES • Sustainable economic development elusive with financial revenues. • Tax revenue is traditional source of income globally. • Viable economies in the world powered by non-oil revenues not oil revenues. • Aggregate revenue has increase in Nigeria. • Total contribution of non-oil to total revenue mix is low.

7. 3.1 HOW DO WE INCREASE TAX REVENUES? Maximize existing Processes of Tax Revenues • Block leakages in collection/remittances processes. • Bring more taxable persons incomes/units into the tax net. • Address tax avoidance and evasion.

8. 3.3-4 Increase the Tax Base • Introduce new taxes hitherto neglected e.g. (i) Sales of Houses and landed property. (ii) Rental Income (iii)Luxury Goods (iv)National Property Tax (assets in key cities)

9. 3.6 Creating More Jobs to Increase Tax Base • Create more jobs in formal and informal sectors will: • increase vibrancy and robustness of economy. • Increase taxable incomes. • Reduce social ills.

10. 4.0 Review of Ban Placed on Used Products • Ban on certain Products is a strategic policy. • To protect infant industries. • Avoid Nigeria being used as dumping ground. • However, sharp practices exist at border. • Goods find their way into shops and markets in Nigeria. • Nigeria is the loser while the border nations are the beneficiaries. • If border cannot be policed, then review the policy to avoid loss of revenue.

11. 5.0-2 Infrastructural Development for Increased Revenue Generation • Economy is generator-driven (generator cartel). • Infrastructures (Energy, water, access roads) grossly inadequate. • Serious need to improve infrastructural facilities to: (i) Encourage FDI (ii) Rapid economic/industrial development (iii) Additional taxable incomes (employed persons and firms).

12. 6.0-4 Revenue Collection by MDAs • Provisions of Section 162(1) of the 1999 Constitution of FRN. • “Federation Account” into which shall be paid all revenues collected by the Government of the Federation. • Yet some MDAs collect, retain, use and remit “operating” surpluses. • This depletes the Federation Account. • There is no control over the Agencies. • What roles should RMAFC play in this issue?

13. 7.0-2 RURAL DEVELOPMENT • Each tier of government get funds from Federation Account to contribute to economic development. • The sharp practices exist in the administration of Local Government Funds. • RMAFC needs to look for ways and means to address the issue.

14. 8.0-3 Education, Science and Technology • Story of Asian Tigers is an example of the power of: (i) strategic planning. (ii) Investments on Education, Science and Technology, Taiwan Today (iii) 23 million people. (iv) 3% of Nigeria’s landmass (2/3 of landmass not useable. (v) 170 universities/institution of higher learning. (vi) Zero unemployment. (vii) US$20,000 per capita income – higher than US, Germany, Japan, etc. (viii) Foreign reserve US$365 billion. • Nigeria needs to borrow from this experiment.

15. 9.0-4 Diversification of the Nigerian Economy: A national Priority • Economic diversification is the expansion of production frontiers. • The capacity of the economy to generate income is a function of Productive activities. • Advantage of a diversified economy: (i) Generation of employment opportunities, social security and poverty alleviation. (ii) Foreign exchange earnings. (iii)Food security (agriculture).

16. 10.0-6 Economic Diversification – What are the Constraints? • Gross inadequacies in infrastructural facilities. • Brazen importation of products. • Negative national image and socio-cultural attitudes. • Unstable political leadership. • Absence of focus on permanent national interest. • General fiscal indiscipline.

17. 11.0-1 Diversification of the Economy – In What Areas • Revamping the Agricultural Sector (i) Agro-allied industries. (ii) Formidable fiscal incentives. (iii) Research/development. (iv) Commodity Boards.

18. 11.2 Solid Minerals Development • 250 solid minerals in Nigeria. • Located in all States and Local Governments • Rebrand the Sector by attracting FDI and Joint Venture Partnerships

19. 11.5 Tourism Sector • Various African Nations depend on tourism e.g. Kenya, South Africa, etc. • Nigeria has many tourist destination. • Tourism can only thrive under: (i) Security of lives and property. (ii) Positive social-cultural attitudes. (iii) Adequate infrastructural facilities.

20. 11.3 Manufacturing Sector • Key to economic viability because of: (i) Productions for local consumption. (ii) Reduction in dependence on imports. (iii) Conservation of foreign reserves. (iv) Participation in export trade. • Manufacturing Sector determined in past 2 decades. • This Sector must be revived by (i) improving infrastructures. (ii) Administration of relevant incentives. (iii) Proper funding.

21. 12.0 SUMMARY (See Paper)

22. 13.0 Recommendations • The nation’s hope to become an economic super power come 2020 will continue to be a pipe dream if infrastructural inadequacies are not urgently addressed. A Marshall Plan must immediately be designed for power, water, roads, railway etc. • The problem of the “Generator Cartel” must be squarely addressed. A ban on further importation of gen sets must be explored, if in the national interest. • Leakages and wastages in current tax revenue collections must be plugged. RMAFC must pay closer attention to the operations of the FIRS and the Department of the Customs. The law requires that this be done.

23. Other tax revenue sources discussed in this paper must be explored. There are: (i) Tax on Sale of houses and properties. (ii) Rental Income (too much leakage). (iii) Tax on luxury goods. (iv) National Property Tax. • Revisit the policy on the Ban on some Used Products and make the initiative work in the national interest towards increasing the revenue base. • The policy on revenue generated by MDAs is woeful. It needs total re-examination. The current model is prone to sharp and corrupt practices. • RMAFC must come to the rescue of LGAs from the stranglehold of State Governments. Rural Nigeria cannot develop to the extent that allocations meant for that purpose are high jacked by State Governments. • We must return to basics. There is urgent need for a Marshall Plan for Agriculture, Solid Minerals, Manufacturing and Tourism.

24. Nigeria must learn from the Asian Tigers. The key to their success is massive investment in Education, Science and Technology. We must get our priorities right. • Inconsistency in policy formulation and lack of continuity of programmes have resulted in undue waste of our national wealth. Policy summersaults should be kept to a minimum. • While Nigeria gets its environment ready for economic growth, attempts will be made to convince advanced nations that we are a good destination for FDI in the non oil sectors.

25. Finally, RMAFC must have the guts to lead the nation in economic revival. It must aggressively pursue its mandate under the law without fear or favour. RMAFC is the economic “Think Tank” of the nation. To achieve its mandate, the Agency must be ready to propose bills as legislation(s) to correct some anomalies in the nation’s economic and financial management.

26. Thank you for listening