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Tax Harmonization and Prospects for Nigerian Economy

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By Kelechi Okoronkwo

To harmonize means to produce a pleasing combination; the way it happens in music production. Different sounds and notes are blended to produce harmony; and that is when a musical piece is pleasing.

For taxation to be pleasing, there is need to harmonise the tax system.
The above analogy was the opening note of Mrs.
Ifueko Omoigui Okauru, a former Executive Chairman of the Federal Inland Revenue Service (FIRS) as she moderated a panel discussion on the theme, Tax Harmonisation for Enhanced Revenue Generation during the second National Tax Dialogue at the Presidential Villa, Abuja recently.

The panel discussion threw the reality on our faces—despite the level of one’s optimism, the fact remains that taxation in Nigeria is not pleasing, currently. A single country which has 774 Local Government tax committees, 38 tax authorities and multiple tax laws is far from having a pleasing tax system. The good news is that the Second National Tax Dialogue, hosted by the Federal Inland Revenue Service,  began leading on a national scale, discussions with critical stakeholders at various levels to ensure that soon, Nigeria’s tax system would be properly harmonised and ultimately become pleasing.

The FIRS used the huge platform provided by the tax dialogue held on March 29, 2022 to draw attention to the need for tax harmonisation in Nigeria. It is also gratifying to note that key stakeholders at the event were in tune with the reality and pointed the way forward for tax harmonization in Nigeria.
President Muhammadu Buhari, who declared the dialogue open noted that Nigeria’s current tax system is characterised by fragmented administration, and multiple (and sometimes, overlapping) taxes, saying that most tax-efficient nations, tax administrative processes and practices are harmonised within a single system. He stated that one key deliverable of this year’s tax dialogue is to promote synergy in tax administration among the different tiers of government. 
Hear him: “Harmonising taxpayer identification across the country is a good start; but we must do more to promote ease of doing business (including ease of tax compliance) in Nigeria. On our part, we have started by clarifying in the 2021 Finance Act that FIRS is the sole authority to administer tax for the Federal Government.  This clarification became necessary in order to avoid taxpayers being burdened with multiple tax compliance obligations towards different agencies of the same government.  Multiplicity of tax administration is as undesirable as multiplicity of taxes; it creates uncertainty and instability; and above all, it is inefficient”.

Making reference to the 2021 Revenue Statistics in Africa, a report by the Organisation for Economic Cooperation and Development (OECD), President Buhari noted that the average ratio of Tax-to-GDP of 30 selected African countries in 2019 was 16.6% while Nigeria recorded a mere 6.0%.

“It is obvious that much needs to be done in the area of tax revenue mobilisation.  It is my expectation that the discussions at this 2022 National Tax Dialogue will be focused on what we must do to maximise legitimate revenue collection and massively improve the Tax-to-GDP ratio. We all know that good intentions are not enough as they simply cannot pay for infrastructure, security or social amenities. We must therefore improve tax revenue without necessarily raising new taxes. Revenue from commodities, including crude oil, are too volatile and unreliable.  Therefore, I pledge government’s support for any viable initiative for improving tax revenue that should emanate from this dialogue”, the President said.

The Minister of Finance, Budget and National Planning noted that for the Federal Government to achieve its tax objectives it needs to rethink the current tax system. “We must rethink the current fragmented tax system and harmonise same.  The tax policy, legislation and administrative practices at all levels must function as one indivisible whole.  For example, a harmonised taxpayer registration will ensure that no taxpayer can hide from the relevant tax authority. We have observed that countries having lower economy and fewer tax base but streamlined tax administration has fared much better than Nigeria in terms of tax revenue collection; and ratio of tax-to-GDP. The goal for this year’s National Tax Dialogue is, therefore, to kick-start the discussion for the harmonisation of the fragmented tax systems into a coherent whole for improved tax revenue collection for all the governments in the Federation”, she said.

For the Executive Chairman of FIRS, Muhammad Nami, harmonisation of the Nigeria’s tax system is long overdue. He noted that fragmented tax system provided loopholes in the system, causing the country to lose trillions of tax revenue. “This discussion is imperative in view of the fact that despite our 38 tax authorities, several tax laws and numerous taxes or levies, majority of the taxpaying public still remain outside the tax net.  The tax-dodgers found it convenient to meander among the competing revenue agencies escaping their tax obligations. 

The result is suboptimal revenue generation at all tiers of government. It is our expectation that this second edition of the Tax Dialogue will achieve a lot more for tax administration in Nigeria. We thank the President for his continued support towards making taxation the pivot of development and economic growth in Nigeria. We equally thank the Honourable Minister of Finance, Budget and National Planning, Mrs. Zainab Shamsuna Ahmed and her team, the legislators, ministries, departments and agencies of government, who have been of great support to the Service”, Nami said.

Other distinguished speakers at the dialogue who threw weight behind harmonisation of Nigeria’s tax system included the Minister of State, Finance, Budget and National Planning, Prince Clement Agba, the Governor, Central Bank of Nigeria (CBN), Godwin Emefiele and the Ooni of Ife, Oba Adeyeye Enitan Ogunwusi.

Other knowledgeable personalities who led the discussion from the panel were a member of FIRS Board, Mrs. Adetola Aigbangbe, PwC Africa Tax leader and thematic lead, National Economic Summit Group Taxation and Public Finance Policy Commission, Taiwo Oyedele, Commissioner for Finance and Coordinating Economy, Imo State, Dr. (Mrs) Doris Uzoka-Anite, the Executive Chairman, Kaduna State Internal Revenue Service, Dr. Zaid Abubarkar and the FIRS Group Lead, Special Tax Operations Group, Matthew Gbonjubola. 

The success of the first National Tax Dialogue in 2021 on the theme, Taxation in a Post-COVID Economy, which highlighted the importance of tax automation in Nigeria, brought about massive improvement in automation in Nigeria’s tax system. The result was evident on the revenue performance of the FIRS in 2021.  Testifying to this, Nami said: “2021 was a year that the whole world continued to battle a devastating global pandemic which affected economic growth and disrupted business; yet, the FIRS was able to record an unprecedented feat in tax revenue generation. The Service surpassed its target and collected N6.4 trillion, the highest collection ever in the history of the FIRS.   This feat was largely made possible by the cooperation of all stakeholders and use of technology which anchored our operations.  Our tax system can do much more provided policies, laws, administrative processes and practices are harmonised to function as one”, he said.
The FIRS boss, recalled that FIRS alone contributed 59.45 percent of revenues shared among the three tiers of government by the Federation Accounts Allocation Committee (FAAC) in March, 2022.

“Permit me to quickly illustrate this with statistics from March 2022 FAAC meeting: Total revenue from all revenue agencies stood at N803.072 billion. Of that amount, tax revenue contributed by FIRS alone stood at N513.522 billion (63.94%); Non-tax revenue (from all other agencies) stood at N289.55 billion (36.06%). Mr. President may note that average tax or FIRS contribution to FAAC in 2021 was 59.45%. Mr President, this trend is set to continue for some time to come.  As such, all hands must be on deck to support the tax system and make it function efficiently”, Nami said. 

The success of the second National Tax Dialogue signals an era of tax harmonisation in Nigeria; an era with promises of economic prosperity for Nigeria. The FIRS hopes to meet and possibly surpass its N10.1trilion revenue target by the end of 2022.

Okoronkwo is a technical staff to the FIRS Executive Chairman. 

BUSINESS

Again, Tinubu Seeks Senate Approval for $20.52bn, €1.045bn External Loans

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By Tambaya Julius, Abuja

President Bola Tinubu has asked the National Assembly to approve a supplementary external borrowing plan of $20.52 billion and €1.045 billion to finance projects and programmes across critical sectors of the Nigerian economy.

The request was conveyed in a letter read by Senate President Godswill Akpabio during plenary on Tuesday.

Tinubu said the proposed loans would help address the country’s infrastructure deficit, accelerate economic growth, create employment opportunities and improve the living conditions of Nigerians.

He urged the National Assembly to approve the 2026–2027 Supplementary External Borrowing Plan to enable the Federal Government to implement its development projects and programmes without delay.
Hhowever, the opposition- African Democratic Congress( ADC) has querried the timing of the loan just as it said economic conditions in tje country did not justify any fresh borrowing.

The president said the proposed borrowing would cover infrastructure, agriculture, healthcare, education, water supply, security, employment generation and financial management reforms.

According to him, the need to sustain economic growth and accelerate national development following the implementation of his administration’s reforms had made additional external financing necessary.

Tinubu put the proposed facilities at $20,517,755,901 and €1,045,083,643, adding that the projects and programmes had undergone technical and economic assessments to determine their potential contributions to national development.

He said the proposed investments were expected to stimulate economic activities, create jobs, promote skills acquisition, encourage entrepreneurship, reduce poverty and strengthen food security.

The president added that most of the projects would be implemented across the 36 states of the federation and the Federal Capital Territory (FCT).

He explained that the scale of Nigeria’s infrastructure needs and the financial resources required to address them had made broader external borrowing necessary to bridge the funding gap.

Tinubu said the funds would be channelled primarily into critical infrastructure, particularly power, transportation and healthcare, while other sectors would also benefit from the proposed financing.

He called on the Senate and the House of Representatives to give the request urgent consideration, arguing that prompt approval would facilitate timely disbursement and effective implementation of the projects.

Following the presentation of the letter, Akpabio referred the request to the Senate Committee on Local and Foreign Debts for consideration and directed it to report back to the chamber within one week.

The committee is expected to conduct the initial legislative review, with possible collaboration with the Senate Committee on Appropriations and other relevant committees.

The proposed borrowing plan must undergo legislative scrutiny before the external financing can proceed.

However, the letter, as presented to the Senate, did not provide a project-by-project breakdown of the proposed facilities, their individual financing terms or the allocation of funds among the beneficiary sectors.

The request comes as the Federal Government seeks additional resources to finance infrastructure and development programmes amid competing demands on public finances.

The implementation of the borrowing plan will depend on the outcome of the National Assembly’s consideration and the details of the projects to be financed.

In a statement, the Director of Media and Publicity of the ADC-PCC, Kola Ologbondiyan, said the fresh borrowing request came amid rising living costs, increased taxation and growing economic hardship among Nigerians.

Ologbondiyan questioned the rationale for seeking additional foreign loans when, according to the council, millions of citizens were struggling to meet their basic needs.

“What exactly is President Tinubu borrowing all this money for? Where are the roads, the electricity, the hospitals, the jobs and the critical infrastructure that should justify this relentless accumulation of debt? Nigerians deserve answers,” he said.

He also demanded explanations on the utilisation of funds saved from fuel subsidy removal and the proceeds of previous borrowings.

The ADC-PCC expressed concern that continued dependence on foreign loans, without clear evidence of corresponding improvements in infrastructure, productivity, employment and citizens’ welfare, could push Nigeria deeper into a debt trap.

According to the council, mounting debt-servicing obligations could limit the ability of future administrations to make independent economic decisions and undermine the country’s fiscal flexibility.

“This is not a sustainable path to national development. It is a dangerous attempt to mortgage the future of Nigeria and generations yet unborn,” Ologbondiyan said.

He argued that the government should not continue to demand economic sacrifices from citizens while seeking additional loans without adequately explaining how existing resources had been spent.

The council further warned that excessive borrowing could expose the country to greater financial pressure and constrain its ability to fund critical public services.

It insisted that any new borrowing arrangement must be tied to clearly defined national priorities, productive investments and measurable benefits for Nigerians.

The ADC-PCC therefore called on the National Assembly to subject the proposed loans to rigorous scrutiny and reject the request unless the Federal Government demonstrates their necessity, sustainability and expected benefits.

It also demanded that Tinubu publish a comprehensive account of all domestic and foreign loans obtained since May 29, 2023, alongside a detailed breakdown of revenue generated from fuel subsidy removal and how the funds had been applied.

The council called for full disclosure of the proposed facilities’ purposes, interest rates, repayment schedules, associated fees, conditions and any collateral or guarantees attached to them.

It maintained that Nigerians had a right to know the financial obligations being incurred on their behalf and the implications for the country’s economic future.

“Nigeria cannot borrow its way out of poor economic management. Borrowing must be tied to clearly defined national priorities, transparent expenditure and measurable outcomes.

Anything less is an injustice to the Nigerian people,” the statement added.

The ADC-PCC also urged the National Assembly not to abdicate its oversight responsibilities, insisting that lawmakers must ensure that any borrowing arrangement does not expose the country to unacceptable financial risks.

It said the Federal Government must demonstrate how the proposed loans would stimulate economic growth, create jobs, improve infrastructure and raise living standards rather than impose additional liabilities on future generations.

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NESG Chairman Urges Shift from Economic Reforms

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Chairman, Nigerian Economic Summit Group (NESG), Olaniyi Yusuf has urged the Federal Government to translate economic reforms into tangible results, including job creation, increased productivity and improved living standards.

Yusuf made the call on Monday in Abuja at the 32nd Nigerian Economic Summit (NES32), themed “Growth That Works: Delivering Jobs, Productivity and Shared Prosperity”.

He said Nigeria’s economic reforms had created an opportunity to strengthen the foundations for socio-economic development, in spite of the pressures on households and businesses.

“Our responsibility now is to ensure that reforms translate into stronger enterprises, better jobs, more productive workers, rising incomes, improved living standards and shared prosperity,” Yusuf said.

He said recent measures, including petroleum subsidy removal, foreign exchange reforms, fiscal restructuring and banking sector reforms, were necessary to address economic distortions.

However, he said macroeconomic stabilisation alone would not automatically translate into broad-based economic growth or improved citizens’ welfare.

Yusuf said households needed decent jobs, stronger purchasing power, and improved security and reduced poverty, while businesses required lower production costs, reliable electricity and affordable financing.

According to him, Nigeria must sustain economic stabilisation while prioritising practical measures to improve productivity and expand economic opportunities.

He said the summit’s theme reflected the need to measure economic success by the quality of jobs created, business competitiveness and the extent to which prosperity reached Nigerians.

Yusuf identified productivity, human capital development and resilience as key priorities for achieving sustainable and inclusive economic growth.

He said investments in education, healthcare, nutrition and relevant skills would improve workers’ productivity and prepare young Nigerians for employment.

The NESG chairman also called for improved infrastructure, predictable regulations, fair competition and an efficient legal system to encourage private investment and business expansion.

Yusuf said Nigeria’s economic performance presented a mixed picture, with improvements in some macroeconomic indicators alongside persistent challenges affecting businesses and households.

He noted that real Gross Domestic Product (GDP) grew by 4.43 per cent year-on-year in the second quarter of 2026, compared with 3.89 per cent in the first quarter.

Yusuf, however, expressed concern over persistent food inflation, high production costs, unreliable electricity, expensive financing and inadequate infrastructure.

According to him, a slowdown in inflation does not necessarily mean that goods have become affordable, as households continue to grapple with elevated prices.

Yusuf urged policymakers to prioritise productive investments, effective public expenditure and measures to address poverty, food insecurity and gaps in access to essential services.

He also called for stronger links between education and employment through technical and vocational training, digital skills and industry relevant learning.

The NESG chairman identified agriculture, agro-processing, manufacturing, construction, tourism and digital services as sectors with opportunities to expand productive employment.

He said the private sector remained central to Nigeria’s economic transformation but required an enabling environment to invest, produce and create jobs.

Yusuf urged businesses to invest in technology, workforce skills, local supply chains and export competitiveness, while calling on the government to improve infrastructure and ensure regulatory predictability.

He emphasised the need to assess the actual impact of reforms rather than merely documenting policies introduced or activities undertaken.

Yusuf said commitments arising from the summit should include clear institutional responsibilities, realistic timelines, measurable indicators and periodic reviews to ensure accountability.

He called on the government, businesses, development partners and other stakeholders to work together to translate economic stability into investment, productivity, employment and shared prosperity.

Yusuf said the ultimate test of the summit would be whether its deliberations produced tangible improvements in the lives of farmers, manufacturers, entrepreneurs and young people seeking decent jobs.

He urged participants to develop practical solutions and measurable commitments that would continue to deliver results beyond the summit.

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NEWS

Motorists Storm Minna NNPC Mega Station, Threaten Mass Protest Over CNG Scarcity

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From  Dan Amasingha, Minna.

Angry vehicle owners on Sunday staged a peaceful protest at the NNPC Mega Station along the Western Bypass in Minna, Niger State, over the alleged three-month shutdown of the facility’s Compressed Natural Gas (CNG) dispensing service.

The protesters, who accused the station’s management of failing to address the persistent shortage, said the development had frustrated the Federal Government’s initiative to promote CNG as a cheaper alternative to Premium Motor Spirit (PMS), popularly known as petrol.

They lamented that despite investing hundreds of thousands of naira and, in some cases, over ₦1 million to convert their vehicles to run on CNG, they had been unable to access the product in the state capital for months.

Findings indicated that a component of the station’s CNG dispensing equipment had reportedly developed a fault but had allegedly remained unrepaired, leaving motorists who rely on the alternative fuel with little choice but to return to the more expensive petrol.

The persistent outage, the protesters said, had not only undermined the economic benefits of converting their vehicles but had also imposed additional financial burdens on vehicle owners already grappling with rising transportation and fuel costs.

Speaking during the protest, one of the motorists, Engr. Israel Ogbonnaya, described the situation as discouraging, alleging that repeated visits to the station to obtain explanations from the management had yielded no meaningful response.

“It is so discouraging that for three months now, the CNG station at NNPC Minna has not functioned. Imagine that since January, some people did conversion and have not recovered their money,” he said.

Ogbonnaya expressed disappointment that motorists had allegedly received no satisfactory explanation regarding the prolonged breakdown.

“The CNG broke down, nobody has spoken to us. We have come here several times demanding answers from the management, and nobody is talking.

“So, for now, we want to bring the attention of Nigerians and those in authority to the situation in Minna.

 CNG is the heartbeat of the President. He commissioned a committee to look into this scheme, and these people are taking us for granted,” he added.

Another protester, Mohammed Doko Saidu, questioned the rationale behind encouraging motorists to convert their vehicles to CNG without ensuring the availability of adequate dispensing facilities to meet demand.

Saidu disclosed that he had spent more than ₦1 million converting his vehicle, only to discover that the product was unavailable in Minna.

“The frustrating aspect of all is that I just installed CNG, spending over a million naira, without a single gas in Minna; hoping that it is going to be fixed today, it is going to be fixed tomorrow, and up till this moment, there is nothing.

“Nobody is saying anything. The station is just lying fallow. In short, I had to disconnect some of the cylinders installed in my car because there is no gas.

 What kind of government are we in? It is frustrating,” he said.

The protesters called on the NNPC Mega Station’s management and other relevant stakeholders to urgently repair the faulty equipment and restore CNG supply to Minna.

They warned that failure to resolve the problem could trigger another protest involving a larger number of aggrieved motorists, including commercial tricycle operators who also depend on CNG to reduce their operating costs.

The motorists maintained that the prolonged unavailability of the product had defeated the purpose of the conversion programme, forcing them to bear the cost of installing CNG systems while continuing to spend more on petrol.

The development raises concerns among affected motorists over the reliability of CNG supply infrastructure and the need for prompt maintenance of facilities established to support the Federal Government’s alternative-fuel initiative.

Efforts to obtain comments from the manager of the NNPC Mega Station were unsuccessful as of press time, while attendants on duty declined to speak on behalf of the management.

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