The state of the Nigerian economy has become so pathetic that even outsiders are beginning to have their say on how to forestall an implosion.
And that has to be, since the Federal Government under President Muhammadu Buhari would not yield to calls for appointment of an Economic Adviser.
However, the risk with external counsel are obvious, including limited knowledge and questionable patriotic leaning or a total lack of it.
It must be noted that outsiders’ rights to offer counsel is conferred by perceived implications of the Nigerian economy going awry for neighbouring countries.
So it can be understood if Salifou Tiemtore, Director, Domestic Tax, Economic Community of West African States, chooses to clamour for the increase of Value Added Taxes in Nigeria.
However, the need to bolster the economy is no doubt urgent. Little wonder many informed opinion leaders have been calling on those managing the economy to take urgent steps to arrest the continuous decline.
This can be evidenced in the Nigerian Governors Forum, working with the Central Bank of Nigeria, mooting the idea of tinkering with increasing the pump prices of petroleum products.
The government, feelers have it, would have gone ahead with the idea, but for widespread concerns that it might trigger social upheaval.
Despite these concerns, government functionaries have been consistently alluding to it in a manner that signals that it might happen any moment government summons enough courage to pull the trigger.
As an interim measure, the Federal Government has been borrowing at an alarming rate. But now that Tiemtore has counselled the government to consider increasing the VAT, on luxury items, another round of national conversation has started.
In the report, he compared the rate in Nigeria with what obtained in other West African countries, like Ghana where VAT stood at 15 per cent.
He said it varied from 19 – 20 per cent in some other countries within the sub region, and he saw no economic wisdom in Nigeria paying less VAT than Niger Republic.
Recall that the current rate of VAT in Nigeria is 7.5 per cent, which came into force in February 2020 with a 50 per cent increase from the previous five per cent.
It seems shallow to advise governments to increase taxes in the bid to refloat ailing economies, without factoring in local nuances and prevailing circumstances.
It must be borne in mind that Nigeria is a multiethnic and religious sensitive society with opinions often sharply divided or impacted by ethno-religious sentiments.
Again, Nigeria has a history of public reaction to sensitive matters like tinkering with pump prices of petroleum products.
Some scholars argue that tools of strategic engagement and strategic communications can help the government win in the court of public opinion, thereby, making any decision reached belong to the people, or at least seem so. We agree.
Strategic communications and engagement would show the government as standing with the people and afford it a chance of enthroning advocates outside the corridors of power, so that the conversation and decision on what to adjust can be seen as ‘the people’s choice and decision.’
The journey of engagement and communication would also help government wear-out the resistance of the people and opposition, while also affording them time to gauge the mood of the country, so as to make the announcement at an opportune time.
The point is that government needs to take strategic steps to address the prevailing perception among the populace, another major factor, likely to guide the input to conversations around the issue.
A school of thought opines that those in public positions should be more exemplary in utterances and conduct so as to bridge the trust gap, which seems to have broken down in Nigeria.
Another area that must be addressed is the availability of reliable data.
“A school of thought opines that those in public positions should be more exemplary in utterances and conduct so as to bridge the trust gap, which seems to have broken down in Nigeria”
Our in-house analysts align with the thought that the public would be more likely to subscribe to an increment of VAT if the government can set out a clear roadmap of what public needs the proceeds of such increase would be applied to.
An accessible document that speaks to, for instance, the hospitality industry being subjected to higher VAT of say 15 per cent, from 2022, with clear figures of what VAT from the segment yielded last year, and can yield in 2022 should indicate that the government is on top of the situation.
This would also help dispel the widely held notion that tax proceeds are finding their way into private pockets.
The political class must realise that leadership is a contract with the people and show transparency.
As is often said in business and legal circles, let them show the terms and conditions of whatever increment they propose. For instance, after setting out the historical figures of VAT income, the government should tie the expected revenue from the increase to certain people-projects.
It is important to let the documentation of data gathered from strategic engagements and communications show that whatever decision the government announces was reached by Nigerians.
