BY FESTUS OKOROMADU, ABUJA
The Manufacturers Association of Nigeria has identified the major challenge bedeviling the Nigerian economy as the siphoning of revenues collected by government agencies.
The association said that contrary to the popular belief in government circles that the country has revenue or debt problems, the current financial crisis is due to the insincerity of those trusted with the management of the revenues generated.
This was contained in MAN CEO’s Confidence Index first quarter 2023 report released Tuesday.
The report reads in part: “Contrary to the popular belief in the government quarters that Nigeria has a revenue problem, the country’s debt crisis is not a result of inadequate revenue and it is anti-growth to view manufacturing taxes as the last resort for curbing the debt problem.
“Amid multiple taxes, Nigeria’s real problem is not revenue generation or collection but the siphoning of collected revenue so that they do not reflect in the records.”
Speaking of the country’s debt burden estimated at N77 trillion, the association said there is a likelihood of it truncating the economic plans of President Tinubu-led government.
The manufacturers also lamented that the sector has been at the receiving end of Nigeria’s debt crisis which has seen the nation’s debt profile rise by 410 percent over the last eight years.
On the implication of the debt burden on the sector, the report said: “To start with, the rising domestic debt is crowding out private investment in the manufacturing sector by reducing credit availability and forcing a hike in lending rates.
“External debts are mostly serviced in foreign currencies; hence high demand for foreign currencies further depreciates the naira and makes importation of non-locally produced critical inputs highly expensive for manufacturers.
“Moreover, higher debt servicing is consuming a greater volume of forex and worsening the forex scarcity that has plagued the manufacturing sector for many years. Higher debt repayment requires increased revenue.
“The Nigerian government has continued to breed a harsh business environment by its indiscriminate imposition of high and multiple taxes on manufacturers all in a bid to generate revenue.
“Huge public debt led to low foreign investment and foreign capital inflow which worsened the forex scarcity that has remained a bone in the throat of manufacturers.”
It noted that: “The manufacturing sector which has always been at the receiving end has not felt any significant impact of the debt finance on the numerous challenges that have bedeviled its performance in many years. Infrastructure decadence, forex scarcity, credit crunch and naira depreciation have become bones in the throats of MAN members despite the humongous increase of over 410 percent in the country’s debt profile in the last eight years.
“Amid multiple taxes, Nigeria’s real problem is not revenue generation or collection but the siphonage of collected revenue so that they do not reflect in the records.”
Expressing its views on how the debt situation will impact the current administration, the report said: “MAN is of the view that debt worth of N77 trillion is an enormous burden to inherit and will most likely limit the achievements of the new administration.”
On the way forward, MAN recommended implementation of the following, among others: “Increase the revenue base by widening the tax net through an enhanced data capture of business operators in the informal sector.
“Strictly implement the Voluntary Assets and Income Declaration Scheme (VAIDS) through the Federal Inland Revenue Service (FIRS).
“Further identify and amend the loopholes in the tax laws in order to reduce the leakage of tax revenues.
“Promote fiscal discipline by reducing the cost of governance and strictly complying with section 41 of the Fiscal Responsibility Act and section 38 (sub-section 2) of the CBN Act.”