Nigeria’s revenue-to-GDP ratio will rise to 25 percent in 2026 from 8 percent in 2023, according to Minister of Finance Wale Edun.
He made this projection on Tuesday at the launch of Afrinvest’s 2023 Nigerian banking sector report in Lagos.
He said this will be achieved through the successful implementation of the ongoing domestic reforms, which will also increase the tax-to-GDP ratio from 10 percent to 18 percent in the same period.
The minister, who was represented by Armstrong Takang, the managing director of the ministry of finance incorporated, said the domestic reforms are aimed at restoring macroeconomic stability and fostering inclusive economic growth.
He listed some of the reforms as forward sales transactions, attracting international capital flows, executive orders to boost the domestic supply of foreign exchange, reforming FX markets, removing subsidy from petrol, establishing a fiscal policy and tax reforms committee, eliminating smuggling and theft, and applying existing rules rigorously.
He also said attracting international investments through foreign direct investments (FDI) and foreign portfolio investments (FPI) are part of the strategies to grow Nigeria’s economy.
Takang said the World Bank president, Ajay Banga, had advised Nigeria to increase domestic revenue mobilisation because foreign capital is more costly.
Abiodun Keripe, Afrinvest group managing director (GMD), who spoke on the sideline of the event, said the government should explore other sources of income rather than relying on the capital market to fund its activities.
He said the government is crowding out the private sector in the capital market because investors prefer government bonds, which offer higher returns than private sector loans.
He said the private sector cannot compete with the government’s borrowing rates, which were around 15-16 percent as of Monday, nor pass down such costs to their customers.
He said: “The days of ways and means, and you know, getting the central bank to print money to fund government, they are effectively over.”
He said the president made the promise so he has to match it with action.