The International Monetary Fund (IMF) said Monday that domestic revenue mobilisation was one of the most pressing policy challenges Nigeria and other sub-Saharan countries are facing as they seek to raise revenue in making progress toward their sustainable development goals while preserving fiscal sustainability.
The IMF equally expressed worries over rising debt profile of countries like Nigeria, casting doubts on the capacity to repay.
Amine Mati, IMF’s country senior representative, said this during the public presentation of the Spring 2018 Issue of the sub-Saharan African Regional Economic Outlook (REO) in Lagos.
The IMF official said, “Despite substantial progress in revenue mobilisation, sub-Saharan Africa was still one of the regions with the lowest revenue-to-GDP ratio.”
At the presentation themed: “Domestic Revenue Mobilisation and Private Investment,” Mati disclosed that Nigeria and other Sub-Saharan countries would grow their economies by an average of 3.4 percent in 2018, from 2.8 percent in 2017.
He asserted that about two-thirds of the countries in the region could experience the growth riding on the back of stronger global growth, higher commodity prices and improved capital market access.
The IMF country representative, however, said on current policies, average growth in the region was expected to decline below 4 percent over the medium term.
“Across countries, economic outcomes are far from uniform. Oil exporters are still dealing with the legacy of the largest real oil price decline since 1970 with growth well below past trends and rising debts,” he added.
He said there was the need for prudent fiscal policy to rein in public debt, while monetary policy must be geared toward ensuring low inflation and advised the countries to also continue to pursue structural reforms to reduce market distortions to increase private investment.
Mati said this would strengthen revenue mobilisation to give governments the means to invest in the physical and human capital as well as social infrastructure.
Patience Oniha, director general, Debt Management Office (DMO), said the decline in interest rate in sub-Saharan countries meant that there were about N200 billion in the market for the private sector to invest in.
“You will also notice that we are retiring some of the treasury bills as they mature.
“The main challenge I am giving to the private sector is; why is money still sitting where it shouldn’t be? Why has it not reached the private sector because that was the key objective of our strategy.
“We borrow because there is a revenue shortfall. The National Assembly passed the budget last week and we know it was higher than what the executive presented.
“So, as a debt manager what I am looking for is to see where the funding of that incremental size may come from. Am I supposed to be borrowing to make up for that shortfall,” Oniha said.
Laoye Jaiyeola, chief executive officer of the Nigeria Economic Summit Group (NESG), said there was an increase in the macro-economic stability as the inflation rate continued to decline.
Jaiyeola said this had resulted in a drop in interest rate which in turn would have a positive impact on private sector activities.
He added that government still needed to boost the framework around Public-Private Partnership to scale up the operation of the private sector.
Jaiyeola commended the government on its several efforts to ensure that the ease of doing business in the country continued to improve.
Jaiyeola suggested outright privatisation and concession of public assets to reduce government’s burden and to block leakages.
He also suggested leveraging on technology to block such leakages.