By Charles Abuede
Zainab Ahmed, Nigeria’s minister for finance, budget and national planning, has reiterated that the Finance Act 2020 is aimed at supporting businesses and vulnerable households in Nigeria, while improving fiscal discipline, encouraging domestic investors and also enhancing macroeconomic stability in the face of the myriads of challenges posed by the global health crisis.
Ahmed made this assertion while delivering her keynote address during an executive roundtable on the Finance Act 2020 and Economic Outlook for 2021 held virtually by Nigeria’s leading professional services firm, PwC Nigeria, earlier this week and monitored by Business A.M.
The finance minister in her presentation on the economy and government’s policies towards recovery, said the present administration which has signed into law the bill is also committed to making possible the routes to economic recovery, stimulate growth in the economy through actionable policies and interventions designed to foster economic resilience and sustainability of businesses.
TaiwoOyedele, fiscal policy partner and West Africa tax leader at PwC Nigeria, while sharing insights into the Finance Act and how the significant changes that have been made into existing laws will shape the tax environment in Nigeria in 2021 stated that the government should abolish the tax on vulnerable companies, especially during the period of loss-making.
“There were no easy choices or a silver bullet given the limited fiscal space for incentives and to deliver on counter-cyclical measures,”Oyedele said.
He commended the policy direction of the government not to introduce new taxes or increase the rate of existing taxes, just as he also lauded the government for the reduction in the minimum tax rate to 0.25 per cent from the initial 0.5 per cent.
The virtual event which was targeted at CEOs, C-Suite executives and MSMEs and focused on the impact of changes to existing laws by the Finance Act 2020 and other significant government policies that may impact businesses and taxpayers in Nigeria, also had Andrew Nevin, the chief economist at PwC in the panel where he noted themes that policymakers and businesses need to consider in 2021.
According Nevin, Nigeria must find innovative ways to: unlock Nigeria’s vast dead assets, which is as much as $900 billion to stimulate growth; harness the power of the diaspora; drive export growth through services, improve Nigeria’s low investment and gross capital formation, movement of the thriving informal sector to the formal sector, improving the ease of doing business and the business environment, addressing the distortions of exchange rate, subsidies and power, shifting focus from GDP lens to sustainable development goals and prioritizing climate change.
“Nigeria’s economy is distorted by the exchange rate; fuel subsidy regime; and the power sector. Addressing these three big distortions will be taking the giant step to restructure the country’s economy holistically; achieve the 7 per cent gross domestic product growth, and improve the lives of the average Nigerian. Out of the 10 themes, another important theme to consider was Nigeria’s gross fixed capital formation, which in 2019, stood at less than 20 per cent. And PwC estimates that Nigeria would need an investment rate of at least 26 per cent to 28 per cent of GDP to achieve 7 per cent growth.”
Other speakers at the virtual roundtable were, Sam Nwanze, CFO Heirs Oil & Gas, and Amal Hassan, the founder and CEO of Outsource Global Technologies, who gave their perspectives on the Act and the implications for large corporates and SMEs respectively.