In a media presentation held in Lagos on April 3rd, 2024, the Executive Director of the Civil Society Legislative Advocacy Centre (CISLAC), Auwal Ibrahim Musa (Rafsanjani), addressed Nigeria’s severe fiscal crisis and proposed a comprehensive approach to tackle the underlying issues.
Nigeria is currently grappling with a significant fiscal crisis characterized by a continuous decline in federal government revenue over the past five years. The root causes of this crisis, as highlighted by CISLAC, include unsustainable debt levels, unrealistic budgeting, weak revenue mobilization efforts, misplaced spending priorities, and a lack of transparency and accountability in public finance management.
According to CISLAC’s analysis, Nigeria has experienced substantial shortfalls in revenue, with deficits ranging from 31% to as high as 50% between 2018 and 2023. Meanwhile, the country’s overall debt burden has surged to N97.34 trillion in the fourth quarter of 2023, up from N87.9 trillion ($114.3 billion) in June 2023. This alarming trend has raised concerns about the government’s reliance on external borrowings, the increasing role of private creditors, the subjective assessment of debt sustainability, and the lack of accountability in loan utilization.
CISLAC emphasized the urgent need to address significant revenue losses attributed to tax expenditures, which account for approximately 4% of GDP, equivalent to N6.8 trillion. To tackle these challenges, CISLAC proposed a series of measures focusing on tax expenditures, debt management, revenue mobilization reforms, and spending prioritization.
In the area of tax expenditures, CISLAC called for a comprehensive review of existing tax incentives to ensure their effectiveness, efficiency, and alignment with national development priorities. It also urged stakeholders’ engagement and the promotion of transparency and accountability in tax administration.
Regarding debt management, CISLAC stressed the importance of prudent debt management practices, including investigating the movement and spending of loans received by the Federal Government, revising legal and institutional frameworks, enhancing oversight mechanisms, and exploring innovative financing mechanisms and debt restructuring options.
In terms of revenue mobilization reforms, CISLAC advocated for the review and updating of tax laws, closing of loopholes, addressing tax evasion and avoidance, and promoting investment-friendly tax policies.
In prioritizing spending, CISLAC called on the National Assembly to scrutinize budget proposals, increase investment in critical sectors such as infrastructure, education, healthcare, and social welfare, propose community-driven development initiatives, and strengthen oversight mechanisms.
CISLAC underscored the importance of effective legislative engagement in achieving meaningful reforms, urging the National Assembly to ensure rigorous scrutiny of loan approvals, convene public hearings and consultations, collaborate with executive agencies and international partners, and champion legislative initiatives that promote fiscal transparency, accountability, and sustainability.
In conclusion, CISLAC emphasized the need for sincere commitment from the government to address Nigeria’s fiscal challenges with transparency, accountability, and fiscal prudence as guiding principles. By harnessing the collective expertise and insights of all relevant stakeholders, CISLAC expressed confidence in navigating the complexities of Nigeria’s fiscal landscape and charting a course towards sustainable economic growth and development.