As oil revenues decline, the federal government of Nigeria has relied on the non-oil sector to fill the gap. Although the revenues generated by the non-oil sector are significantly lower than required to meet the government’s financial needs, they have been lauded by Finance Minister Zainab Ahmed.
While presenting the finance ministry’s 2015-2023 scorecard on Thursday, Ahmed revealed that the non-oil sector accounted for 73% of the government’s revenue.
This received the minister’s applause as it underscores a major boost to President Muhammadu Buhari’s economic diversification policies.
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While appreciating the progress of the non-oil sector, Ahmed revealed that as part of its economic diversification plan, the federal government is ready to establish the Embedded Ministry of Finance as an investment arm of the federal government.
“If the government is going to take on any assets, the Ministry of Finance Incorporated is the investor representing the government.
“Ministry of Finance Incorporated used to be a treasury department, but now we have Presidential approval to transform it into a world-class investment firm. The merged Ministry of Finance currently has 130 corporate entities and has various investments in these entities,” he said.
This follows a similar move by the government to incorporate the country’s national oil company, the Nigerian National Petroleum Corporation (NNPC), as considered in the Oil Industry Act (PIA).
According to Ahmed, the latest figures show that the non-oil sector contributed 30-35% of federal government revenues, but the figure has risen to 73%.
The federal government’s revenue shortfalls were engineered by the significant decline in oil revenues, which resulted from oil theft and vandalism of oil installations. But the minister said crude oil production rose to 1.3 million barrels per day (mbpd), from a low of 800,000 bpd.
The minister also spoke about other fiscal policies geared towards economic growth, which include laws aimed at improving the current tax regime.
“We have introduced the Annual Finance Act which is the main tax tool we use to make tax policy programs and to change tax laws that have been problematic for business or unfair to business, or to bring more revenue to the government.
“We have been able to improve it across several tax laws and improve the efficiency of the tax administration. We have also been able to raise taxes. For example, VAT increased from 5% to 7.5%. We’ve been able to reduce taxes for small businesses,” she said.