Christine Lagarde, managing director of the International Monetary Fund (IMF), says Nigeria’s value added tax is the smallest in the west African region, appealing to the senate to work out the modalities for improving it.
In her meeting with lawmakers in Abuja on Wednesday, Lagarde said Nigeria’s economy has “a large regional footprint and its fortunes affect that of its neighbors, especially through trade”.
“For example, it is estimated that a one percent reduction in Nigeria’s growth causes a 0.3 percent reduction in Benin’s growth. So what can policymakers do?” she asked.
“My policy refrain is this: Act with resolve—by stepping up revenue mobilisation. The first step is to broaden the tax base and reduce leakages by improving compliance and enhancing collection efficiency.
“At the same time, public finances can be bolstered further to meet the huge expenditure needs. For example, the current VAT rate is among the lowest in the world and well below the rates in other ECOWAS members—so some increase should be considered.”
Quoting great Nigerian novelists like Chinua Achebe and Ben Okri, Lagarde expressed optimism that “Nigeria will rise again”.
“I firmly believe that Nigeria will rise to the challenge and make the decisions that will propel the country to greater prosperity,” she said.
“As the great Nigerian novelist Chinua Achebe once said: ‘If you don’t like someone’s story, write your own.’ This is exactly what you are doing right now.
“And let me assure you that, as you go forward, as you develop your story, the IMF will support your efforts. Today, I would like to offer my perspective—on your story and punctuate it with three R’s: resolve, resilience, and restraint.
“Today policymakers have the opportunity to address near-term vulnerabilities and medium-term challenges—with resolve, resilience, and restraint. Today the ‘Giant of Africa’ is walking with a spring in her step—inspiring others in the region and across the world.
“As the great Nigerian poet Ben Okri once said: ‘Our future is greater than our past’.”