El-Rufai: Nigeria reaching maximum capacity to borrow

Nasir el-Rufai, governor of Kaduna, says the country is reaching its maximum capacity to borrow.

The federal government recently sought approval from the national assembly for a $1.2 billion agricultural financing loan from Brazil.

Nigeria’s total public debt stock, which comprises that of the three tiers of government, stood at N31.009 trillion at the end of June 2020.

Speaking on Thursday at the 22nd annual tax conference of the Chartered Institute of Taxation of Nigeria (CITN), el-Rufai said Nigeria must take the issue of tax revenue collection seriously now that crude oil prices have collapsed.

He also said that only a minority of Nigerians pay income tax, especially those whose taxes are deducted at source- including formal sector employees, public servants and the like, lamenting that tax payment is treated as an illegitimate imposition.

Listing Lagos and Edo as states that have done well in tax revenue collection, he said many states have been unable to do same, resulting in a lag of governmental operations.

“The total internally generated revenues by states are currently less than one percent of the gross domestic product (GDP), despite the fact that Nigeria’s current fiscal federalism framework allows states and local governments to collect many taxes, levies and fees, ” he said.

“This low rate of internal revenue collection depresses public finances and hampers the ability to deliver social goods, services and physical infrastructure.

“This in turn limits competitiveness, shrinking the ability to promote the sort of economic dynamism that can create jobs, expand public revenues and improve public welfare.”

The Kaduna state governor emphasized the need for an effective tax system that would consider supportive strong institutions, particularly by government building fiscal capacity across its economic and political institutions.