The Chairman, T&C group of the Manufacturers Association of Nigeria,MAN, Mr. Ikpong Umoh, has called on the Federal Government to curtail excessive borrowing, stressing that Nigeria’s debt profile, estimated at over N17.3trillion, is worsening economic recession in the country.
Umoh said that the huge debt is made up of external and domestic borrowing of the Federal and State governments, which is equivalent to about $57.39billion. He explained, “N1.8trillion is allocated for debt servicing in 2017 budget, which means above 60percent of capital expenditure is going into debt servicing.
This is worsening the current recession because without tangible investments in developmental projects, economic crisis will take another dimension. Before, we had hoped that the economy was going to improve but now, there is no hope as oil price has declined below the budget benchmark, making the government jittery.
That is why government is talking about tax reform and tax amnesty without taking into cognisance the fact that, tax reform policy cannot be efficient with diversion of huge income accruing for government through taxation into private pockets.” Nigerians do not trust government now on the use of tax funds, so they think there are no incentives for people to pay tax. Under the new policy, local operators of Small and Medium Enterprises (SMEs) are expected to declare their assets and pay more tax when such companies are closing shop daily.
For instance, five local manufacturing firms just went under last month, and government is not doing enough to nurture the grow of these SMEs as we see in China, America, South Korea and other countries where premium is place on the growth of SMEs. Government is giving the multinationals tax holidays and waivers on various ways.
Sometimes a consortium of Nigerian banks will give them money, they are allowed to import their products made abroad to sell in Nigerian markets while the local SMEs are closing down. On the way out, he said, “Government should allow local SMEs to bring in raw materials at zero duty and no Value Added Tax, VAT, for at least five years.”