NIGERIA’S FOCUS ON OIL must shift to diversification of the economy in order to reduce economic vulnerabilities presently plaguing the country. At the World Bank and IMF annual meetings in Washington, United States, IMF Managing Director, Kristalina Georgieva, explained that the level of economic growth in Nigeria was too slow to reduce its poverty rate.
Georgieva said IMF understood the importance of Nigeria to Africa’s economy, and consistently advised the country on the need for major improvement in the fiscal space, particularly, in relation to revenue, economic diversification and corruption.
“Nigeria matters to the whole of Africa. When Nigeria does well, Africa does well. What we see however is that economic recovery remains still too slow to reduce vulnerabilities and most importantly to reduce poverty in the country. What we experience is some good thought around shaking up economic policy now that a government is being constituted in Nigeria.
“We have been quite consistent to talk about three issues in Nigeria. One is the question of fiscal capacity. As you know, the tax collection levels in Nigeria leave quite a lot of room for improvement and without strengthening the fiscal position of the government, the expenditure side of course would suffer.”
Georgieva said IMF had always recommended increase in tax revenue to Gross Domestic Product to 15 percent, on revenue generation. At that level, government would be able to finance its programmes. Nigeria’s tax revenue to GDP ratio, presently, floats between seven and eight percent.
On economic diversification, Georgieva said: “We have been consistently recommending the country to diversify the economy because reliance on oil does not serve very well and that means to continue with structural reforms that would make that possible.”
On corruption, she said there was need for strong anti-corruption policy that would be unambiguous. “Fight corruption and make sure that the richness of Nigeria serves Nigerians inside the country and in that regard, the Fund last year adopted a very clear, strong policy on anti-corruption.
“We engaged with governments to build their capacity to make serving the citizens of the country with the money of the country possible.” And with the right mix of policies and structural reforms, countries could unleash economic growth on the global front, Georgieva said.