Speaking during an interview on ARISE News on Monday, Oye said while the IMF was correct in identifying Nigeria’s revenue challenges, its proposed solutions were unsuitable for the country’s current economic realities.
Former Chairman of the Organised Private Sector of Nigeria (OPSN), Dele Oye, has urged the Federal Government to reject recommendations by the International Monetary Fund (IMF) to impose new taxes, including excise duties on telecommunications services and fuel, warning that such measures would worsen poverty and place additional burdens on Nigerians already struggling with the effects of recent economic reforms.
“I agree with them that the diagnosis is correct, but the prescription is wrong,” Oye said.
He acknowledged that Nigeria faces a revenue shortfall, noting that the country’s tax-to-GDP ratio remains below the African average. However, he argued that this should not justify the introduction of additional taxes at a time when many Nigerians are yet to benefit from the gains of ongoing reforms.
“For the ordinary Nigerian, it’s not a real reality. The poverty trajectory has gone up, so it’s not the right time to impose taxes. Government should be patient to allow the reforms to trickle down to the people, so that they can benefit from the reforms.”
Oye noted that despite improvements in some macroeconomic indicators, poverty levels have continued to rise, stressing that reforms have yet to translate into meaningful relief for ordinary citizens.
“That’s why I say we disagree with the suggestion. The diagnosis is correct, the prescription is wrong.”
The economist argued that Nigeria is already burdened by numerous explicit and implicit taxes that make the cost of doing business among the highest on the continent.
“Nigeria is not a tax paradise. We pay several implicit taxes, which are not even captured in any ledger.”
He cited high borrowing costs as one of the major burdens on businesses.
“We have what we call the interest rate tax. In Nigeria today, for you to borrow commercially, it is about 35 per cent. In South Africa, it is about 10.5 per cent. If I’m to compete under the African Continental Free Trade Area with my African brothers on the same product from South Africa and Nigeria, I’m already 25 per cent down.”
According to him, Nigerian businesses also contend with multiple taxes and levies imposed by federal, state and local governments, alongside regulatory agencies.
“You have all sorts of levies from the federal, state and local governments. We pay signage fees, environmental charges and everything. Nigerian businesses pay these taxes.”
Oye further highlighted the country’s unreliable power supply, which forces businesses to generate their own electricity.
“There’s also what we call the energy tax. An average entrepreneur in Nigeria has his own Independent Power Project. The last World Bank calculation was that from grid failures alone, there is about N7 trillion to N10 trillion lost.”
He also pointed to exchange rate volatility and insecurity as hidden costs borne by businesses.
“Then you have what we call the security tax. If you live in the South-East, you pay for sit-at-home tax, where you don’t have to work on Mondays.”
Rather than introducing new taxes, Oye said government should focus on improving tax administration and broadening revenue collection.
“The Federal Inland Revenue Service has done very well. They have increased tax collection in the last two years by about 183 per cent.”
He noted that even the IMF acknowledged that improved tax administration could significantly increase government revenue without introducing additional taxes.
“The IMF itself acknowledges that if they continue to do what they’re doing, they’re likely to generate another 3.1 per cent of GDP. So this is the right thing to do, not to impose new taxes.”
Oye also called for a review of tax incentives and holidays enjoyed by large corporations.
“Most of the big companies enjoy substantial tax holidays. Some of them have renewed and renewed. Instead of charging the recharge card seller or the person who is barely trying to survive, we should broaden the burden to these multinationals and make sure we extract what we can get from them.”
He described the cost of governance as “the big elephant in the room”, arguing that Nigeria maintains an excessively expensive government structure.
“Nigeria operates a very luxurious type of government. We have 469 federal lawmakers, all of them with their aides and everything. In the 36 states, we have state assemblies. We also have local governments.”
“Nigeria cannot afford this large government. You need to cut this size.”
Oye also criticised what he described as the IMF’s one-size-fits-all approach to economic policy.
“The IMF template is not necessarily made for developing countries like Nigeria because almost all their recommendations are mechanistic. It’s the same recommendations they give to Chile, the same they would give to every other economy.”
“When you apply the same medicine to different circumstances, it does not work. It triggers a different outcome.”
While acknowledging that recent reforms have delivered some macroeconomic gains, he maintained that their benefits have not reached most Nigerians.
“There have been some macroeconomic gains from the reforms, but this has still not cascaded to the lowest level. You can see workers are already asking for additional salary.”
He warned that imposing fresh taxes at this stage could aggravate social tensions.
“Just imagine if we impose new taxes. What you create is further unrest and even deeper poverty.”
Oye also called for greater transparency in the government’s social intervention programmes, particularly cash transfer schemes.
“Government should also demand transparency in the way we do our cash transfers for vulnerable people so we can make sure the measure is impactful.”
He pointed to improvements in oil production and efforts to curb crude theft as examples of alternative revenue sources that could help bridge fiscal gaps.
“If we continue to move in this direction, we can have more money coming from those sectors than whatever you can do by taxing the poor.”
The OPSN former chairman further argued that reducing government borrowing from the domestic market would help lower interest rates and improve access to credit for businesses.
“If government stopped borrowing heavily and aggressively locally, the banks would be forced to deal with entrepreneurs.”
“All Nigerian capital needs is credit to be able to drive this economy. When businesses make more money, government gets more out of taxes.”
Reiterating his opposition to the IMF proposal, Oye said Nigeria should focus on consolidating the gains of ongoing reforms rather than introducing additional taxes.
“What we are trying to do here is to let the government know that this is bad advice. The diagnosis is correct, but the advice will not work in the Nigerian situation.”
“People are just trying to recover. It is not the time to go to tax.”
He concluded by urging government to sustain reforms while reducing its cost of governance and creating a more enabling environment for businesses.
“All government needs to do is continue to change the way it does business.”
Boluwatife Enome
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