Nigeria’s economic path is under scrutiny as Dele Oye, Chairman of the Organised Private Sector of Nigeria (OPSN), challenges the government’s reliance on taxation. He argues that sustainable growth hinges on boosting productivity and creating a business-friendly environment, not on imposing excessive taxes. This article dives into Oye’s perspectives, the concerns over Nigeria’s budget deficit, and potential solutions for a more prosperous economy.
Quick Points: What’s the Fuss About?
- Taxation vs. Productivity: Oye believes Nigeria should prioritize productivity over taxation for economic growth.
- Budget Concerns: A growing budget deficit raises concerns about Nigeria’s economic outlook for 2025.
- Private Sector Support: Oye urges the government to better support the private sector through policies and funding.
- CBN’s Role: The Central Bank of Nigeria (CBN) is urged to reduce the Monetary Policy Rate (MPR) and cap public sector borrowing.
- Global Shocks: Potential disruptions from US policies and the need for Nigeria to calibrate its budget are highlighted.
The Tax Tightrope: Is Nigeria Squeezing Too Hard?
Dele Oye isn’t mincing words: Nigeria’s tax-heavy approach could backfire. He argues that piling on taxes and sanctions won’t solve inflation. Instead, it’ll just suffocate businesses. Oye believes the key is to make Nigeria a magnet for investment by creating a competitive environment. Forget heavy-handed taxation; think reasonable regulations and accessible loans.
Boost Productivity, Not Just Taxes
According to Oye, the government needs to prioritize productivity. Reasonable regulations, affordable loans, and strong engagement with stakeholders will fuel this productivity. He points out that increased profit for businesses ultimately benefits the government through taxes.
Budget Blues: Is Nigeria Headed for Trouble?
Oye is worried about Nigeria’s economic outlook for 2025, citing the growing budget deficit. He acknowledged the government is trying to support the private sector by funding the Bank of Agriculture and the Bank of Industry. He noted that those institutions should be properly funded so that businesses can have reasonable single-digit loans.
CBN to the Rescue? What the Central Bank Can Do
Oye believes the Central Bank of Nigeria (CBN) needs to step up. He suggests lowering the Monetary Policy Rate (MPR) and capping public sector borrowing. If the public sector repays its debts, inter-bank rates and interest rates will fall, with the CBN’s support.
Customs and the 4% Charge: A Pain in the Neck?
Oye also criticized the sudden enforcement of a 4% charge on goods entering Nigeria. He fears this will hurt industries just recovering from reforms. He appeals for suspension of the charge, or at least focusing it on luxury goods, not raw materials for production.
Banks Booming, Industries Busting: What’s the Deal?
Oye highlights a worrying imbalance: banks are making record profits, while industries struggle. He questions how banks can thrive without supporting industries, pointing to high interest rates. He notes that the government is the biggest payer of interest, with a significant portion of the budget going towards interest payments.
Global Shocks: Trump’s Policies and Nigeria’s Economy
Oye also addresses potential global economic shocks, particularly those linked to US policies. He noted that Nigeria already suffered a setback with the closure of USAID, forcing the government to allocate funds for HIV-related programs.
The Dangote Example: Encouraging Local Production
Oye praised local industries like the Dangote Refinery for making strides in global trade. He emphasizes the need to encourage local production and support local companies to become global players, reducing dependence on foreign imports and using scarce dollars for domestic production.
The Bottom Line: Productivity is Key
Dele Oye’s message is clear: Nigeria needs to shift its focus from taxation to productivity. By creating a business-friendly environment, supporting the private sector, and encouraging local production, Nigeria can achieve sustainable economic growth. He warned that the National Assembly should not unnecessarily start doing senatorial increases for most of these government MDAs who are not part of the productive sector
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