By Uche Mbah
Nigeria has projected that in 2021, it will spend N3.1 trillion on debt servicing alone. This accounts for about 25% of the projected revenue for that year.
Total projected expenditure, however, is N12.25 trillion, even amid revenue constraint.
In recent times, there has been a serious drive for government revenue through various taxation methods. One of the latest is the increase in value-added tax, which critics claim is targeted against the poor population, as the final burden will be on them, and has caused a marginal rise in inflation due to market pressures.
The Nigerian economy is reeling from severe revenue constraint which analysts claim is a result of a drastic drop in Oil revenue amid COVID 19 pandemic. Corruption is also cited as part of the reason for revenue leakages.
According to a revenue outlook released by the Finance Ministry on Monday, spending would focus on the completion of as many ongoing projects as possible. It asserts that new works would only be allowed if there were adequate resources to complete ongoing projects.
Meanwhile, the Central Bank of Nigeria (CBN), on Monday, said President Mohammadu Buhari has approved the set-up of a N15-trillion infrastructure development company with Nigeria’s sovereign wealth fund.
The company, InfraCo PLC, is expected to focus on raising government investment in the transport sector, said Godwin Emefiele, the CBN Governor.
According to Emefiele, the equity injection into the new project will over a five-year period to begin with.
The CBN will jointly own the firm with the Sovereign Wealth Fund and the African Finance Corporation (AFC), but it will be managed independently.
