The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, has revealed that Nigeria now spends less than 50 per cent of its revenue on debt servicing—significantly down from nearly 97 per cent before recent economic reforms.

Oyedele made the disclosure in Lagos on Monday while delivering the keynote address at PwC’s Executive Summit on Nigeria’s Tax Reform, themed “The New Tax Era: What Nigeria’s Tax Reform Means to Individuals and Businesses.”

Oyedele noted that before the implementation of economic reforms, nearly 97 per cent of the government’s revenue was being used to service debt.

“We’ve cleared unmet forex futures that were more than $7bn. And we move from under $4 bn external reserve to over $20bn today. Budget deficit is declining, and we’re spending more on infrastructure.

“Tax to GDP ratio moved from under 10 per cent is now 13.5 per cent in two years. Instead of 97 per cent, service debt is now under 50 per cent in two years. We no longer print money to spend. Rather, we’ve paid down part of the ways and means that the previous administration printed,” he stated.

He explained that without the current economic reforms, Nigeria’s currency risked becoming worthless.

He warned that the country was on a similar path to Zimbabwe and Venezuela, where economic collapse led to severe currency devaluation.

“Nigeria today, without reforms, would have looked like that. Bigger deficits, more naira printed. We will have easily over $10bn unmet forwards. Tax to GDP ratio will be less than 10 per cent. We’ll be spending over 100 per cent of our revenue to service debts. You hold money; you will not find PMS to buy. There’ll be more poverty, and there will be more ways and means.

“I thought to bring the currency. I’ll show you. So, this currency, this banknote in my hand, is 100 trillion Zimbabwean dollars. I’m not 100 trillion one notes. This note, at the time I got it, was barely enough to buy a loaf of bread. I gave my friend, whom I got this from, $10 and he is still grateful till tomorrow. This is what would have happened to Nigeria. Nigeria was the road to Venezuela and Zimbabwe,” he said.

According to the FPTRC Chairman, the country could have achieved a $1 trillion economy by now if the ongoing economic reforms had been initiated ten years earlier.

“If some of these reforms that were done in the past two years had been done 10 years ago. I tell you authoritatively today, Nigeria will be a $1bn economy guaranteed. And the price of PMS will be under N300/litre because the exchange rate will be under N300 to the USD.

“We’ve done this analysis over the past 10 years. Comparable balance of payment between Nigeria, Kenya and South Africa. Yet naira has lost six and a half times more value than Kenya shillings and South African rand. If only we had maintained the same level of stability as those two other countries. Nigeria will be a $1tn economy. What that means is the size of the middle class will probably be 10 times what it is,” Oyedele stated.

He argued that the government had been wasting trillions of naira on petrol subsidies, allocating a significant portion of its revenue to debt servicing, and printing naira indiscriminately.

“We committed them to subsidise PMS. It still wasn’t enough. NNPC took the taxes they were supposed to pay and they used that as well. It was not enough. They started taking the taxes of the other operators in the industry to also pay for the PMS. It still wasn’t enough. If we had continued till this day, the subsidy regime would have collapsed.

“Naturally, you would hold N100,000; you will not find a litre of PMS to buy. And I said that with all sense of responsibility. Responsibility because we’re running out of fiscal space to deal with the subsidy.

“Many people like you, including myself, knew there was a lot of corruption in it. That’s true. Could we have removed the corruption in the time frame? No. We had a huge budget deficit. We printed over N30tn to spend. We’re not building roads. It wasn’t that we’re building electricity. We were paying salaries,” he emphasised.