Reducing govt spending not feasible – Akabueze

In this interview, the Director-General of the Budget Office of the Federation, Ben Akabueze, discusses the 2024 budget with EDIDIONG IKPOTO, highlighting how low public revenue is affecting the country’s economy

For decades, Nigeria has been operating deficit budgets, financing the deficit through debt. How can we reverse this negative trend?

The key is to generate enough revenue to meet our needs. We are not currently there.

What are the bottlenecks that militate against our ability to generate revenue at optimal capacity?

The bottlenecks are many. We have, first of all, a low willingness to pay taxes in Nigeria. We also have institutional problems. In South Africa, in 2022, they collected N26tn in Personal Income Tax. Our total tax receipt that same year across various tax categories was just half of that and yet we have a larger economy. We are three times their population.

So, there is a low willingness to pay taxes, and far too many people are not paying taxes. So, in order to address this, you have to create structures that make it difficult for people to evade taxes. In other countries, like in the UK, they say that there are only two things that are certain in life — taxes and death. Here, people actually go through a whole lifetime without paying taxes.

You recently said that contrary to popular perception that Nigeria is spending too much money, we are not spending as much as we should. Why should we spend as much when we are not raising adequate revenue?

Whether you have revenues or not, there is a minimum expectation that citizens have from the government in terms of delivering public goods and services. If the government woke up and said that it would not construct any roads because it had not collected enough revenue, the people would not accept that. So, the government has to strike the right balance to be able to deliver a minimum level of public goods and services while trying to fix its revenue problems.

The government cannot say until it has the revenue that it will not provide public goods and services. It does not work that way. I was part of the Lagos State Government during the drive to increase government revenue. At that time, all those roads that were built with signages saying ‘Taxpayers money at work,’ were being funded by debt. Ultimately, those debts will be paid by taxpayers’ money. It began to make a connection in people’s minds, a connection between paying taxes and getting the infrastructure delivered.

So, by spending the money to build the roads even though through borrowed money, it improved people’s willingness to pay their taxes. If for instance, access roads are repaired and the government says it is from taxpayers’ money, the people’s willingness to pay tax will be higher. But if the government waits until taxes are paid, that road may never be built because people may not have the willingness to pay the tax.

In the budget of the Federal Ministry of Trade and Investment, N1bn was earmarked for the creation of a Trade Intelligence Unit. Is it necessary to spend that much on data collection, which is already being collated by the National Bureau of Statistics?

The NBS collects data, but data that is relevant to its own job. For the Ministry of Industry, Trade and Investment, the data that they need is not necessarily of relevance to NBS. They need data because they make policies for the sector. NBS may be interested in data about how many new businesses were registered in the quarter. The ministry is not just interested in how many businesses were registered. They are interested in how many more could have been registered and the reasons that they were not registered.

You mentioned that about 25 agencies had been kicked out of the 2024 budget and that there had been pushback as a result of that. Is it possible to keep everyone happy in the process of coming up with a budget?

No. It has never been our objective to keep everyone happy. The day you see the head of budget being everybody’s friend, you can bet that he is doing something wrong.

How does the budget office plan to align budgetary priorities with economic resilience in 2024, especially in the face of accelerating inflation and currency depreciation?

I think that our policy objectives speak to the challenges that we see in the economy. So, do we think that the budget can deliver on these objectives? I will be a bit positive and say that the budget will deliver on those objectives. Is it a silver bullet? No. Is it a perfect budget? No. But then, in our current circumstances, I believe that our biggest fiscal challenge is raising public revenue. That is the low public revenue against the background of the ever-increasing demand for public goods and services.