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 Daily
Independent Online.
* Friday, July 02, 2004.
FG seeks N280b to fund NEEDS
• Collects N440 billion VAT in 10 years
By
Esan Sunday
Snr. Finance Correspondent
and
Sanya Adejokun,
Snr. Correspondent (Abuja)
Abuja
is seeking $20 billion (N280 billion) to finance its current economic
reform programme, encapsulated in the National Economic Empowerment and
Development Strategy (NEEDS).
This
emerged on Thursday, coinciding with news that the government made N440
billion from value added tax (VAT) in its first decade of operation.
Its
sights are set on the capital market as a major source of funding NEEDS.
A minimum $4.5 billion to $5 billion needed to finance it yearly would be
sourced from the domestic market and from foreign direct investment (FDI).
The
capital market is central to the achievement of the goal and as such has
to be more innovative and be conscious of the huge responsibility on its
shoulder, Finance Minister Ngozi Okonjo-Iweala said in Abuja on Thursday.
She
spoke at the biennial conference of chief executives and directors of
quoted companies, organised by the Nigerian Stock Exchange (NSE).
The
minister, who represented President Olusegun Obasanjo, said by
recognising the importance of the capital market, the government has
given it a central place in its NEEDS programme.
She
said: “There is a need for the various institutions, players, and actors
in the system, including the NSE itself to think seriously and come up
with strategies to enhance capacity and develop new strengths which are
needed to achieve the objectives encapsulated in the NEEDS”.
For
the NSE to achieve its goals, she implored, it must, as a matter of
importance, work towards consolidating on good corporate governance,
especially in the areas of sound ethical practices.
In her
view, the regulatory requirement to disclose both operational and
financial information periodically must also be scrupulously enforced to
make the system more transparent in order to reduce the opportunity for
unscrupulous persons to dupe shareholders.
Her
words: “I know that the overwhelming majority of the stakeholders in your
sector are people of integrity who are doing their best to keep on the
straight and narrow path of professional practices.
“But
the well publicised fraud involving Nestle shares showed that there also
exists a tiny minority of persons who are seeking short cuts to wealth
using the stock market. Such practices are not only wrong, but also have
the potential of sabotaging the good work you are doing. They attack the
stock market where it hurts most - public confidence”.
With a
promise that the government would gradually move its investment from the
money market to the capital market for long term funds, Okonjo-Iweala
said government bonds of N1.3 trillion in securitised public domestic
debts - 60 per cent of which is currently in 91-day treasury bills -
would soon be restructured
to longer terms and listed on the stock exchange.
She
declared that the N440 billion derived from VAT in the first 10 years of
its collection is unsatisfactory and asked members of the newly sworn in
VAT Tribunals in the three zones of Ibadan, Enugu and Kaduna to ensure
that the rules are applied so that defaulters are promptly sent to jail
to deter others.
“An
average of about 15 per cent recorded as annual VAT revenue generation
increase in the last 10 years of operation is not good enough. The N440
billion realised as revenue from the tax source in the 10 years of
operation up to 31st December, 2003 is equally not satisfactory enough, moreso,
when one realises that VAT is a system in which high revenue-yielding
potentials abound”, she said.
According
to her, the relatively low annual average increase and less impressive
annual average collection are indices suggesting that a lot still has to
be done to actualise the full potentials of the tax.
She
added: “This has not been happening, not only in VAT but generally in out
tax administration. The enabling laws are there, the machinery for
enforcement such as the police or the EFCC (Economic and Financial Crimes
Commission) is there. Also available for this purpose are the regular
courts if the VAT Tribunals are for now not competent to handle criminal
matters.
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