Archive Develop alternative national strategy to reduce oil dependence

Develop alternative national strategy to reduce oil dependence

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By Abimbola Akosile

The federal government has been told to develop an alternative national development strategy that de-emphasises reliance on oil revenue and prioritises alternative sources of revenue generation, including fair tax, in the face of dwindling oil revenue.

Also, the Nigerian Minister of Finance/Coordinating Minister of Economy, who is also the Chairperson of the AU Finance Ministers’ Forum, has been urged to adopt the Thabo Mbeki Panel Report on illicit financial flows out of Africa, and draw up a plan of action and implementation of the report.

The Nigerian government was also enjoined to develop mechanisms and policies to check and eradicate illicit financial flows; while government was advised to review its tax incentives policies, stop arbitrary granting of incentives and waivers that undermine the tax base of the country as a sustainable means of resource generation.

The calls formed part of a communique issued after a high level meeting organised by ActionAid Nigeria at the weekend in Lagos, to mobilise support for the Thabo Mbeki Panel Report on illicit financial flows out of Africa

At the meeting participants were drawn from the media, professional institutions, civil society organisations, youth and labour groups.

Deliberating on the challenges and implications of illicit financial flows on the country and the African continent, participants agreed that the movement of funds out of the country and Africa has undermined the development of African countries for too long and requires urgent action.

The meeting noted that there are optimistic tales about growth of Africa’s economy from different governments on the continent, and that in spite of the claims, several issues still threaten the potential of this economic development, especially Illicit Financial Flows (IFF) out of the continent.

To them, the different forms of illicit financial flows including undocumented commercial transactions, tax avoidance, mispricing of trade exports and import, cross-border smuggling continuously drain the foreign exchange reserves of various countries, leading to the collection of reduced tax, undermine resource generation for development and frustrate the efforts at curbing and eradicating poverty.

The meeting was to build collective action within the media, stakeholders in economic and social development for the adoption of the Mbeki Panel Report by African governments, set agenda for alternative domestic resource mobilisation and financing for development.

“The falling prices in the international crude market and the Nigerian government admission of challenges with finances and introduction of austerity measures have further raised the need for a deeper reflection in Nigeria and a conscious attention to alternative and sustainable financial planning based on tax and stoppage of illegal fund transfer out of the country.

“Nigeria has lost huge revenue to leakages particularly through illicit financial flows. Poor governance, weak regulatory structures, double taxation agreements, tax incentives, financial transactions opacity and tax havens are the enabling factors for illicit financial flows in Nigeria.

“Nigeria’s external reserves has fallen to $35.8bn on December 9, down 19.5 per cent from $44.5bn recorded same date last year, in the same vein, the country has lost huge revenue to the drop in the global price of crude oil from $115 per barrel in June, 2014 to $68.62 in December, 2014. This portends grave consequences for development and necessitates the need to seek alternate means of financing development in the country”, the participants noted.

They also recommended that, as the 2015 general elections draw closer, all those seeking public office should provide clear articulation on the issues of resource mobilisation for financing development besides the rent from oil as well as actions for dealing with the scourge of illicit financial flow out of the country.

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