Home Finance & Economy ‘FG identifies data as vital tool for revenue and economic growth’

‘FG identifies data as vital tool for revenue and economic growth’

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The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed has identified data as one of the vital tools which the federal government is deploying to boost revenue and improve economic growth.

She made this disclosure while making her submissions at a virtual conference on Thursday, tagged: ‘Leveraging Data to Drive Inclusive Policy, Revenue Generation and Improved Governance.’

According to her, data does not only play a key role in boosting revenue growth but also blocking leakages.

“Data has aided the government to facilitate result-oriented decision-making in the face of uncertainty provides a basis for comparing the consequences of alternative policy choices and allows us to monitor and evaluate our performance relative to our planned targets.”

Underscoring the relevance of data, she said: “Under the Strategic Revenue Growth Initiative (SRGI), we have identified various revenue initiatives that could potentially generate N13 to N18 trillion across both oil and non-oil sources and ensuring that we are able to achieve 15 per cent revenue to GDP target by 2023. Importantly, we recognized that the support of States would be necessary to achieve the 15 per cent target. In fact, the States would need to cumulatively generate about N3.4 trillion. 

“Apart from behavioural changes at the macro level, a data-driven approach also drives changes at the micro-level, within our institutions. This can be in the form of plugging revenue leakages, or by identifying new sources of revenue. Let us consider these two points in turn.”

“Accurate and reliable data is also essential in plugging revenue leakages. Data is equally relevant for identifying new sources of revenue. It is not enough to simply plug leakages; new sources of revenue are a necessary complementary strategy.  

“Specific actions include identifying sectors of the economy that can benefit from fiscal and tax reforms while expanding the base and/or rate for such taxes. Ultimately, the goal is to ensure that such policy decisions are driven, not by ideology, but by data,” she said. 

Citing an instance using Q1 2020 data, Ahmed disclosed that the analysis found that activities which constitute a large chunk of nominal GDP contribute relatively less to VAT collection.

“For example, Professional Services accounted for 22 per cent of total VAT collection in Q1 2020, this activity only accounts for 3per cent of nominal GDP. On the other hand, Manufacturing accounted for 13 per cent of nominal GDP in Q1 2020 but only one per cent of total VAT receipts. Trade appears to be one activity that contributes as much to economic output as its share of VAT receipts. 

“This may also explain why it is a significant predictor of the direction of the economy. Moreover, because it employs a sizeable proportion of the labour force and involves highly informal economic activity across the country, it can also give a sense of how the generality of the populace are feeling or faring. 

“This suggests that there may be some room to consider how to design appropriate tax policies sufficient enough to generate revenue from growth in that sector without constraining it.  

“This may be through the greater formalization of the sector, providing incentives for operators to enter the tax net. For this reason, the forthcoming National Census of Businesses to be conducted by NBS will provide policy-relevant data to support businesses in the country. This will be very useful for the design of appropriate sector initiatives. I believe these examples clearly underscore the need for a robust data production framework to support the policymaking process,” the minister further explained.

In his remarks, the Statistician-General of the federation, Dr Yemi Kale said being the apex body of official statistics, a key function of the NBS is to centralize and mainstream the data generated within the public sector itself, adding that the type of data can provide the most useful insight into opportunities for revenue generation, and highlight gaps that exist within the tax collection system.

According to Kale, aside from providing data, Artificial Intelligence (AI), as well as blockchain technology, has the capability to drive huge national and economic growth.

 He said: “Technology and innovation are expanding the boundaries of administrative data and the speed and accuracy of value creation.  Blockchain technology and Artificial Intelligence can help governments predict areas for intervention, detect tax liabilities from different groups efficiently, assess fraud risks that underpin corruption, and monitor processes internally,” 

He, however, stated that the data production structure still faces some challenges which need to be addressed urgently. 

“Despite the ability to impact on the process of good governance, our data production architecture still faces some challenges.  

“For instance, we still need to address the resistance to data sharing internally, which is reinforced by the realization that with transparency comes accountability or the common misconception that sharing data means the loss of ownership or visibility as it relates to the information being shared”, Kale stated.

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