reuters.com/world/africa/n… Nigeria struggles with an issue shared by many African states, tax collection and revenue generation. This is reflected by the fact that while oil revenues comprise around 40% of GDP they make up around 70% of state spending. 🧵Thread🧵 - ThreadSky

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africatakes.bsky.social • 21 days ago

https://reuters.com/world/africa/n…

Nigeria struggles with an issue shared by many African states, tax collection and revenue generation. This is reflected by the fact that while oil revenues comprise around 40% of GDP they make up around 70% of state spending.

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africatakes.bsky.social•21 days ago

Reform to address this challenge feels necessary. The government needs to more effectively monetise the broad array of economic activity taking place across the country so that it can effectively reinvest; reducing dependence on nervous foreign investors and global oil prices.

africatakes.bsky.social•21 days ago

However, there will be significant challenges to doing so and given the back and forth we have witnessed on removing oil subsidies, it’s likely that fear of exacerbating cost of living challenges and prompting public backlash will undercut the rollout of reform.

africatakes.bsky.social•21 days ago

While the government has said that removing VAT from some key goods will reduce costs for most consumers, greater focus on tax compliance will likely result in citizens paying more while greater VAT costs on other business spending will likely prompt them to increase prices.

africatakes.bsky.social•21 days ago

This comes at a time of high levels of anxiety over cost of living, reflected in last years protests across Nigeria, the removal of popular subsidies, high levels of inflation and an ongoing increase in telecom tariffs.

africatakes.bsky.social•21 days ago

Possibly the state clampdown following last year’s unrest will be sufficient to discourage high levels of unrest and provided the measures succeed in bringing down spending on some key expenses the government will possibly get away without too great a public reaction.

africatakes.bsky.social•21 days ago

But if the government is unlucky, and the measures are rolled out as there is a spike in global prices on oil or food, there is a possibility that these reforms will become a flashpoint for protests.

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