President Bola Tinubu on Tuesday unveiled commitment towards diversification of Nigerian economy from overreliance on the production of fossil fuels and maximise revenue potential from this critical industry, by pushing policies to attract investment in the oil and gas sector.
Tinubu who gave the insight while declaring open a two-day retreat with the theme: ‘Navigating change: Legislative strategies for economic transformation’, also gave insight into the rationale behind the signing of Executive Order aimed at unlocking $10 billion fresh investment into the oil and gas sector of the nation’s economy.
Mr. President who was represented by his Chief of Staff, Hon. Femi Gbajabiamila said: “The oil and gas industry has long been the lifeblood of our national economy. My administration is working tirelessly to change this and diversify our economy from overreliance on the production of fossil fuels. However, we are also determined to maximise revenue potential from this critical industry. For this reason, we are pushing policies to attract investment in the oil and gas sector.
“Recently, I signed an Executive Order to unlock about $10 billion in fresh investments in the sector. This will happen through Fiscal Incentives for Non-Associated Gas (NAG), Midstream and Deepwater Oil & Gas Developments.
Just last week, the Federal Government of Nigeria signed the Consolidated Guidelines for implementing Fiscal Incentives for the Oil & Gas Sector. The guidelines, which represent a cornerstone of the Presidential Directive, aim to enhance the Nigerian oil and gas sector’s global competitiveness while stimulating economic growth.
“The Executive Order also streamlines contracting processes, procedures, and timelines from 36 months to 6 months. The order also seeks to ensure that local content requirements are implemented without impeding investments or the cost competitiveness of oil and gas projects.
“Related to this are the reforms we are implementing to our tax regimes to limit the taxes collected without negatively affecting government revenues. All of these have the same objective – to reduce government interference with the commercial imperatives of businesses in the country so that businesses based here can be competitive and focus on their core objectives of economic growth through innovation and trade.
“We will need the support of the National Assembly to fully implement some of these reforms, as statutory changes will be required in some areas. I am confident that when the time comes, the governing partnership we have established between the Executive and the Legislature will ensure that these changes are effected swiftly to benefit our nation.”
While noting that the existing goodwill, harmony, and collaboration between the Executive and Legislative arms are beneficial and crucial to achieving our shared national development goals, he maintained that: “working together, as we do, will help us deliver the gains of democratic good governance to our people and ensure the quick progress our country desperately needs.
Mr. President affirmed that while the very essence of checks and balances means there will be times when the Executive and Legislative prerogatives inevitably collide.
He however urged that: “Above all else, the national interest must guide our decisions in those moments. “We share a common responsibility in shaping the future of our nation, and it is through our collaboration that we can effectively fulfil this duty.”
While delivering the keynote address, Speaker Tajudeen Abbas decried that Nigeria’s efficiency in collecting Value Added Tax (VAT) is the lowest among its African peers, indicating significant inefficiencies in its tax system.
He, therefore, expressed the readiness of the 10th House to aid the economic policies and programmes of President Bola Ahmed Tinubu administration.
This, Speaker Abbas noted, includes engagement with stakeholders on laws governing finance, tax, and oil sub-sectors of the economy, with the aim of causing positive reforms.
He explained that the House made a deliberate decision to focus on tax reforms and modernisation as well as a review of the implementation of the Petroleum Industry Reform Act (2021). “The overarching objective is to discuss and identify concrete legislative strategies for economic transformation,” he said.
The Speaker expressed his pleasure that the legislative retreat was taking place “at a point in our nation’s economic landscape when the current administration is diligently implementing policies and initiatives to steer our economy towards recovery, growth, and sustainable development.”
He stated that the commitment and foresight shown by the government in addressing economic challenges “deserve commendation, and it is imperative that we, as legislators, align our efforts to support and enhance these endeavours.”
Speaker Abbas said: “As a critical arm of government, the legislature has a crucial role in shaping our nation’s economic transformation and development. Part of our law-making powers is the authority to enact tax reforms and strengthen resource governance mechanisms. By designing and implementing progressive tax policies, we strive to ensure a fair and efficient tax system that boosts revenue while fostering economic growth and equity. This involves not only broadening the tax base and simplifying tax codes but also enhancing compliance and minimising loopholes that benefit only the wealthy.
“Furthermore, the legislature’s oversight function is central in the governance of natural and financial resources. It ensures transparency and accountability in the exploitation and management of resources, which is essential for sustainable development. By holding government and private sectors accountable, the legislature helps prevent the mismanagement and corruption that can often undermine economic progress.”
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He added that the retreat aimed to foster stakeholders’ engagement, ensure constructive dialogue, exchange ideas and offer insights on legislative strategies that will contribute to the economic transformation of our country.
“Accordingly, this forum allows us to take a deep dive into the tax reforms instituted by President Tinubu and undertake a review of the implementation of the Petroleum Industry Act (2021). We consider these two initiatives vital in our nation’s quest for economic recovery, transformation and growth. The two areas speak to both the oil and non-oil sectors of the Nigerian economy,” he said.
While stating that Nigeria’s tax revenue struggles are primarily due to narrow bases for indirect taxes, low compliance rates among taxpayers, substantial tax exemptions, and generally low tax rates, the Speaker added that the situation was compounded by “a lack of enthusiasm and morale for tax compliance, contributing to the nation’s underwhelming fiscal performance.”
He stressed: “Comparatively, Nigeria’s efficiency in collecting Value Added Tax (VAT) is the lowest among its African peers, indicating significant inefficiencies in its tax system.
“This trend of low tax revenue, coupled with a continued dependency on the increasingly unstable oil revenue, presents a major risk to Nigeria’s fiscal sustainability. It also highlights an important area for potential reform to boost revenue and stabilise the country’s economic framework.
“The lack of growth in non-oil revenue sources and the volatile nature of oil income underscore the urgent need for Nigeria to diversify its revenue base and enhance its fiscal management to ensure economic stability and growth.”
Speaker Abbas noted that several empirical studies had shown that Nigeria has the potential to further increase revenue if priority tax reforms are implemented. He stated that “the House stands ready to support the Executive to achieve its overall goal of reversing the negative trend.”
He also noted that this is in keeping with the Legislative Agenda of the House, which prioritises economic growth and development, focusing on economic restructuring, diversification and agricultural development and enacting tax reforms that will simplify our tax codes, expand the tax base and strengthen mechanisms for compliance.
The Speaker stressed: “Of particular interest to the House is increasing government revenues without unduly burdening the citizens, especially the vulnerable.”
Another important thematic area at the retreat, Speaker Abbas noted, was the potential of digitalisation and technology to transform tax administrations by enhancing the efficiency, transparency, and fairness of tax systems. He said these advancements enable tax authorities to collect, process, and utilise information more effectively, leading to improved operational capacities.
For taxpayers, he said integrating digital tools could simplify compliance, making it a more seamless part of everyday personal and business activities, thereby reducing friction and increasing ease of engagement with tax systems.
The Speaker noted that the second leg of the retreat centred on the Petroleum Industry Act (PIA), which represents a legislative milestone passed by the 9th Assembly.
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