Nigeria’s revenue to GDP ratio is the lowest in Africa, the Director-General of the Budget Office, Ben Akabueze, has said.
Mr Akabueze said this while speaking at the 2022 budget dialogue held in Abuja on Friday.
“Our revenue to GDP ratio is also the lowest in Africa,” he said.
“As I said earlier, it is about 9 per cent. So, if our revenue to GDP ratio is at 9 per cent and our public expenditure to GDP ratio with recent significant growth is about 14 per cent, then already you see a gap between 9 and 14 and that gap is funded by debt.
“That gap of 5 per cent is funded by debt.
“We must fix our revenue challenge because oftentimes people just say cut expenditure,” Mr Akabueze said.
“The truth is cutting expenditure is not currently a viable option for two main reasons.
“Firstly, our public expenditure to GDP ratio is about the lowest even on the continent of Africa.
“As a country, our public expenditure to GDP ratio is under 15 per cent.
“Even on the continent of Africa, that ratio, the average is over 30 per cent.
“The global average is over 30 per cent.
“I am talking of the whole of the federal, state and local governments.
“The reality is that in aggregate, governments in Nigeria are not spending too much, they are spending too little,” he added.
He noted that the solution is not to cut government spending.
“The solution is to make government spending more efficient and increase the scope for the government to be able to spend more because our public expenditure to GDP is so low, that is why the delivery of public goods and services is weak.
He noted that cutting personnel cost which currently stands at N4.11 trillion would not be right because public sector wages are already low compared to the private sector.
“There is a correlation between low public expenditure to GDP ratio and low revenue to GDP ratio,” Mr Akabueze noted.