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Kemi Adeosun is
a new entry this year
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Kemi Adeosun has been the finance minister of Nigeria since
November 11 2015. Her work in improving Nigeria's economy has
focused on looking towards alternative economic activity to
boost government revenue. With oil accounting for 70% of
government revenue in Nigeria, but only 13% of the economy,
Adeosun has focused her time in office on reviewing tax policy
to effectively harness the much-needed resources for
sustainable economic growth and development.
Raising non-oil revenue has been her priority, especially in
light of the slump in oil prices. As Adeosun drills down to the
details, she tells the government to forget about oil,
particularly because the fluctuating price has affected revenue
collection. Adeosun told the Financial Times that a
number of federal agencies had habitually under-reported their
revenues. "Because of oil, we ignored everything else," said
Adeosun. She is working on strengthening Nigeria's tax policies
to evolve the country's tax system to support its shifting
fiscal structure.
However, her appointment to office wasn't always believed to
be beneficial to the economy. The business community criticised
her appointment to office because she was seen as "poorly
qualified for the job". Her career in taxation had taken her
from being a senior manager at PwC in London to a managing
director at Chapel Hill Denham Management – unusually
junior positions for a person then thrusted into a top
government job.
Adeosun began her government career as the commissioner of
finance in the Ogun State in 2011. She was described by the
Economist as an "accountant who cleaned up the books
of one of Nigeria's smaller states" in November 2015, but less
than a year later the same publication called her the
"tenacious" finance minister that is helping Nigeria get
control of its earnings.
Adeosun has had her work cut out for her. Nigeria has one of
the lowest tax-to-GDP ratios in the world at just 5%,
necessitating an overhaul of its tax policy. On August 10,
Adeosun spoke to the inauguration committee about the National
Tax Policy document, which was introduced in 2012. The
committee was tasked with reviewing the National Tax Policy,
recommending a list of tax laws and regulations, suggesting an
effective implementation process for the law, and reviewing
existing double taxation agreements. Other work tasked to the
committee included ensuring inter-agency cooperation between
the Federal Inland Revenue Service (FIRS) and other revenue
agencies to enhance the government's internally generated
revenue, and expanding Nigeria's treaty network to include
major trading partners. "Government shall indeed remain
committed to the continuous improvement of our tax system as
part of a dynamic framework to enhance compliance," Adeosun
said.
In its latest health check of the Nigerian economy, the IMF
recommended that Nigeria raise its VAT from 5% to 7.5%, to
broaden its tax base and to strengthen its tax administration
in order to fill the revenue gap left by oil. Adeosun is also
encouraging the government to implement technology-driven tax
reforms to improve efficiency in tax collection. In an article
written by Adeosun, she said that Nigeria's tax system is
moving in a fresh direction.
"Infrastructural projects such as rail and roads create
jobs, generate taxes and stimulate further spending. This is
the economic multiplier effect that capital spending brings,"
Adeosun said. "Therefore, while an increase in public spending
may create a deficit in the short term, the resultant increase
in productivity will lead to a higher rate of economic growth
and greater tax revenues."