As finance minister, Zainab Ahmed presided over Nigeria’s economic response to COVID-19. She now plays a key role in the country’s economic recovery plan and efforts to reduce the national debt by bolstering tax collection.
The Nigerian government increased the VAT rate from 5% to 7.5% and Ahmed has focused on preventing ‘leakage’ from the tax system and cutting spending.
As Ahmed told a tax workshop at the Economic Community of West African States in October: “If we have more taxes and redirect the taxes to the right fiscal sectors of our economy, we will reduce our debt burden.
“It is not as if the debt is beyond what the government can handle,” she added. “If you look at the ratio of the debt to the gross domestic product [GDP], I think the government is doing well.”
Nigeria faces a high level of debt and tough demands from credit rating agencies. Raising taxes and sealing leakages is one strategy for fiscal consolidation.
But this strategy comes with its own problems.
The Nigerian government could reduce the debt, but this could come at the cost of the economic recovery. COVID-19 hit Nigeria’s GDP growth rate hard and millions more people have been pushed into poverty. In short, Ahmed’s job isn’t getting any easier.
