FIRS, Customs, & NIMASA’s Proposed Merger Receives Mixed Reviews

The proposals of the President Bola Tinubu-appointed Policy Advisory Council, which included a request for a state of emergency to be declared in terms of generating money and national security, drew conflicting reactions yesterday.

The Federal Inland Revenue Service (FIRS), the Nigeria Customs Service (NCS), and the Nigerian Maritime Administration and Safety Agency (NIMASA) were among the three government departments that the council, which Tinubu established when he was still the president-elect, suggested be merged.

The council, which consists of Senator Tokunbo Abiru as chairman, Sumaila Zubairu, Dr. Doris Anite, and Dr. Yemi Cardoso as members, reported that the three organizations will now become the Nigerian Revenue Service. The document was produced in partnership with KPMG, a consulting firm.

In addition to that, the council recommended the implementation of the Stephen Oransaye report on rationalisation and restructuring of government ministries, agencies and parastatals.

A revenue target of $1trillion was set within eight years from the planned recommended merger of the three agencies.

To grow the contribution of the manufacturing sector to the gross domestic product, the government was advised to provide incentives, including partnerships with strategic trading partners, “to accelerate the growth of key sectors (light electronics assembly, garments, fertiliser, refined sugar, oil palm, automotive), ultimately generating a target output in excess of $50billion annually.”

Other targets as contained in the document is to achieve a 7 per cent average annual growth rate from the present 3.25 per cent, lift 100 million out of poverty, create the enabling environment to generate 50 million jobs and deliver sustained inclusive growth.

Also, the document recommended the passage of an Emergency Economic Reform Bill to grant the president special powers to drive the economic reform agenda.

There was also a proposal for the establishment of a strategic co-ordinating organ to ensure alignment of monetary and fiscal policies, to be chaired by the president and include the vice president, minister of finance, Central Bank of Nigeria (CBN) governor, minister of trade and investment, and chief economic adviser to the president.

The council also recommended the domestication of at least 50 per cent (valued at $17bn) of the value chains of the three largest manufacturing sub-sectors by contribution to gross domestic product, that is food and beverages, chemicals and petrochemicals and textile, apparel and footwear.

The launch of a consumer credit scheme for housing and consumer goods (such as automobile, furniture etc) was equally proposed via the following options: utilisation of 20 per cent of the Cash Reserve Fund of N5 trillion in the CBN, set aside to promote long-term (20-30 years) mortgages and affordable consumer credit to leverage pension funds of N9 trillion.”

It’ll be cumbersome – Prof Nwokoma

A professor of Economics, Ndubisi Nwokoma, said the merger of the three agencies would be too cumbersome, noting that it would breed unnecessary bureaucracy.

He said, “To bring in such mega organisations into one, you are going to create bottlenecks. To me, that is not a good idea. It is just to strengthen them as they function, focusing on different aspects of revenue generation. But to have one mega organisation may be counter-productive.”

On the foreign exchange policy, Nwokoma, who is the director, Centre for Economic Policy Analysis and Research (CEPAR), University of Lagos, recalled that there were multiple rates under Charles Soludo and Sanusi Lamido Sanusi as CBN governors but with very a narrow margin.

“The problems are not necessarily about policies. Policies have always been there, they have been working. It is only under Buhari that the whole thing went haywire and it is simple. It was because of political interference. We can look at the template under Soludo and under Sanusi and then adopt it.

“So, this idea of bringing something from the moon, we can’t reinvent the wheel. Go back to what has worked in the past and adopt it,” he said.

On the employment target, the university don said the target was not feasible, advising the government to address some of the factors that create jobs.

“Have we been able to address the issue of security? Have we been able to address infrastructure? Have we been able to address the issue of multiple taxation? You need to look at growth-inducing factors because when there is growth, when there is production, jobs are created.

“We have the manufacturers always crying, and clearing up their goods is a problem. There are multiple agencies trying to clear goods. It costs more to clear your goods from the port than to bring your goods from China to Nigeria. You find out that there are many factors that need to be addressed. They talked about 50m jobs, did Buhari not make the same promise about 3m jobs, was that achieved?

“Furthermore, the outlook remains fragile given Nigeria’s high population growth rate and declining gross domestic product per capita.

“There is an urgent need to implement high-impact initiatives to grow the economy at a GDP average growth rate of 7 per cent per annum in order to achieve a $1trillion GDP in the next eight years.”

Ex-CITN president backs plan, advocates careful integration

The immediate past president of the Chartered Institute of Taxation of Nigeria (CITN), Adesina Adedayo, in a chat with our correspondent, said the merger of the three agencies may be a wise decision, but Nigeria doesn’t have the structure on ground.

“The truth of the matter is that if you are talking about cost of governance, duplication of duties, you would want to have a directional flow about your revenue sources. In other developed countries, when you look at what is happening at the customs level, when people import equipment, it goes into companies, there should be a way to control that.

“You have the Ghana Revenue Service for instance, who are technically in charge of what is happening at customs and revenue level. You need to start looking at getting the maximum value effect for our revenue flow. So from that perspective, it is a good decision to have these mergers. But the second level to it is the fact that do we have structure to ensure that they will not be working at cross-purposes?” he said.

He said if such a merger would be carried out, it must be done effectively, adding that the integration must be done in a way that there would be no inferior or superior parties.

On manufacturing, Adedayo further said Nigeria should look at their comparative advantage and invest in those areas to create jobs.

On job targets, he said there should be a well defined data of the type of jobs to be created. “When you are talking about 50m jobs, is it a graduate-related job or those in the lower ranks? There must be logic to the flow,” he said.

An economic analyst, Babatunde Adeniji, said the idea of the merger of the agencies “has a lot of merit, given the bloated nature of many government agencies with the need to make government more nimble and efficient.”

He said more jobs could be created if there was political will on the part of the government.