As the move for Energy transition deepens and multinational oil companies begin divestment, a Civil Society Organisation, BudgIT Foundation, has urged oil-producing states in Nigeria, including Akwa Ibom to diversify as well as strengthen their revenue base.
Head of Research and Policy Advisory Unit of BudgIT, Iniobong Usen stated this over the weekend in Uyo, during a focus group discussion on “Fiscal Resilience for the Energy Transition in Akwa Ibom State,” which was organized in collaboration with Policy Alert and supported by Natural Resource Governance Institute, NRGI.
Usen observed that states in the Niger Delta get a large chunk of their revenue from the federation account as FAAC receipt and urged the state governments to look for other viable sources of revenue as oil and gas companies are divesting.
He also called for blockage of revenue leakages by fully operationalizing Treasury Single Account, digitising revenue collection, improving ease of doing business, shunning multiplicity of taxes as well as giving priority to capital expenditure to address infrastructural gap.
He said, “For the state to have fiscal resilience amid the transition, there should be diversification of revenue base from oil and gas so that other sectors of the economy whether it is tourism, Tech, Agriculture etc would be given needed attention.
“The state government should provide the enabling environment for them to thrive. What is the tax regime, reduce the total number of taxes they collect from citizens and data collected so that the citizens will be able to pay what is fair at the end of the day, we need to introduce progressive taxes.”
Usen noted that successive governments in Akwa Ibom had invested a lot in setting up some assets in the state such as the Nest of Champions Stadium, Ibom Hotel, International Worship Centre, 21-storey building, Ibom Air among others and the state now needs to ensure that those investments bring maximum profit.
He said the welfarist system around those assets should be reconsidered such that whatever services or goods those assets were meant to provide, are done using the right business frameworks, regretting that from available figures, the returns from those assets were very little.
Also speaking, Dr Iboro Nelson, a Development Economist, urged the government to invest more in revenue-yielding infrastructure like “power” which would enhance the business environment such that Small and Medium-sized Enterprises (SMEs) would thrive.
She advised the oil-producing states to invest the windfall they are getting now so that when the revenue from oil started depleting they could fall back to their investments.
“We should be looking at promoting transparency and accountability in most of our investments such as Ibom Air. We should be diversifying to the tourism sector and agriculture. This energy transition is just like a human being who knows that he or she is going to retire in the next three years. The person will definitely use his entitlements and earnings to invest so that you’ll be having returns.” She added.
Earlier, in his welcome remarks, Edidiong Dickson of the Policy Alert noted that Akwa Ibom State has not done enough to increase her domestic revenue from other sources apart from oil, regretting that if proactive steps were not taken and transition occurs, the state may be exposed to fiscal struggle that accompanies transition.
“Akwa Ibom State is one sub-national that a large chunk of its revenue is derived from oil, we have not done enough to Increase domestic revenue from other sources, which means when that transition happens we are going to be exposed to the fiscal struggle accompanies that transition.” He stated.
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