In a bold move to address Nigeria’s economic challenges, the Federal Executive Council (FEC) has approved the Economic Stabilisation Bills (ESB), which contain several recommendations from the Presidential Fiscal Policy and Tax Reforms Committee. The ESB is a core component of the government’s Accelerated Stability and Advancement Plan (ASAP), aimed at creating a foundation for long-term, inclusive growth.
The ESB proposes amendments to 15 key tax, fiscal, and establishment laws to stimulate economic recovery, stabilize inflation, and drive job creation. It is anticipated that these reforms will position Nigeria to manage its macroeconomic challenges while promoting sustained growth.
Key Policy Objectives
The proposed legislative changes within the ESB are designed to address several pressing economic concerns and align with the government’s broader economic strategy. These objectives include:
- Inflation reduction and price stability: Tackling inflation to ensure price stability and protect vulnerable populations.
- Strengthening the naira: Complementing monetary policy measures with fiscal interventions to support the naira and sustain exchange rate convergence.
- Promoting fiscal discipline: Enhancing government revenue through improved remittances and greater fiscal responsibility across public institutions.
- Job creation and poverty alleviation: Encouraging employment opportunities and lifting people out of poverty through targeted tax incentives and reforms.
- Export promotion and diversification: Broadening Nigeria’s economic base by incentivizing exports and diversifying revenue sources.
Key Proposed Changes
Among the significant amendments proposed in the ESB are:
- Income Tax Reforms: Changes to income tax laws to promote employment within the global value chain, particularly in the digital economy, offering Nigerians increased opportunities for growth and development.
- VAT Incentives for Exports: Zero-rated VAT on export goods, services, and intellectual property, alongside enhanced incentive regimes to boost international trade and revenue diversification.
- Gas Sector Investment: Amendments aimed at simplifying local content requirements and encouraging investment in the gas sector to ensure Nigeria remains competitive on a global scale.
- Foreign Exchange Reform: Enhancing the regulatory powers of the Central Bank of Nigeria (CBN) to increase forex liquidity, strengthen the naira, and maintain stable exchange rates.
- Private Sector Tax Relief: Offering tax reliefs to companies that provide wage awards or transport subsidies to employees, alongside incentives for businesses generating and retaining new jobs for at least three years.
- Government Revenue and Fiscal Discipline: Mandating stricter remittances from government agencies and corporations to the Consolidated Revenue Fund (CRF), boosting public sector efficiency and fiscal discipline.
- Support for Small Businesses: In collaboration with state governments, the ESB proposes suspending certain taxes and levies on small businesses, such as haulage fees, market taxes, and other micro-enterprise charges.
- Tax Base Expansion: The introduction of the Tax Identification Consolidation and Collaboration (TICC) initiative is expected to widen the tax net, level the playing field for businesses, and expand the national tax base.
- Funding for Students’ Loan Scheme: Additional funding will be provided to enhance the Students Loan Scheme, ensuring broader access to education for underprivileged Nigerians.
Next Steps
The Economic Stabilisation Bills are set to be transmitted to the National Assembly, where the government hopes they will be passed into law swiftly. Once enacted, these measures are expected to provide a solid foundation for Nigeria’s economic recovery, aligning with both fiscal and monetary policies to drive long-term prosperity.
As Nigeria faces economic pressures, the ESB seeks to balance the urgent need for stability with policies that foster growth and equity across various sectors, ensuring a more inclusive future for all citizens.
