The International Monetary Fund (IMF) has identified domestic revenue mobilisation as one of the most pressing policy challenges facing Nigeria and other African countries.
The IMF stated this in its latest Regional Economic Outlook titled: “Domestic Revenue Mobilisation and Private Investment,” that was posted on its website yesterday.
According to the report, nearly all countries in the region are currently seeking to raise revenues to make progress toward their Sustainable Development Goals (SDGs) while preserving fiscal sustainability.
“Despite substantial progress in revenue mobilisation over the past two decades, sub-Saharan Africa is still the region with the lowest revenue-to-GDP ratio,” the fund added.
It reiterated that sub-Saharan African countries were at growing risk of debt distress because of heavy borrowing and widening fiscal deficits.
But it stated that sub-Saharan Africa was set to enjoy a modest growth uptick, adding that decisive policies were needed to both reduce vulnerabilities and raise medium-term growth prospects.
Average growth in the region was projected to rise from 2.8 per cent in 2017 to 3.4 per cent in 2018, with growth accelerating in about two-thirds of the countries in the region aided by stronger global growth, higher commodity prices, and improved capital market access.
On current policies, average growth in the region was expected to plateau below four per cent—barely one per cent in per capita terms—over the medium term. “Turning the current recovery into sustained strong growth consistent with the achievement of the SDGs would require policies to both reduce vulnerabilities and raise medium-term growth prospects.
“Prudent fiscal policy is needed to rein in public debt, while monetary policy must be geared toward ensuring low inflation. “Countries should also strengthen revenue mobilisation and continue to advance structural reforms to reduce market distortions, shaping an environment that fosters private investment,” it added.
“Private investment in sub-Saharan Africa is low compared with other countries with similar levels of economic development.
“The low level of private investment is constraining the region’s efforts to improve social outcomes by holding back labour productivity and the resulting gains in real wages and households’ income,” it stated.