2016 budget: NBS seeks economic diversification, appropriate taxation

• As crude oil prices fall to $31.44 a barrel
For the country to effectively execute this year’s budget, the nation’s production and export profiles need to be diversified away from the current dominance of crude oil, the Statistician-General of the Federation/Chief Executive Officer of National Bureau of Statistics, Dr. Yemi Kale, has prescribed.

Yesterday, the crude oil prices sustained a sliding profile, with West Texas Intermediate falling from $32.28 per barrel to $31.44, representing a 0.50 per cent drop during the early trading. The price of Brent crude oil also dropped by 1.10 per cent from $34.62 to $33.53 a barrel.

The falling prices were attributed to oversupply to the tune of one to two million barrels per day, mainly from U.S. shale output, while other producing nations, especially the Organisation of Petroleum Exporting Countries (OPEC), were yet to effect production cut.

The current prices were however a rise from the earlier situation in January, when the commodity was trading between $28 to $30 per barrel, far below the country’s crude oil benchmark of $38 per barrel.

Speaking on how to bring Nigeria’s economy back on track, Kale prescribed diversification of government revenue, while the administration should ensure that current economic activities, both formal and informal, are taxed appropriately.
He specifically called for the introduction of policies that would deepen the currently existing economic diversification drive, to promote sustainable growth and development of the economy.

He said that diversification in exports and in domestic production will accordingly fast-track economic growth.
Speaking at the Standard Bank West Africa conference in Lagos, Kale stated that cross-country empirical evidence points to a range of general policy and reform measures that have proven effective, in promoting diversification and structural transformation.
He listed them to include improving infrastructure and trade networks, investing in human capital, encouraging financial deepening, and reducing barriers to entry for new products.

According to him, the experiences of the South- East Asian countries, some of them with similar economic characteristics as Nigeria, are instructive in this regard. “Faced with problems of economic stagnation, high unemployment rate, runaway inflation and persistent external sector imbalances, the thrust of development policies in those countries shifted in favour of the diversification of the productive base and broadening of the export base of the economy through massive investment in physical and human capital,” he stated.