Nigerian Revenue Summit: Fostering growth, transparency, and collaboration in the digital age

In today’s world driven by technology and innovation, we are compelled to make a necessary shift from traditional systems to digital platforms and solutions, which has proven itself to be a necessity.

Nigeria, a nation endowed with vast resources and a vibrant entrepreneurial spirit, is poised to harness the power of digitalization to redefine its revenue collection landscape and find creative ways to expand revenue generation opportunities.

Recognizing the significance of this transformation, Interswitch, one of Africa’s leading digital payments and commerce companies, has taken a proactive role in catalyzing this change through the organization of the Nigerian Revenue Summit. The summit transcended borders, sectors, and ideologies, with the theme, ‘Digital Payment as a Catalyst for Revenue Growth.’

What was once the Northern Revenue Board Forum has now evolved into a national conversation. The Nigerian Revenue Summit has opened its doors to tax administrators, finance experts and other relevant stakeholders from every corner of the nation.

This evolution is not just symbolic; it signifies the expansive vision of leveraging digital payments as a transformative force in Nigeria’s economic narrative.

At the heart of this transformation lies the recognition that we live in an era where technology dictates the direction of progress. Digital platforms, often overlooked in its ubiquity, is now positioned as the backbone of revenue collection.

Its effectiveness rests on its ability to reshape the traditional ways we generate and collect revenue, effectively addressing several issues inherent in traditional methods. One of such issue is the absence of transparency.

Digital platforms introduce an unprecedented level of transparency which is especially important in a country striving for financial accountability. The reliability of digitalization facilitates the streamlining of processes, making revenue collection seamless for individuals, private organizations, and government bodies.

Consequently, the accountability which digitalization provides ensures that every naira is accounted for, reducing revenue leakage, and promoting fiscal discipline.

Crucially, the Nigerian Revenue Summit doesn’t limit its vision to just the formal economy It recognizes the informal sector’s invaluable contribution to GDP of the country.

Through a range of innovative solutions – Automated Enumeration, Diverse Payment Channels, Centralized Payment View, Boost Compliance, and Visibility – the informal sector is primed for a transformation that fosters inclusivity and accountability.

Highlighting a significant revenue gap, Chijioke Uwaegbute, Tax and Regulatory Services Leader at PWC Nigeria, points out that South Africa shines as a standout performer in Africa’s Tax Administration Landscape. It generates an impressive 17 times more revenue than the collective internally generated revenue (IGR) of all Nigerian states combined.

This revelation is particularly noteworthy in the context of Nigeria’s recently published IGR figures for the first half of 2023, which show an approximate total of NGN641 billion originating from Pay-As-You-Earn (PAYE) taxes.

Despite the nation’s adoption of technology at varying levels of maturity, a substantial tax gap looms large, averaging at 1.5%, which is the difference between the top 5 IGR collecting states’ tax-to-GDP ratio and the African average of 18%.

This gap represents a golden opportunity for the State Tax Administration to harness technology for swift gains in revenue collection.

Comparative analysis further underscores the urgency of addressing Nigeria’s revenue challenges. South Africa’s Revenue Services (SARS) impressively collected over N39 trillion in taxes in 2021, with approximately 40% of this revenue sourced from Personal Income Tax (PIT).

In stark contrast, Nigeria, a country with over three times South Africa’s population, managed to collect less than N1 trillion from PIT. Even Kenya, a nation with a GDP roughly equivalent to that of Lagos State, surpassed Nigeria’s overall tax revenue collection by more than half.

Such disparities in revenue collection contribute to Nigeria’s concerning tax-to-GDP ratio, which stood at 10% in 2022, lagging behind the African average by 8%. This low revenue profile poses a significant threat to Nigeria’s sovereign credit rating, and overall economic stability.

In the words of Chinyere Don-Okhuofu, the Managing Director, Industry Ecosystems (Interswitch Indeco), “The Nigerian economy is primed for digitalization, and as a technology-centric company, Interswitch is keen on its message of collaboration, which forms the basis of the summit, bringing together stakeholders who hold the power to shift the economic landscape of the country through technology.”

The summit showcased two transformative solutions that underscore the theme’s practicality Interswitch Solution targeted at the Informal Sector and Interswitch Central Billing and Tax Administration System both Solutions are designed and positioned to automate the revenue processes in the informal and formal sector respectively. Both solutions recognize the need for data capture, assessment and generation of a single invoice

For Nigeria, a developing economy with boundless potential, embracing digitization is a pivotal step towards sustained growth. The benefits extend far beyond convenience, resonating with government and private enterprises alike.

The revenue summit is a symbol of reflection on how we reimagine our economic landscape, advocating transparency, inclusivity, and accountability.

The path of embracing digital payments isn’t merely about adopting a modern invention; it’s about building infrastructure of growth, transparency, and dynamism.

The Nigerian Revenue Summit is our compass that points us toward an economy that thrives, adapts, and uplifts all, a nod to Interswitch’s overarching goal of creating a prosperous Africa through technology.