 And we're back with a breakfast in Plostivia, Africa, for AFS Conversation, where the International Monetary Fund, IMF, has once again stressed the need for Africa's giant to put an end to energy subsidy, even as a code for the country to increase their revenue base, by focusing on increasing its tax bracket and compliance rather than engage in more borrowings. Now, presently, the country's debt profile is in excess of a 42 trillionaire with the government planning to borrow more just to meet the needs of the 2023 budget and its obligation. The Nigerian's public debt profile had risen so much under the President Obama, the Buhariats administration, when compared to the previous government since 1999, and foreign debt also grew three times more than the combined figures recorded by the past three administration. It's also reported that domestic debt as well as foreign debt showed so much. But just interesting is the fact that when President Ulusha Gunobasanjo was president at the time, there were consents of $28 billion as foreign debt. That was what we're looking at in 1999. And when he was leaving, he left $2.11 billion in 2007 after successfully securing a right off by the London and Paris Club of foreign creditors. That was when we talked about debt cancellation. The Nigerians were very happy. Then the Yaredo and Jonathan government added $1.39 billion in what they met. And then Jonathan government incurred additional $3.8 billion, taking the country's total foreign debt to about $7.3 billion when that administration came to an end in 2015. But the Nigeria's external loan reached $28.57 billion by December 2020, meaning that an extra $21.27 billion had been accumulated on the President Obama, the Buhariats administration three times the combined amount. And if you want to go through the consents or the debt profile, if time will let us, I'm sure that because of this conversation, we'll just run through all of that where we are. But we'll just leave you with that because we have our guest who's joined us this morning, a financial analyst in Lagos, Mukta Mohamed. Thank you so much for joining us. Thank you. Good morning. Yes, Pais. I'd like you to speak to the suggestions and thoughts from the IMF asking that Nigeria should consider the stoppage of energy subsidies and also consider expanding her tax bracket and ensuring compliance rather than borrowing. When I come up to agree with them in one area, I think in the area of subsidy payment, I think it's high time Nigeria stops that wastage in the area of subsidy payment. Then if you talk about tightening the tax bracket, we keep saying tightening the widening the tax bracket, widening the tax bracket. But what we see the government do is most time what the government do is to put more burden on the already boarding that are paying taxes. It all seems to widen the tax bracket because if you talk about widening the tax bracket, a report came out last week on how the OICs are seeing millions of dollars and accumulated trillions of net that is about six trillion that is okay to even fund our budget deficits. So in terms of widening the tax bracket, I think we should begin to look at the OICs. That is the organization of international companies that are in Nigeria. We need to begin to look at them, whether they really pay the real tax to us. That is where I think the widening should come from because when you talk about widening the tax bracket with other Nigerians and they already highly boarding and all that thing I would say, if you're talking about widening the tax bracket, then you must be thinking of getting the informal sector and getting the informal sector to begin to pay tax comes with a lot of challenges and one of those challenges is that you need to get them to the infrastructure for them to see that government is really care about them and government is actually concerned about their businesses. So, but I think one that we all have agreed as Nigerians and as economists, as financial analysts, everybody have agreed that the subsidy regime should pay. But where we are now is if the subsidy regime ends up, what are the palliative especially for the downtrodden and I keep saying that it's not only downtrodden that need palliative even the rich that are providing a job also need palliative in one area or the other. So it's left for the incoming government to begin to tickle on that. I think again, even with the incoming government, since they are the same government, they should put a halt to the 800 million dollars that the current administration is planning to put as palliative for subsidy payment, I think they should put an halt to that and see when they come in what other strategy they will use. Let's start off with the first concern because the IMF in her report raised critical points, three of them amongst if you look at the breakdown and concern for developing economies, one which you say you agree is that to put an end to energy subsidies, that's what is asking and you're saying that yes you do agree but then if you say we need to put an end to energy subsidy, do we have, have we been able to put in place, you know, prepare the entire country to cushion the effect of what will happen when we remove the subsidy? Do we have refineries functioning? Are refineries functioning? Do we have the capacity to refine our own crude? That's also on the one hand. What about the concerns of techs that has also characterized and gulped a lot of resources? On today's, you know, papers you have reports saying that about 29 trillion, a combination of subsidy and oil theft between 2005 up until 2020 or 2022 has got 29 trillion error. That's a lot to grapple with. So, so if we're saying that yes, it's okay to put an end to subsidy, have we put our house in place to ensure that we have gotten to the point where we can remove subsidy? Well, when you talk about putting a house in place, I think it's boiled down to structures. If you look at the 29 trillion you're talking about oil theft, you need to look at it this way. I think before now I think we should be talking more than that. The government came up with a strategy by giving the former military that the opportunity to manage the pipelines and since then we've seen a reduction in terms of oil theft that shows that it was an indigenous problem. And that's where we had the Navy. Maybe the Navy have no more. They are not as indigenous as the former militants to be able to tackle this oil theft. Remember also we have the petroleum industry that also made a target, tackling oil theft with incentive for every community that adds pipeline through the Swiss and the pipeline by no panelized. But up to now we've not been able to implement that because of the subsidy regime that we are still doing. When you talk about refinery being in place and what refineries being in place, you know the government has no business imputing refineries. I keep saying it and they have a lot of refineries. We look at the category refinery, the protocol refinery, the water refinery. All the refineries are in the test stage and I expected that the government by now should have sold all the refineries. Especially the protocol refinery where we had that the minister for petroleum then was saying that they are actually working. I am making sure that by January that refineries will begin to produce a little bit of refineried product for Nigerians. But up to now we've not seen that. That tells you that there's a lot of corruption when it comes to Tonara maintenance. We've been having Tonara maintenance since the administration of President Ibrahim Babangida up to now and it has not yielded the results. The only president that took the bull by the horn to address this this so-called Tonara maintenance money was the President Bishop of Assange. When he decided to sell off all the refineries or unfortunately leave all and then the incoming government of President Umangashu must tell you that you are overruled at them stairs and that is why we have the challenge. If you say what are we going to look? We are paying subsidy of about six trillion and assistance now from the time from now from in terms of when throughout last year we've had our petrol and price moved to about 81% so definitely then if you are moving the price by 81% then you are still paying subsidy and I mean where the subsidy hasn't come down. It's only in Nigeria that you keep seeing that costs keep increasing even when there's hardship in the land. We consume more petrol and product even when there's hardship in the land. We've not had a trust. Maybe a system we can trust to really say this is the amount of where consumption that we are consuming and this and that and that. So I think if we were able to come up with that trust we may not have been paying this month for subsidy payment like we are and so what people are saying is that we worked if if if you have to remove palliative then come up with with palliative. I mean if you want to remove subsidy come up with palliative that we touch everybody especially the land because the first subsidy on it's the one that's so far moved in this area for for a subsidy because they are the ones that still take the buses and some of these buses now have been moved by Tsu left center and so definitely the the the the the price of transportation has gone up so it's only those Nigerians that have cars the rich Nigerians that go to the to filling station to buy at 168 and also mustn't forget that in the rural area and outside of Lagos it's hardly you get for for 185 Naira it's selling above that we we are above that we're looking at about 250 the 160 even in Lagos some filling station up to this moment are selling for above 185 Naira. Okay so so then I know that you've spoken to you know the issue or the consensus been raised by the IMF and it's not just the IMF yourself and others have also believed that subsidy should be removed but again my question is do you think that we have put the necessary measures in place are we ready to take out subsidy or we're just saying that there's need for us to take it out really. I think we're forcing this take it out. Take it out take it out take it out whatever happens happens. Whatever happens after that you begin to strategize because do anybody any good because if you look at the increment in for petroleum price they don't consult Nigeria before they do it they just do it and then we we come up looking for strategy to live with it. So take it out first then but again I expect that you are taking it out you have your strategy on how to address some of those issues that will make the cost of living high for for Nigerians for me that is what they need to do. So so then again it's my question we already know that the government had said eight hundred billion dollars being borrowed from the the World Bank as means of piloting they're going to put it across you know some Nigerians ten ten thousand that's exactly what's stipulated. Do you think that this is actually very sustainable is this a sustainable strategy and are the other strategies so I think that you're just trying to be you know politically correct on this one and not to just be there but to be very honest again I ask do you think that we have putting measures to cushion the effect of stopping or removing subsidy? I'll come back to this question again that you just asked again I think we have never we we have never done that before now remember we have done piloting before when it comes to these issues remember the petroleum transform during the Sanyabacha regime whereby certain amount was set aside by managed by the current president and president Murubu Hale was he was the head of a petroleum transform ptf and what we do then is that when we are talking about palliative we only talk about road transports that's the only palliative people I keep saying and we buy buses we give buses and at the end of the day those these buses really meet the needs of all Nigerians there's more about the civil servants and how many Nigerians actually civil servants what of the informants sector that needs to move their goods from the rural area to the urban area what type of max transportation and you provide them for them even when they try to go to the Nigerian national union transport workers it it it didn't it didn't meet the desire because even with that some of those bus backtalk those bus were not well managed so it's insane to continue to do the same thing I think you have a different result even the current 800 million palliative that we're 800 million dollars palliative that we're seeing five thousand look I say it how much is five thousand I say give me five five thousand and the end of the year you collect sixty thousand if you look at the the the current exchange rate in terms of nine to the dollar in the parallel market that sixty thousand naira is not even up to a hundred dollars that is one then secondly if you go to the import export window of the government which is about four hundred and sixty to them sixty thousand naira is roughly about one hundred and twenty twenty dollars per year what can that really help you or the downtrodden especially in the rural area if you look at the report that have come from NPS Nigerian people of statistics it shows that inflation of figure is even going higher in the rural area than in the urban area and why is this because the cost of living in the rural area has even gone high because most of them have to transport their goods and their transportation has gone over 200 percent because of the cost of petroleum products in those areas because most of them buy this product for as high as 300 to 300 to 350 naira per litre so when you look at that you say oh are you being sincere with a man political correct about subsidies should go but when we are beginning to think about subsidy we must always think of subsidy that will touch everybody that will make that will make economic sense i give you an example with Kenya when the Kenyan president came into power the first thing he did was to remove subsidy in petroleum product he said he was going to do that and then put back the subsidy in the diesel area and what did we say in that we saw that he was looking at look most of our industry runs on gas which is diesel so what are we going to do we'll measure we subsidize that so that when we put any production the cost of production will come down and so by that's when doing the cost of goods and services also will come down and it's going to affect everybody Moqta, Moqta you know the reason I'm asking this is it's we understand that a lot of persons have not believed you know in subsidy from the onset so you have people who don't believe that this subsidy is even really a thing that is just meant for a few and some other persons who would have described including this government once upon a time when they were not in power they had described subsidy as a scam now we're here saying we want to take out subsidy i hope that we're all following the conversation that petrol might be selling for 750 nair per litre 500 nair do we know what the implication of that means we live in a climb where salaries have not been increased for only god knows how long 30 000 nair a minimum wage has not been implemented there are still some state government that have not been able to pay 30 000 nair and we know that for every other time you have the cost of petrol go up it trickles down on every other thing that you have to buy so I don't understand if we have if this government and everybody that's on board or is in this boss is thinking because if you say you're going to remove subsidy and say in june june is almost here sometimes when may june is here already we just have a few moments and we're saying what are the meat yes everybody's calling remove subsidy but what exactly have we put in place are we not supposed to be proactive as a people are we going to be reactive just you know remove subsidy and then react to whatever happens do we I don't know if we if we're thinking about the the picture because if we live in the climb where we're talking about inflation on double digits you want to agree with me you're also talking about the fact that a lot of people are jobless so you're talking about the fact that petrol is on the high now how many businesses will continue to be sustained how many people will continue to pay salaries do we know what's going to happen we're also projecting that you know unemployment rate might just be hitting 41 percent so do we anticipate that more people will be unemployed I have to this time out I mean I'm not trying to be a prophet of doom here but I'm saying are we thinking about the effect of removing subsidy as much as we say it's important to remove it have we made the necessary plans to cushion the effect of this should we just wait and be reactive and whatever happens then it happens how does that make it you know very fair okay I'll come to your personal removal of subsidy okay um if you remove subsidy you should also know that if it is if it is well managed other industry will come in then we'll begin to have those jobs I'm telling you we've seen that happen in the in the communication sector we'll see that happen in the power sector and we expect that to continue to happen in those sectors going forward so definitely we are going to see those challenges the little challenges that comes with removal of subsidy like you have mentioned in terms of bringing down in terms of cost of living I'll give you an example there's this subsidy has been moved from this for a very long time and what we're seeing now at the point this is what's selling for 900 naira but today it's selling for 713 naira that is what removal of subsidy can do because every market forces begin to determine it now I know the challenge is that oh do we have the refineries working remember that everybody wants to invest in refinery everybody wants to do that but again when you are being controlled and by pricing you don't want to by time you open up that sector you're going to get a lot of investment that are going to come into this country as a means of removal of this subsidy so for me removal of subsidy has its noble effect it has its challenges and you which you have rightly pointed out in terms of cost of living especially for the ordinary Nigerians they really increase those are things that if we remove subsidy and government is saying that some of this money from removal of subsidy some of them will be used to increase the salary of civil servants some of the money from this subsidy will be used to to develop our infrastructure especially health and education I mean sincere policy that we can come up and see that it is working it will have an effect in our productivity institution whereby we have spent about 6 trillion in a year for subsidy how much is the total staff strength of the Nigerians how much does the civil servant take home even the political appointee do we spend up to 6 trillion in a year and again we don't even have the statistic to even match of this that's what I'm skipping saying the data to even match of this subsidy payment that really how much of this that we consume and again when you're talking about who have to be reactive or proactive but you know but he might change during the income administration that we have always been reactive not proactive to any issues that have to do with Nigeria that's always been a reactive type of situation so for me I think we need to even like you said the income the income administration I'm saying that we're going to remove subsidy we're going to but if you listen to them the language is beginning to change they are saying okay when we come in we look at it we look at ingenious ways of doing it really there are ways there's no rocket science there are ways that we can do this that could be beneficial to those that need to benefit from subsidy removal that is my point Ghana removed their subsidy Ghana have removed subsidy from petroleum product where did Ghana say okay we start paying subsidy on energy that is power it's paying subsidies for every Ghana a certain percentage of of that is paid and that touches everybody and that also can be regulated that we know how many households and how much of subsidy that each household is going to going to benefit from the UK did the same thing they went to the energy sector during their meltdowns and said look we are coming to winter there might be a lot of it they said okay each household is entered to 2500 for power cost so those are ways to begin to say okay subsidy is coming but it's going to touch everybody not the type of subsidy that we are operating that we don't think that the ones that suffer more than they reach how many four has two or three cuts and that's why I'm saying that even at the move out of subsidy as the I mean subsidy is still there the price of petroleum product have increased over 81 percent so and yes the subsidy bill keep going up so who who is collecting subsidy why are we still paying high even when we are paying subsidies we are we are still giving some so it is it's an ongoing conversation which I think that the income and the situation engage the stakeholder engage the Nigerian Labour Congress engage everybody that has anything to do with subsidy and see how best way to tackle it now just quickly in on which is actually the main you know focus of this conversation talks about the external borrowing and the IMF seem to be you know performing an advisory wrote in Nigeria of course we already know why that is the case they are saying that there's there's need for us to increase our revenue base by focusing on increasing our tax bracket and you have said that that's not the case but but I'd like you to speak to that how can we increase our revenue base if revenue is the challenge and also the issue of increasing the tax bracket what does even what does that even mean about increasing tax bracket well what are you talking about increasing tax bracket they are thinking get maybe whip him or tax and the government knows that you can't tax more Nigerians so if you can't tax more Nigerians get more Nigerians into the tax bracket and now this administration have done well in that area you agree with me that way the tax return we've been getting has been a little bit higher comparable to other administration so I think that has been they have been able to achieve tax and they are still working on that now when you talk about the tax bracket like I said the sector is a former sector that pay tax the former sector seems to be emitting from payment of tax I think that is that that the IMF telling and the IMF of the work and I telling Nigerians you need to see how you can engage and get tax from discipline some states have done it whereby every month the small business attacks a fixed amount of money and this money has been collected and then they have other incentives like some of them said okay you can go to the hospital you can go there you have free medicaid where if you are a pregnant woman if you are a child your child is sick you can take them to the hospital this is why we are collecting this tax so that's why I said that the government must come with what is going to be beneficial to the informal sector if you are paying tax what are the benefits that comes with this payment of tax because a lot of them are actually incurring a lot of more overhead costs in their businesses because they have to provide power of themselves some of them maybe have to provide work for motorists to move into their own location so I think widely the tax bracket has a lot to do with looking at ingenious ways of getting the informal sector and what they are going to give back to them for me if we are able to achieve that then they would have widened the tax bracket and bringing more income to government look I keep saying the era whereby government look at tax as revenue is gone most government all over the world now begin to look at tax as a means of attracting investment into their countries when this investment comes in they are going to create jobs and from these jobs these jobs people are going to pay tax and then the PPP which is public private partnership is what is done everywhere in the world if you are going to look at all our boring ways down to build infrastructure but how much of this infrastructure can generate revenue on their own why are you not giving this infrastructure to the private sector to build and operate for certain numbers of years whereby you now use your project as a collateral and then instead of going all always to go to two projects that does not add it does not bring income there's economy value if you look at the legacy part on the expressway if you have given it to the private sector then we have this road too we have got memory not going in we have this road maintained we have to go unfortunately and be prompted that we're out of time we'll continue this conversation how to generate our revenue base or increase our revenue base I beg your pardon rather than engage in more borrowings because that has always been an option for us as long as we say there's nothing wrong and borrowing and some other quarters would say widen the tax margin let's have the elites pay taxes because some of them are not paying taxes as much as they should pay Mukta, thank you so much for being part of the show I pledge all this thank you good morning all right then we're having speaking with the financial analysts Rahti and Lagos Mukta Muhammad he joined us via Zoom we'll just take a break when we return we'll talk a bit of sports before we join the newsroom at 9 o'clock please stay with us good morning