HomePolicyTo contain revenue shocks, Gov’t mulls retrain-to-exit incentives for...

To contain revenue shocks, Gov’t mulls retrain-to-exit incentives for federal workers, merging of agencies; further VAT increase planned

Zainab Ahmed, minister of finance: The Government of the Nigerian Federation has no plans to lay off federal workers in 2022

The Government of the Nigerian Federation has no plans to lay-off federal workers in 2022.

Speaking on the NTA ‘Good Morning Nigeria’ programme on Thursday, Zainab Ahmed, Nigeria’s minister of finance, revealed that government would explore policy incentives to encourage some federal workers to voluntarily exit, as well as merge some federal agencies, with a view to reducing overheads.

Minister Zainab Ahmed added, “Mr President doesn’t want to disengage staff. That is what he has directed from the beginning of his administration. He also directed that we pay salaries. The Federal Government has never failed in paying salaries and he said we must always pay pensions.

“So, he has been consistent in those directives and we have followed those directives to the letter.”

Ahmed said, “Well, we do hope that at the end of the exercise, some agencies will be merged and it will cut down operational costs.

“And also we will be able to come up with incentive packages to retrain people and redeploy them in some areas where they are useful. For example, we still have a very high need for teachers so we can retrain people and send them to teach but also incentive packages to exit. Again, that is also money. If you want people to exit you have to pay them.

Zainab Ahmed also said the Government has plans to increase the rate of Value Added Tax paid by Nigerians.

Two years after the government increased VAT from 5 per cent to 7.5 per cent, Ahmed said that the planned further increase in VAT is a measure being adopted by the government to shore up revenue.

She added that at 7.5 per cent, Nigeria has the lowest VAT rate in the African region.

Ahmed said, “7.5 per cent VAT is the lowest in Africa, and it is about 50 per cent of the sub-Saharan African average which is about 15 per cent, so we are still very low.

“Yes we have to increase VAT at some time going forward, we can’t stay at 7.5 per cent when we want to increase our revenue.

“At some point, I am not saying this year, because we didn’t make provision this year.”

She explained that the government didn’t make provisions for the increase in the Finance Act 2021 because of the contentions between the Federal Government and state governments on VAT.

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