Afam Offor Nwaeze

　　Afam.nwaeze@nationalplanning.gov.ng

　　In the area of fiscal governance, a stark contrast emerges between the governments of developing countries, particularly those in Africa, and their counterparts in OECD nations. This disparity is most evident when examining the proportion of tax revenue collected as a percentage of their respective Gross Domestic Products (GDPs). While OECD countries boast an average tax revenue collection of 33% of GDP, their developing counterparts lag significantly behind, averaging a mere 16%. This striking divergence raises fundamental questions about the underlying factors and implications of this discrepancy, shedding light on the intricate dynamics of tax collection systems in the global landscape.

　　How inland tax revenue agencies perform matters a great deal in realizing tax revenue potential. Many developing countries’ tax revenue agencies face challenges of corruption/inefficiencies. Multiple explanations exist: the absence of vision and goal setting; the lack of innovation, transparency, and accountability; low citizens’ trust; the absence of professionals; poor staff empowerment; unethical behaviour or misconduct by leaders and employees; poor welfare and staff development; and poor communication of goals and objectives.

　　Transformation of internal revenue services is possible. This blog focuses on a transformational leader, Mrs. Ifueko Omogui, who took over as Head of Nigeria's Federal Inland Revenue Service (FIRS) in 2004 and implemented a successful reform program during her tenure from 2004 to 2012.  When she took leadership of FIRS, Nigeria's tax revenue profile was one of the lowest in the world, with only 6% of GDP, and the FIRS faced serious challenges, such as fraud, outdated employee skills, lack of training and evaluations, poor treatment of taxpayers, lack of data on tax administration, and insufficient resources for technology improvement and personnel development. Under her leadership, Nigeria’s FIRS was transformed and Nigeria’s tax revenue increased from less than USD$7.9 billion in 2004 to over $30 billion in 2011. However, by the close of the year 2022, the fiscal authorities successfully amassed a substantial sum exceeding USD$23.7 billion through the accrual of tax revenue, owing to the devaluation of the domestic currency (Naira) by an extraordinary 277% against the United States dollar since 2011. Remarkably, the Nigerian Revenue Service achieved an unprecedented feat in local currency collection, amassing a staggering N10.1 trillion in 2022, signifying an unparalleled milestone in the nation's fiscal history.

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　　Mr. Nwaeze Afam Offor works as a Chief Planning Officer in the Federal Ministry of Finance, Budget and National Planning, Nigeria. Prior to joining the Nigerian Public Service, he worked in several capacities within the Nigerian Banking Industry. His interests include, institutional process reforms, effectiveness of public policies and corporate governance in Nigeria. At ISSCAD, he is currently undertaking a doctoral study in National Development.