Taxation: Effective tax administration a panacea for poverty eradication in Nigeria The problem: The Rio+20 in 2012 conference argued that “close to 40 percent of the population of the developing world lived in extreme poverty” this is a great source of concern particularly in Nigeria with enormous natural resources egg crude oil. However, according the national bureau of statistics report in 2010 that over 64 percent of the population leaves below the poverty line of $1.27 per day. The problem of poverty is exacerbated by the incidence of high illicit financial flows (IFF) where the public funds are siphoned by corrupt government officials mostly through contracts.

1. Week-3-Development Finance Impact Project – Digital Artifact
Taxation: Effective tax administration a panacea for poverty eradication in Nigeria
By
Mohammed N. Ibrahim
Financing for Development Course
World Bank Group
Program: Financing for Development Course
World Bank Group
December 09, 2015

2. Week-3-Development Finance Impact Project – Digital Artifact
Taxation: Effective tax administration a panacea for poverty eradication in Nigeria
The problem: The Rio+20 in 2012 conference argued that “close to 40 percent of the population
of the developing world lived in extreme poverty” this is a great source of concern particularly in
Nigeria with enormous natural resources egg crude oil. However, according the national bureau
of statistics report in 2010 that over 64 percent of the population leaves below the poverty line of
$1.27 per day. The problem of poverty is exacerbated by the incidence of high illicit financial
flows (IFF) where the public funds are siphoned by corrupt government officials mostly through
contracts.
What can be done/ (Proposal for the issue raise above): I am proposing an efficient tax
collection and administration. Nigeria receives support from different international source
toward eradication of poverty, thus, with poor taxation policy in terms of collection and
administration. The international resource flows (IRF) e.g. ODA, Development finance
institutions (DFIs), NGOs and Foundations, Innovative finance, and South-South corporation
(WWW.devinit.org), were all geared towards poverty reductions as one of the motives of the
IRF. These resources are mostly targeted towards public sector among other sectors e.g. private
sector. However, Nigeria still experience a poor taxation collection and administration that
increase efficiency in managing internal resources that can be used to eradicate poverty in
collaboration with IRF.
Obstacles to these IRF in Nigeria: The major challenge to effective utilization of IRF in
Nigeria to fight poverty is that of the lack of transparency in the affairs of government e.g. poor
taxation, the Poor or weak domestic resource mobilization strategies but most at times depending
on external aids with no commensurate commitments to improve internal mechanism of

3. Week-3-Development Finance Impact Project – Digital Artifact
generating resources and effective utilization. Consequent upon the above obstacles developed
nations are becoming reluctant in providing support to countries such as Nigeria due to high
level corruption. Another major obstacle in improving poverty I Nigeria is the lack of or weak
rule of law and this also affect foreign direct investment in the country which can generate
employment due to the activities of foreign investors in the country.
Solution to the problem: I am proposing that Nigeria make best use of technology
innovations in improving tax collection and administration. For instance the Nigerian
government can map all the business premises using coordinate technology or GPRS and the use
of national identification using biometric technology to register all citizens and track their
incomes to ensure proper tax collection and strengthen the rule of law to ensure proper and
efficient tax administration. Strengthening the rule of law can block illicit financial flows in the
country. According to IMF magazine as reported by Marcel (2014) that developing nations
including Nigeria are losing one trillion dollars annually as a result of illicit financial flows. And
this is the more reason why Nigeria needs to strengthen its tax collection and administration
(Okonjo-Iweala, week-2, 2015).
The way forward is to enforce the rule of law and efficient tax administration by
rewarding law abiding citizens with some tax credits annually. The resource generated from
taxation can be judiciously used in providing services to the public and will help in creating an
enabling environment for investors to invest in Nigeria.