Fixing Nigeria’s haemorrhaging economy

 

That Nigeria’s economy is in bad shape is not in doubt. The entire global economy is either in recession or close to it. In every election across many democracies, the economy ranks high on the ‘to do’ list of candidates vying for elective offices, especially the presidency. I sincerely pity whoever will take over from the President, Major General Muhammadu Buhari (retd.), in 2023. There will be no honeymoon for the next president as the situation in the country is very dire. It is almost a certainty that the incoming government at federal and sub-national levels will meet not only empty treasuries but a gargantuan debt profile.

According to the June 9, 2022 edition of Nairametrics, the quarterly public debt portfolio report released by the Debt Management Office in June 2022 shows that “Nigeria’s total debt stock rose to N41.6 trillion in the first quarter of 2022, representing a N2.05 trillion increase compared to N39.56 trillion recorded as of December last year.” On August 15, 2022, data released by the National Bureau of Statistics shows that the inflation rate in Nigeria spiked to 19.64 per cent in July 2022, the highest rate recorded in the last 17 years. Nigeria’s Excess Crude Account, which usually provides a buffer during the economic meltdown, has been drawn down. Many newspapers reported that the Office of the Accountant General of the Federation revealed on Tuesday, July 26, 2022 that Nigeria’s ECA has been depleted to $376,655 in July from $35.7 million recorded the previous month. If you still haven’t seen the red flag, let me share more statistics with you.

Nigeria’s unemployment rate as of the end of 2020 rose to 33.3% from 27.1% recorded as of Q2 2020, indicating that about 23,187,389 (23.2 million) Nigerians remain unemployed, according to the last released labour force report published by the National Bureau of Statistics. Many economists are of the opinion that it may have risen to about 35 per cent this year. The World Bank in a March 22, 2022 report titled, A Better Future for All Nigerians: 2022 Nigeria Poverty Assessment, said that the number of poor Nigerians is projected to hit 95.1 million in 2022. World Bank noted that the COVID-19 crisis is driving up Nigeria’s poverty rate, pushing more than 5 million additional people into poverty by 2022. There’s no gainsaying that insecurity has significantly impacted negatively on Nigeria’s economy in all ramifications.

As part of the cost-saving measures, Nigeria’s state governors in July 2022 proposed to the president to offer federal civil servants, who are older than 50 years, a one-off retirement package to exit the service.  They made the proposal as part of coordinated efforts to instil fiscal discipline and prevent the nation from imminent economic collapse. The proposal also urged the government to begin implementation of the updated Stephen Oronsaye Report, which suggested the merger and shutdown of agencies and parastatals with duplicated or contested functions as a way to address bureaucratic inefficiency and reduce the cost of governance. While I disagree with the governors on the former, I agree with them on the latter.

Again, in order to stave off the total collapse of the economy and cut down on the country’s borrowing, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said government would begin the implementation of a five per cent excise duty tax on all voice calls, SMS and data services, in addition to the existing 7.5 per cent Value Added Tax paid for goods and services across all sectors of the economy. She made the disclosure during a stakeholders’ meeting, organised by the Nigerian Communications Commission and the telecoms industry regulator.

The minister, who was represented by the Assistant Director, Tax Policy, Federal Ministry of Finance, Budget and National Planning, Musa Umar, noted that “The five per cent excise duty has been in the Finance Act 2020, but has never been implemented.” I am against this move by the Federal Government and made this known last week Monday, August 15, 2022 on Good Morning Nigeria on Nigeria Television Authority. My antagonism is premised on the fact that this will further lead to a rising cost of living as the telecommunication operators have said that they cannot absorb the burden on behalf of their customers as they are already paying about 39 taxes and levies.

I am of the considered view that if the Nigerian government, at all levels, can block all the revenue leakages and fight corruption to a standstill, there will be no need to further tax the already impoverished Nigerians. One significant economic leakage is oil theft. On August 8, 2022, while on a courtesy visit to the Imo State Governor, Hope Uzodinma, Minister of State for Petroleum Resources, Timipre Sylva, disclosed that hoodlums who perpetrate oil theft has caused the production level to reduce by 400,000 barrels per day, translating to a drop from 1.8 million to 1.4 million bpd. This is an industrial-scale daily loss in a country that purportedly has over 20 security agencies, including the Navy, as well as Nigerian Maritime Administration and Safety Agency. If only we are able to curb this economic crime, there will be enough resources to fund our national budget and share with the sub-national levels.

Another area Nigeria’s economy is haemorrhaging is in non-remittance of funds into the federation account by revenue-generating agencies. A December 10, 2018 report in Premium Times titled,” is very revealing. The report read in part that “The Federal Government said …… its own enterprises, including the Central Bank of Nigeria, owe about N10 trillion in unremitted operating surplus as at the end of August 2018. The Director-General, Budget Office of the Federation, Ben Akabueze, disclosed this during his town hall meeting with chief executive officers of government-owned enterprises in Abuja. Lamenting the poor returns on investment by the GOEs, records from the Office of the Accountant General of the Federation showed the Petroleum Products Pricing Regulatory Agency as the worst culprit, with an unremitted operating surplus of over N1.3 trillion, followed by the CBN with about N801.2 billion and Nigeria Ports Authority with N192.1 billion.” Just imagine what that humongous amount will do for Nigeria’s ailing economy if remitted. Despite this revelation, there are no known punitive measures that have been taken against the defaulting agencies. This is impunity at its peak!

Another source of economic bleeding is corruption. Just last month, the suspended Accountant General of Federation, Ahmed Idris, and his co-travellers were dragged to court by the Economic and Financial Commission on a 14-count bordering on theft and criminal breach of trust to the tune of N109.5 billion. Though he and his co-defendants have been granted bail by the court, it beggars belief that the AGF, who superintends over the Integrated Payroll and Personnel Information System, which is meant to weed out ghost workers, could be caught with his hands in the cookies jar. It shows that the anti-corruption measures of the Buhari regime are not foolproof. The Niger Delta Development Commission forensic audit report has similarly shown gargantuan public finance recklessness. Unless these leakages are stopped, Nigeria is bound to haemorrhage to death.