“The money was all appropriated for the top in the hope that it will trickle down to the needy. Mr. Hoover didn’t know that the money trickled up. Give it to the people at the bottom and the people at the top will have it before night, anyhow. But it would at least have passed through the poor fellow’s hands.” – Will Rogers (quoted from Zombie Economics. Pg. 137).
No country for Nigerian elites. It is doubtful if there will be entry passes into heaven for them as well. Remember “No Country for Old Men”, the 2005 Hollywood flick featuring Tommy-Lee Jones and the psychopath portrayed by Javier Bardem? In that movie, Tommy’s character had come across some heist and sought to appropriate it by crossing over to Mexico, where he was hunted down at every step by the seemingly ubiquitous “Anton Chigurh” (Javier). Nigerian elites should be served notice, that with the way they are playing this game, upheaval of unprecedented proportions is being toyed with. Are Nigerian elites waiting to be hunted down like Tommy Lee Jones?
But seriously, are Nigerian elites painfully timid, extremely selfish or pitifully myopic… or they simply don’t understand the concept of enlightened self-interest?
I recall attending the APC Economic Summit sometimes mid-2015… I recall entering one of the breakout sessions on Education, chaired by Bolaji Abdullahi, an ex-minister for Youth and Sports. There he was, trying to put his ideas across, constantly heckled by many a professor who believed that all Nigeria needed were world-class universities – and not the urgent empowerment of the youth as Abdullahi believed; a position I subscribe to.
I recall attending the APC Economic Summit sometimes mid-2015. It was APC’s first – and so far – only such summit. In that summit, they invited a lot of professors and eggheads. Many showed up with their best ideas. But all we heard, were a litany of Nigeria’s woes, and not many solutions. This summit was quite well-attended, and had a coterie of very important people up on the high table. In the crowd were also many important and big names. Getting through an idea of one’s own was a near-impossibility. You had to sit and listen. I recall entering one of the breakout sessions on Education, chaired by Bolaji Abdullahi, an ex-minister for Youth and Sports. There he was, trying to put his ideas across, constantly heckled by many a professor who believed that all Nigeria needed were world-class universities – and not the urgent empowerment of the youth as Abdullahi believed; a position I subscribe to.
It was an experience that tested the patience. Up came many clichéd ideas and the usual bellyaching. “We should revive Agric” (as if the last Minister wasn’t saying the same thing). “We should revive manufacturing” (as if we understand where the world is presently in terms of manufacturing or appreciate that we can only produce for our own consumption in this brutally globalised world). Nigerians are great at complaining, and exonerating themselves from the existing problems facing the country.
Of note was that in that summit, almost everyone given the chance to speak, complained that the country will not have money to fund its programmes because the price of crude oil was already trending down. Pauper and king, civilian and politician, ruler and ruled. All said the same thing. Crude oil price must have been over $50 then. Today it is less than $30. It was all about stating the obvious and then embellishing this with the lamentations of Jeremiah.
The White Lady’s Question
Then one white woman was recognised. She stood up and asked a question. She said, “I hear you all complaining about how to fund your budget. Yet Nigeria is the only country I’ve been – and I’ve been to a few – where people don’t get fined for over-speeding. How then do you expect to fund your budget?” Lobatan.
But the comment was lost in translation. Most of the big men to whom the question was directed, failed to understand where the lady was driving to. We had a few rambles from the high table and everything petered out. By then I knew my work was done. I could either go and hug the lady, or just leave the venue in peace. I left in peace. She had asked my question.
You see, I once lived briefly in London, UK. A bitter, dinghy place it could be. They don’t rely on any extractive resource and so don’t bellyache about falling prices of commodities. The UK is the epicentre of prudence. They extract about 1.5million barrels of crude oil in the North Sea up in Scotland and tax the companies who do that. If they share the money among the four regions – Northern Ireland, Scotland, England and Wales – they make little noise about it.
I take joy in VP Osinbajo’s call for elite consensus at the recently-concluded Daily Trust Annual Conference. Elite consensus is what it takes to get a nation going. In the countries we admire, the elite have come together and determined that they will give reasonably good standards of living to their people. Not all can be rich, but let most be above poverty and despondency.
But London where I lived was very aggressive in going after its fines, levies and taxes. Council taxes were there for maintaining the community. TV tax was there to assist the BBC stay alive. Congestion tax was there to maintain the City and reduce traffic, and you dare not over-speed, or use a phone while driving. Matter of fact, all children below 11 years need to be kept in car seats. Failure to do so, attracts crazy fines. That is how London finances its budgets – which stands at about 12Billion Pounds Sterling this year (an equivalent of N5trillion). That was what the lady was trying to tell us. Imagine London – the local government perhaps – with the same budget as the whole of Nigeria? 8.5 million people live there. 170 million live here. The N5trillion is almost fully financed from fines and levies. Their duties include those on the environment, policing and transport. Nigeria’s purview is much more vast.
Between the woman’s comments and today, little if anything has changed structurally. What we’ve seen are the same complaints about falling crude oil prices. Now we have reached a crisis point, with more states owing salaries and hordes of people being laid off work. Luckily, the Nigerian government has not increased taxes across the board… yet. And it hasn’t also devalued the currency (at least officially). The pains are much. But I believe there are avenues to escape these pains. It is not about reinventing the wheel. We can simply copy what has worked elsewhere. I will share three avenues for raising money in a society, that has worked and keeps working elsewhere.
These ideas actually impact the elites. They are ‘progressive’ in nature. But it is not just about pains for the Nigerian elites. Whatever they give today, they rapidly get back. The crash in the price of crude oil is a call on Nigeria to finally have governance that makes sense. I’m afraid though, that a lot of the wasteful behaviours of the past are still with us, like the purchase of thousands of SUVs (‘treated’ – or bullet-proof) for politicians. Yet, I take joy in VP Osinbajo’s call for elite consensus at the recently-concluded Daily Trust Annual Conference. Elite consensus is what it takes to get a nation going. In the countries we admire, the elite have come together and determined that they will give reasonably good standards of living to their people. Not all can be rich, but let most be above poverty and despondency.
That is the reason why they ensure the basics – food, transport, cheap clothing, and reasonable housing – for their own people. They can then live happily in their mansions and fly their private jets, but not before.
Car Tax, Capital Gains Tax, Inheritance Tax, Luxury Tax and Congestion Charge
For space constraints, I will summarise what I think we should do. I have written extensively about Car Tax elsewhere. It is green (good for the environment). It will help reduce inordinate acquisition of cars. If Nigeria has about 10 million cars running around the place, at an average of say N30,000 per car, per annum, we can raise N300 billion annually at state or federal levels. The taxes can be shared. ‘Average’ means that cars with small engine capacities, or which are environmentally-friendly, can pay a token of say N10,000 annually, while bigger cars pay anything from N50,000 to N100,000. The biggest impediment to having this as a policy, is our elite. Nigerian elites are still in the business of protecting themselves and amassing wealth that they will never use. They own the big cars but want to pay nothing to government like it is done elsewhere. They even buy the cars with public money. And they sometimes own dozens of them. Yet, no dice. That is why I asked the questions at the beginning of this write-up.
Then there is Capital Gains Tax. At a recent conference at Obafemi Awolowo University, Ile Ife, a friend and right-wing economist, Abimbola Agboluaje, mentioned that Professor Paul Collier noted in one of his books that Nigeria was one place on earth where Capital Gains on land and properties were totally privatised. What he means is that elsewhere, when you sell your land or property at a profit, the government shows up to collect its own. Yet, the Capital Gains Tax Act of 1990 states clearly that a tax shall be charged on gains accruing from asset disposal, as from 1967. How many pieces of land have you bought where the ‘omo onile’ simply pocketed the money? Ok, how many corporate property transactions have taken place in all the over-inflated highbrow areas where people never paid a dime to government?
But will our elites agree to pay CGT? Nigeria should gross trillions of Naira from property taxes and CGT. This is the way to go.
I was reading somewhere recently about inheritance tax in the UK. It has always been in their system like that. At a point, many Indians who acquired properties in the UK will cede such properties to their children at ridiculous amounts, but the UK still finds a way around it. But in Nigeria, there is hardly anything like inheritance tax, despite there being many corrupt people who milk the system and turn their families into aristocrats by merely gifting these properties to children for nothing. I could only find one resource by Proshareng.com to the effect that Lagos State has such a provision, which I presume is kept in breach. Should we allow corrupt people to ‘launder’ corrupt money across generations in this cavalier manner? I don’t think so. Again, the elites will never agree.
It is way easier to storm Oshodi or Mile 12 Market and pursue stall owners for puny taxes. It is easier for a camel to pass through a pinhole than to access the fortress of the rich and get them to pay up. But there are other ways. What if we made it mandatory for them to present receipts for luxury taxes before they can get government contracts or any other such favour?
Of course the outgone Minister of Finance mentioned Luxury Tax, but we are yet to see that in operation. She said they intended to tax properties worth in excess of N300million. This is problematic for several reasons. First, how many such properties are around? How do you determine the true values? What if all huge properties become valued at N200million or less all of a sudden? Will any amount come from here? Why not lower the bar? Who says anyone with a property worth N20million cannot pay a token? The trick about such taxes is to make it very low. When people comply because it’s low, you’ll be shocked that it grosses up to a fortune. Trillions await Nigeria in this area.
The outgone Minister also mentioned taxes on private jets and champagne. I’m not sure a single person has been taxed on these. Investigations by TheCable online newspaper reveal that most of these exotic drinks are cleared into Nigeria under the wrong customs codes and they even evade the 100 percent duties paid on them; for a fee, of course. Again, the elite are great at protecting themselves. They are often unapproachable anyway. It is way easier to storm Oshodi or Mile 12 Market and pursue stall owners for puny taxes. It is easier for a camel to pass through a pinhole than to access the fortress of the rich and get them to pay up. But there are other ways. What if we made it mandatory for them to present receipts for luxury taxes before they can get government contracts or any other such favour? Remember, make it small for compliance. Trillions await Nigeria here as well.
It will, however, be the same elitist attitude that frustrates the idea behind car tax and so on. Go to our nearest airport. A big man with 14 cars – mostly SUVs bought with the people’s money – storms through the toll-gate with all the cars without paying a dime. A poor hustler trying to make a dime is asked to pay anything from N200 to get through that same toll gate. If there’s any justice in the world…
I have equally agonised over the need to make money from organising society. In the City of London, there is a Congestion Charge. The last time, I knew it was like eight or 10 Pounds a day. That is like N4,000 in our Naira today. That is what you pay for entering the centre of London in a day with your car. That tells you that only rich people will come into the city with their cars. It may sound far-fetched, but imagine Ikoyi, VI, Maitama, Central Area, Wuse 2 and the rest of our highbrow Areas charging a small token like this? At least it will improve the ambience of these places. It is also a way of getting some back from rich bankers. The only problem is that this also puts a lot of responsibilities on government to do right by the people and put in place infrastructure that works; like trains, mass transit buses, even ferries, whether by themselves or through PPP. I need to point out here, that contrary to what is done in Nigeria, it is not always that we should max out. These days we hear that government should subsidise nothing. Every government subsidises something. I don’t believe in fuel subsidy, but I note that someone on my Facebook page recently pulled out an article that showed that London still subsidises transport for its people. But here in Nigeria, governance seem to have been reduced to inviting smart Alecs to come and rip off the people under some privatisation idea or the other.
This reckless practice of crony capitalism in the name of ‘privatisation’ and ‘private sector initiatives’ is what was responsible for many smart guys obtaining land from the government in Abuja – ostensibly for mass housing – only for them to start selling this piecemeal to end users. Some made 1000 percent in profits from just grabbing the land!
See what the famous Professor Michael Porter of Harvard University has to say on this matter: “In the continuing debate over the competitiveness of nations, no topic engenders more argument or creates less understanding than the role of the government. Many see government as an essential helper or supporter of industry, employing a host of policies to contribute directly to the competitive performance of strategic or target industries. Others accept the “free market” view that the operation of the economy should be left to the workings of the invisible hand.
Both views are incorrect. Either, followed to its logical outcome, would lead to the permanent erosion of a country’s competitive capabilities. On one hand, advocates of government help for industry frequently propose policies that would actually hurt companies in the long run and only create the demand for more helping. On the other hand, advocates of a diminished government presence ignore the legitimate role that government plays in shaping the context and institutional structure surrounding companies and in creating an environment that stimulates companies to gain competitive advantage.”
This reckless practice of crony capitalism in the name of ‘privatisation’ and ‘private sector initiatives’ is what was responsible for many smart guys obtaining land from the government in Abuja – ostensibly for mass housing – only for them to start selling this piecemeal to end users. Some made 1000 percent in profits from just grabbing the land! Agboluaje also mentioned this at OAU Ife where we gave lectures. We have turned Capitalism on its head in Nigeria. And that is not in our enlightened self-interest.
I close this by mentioning the idea of a Charity Commission. Again I have mentioned this elsewhere and even written to the Buhari Government on it (although without acknowledgement). I also put the idea in my latest book Change is Going to Come. I was discussing with a friend recently and we noted that our religious institutions have become serious cash centres and have plugged into the finances of most Nigerians. Many of them are sitting on Trillions of Naira “in the name of the Lord”. Good luck to them. But the way it is done in the UK, where the Minister of Finance was probably born, grew up, studied and lived in, is that a Charity Commission supervenes over all religious activities and ensures to an extent that the citizens of a country are not being cheated.
Lest it be seen as some anti-Christian thing, the Charity Commission is the body that will ensure that crazy fanatics who run Islamic sects don’t become the next Boko Haram too, because they constantly check on these gatherings and sects, obtaining names of their sponsors and trustees and keeping everyone in check.
The Commission also ensures that – since these religious institutions are registered at the Company House (Corporate Affairs Commission equivalent) as ‘Charities’ – they actually use donations (all monies contributed, including tithes, yes), for charity reasons after paying the pastor and other workers very generous salaries. Obviously, our powerful religious elites (especially the ‘pentecostals’ and prosperity preachers) will hate this – for they abhor financial transparency – and it will not see the light of day. They prefer, instead, to keep the people the way they are, totally dependent on their ‘supernatural’ dictates and unable to think for themselves. That is why each year, and each month, the entire nation is drenched in prayers, and pastors especially make unreasonable promises to our people, which never come true, even as the ‘church’ gets exceedingly richer. One pastor complained to the Punch newspapers recently that he was not allowed to withdraw Dollar cash from his Domiciliary account into which any foreign currency meant for the church is being paid globally. Should church Dollars be deposited in his account?
Lest it be seen as some anti-Christian thing, the Charity Commission is the body that will ensure that crazy fanatics who run Islamic sects don’t become the next Boko Haram too, because they constantly check on these gatherings and sects, obtaining names of their sponsors and trustees and keeping everyone in check. Again, the elite will not agree. This is hardly monetary, but the power in religion will not allow us move forward.
So, are Nigerian elites any of the above? What’s wrong with them (us)?
‘Tope Fasua, an economist and consultant, is CEO of Global Analytics Consulting.