…it’s either this country is setting everlasting records in thievery, or our figures – population, GDP and the rest – are just overhyped products of dirty politics. The figures…have shown that we suffer a double jeopardy; ravenous and reckless politicians, together with stratospherically corrupt civil servants and disconnected citizens…
In my last book, Change is Going to Come, I start off by telling Nigerians that all the experiences we wanted with regards to development and better ways of doing things, were already here in Africa. There is no need to look to far away Europe, or hope for the infrastructure of USA, or constantly cite Lee Kuan Yew of Singapore. Right here in Africa, abound countries that are at least trying and making some progress. Nigeria has been abandoned to its own devices, with the occasional firefighting being done here by the global community; even if that too is problematic.
And so, in order to get inspiration, we don’t need to leave Africa. Between Kenya, Ethiopia and South Africa, we will be challenged all we want. Algeria, Morocco and Tunisia are not doing badly. Egypt is an ancient economy and is also massive and diversified. We can be inspired by the decisions these countries are taking towards the future, and how they are reforming systems and reshaping their peoples’ mindsets. We can also be inspired by how their economies are getting more structured, how their people are complying with their tax laws, how the countries are generating income without turning into international beggars or digging holes for their children, in terms of debts. We can also take inspiration from how diversified their economies are; meaning they are increasingly generating business from within, which makes their people self-dependent and their companies grow. Here in Nigeria, especially these days, business is painfully driven by nepotism; it’s “man-knows-man” like never before, meaning too many people are excluded from the economy because they don’t belong to some inner caucuses. Politicians have mercilessly hijacked everything. This is not the way to build an economy. Indeed there is need for a new economic order in Nigeria now more than ever, because untold millions are daily dropping into abject, pitiable penury, while the government feigns ignorance or inability.
It is this prebendal economic system – a situation where politicians have entered into overdrive mode grabbing any and everything for themselves – that has led to increase in crime across the country, hopelessness among our youth, leading them to their wayward ways of life, and the reality that young Nigerians are trooping across the Sahara desert in search of opportunities that largely turn out as illusions. Nigerian families are leaving for Europe by every means and many perish in the unforgiving desert. Better-trained Nigerians are rushing to Canada and elsewhere, even more than they did around Buhari’s first coming in 1984. These are people trained with Nigeria’s money who ought to stay here to make the country better. A recent IOM/Nigerian Commission for Refugees report says the number of Nigerian women who migrated illegally to Italy alone, surged from 433 in 2013, to 11,009 in 2016 alone. A record 200,346 Nigerians fled the country in 2016, with 36,000 journeying by sea, including many UNACCOMPANIED CHILDREN! Buhari, is this not a shame? Or you don’t care? Perhaps this will be attributed to your corruption fight, but fighting corruption is one thing – even though corruption is very much still around and kicking – while having an idea on how to redistribute wealth so that millions don’t die in penury is another. This government has written its own testimonial.
I recently came back from Ethiopia. Well, I spent just a day and a night there in transit. This wasn’t my first time, but I perhaps got the opportunity to look at the country more closely this time. I discovered that in Addis Ababa, like other European countries (France, Netherlands, UK), there is a prevalence of small cars which you can easily park in the small spaces on their small roads. I couldn’t recall seeing any Toyota Landcruiser or other SUVs there – not to say there aren’t but they certainly are not as prevalent as we have in Nigeria. I recall seeing one of those long buses they use in London that has something like a flexible tube in the middle to aid its turning. Of course there is the Addis Metro which ferried 35 million passengers in 2016 and made a revenue of $5 million (N1.65 billion). This is remarkable because it seems the Ethiopians bother with transparency and efficiency. On the streets of Addis, one will also notice one legacy – the Lada Car. These were cars that debuted around 1975; the Lada 1600 model. From the airport, a cursory look into the taxi rank will reveal a lot of these cars; a throwback to the Haile Mengistu socialist days and their romance with Russia.
This observation about the Lada car is significant. The other day Ethiopian Airlines made a pitch for our Arik Airlines which has been run aground and is now managed by AMCON. Some shareholders of Arik ran to town to claim they were being cheated. This is an airline that was allegedly started with huge funds stolen from Rivers State, and has several billions hanging around its neck in bad bank loans. Nigeria has been unable to manage anything and so all our government agencies and factories are dead. All we know is controversy. Ethiopia seems to be flying ahead presently and the buzz could be felt on the streets. They have a population of 100 million plus. Through their airline business they have been able to diversify the economy of this landlocked country. I will give the tourism figures later. But suffice to say Ethiopian hotels are doing brisk business because thousands of people lodge in them daily, if only as layover from some flight at Bole Airport.
In my book, I had also detailed what happens in many East African countries – Rwanda, Kenya and the rest – and how they are striving to maintain 24-hours economies; also how they are strict on environmental issues and all that. I documented the gains of our West African neighbours in tourism and how all these countries are getting huge non-debt inflows from other parts of the world, while Nigeria cuts a sorry picture with our apparent addiction to debts and crude oil. I don’t believe Nigeria’s economy is, or has ever been the largest in Africa, and I will explain why.
Our National Budget
The budgeting season provides a great opportunity to reflect on these issues. Nigeria is again articulating its plans for 2018 at the federal level (which is the only level that makes some attempt at some level of transparency anyway). But we can already see that the usual Nigerian crude oil addiction rears its head. It is not only our young children that have a narcotic epidemic going on with them; our government is heavily hooked on the crude oil narcotic as well, and there’s no telling when we shall go into rehab.
The facts on ground are that:
1. Nigeria’s budgeting is lazy and unimaginative;
2. The biggest culprit in the dependency on crude is the federal government;
3. By now, we ought to stop headlining the budget based on crude oil prices and volume of production, but the current MTEF projects into 2020 based on crude oil still!
4. Even with the dependency on crude oil, Nigeria’s budget is too low for its population and its purported GDP. Our national budget per capita is a shame, compared with our African neighbours. This means the government of Nigeria has little or no plans for its people.
And to make matters more depressing, the $20 billion national budget that Nigeria is running is 35 percent funded by borrowing (deficit). The 2018 budget we are preparing is not any better. In fact, almost 25 percent of next year’s entire budget will be spent on DEBT SERVICING, while we project a fiscal deficit of almost N3 trillion on the entire N8.6 trillion budget (a solid 35 percent).
From the above, Nigeria is only better than DR Congo in perhaps the whole of Africa, in terms of the plans our national government has for us. However, even DR Congo is more ambitious than Nigeria in its budgeting, as it targets 12 percent of its gross GDP as annual budget, while Nigeria remains at the very bottom at four percent of GDP.
This throws up a number of issues:
1. Are our GDP figures real?
2. Are our population figures anything close to reality?
3. What bragging rights are we getting with these huge population and GDP figures? Are they worth it?
4. If the figures are approximately real, why is Nigeria’s government punishing its people by not having plans for them?
5. If the figures are close to being real, how are we unable to leverage revenue generation – and by extension budget size – with the huge population and GDP?
6. Is our addiction to debts not sounding a death knell for this underperforming economy, which is the worst-performing, on the worst performing continent?
7. Why has our governments been deliberately limiting our economic performance by their lazy and unimaginative addiction to crude oil?
Considering Other African Economies In Some Detail
It is tough and will be unwieldy to consider the bunch of African economies in detail. A lot is going on everywhere in the world, and particularly in Africa. The Chinese influence has been salutary and no matter the negative propaganda coming from the global West – especially the Americans – the Chinese are adding much value in many African countries. They seem not to mind transferring some of their ideas, in instances where the West have kept Africa in perpetual darkness. Not that I blame anyone though. It is left to Africa to develop on its own at the end of the day. But countries are moving ahead in leaps in Africa. Many of the countries surveyed are growing this year at the rate of 6-8 percent where Nigeria is just managing to crawl out of a self-inflicted, negativity-fueled economic depression, with a growth rate of 0.5 percent and a projected growth of 2 percent where we should be growing at 15 percent if we were serious minded.
A throwback to the Ethiopian example cited above. It is a mindset thing. Any avid traveler who assesses all the economies of Africa today will easily tell which ones will move ahead and which ones will remain in a more. Nigeria is the home of excesses. I don’t know where we got the idea that we can live like this. But even under the Buhari government, our excesses have not diminished. In Abuja here, we see it everyday. Ordinary civil servants prancing around in convoys with the latest and best cars in the world, in a country of 180 million that produces nothing! It’s beyond imagination and our visitors must be agape with the way we are carrying on. If countries – including comfortable ones – know how to cut down costs, especially in government, Nigeria seems not to care. Most of this puny budget we are cutting presently, will go into making politicians, and government appointees, as well as top civil servants comfortable. We see the results of their madness all around us everyday. Many of them know they are doing the wrong thing but are unable to do anything about it. Like Chuck Prince, the then Citigroup CEO said in 2007, “When the music is playing, you’ve got to get up and dance”. Our public servants and politicians all are dancing… until the bubble that they have created bursts, at which point, like a game of dancing chairs in a children’s party, everybody would rush to grab a chair. The problem is, given how long this game has continued, the chairs are getting fewer and on judgment day, a lot of us, most of us, will be caught napping, or more succinctly, ‘jonesing’, because we all seem to be on some sort of narcotic.
Lest we forget, the music will stop the day the creditors come calling for the new billions that Kemi Adeosun and co are busy contracting today, rather than being honest with ourselves to trace where revenues are ending up presently, and why we seem – in the face of a huge economic size as represented by the GDP – to be unable to generate sizeable revenue for the government. It is also important to note that the size of the budget is naturally dictated by the size of national revenue. Even though most nations run some deficit (as it is seen as a sign of growth where a nation spends a little more than it earns), expenditure budgets bear close resemblance to the revenues that a government generates. Therefore from the above table, South Africa generates over 10 times Nigeria’s revenue, and Angola, Kenya, Algeria, Egypt, all generate MULTIPLES of Nigeria’s national revenue, despite some of these economies being much smaller than ours. Remember we claim to be 180 million or more. I still don’t believe our economy is, or was ever, the largest in Africa. If government wants to prove me wrong, let them show it in the revenues we generate. Simple.
And to make matters more depressing, the $20 billion national budget that Nigeria is running is 35 percent funded by borrowing (deficit). The 2018 budget we are preparing is not any better. In fact, almost 25 percent of next year’s entire budget will be spent on DEBT SERVICING, while we project a fiscal deficit of almost N3 trillion on the entire N8.6 trillion budget (a solid 35 percent). This means the expected federal revenue is N5.6 trillion, and so we will be using 36 percent of that (N2.02 trillion) to service debt, while collecting even more debts that our children will have to grapple with when these current characters have long departed the scene. The argument that these debts are due in 30 years time and will be used to build infrastructure that will be there in 30 years is not tenable at all. These infrastructure will not repay themselves, and who knows what new challenges the world will have in 30 or 40 years. What about the cost of maintaining infrastructure? How many infrastructure projects generate anything tangible in Nigeria really?
It is thus totally irresponsible to dig future holes for Nigerians unborn, instead of studying how other African countries have been able to generate and keep good levels of revenue, as compared with their GDPs, and having good plans for the citizens in the interim, while also cutting down on the useless and hopeless excesses of politicians and government agents. Nigeria is by far the WORST country on earth in terms of fiscal responsibility; the only country that goes on a public sector luxury spending binge even in a recession; a country where budgeting is winner-takes-all, where politicians insert PORK-BARREL projects that will never get done inside the budgets of MDAs; a country that is being bled to death, even as it faces the worst socio-economic crises ever.
As an aside, let me quickly chip in that we shouldn’t dive so quickly into the capital vs. recurrent budgeting argument. Left to me, Nigeria should lock down most of its capital budget and focus for the next five years on MAINTAINING and perfecting what we have. Any gash on any road should be fixed within five days. That is the kind of budget we need. Left to me, the only capital project we will do is probably the long-overdue second Niger bridge and a lot of river dredging for inland waterways or the rails. When we see what is presented as budget these days, it only makes one sad.
Meanwhile, talking about diversified economies and revenue generation, let us look at the tourism sector alone. It was tourism that made me respect East Africa. My Facebook Friend from Uganda, Amada Ngabirano was busy complaining the other day that tourists are not finding things easy in Uganda. I told her to thank her stars that they still have tourists! Their own NEPA, called UMEME, announced that there will be power cut in Uganda for less than one day. Ugandans were complaining that it was 2 p.m. and the power hadn’t been restored even though 2 a.m. was promised. Ignorant Nigerians are here, offering opinions about Museveni who wants to die in office, rather than cover our eyes in shame!
South Africa makes almost $10 billion from tourism ALONE each year. Nigeria’s annual budget is $20 billion at best. That means from tourism alone, South Africa makes half of Nigeria’s annual budget. I still can’t see how this economy compares with that of SA in terms of complexity and diversification. SA receives 9 to 10 million foreign visitors yearly. Nigerians make up a portion of this. Nigeria records much less in tourism, with most visitors being diplomats and some businessmen who hole up at Intercontinental Hotel in Lagos or Abuja Hilton until they are able to escape back to the airport amid heavily armed policemen, and back to their countries. Our tourist centres and resorts are dead and insecurity ensures people don’t come here. My neighbour who is from Obudu tells me the resort there has become decrepit. Meanwhile, Ethiopia earned $3.5 billion from tourism in 2016 and is targeting $6 billion this year. Talk about ambitious and accountable countries – even in Africa!
My experience with Uganda is that any visitor is expected to pay at least $200 to a local tourist firm before their visa is issued. This is a great way of promoting tourism, but have we not left it too late? Will yahoo boys not show up as tourist firms? I think we just lack nimble leadership. It’s sad.
Nigeria claims to have four million people coming in as ‘tourists’ every year and that it earned $1.1 billion. I am not being unnecessarily cynical but where are they? Go to Accra and see how many white people are on the road, even inside their ‘danfo’ buses. However, Kenya earned $2.7 billion from tourism in 2015 and Egypt earned $8 billion in the same year, down from $12 billion before the botched ‘Arab Spring’. Further, from my research, Ghana earned $2.5 billion from tourism in 2005 alone, while Tanzania earned $2 billion in 2015. Uganda is a bit more honest. It claims 1.3 million tourists, who spent $1.4 billion in 2015. I’ve been there and the number of foreigners there is almost embarrassing.
The reason why the analysis of tourism in African countries is apt is because really, a country doesn’t have to do much to earn money from tourism. Just be reasonable. Be clean. Be welcoming. Nigeria is none of those. A country like Uganda boasts of its ‘Gorilla Trail’, it’s Wildlife Park at Entebbe, and other natural endowments. The world flocks there. They also take tourists to the church built, where Saint Mulumba among others were martyred. People pay to see these things and be wowed. Kenya takes people to the Safari. South Africa has Kruger Park and the rest. Even a mere stroll in this African weather should attract tourists with their money. Nigeria gets little, if anything. I have never met an European who is planning his next holidays for Nigeria, except he’s some mercenary looking for the next contracting job.
I also understand that a lot of these tourism dollars are earned by the private sector but the sheer volumes speak for themselves. And the ones that go into private sector hands are taxed anyway. My experience with Uganda is that any visitor is expected to pay at least $200 to a local tourist firm before their visa is issued. This is a great way of promoting tourism, but have we not left it too late? Will yahoo boys not show up as tourist firms? I think we just lack nimble leadership. It’s sad.
I have hereunder a chart which shows how tax efficient countries are, judged by the ratio of their tax collections to the size of their GDPs. Nigeria ranks way below, with countries like Saudi Arabia, Oman, and so on, which are Shari’ah countries with zero taxes. How can Nigeria rank with zero-tax havens? Nothing confirms that we are a thieving lot than this. There are several issues here:
1. The average Nigerian evades taxes entirely – exacerbated by a distrust that government foisted on itself;
2. Tax laws are deliberately bent by corrupt government officials;
3. ‘Big men’, meaning politicians and their friends, collect unnecessary levels of tax waivers;
4. The little tax that is paid is diverted into private pockets;
5. An industry of fraudsters exist, who corner and pocket taxes meant for government;
6. The little that is paid is spent on luxury for government officials and politicians, and does not reflate the economy and lead to more taxes in the future;
7. Important, progressive taxes like Capital Gains Tax, Property Taxes, and environmental taxes are ignored altogether due to laziness, and the fact that Nigerians love to game the system for no reason. Those who have simply don’t intend to give anything away for collective progress.
8. Ports and everywhere else that taxes could be collected, are already compromised. Illegal immigrants and smugglers have a field day. Government officials smile to their personal banks.
The bottom line is that fraud is eating away at the very soul of Nigeria and we must end that now.
See below charts (well, taken off Wikipedia for want of better sources), to corroborate our tax efficiency or lack of it.
Figure 2 – Nigeria among the countries with the least contribution of taxes to GDP even though we are a secular country with full tax laws
A country, or even a person that will make progress MUST be able to DEFER GRATIFICATION. You don’t spend just because you can. And when in a hole, you stop digging. Nigeria has continued to dig, even though we are in a hole. That is what the $5.5 billion loan is – a few more kilometres into this dungeon we have put ourselves.
Why Countries Make Progress
Let us look at Ethiopia – a country that was ravished by famine in the mid 1980s but is now very much back on its feet. The country now runs the best and biggest airline connecting the whole of Africa. The country has it’s own issues but is evidently progressing like normal countries should. Nigeria is on reverse.
I mentioned their frugality earlier. That is one factor. A country, or even a person that will make progress MUST be able to DEFER GRATIFICATION. You don’t spend just because you can. And when in a hole, you stop digging. Nigeria has continued to dig, even though we are in a hole. That is what the $5.5 billion loan is – a few more kilometres into this dungeon we have put ourselves.
There is also the attention to details. Whereas Ethiopia was never colonised (and that is not the reason they are making progress), they were, of course, conquered a few times and have even had a civil war. But the attention to detail can be found in the way they maintain their aircrafts and airport themselves without foreign assistance. It is also there in the fact that they were able to evolve their own literacy. They have their own alphabets, which is unique to them. We should think about how they were able to evolve that system by building consensus. In Nigeria, all of us are hecklers. Everybody is shouting at the top of their voices and feeling important. Nothing gets done. This is the reason why we have eaten the country dead. It didn’t start today. We hear about the excesses of our big men even in the 1970s; their insistence on limousines abroad, five-star hotels, free this and that, and all that. I think we didn’t understand the cutover between our ancient fiefdoms and the modern economy. I think we are still somehow primitive, at least a lot of us.
Then progressive countries some times do things that don’t matter. They seem not to matter to the rest of us living with some pre-modern mindsets. For example, they build monuments. They realise that you don’t have to finish eating everything today. Like Lee Kuan Yew once argued that the population of a country is not limited to those who are in it today; that in fact those who are NOT YET BORN are more than those that are alive today. And so, the resources of a country should be allocated having in mind those who are yet unborn. Someone should vote for them, and their votes will always be in the majority because they are more in number. So progressive countries think long term. Nigerians today don’t understand the meaning of monuments. They ask ‘na monument we go chop?’ And so today, a tourist really has no place of interest in our vast expanse of wasteland. Senegal is ahead in this area. Even Ghana.
Lastly a progressive country understands the need for documentation. Because you can only build on what you’ve documented. They try and keep impeccable records because history is important. History not only tells a people where they are coming from but why they are where they are, and where they must now be heading to (John Henrik Clarke). Our love for untruth in Nigeria – as rightly told by Lord Lugard himself – has played out today. It is the refusal to hear the truth about anything that made our successive governments ban history. It is this documentation and love for history that makes Ethiopians drive antiquated Lada cars. It is the reason they have a solid airline, started 72 years ago, while Nigeria blew it’s own. It is the reason we cannot run anything.
Now, who will bell the cat?
But while we wait for that person or persons, let me restate that it’s either this country is setting everlasting records in thievery, or our figures – population, GDP and the rest – are just overhyped products of dirty politics. The figures above have shown that we suffer a double jeopardy; ravenous and reckless politicians, together with stratospherically corrupt civil servants and disconnected citizens on one hand, and on the other, a pathetic inability to dream big and positively.
Now I can exhale.
I need to add the comments of Tidjane Thiam, the current CEO of Credit Suisse worldwide, with respect to the assumption that the best strategy is to fund infrastructure with foreign borrowing. This is what he said in a Bloomberg interview 2015, shortly after he was appointed:
“I did a lot of infrastructure development in my life… To fund them with foreign currency is madness. OK? Madness… We are not going to reach the kind of growth trend that we need if we are unable to do this successfully. You can’t just borrow internationally… You have to be ready to discriminate between those who have reasonable funding strategies and those who have just borrowed in dollars… Warren Buffett joked when the tide goes down you see who has been swimming without trunks. Some of those economies will fall on their face because of that, that currency mismatch… You cannot control your economic destiny if you are not able to mobilise savings and then turn them into productive investment.”
If we take his advise, we would not be busy shopping around for foreign loans, at least.
Algeria Announces Tax Hikes in 2017 Budget. Retrieved from:
Ivory Coast Proposes 11% Larger Budget for 2017. Retrieved from: https://citizentv.co.ke/news/ivory-coast-government-proposes-12-pct-larger-budget-for-2017-143273/
Executive Summary of South African Budget for 2017. Retrieved from: https://www.biznews.com/budget/budget-2017/2017/02/22/executive-summary-2017-budget/
KPMG Kenyan Budget Analysis 2017/8. Retrieved from: https://home.kpmg.com/ke/en/home/insights/2017/03/kpmg-2017-2018-kenya-budget-analysis.html
PWC Ghana Budget Highlights for 2017. Retrieved from: https://www.pwc.com/gh/en/publications/budget-highlights.html
Congo Government Proposes 14pct Budget Cut for 2017. Retrieved from: http://af.reuters.com/article/africaTech/idAFKCN12P1X0
Kushkush, I (2015). Ethiopia, Long Mired in Poverty, Rides an Economic Boom. Retrieved from: https://www.nytimes.com/2015/03/04/world/africa/ethiopia-an-african-lion-aspires-to-middle-income-by-2025.html
Ethiopian Tourism Revenue Hits Record High, Beats Kenya and Tanzania. Retrieved from: https://www.atta.travel/news/2016/07/ethiopia-s-tourism-revenue-hits-record-high-in-2015-beats-kenya-and-tanzania-combined/