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Analysts have predicted a worse economy for Nigeria in
2016 and these various predictions are not unfounded given our mono economic
over reliance on Petro-Dollars for the past thirty-something years. The oil
boom of the 70’s arguably contributed to the non-diversification of the
Nigerian economy and to the boom of public sector corruption. For a country
with the amount of oil exports Nigeria had during the oil boom, considerable
infrastructural developments and socioeconomic improvements were reasonably
expected but denied the greater Nigerian citizenry.
2016 and these various predictions are not unfounded given our mono economic
over reliance on Petro-Dollars for the past thirty-something years. The oil
boom of the 70’s arguably contributed to the non-diversification of the
Nigerian economy and to the boom of public sector corruption. For a country
with the amount of oil exports Nigeria had during the oil boom, considerable
infrastructural developments and socioeconomic improvements were reasonably
expected but denied the greater Nigerian citizenry.
The
Nigeria of 2016 is desperate; desperate to raise revenue from any source at
all. The government is ashamed to tell the governed that the over-flooding of
the oil market with US and Middle East oil will result in lower foreign
reserves and public servants being owed salaries. State governments are
consistently pleading for bailout funds from the CBN to enable them pay
salaries. Due to lack of information, Nigerians still blame the CBN Governor
whenever the price of a Naira to the Dollar skyrockets but still use the Dollar
excessively to buy commodities online without correlating same.
Nigeria of 2016 is desperate; desperate to raise revenue from any source at
all. The government is ashamed to tell the governed that the over-flooding of
the oil market with US and Middle East oil will result in lower foreign
reserves and public servants being owed salaries. State governments are
consistently pleading for bailout funds from the CBN to enable them pay
salaries. Due to lack of information, Nigerians still blame the CBN Governor
whenever the price of a Naira to the Dollar skyrockets but still use the Dollar
excessively to buy commodities online without correlating same.
The
Nigerian 2016 budget screams “non-reliance on Petro-Dollars”. The tune of
diversification is now a popular Nigerian tune having been recited by past
governments but with little or no commitment to implementation. It is pertinent
at this point to note that Nigeria’s non-diversification of its economy is not
due to a lack of viable areas but as a result of poor economic planning, poor
governance and oil induced corruption.
Nigerian 2016 budget screams “non-reliance on Petro-Dollars”. The tune of
diversification is now a popular Nigerian tune having been recited by past
governments but with little or no commitment to implementation. It is pertinent
at this point to note that Nigeria’s non-diversification of its economy is not
due to a lack of viable areas but as a result of poor economic planning, poor
governance and oil induced corruption.
The
unfortunate economic situation of the oil market has imposed a compulsory
mandate on the government to either diversify or face a severe economic crunch.
The highlighted areas are majorly agriculture and taxation. Below are my
recommendations.
unfortunate economic situation of the oil market has imposed a compulsory
mandate on the government to either diversify or face a severe economic crunch.
The highlighted areas are majorly agriculture and taxation. Below are my
recommendations.
Diversification of the average Nigerian’s mindset
The
bitter truth is that after a longtime attachment with Petro-Dollars, Nigerians
have come to see oil as a sole source of revenue. The average Nigerian is
averse to recourse to the agricultural sector believing that individuals in the
oil sector realize more revenue and work under better conditions. An average young
Nigerian would prefer to work in Shell or Exxon Mobil than start a poultry farm
and seek funding from a financial institution. Diversification of the average
Nigerian’s mindset entails a vigorous sensitization program targeted towards
educating Nigerians to explore non-oil sectors for revenue.
bitter truth is that after a longtime attachment with Petro-Dollars, Nigerians
have come to see oil as a sole source of revenue. The average Nigerian is
averse to recourse to the agricultural sector believing that individuals in the
oil sector realize more revenue and work under better conditions. An average young
Nigerian would prefer to work in Shell or Exxon Mobil than start a poultry farm
and seek funding from a financial institution. Diversification of the average
Nigerian’s mindset entails a vigorous sensitization program targeted towards
educating Nigerians to explore non-oil sectors for revenue.
Introduction of New Taxes isn’t Diversification
Nigeria’s
tax regime is well positioned for foreign direct investment but on the other
hand, it harms government internally generated revenue. While Nigeria’s Corporate
and Personal Income Tax regime are at relatively low rates considering the
rates of other countries, the understandable introduction of additional avenues
of taxation such as the CBN Stamp duties, the Abuja one-percent mansion tax and
proposed increase of Education Tax to 4% to supplement our low tax rates may be
commendable. But the low level of efficient and effective administration and
collection of said taxes is an attempt at fertilization after vasectomy. The
introduction of the Abuja Internal Revenue Service is a step in the right
direction and other steps directed towards tax administration and collection
should be implemented. The revenue authorities should consider informal sector
taxation and ensuring that non-PAYE individuals pay their personal income tax.
tax regime is well positioned for foreign direct investment but on the other
hand, it harms government internally generated revenue. While Nigeria’s Corporate
and Personal Income Tax regime are at relatively low rates considering the
rates of other countries, the understandable introduction of additional avenues
of taxation such as the CBN Stamp duties, the Abuja one-percent mansion tax and
proposed increase of Education Tax to 4% to supplement our low tax rates may be
commendable. But the low level of efficient and effective administration and
collection of said taxes is an attempt at fertilization after vasectomy. The
introduction of the Abuja Internal Revenue Service is a step in the right
direction and other steps directed towards tax administration and collection
should be implemented. The revenue authorities should consider informal sector
taxation and ensuring that non-PAYE individuals pay their personal income tax.
Proper Regulation of the Nigerian Business Environment
The
World Bank’s “Doing
Business Report” for 2016 has been released and Nigeria
continues to perform badly in the ease of doing business index, ranking 169 out
of 189 countries. It is trite that a properly regulated business environment
breeds a stronger economy. The regulation and procedures for starting a
business should be easier to encourage entrepreneurship and foreign investment.
Also, the regulation on getting credit for venture capitals, small businesses
and already healthy companies should be in a way to encourage easy funding for
business. A particular improvement would be the introduction of ICT and
computerized systems for registration of businesses and registration of charges
on assets.
World Bank’s “Doing
Business Report” for 2016 has been released and Nigeria
continues to perform badly in the ease of doing business index, ranking 169 out
of 189 countries. It is trite that a properly regulated business environment
breeds a stronger economy. The regulation and procedures for starting a
business should be easier to encourage entrepreneurship and foreign investment.
Also, the regulation on getting credit for venture capitals, small businesses
and already healthy companies should be in a way to encourage easy funding for
business. A particular improvement would be the introduction of ICT and
computerized systems for registration of businesses and registration of charges
on assets.
Nigeria should harness its enormous Gas Reserves
Being
a strong advocate for a direct focus on our gas sector, 2016 might be the year
we need our gas reserves the most. Unfortunately, the Petroleum Industry Bill
which had wonderful provisions geared towards improving the gas sector has been
unbundled; Nigeria still has gas policies and laws aimed at harnessing our gas
reserves and punishing gas flaring. Although the gas sector is capital
intensive, Nigeria should invest in this sector and watch the revenue roll.
a strong advocate for a direct focus on our gas sector, 2016 might be the year
we need our gas reserves the most. Unfortunately, the Petroleum Industry Bill
which had wonderful provisions geared towards improving the gas sector has been
unbundled; Nigeria still has gas policies and laws aimed at harnessing our gas
reserves and punishing gas flaring. Although the gas sector is capital
intensive, Nigeria should invest in this sector and watch the revenue roll.
Conclusion
Nigeria
must make hay while the sun still shines. The government can write down
diversification in its policies and budgets, but the stage where we only ‘’talk
the talk’’ on diversification has since passed. The economic situation of 2016
makes it compulsory to diversify or watch our economy crumble.
must make hay while the sun still shines. The government can write down
diversification in its policies and budgets, but the stage where we only ‘’talk
the talk’’ on diversification has since passed. The economic situation of 2016
makes it compulsory to diversify or watch our economy crumble.
by Odoemenam Chidi
originally posted on www.linnkedin.com