A scenario where Nigerians wake up to find the country's oil has stopped flowing will be a great supposition of gloom - a remote possibility that is worth noting. Sanusi recently sounded an alarm of what would happen to corporate Nigeria should the price of oil dip below a certain value. The Nigerian economy revolves around the public treasury; its funding and management have remained the clog in Nigeria's economic wheel. Firstly, the public treasury has to be adequately funded, which presently is largely done through the auctioning of the petrodollar as against traditional taxation. Is there any correlation between Nigeria's unprecedented high level of public corruption and the manner the Nigerian treasury is funded? It would be nice to know. Secondly, the treasury has to be managed; this has precipitated the most embarrassing corruption on the face of the earth.
In our system, the greater part of the corruption is generated through government spending. Mathematically, it means that if the Nigerian governments stopped spending, public corruption would be mitigated. However, all governments need to spend to keep the wheel of progress turning, and Nigerian governments are no exceptions. So they spend and we spend. However, in the western economies' that we copy, public treasuries are funded through traditional tax. Ours are largely funded by oil receipts - a situation that is stifling the economic growth. It is the funding of the public treasury that has to be diversified away from oil if we have to make any progress. I intend to link the funding of the public treasury with the underdevelopment and corruption in Nigeria.
The Inland Revenue System (IRS) contributed less than one-third of what the Federal Government intends to spend this year. What this means is that should the price of oil dip, it will have a profound effect on governance; just as Sanusi presupposes. This should not be if there has not been too much reliance on oil receipt to run government activities. It is clear that in Nigeria presently, there are only three thriving industries: the oil industry, where the greater part of wealth is generated; the banking industry, where the oil receipt is managed; and governments, where the oil receipt is squandered. The rest of us, outside these 3 economic spheres, are not worse than dogs feeding from the crumbs that fall from the master's table. It is why people are killing themselves to be government, whilst the rest of us are dying by fighting for the crumbs.
The common parlance, 'taxpayers' money,' does not really apply to the situation in Nigeria, because our public treasuries are fractionally funded by tax receipts. This could be responsible for our lukewarm attitude towards governments' squandering of Nigerian public funds. Another saying, 'to put your mouth where your money is,' does not also apply because Nigerians do not pay tax, so to say. This means that our money is not in the public treasury, therefore, we cannot put our mouth on how it is spent; please forget the illusion of the oil belonging to all of us. Now we are beginning to see the defects in our economic system. We cannot eat our cake and still have it. The journey so far since 1986, when we decided to populate the public treasury by xeroxing the naira through auctioning of the petrodollar, ought to be a lesson in disguise. Babangida's regime, in its wisdom, had wanted to put an end to the politicising of foreign exchange allocation, but instead, created another monster - corruption of unimaginable dimension.
Intelligently, people will argue that we are all paying tax somewhat, though indirectly, through the exchange rate, since government has a percentage of the value of the naira in our pockets. They are dead right. However, let us look at the situation holistically. The money the Federal government in Nigeria is going to spend in this fiscal year is going to come from the naira in the people's pocket, which will travel to the public treasury through a combination of routes. For instance, the N4.7 trillion budget will be funded largely by auctioning the petrodollar to the public, fractionally by tax receipt, and minutely by selling of government bonds. Let us now suppose that we embark on a tax reform that rearranges the formula above, whereby the N4.7 trillion is funded largely by tax receipt, say 80%. What that would do is that it would have mopped up the excess naira liquidity in the system. So that at the biweekly Dutch Auction in the Central Bank, where we chase the available petrodollar, the value of the naira will appreciate toward a realistic value.
An appreciable naira will in turn put our local industry, amongst other things, in pole position to compete with imported goods - even with the present dismal level of infrastructure. That will create jobs for our youths. With a higher percentage of tax populating the public treasury, our apathy towards the way the government is run will begin to wane. Social justice is a two-way street. The rich have to pay their fair share; otherwise they cannot go to bed with their two eyes closed. The argument continues.
Samuel Akinyele Caulcrick,