08 Mar 2009 |
|
The Oil Still Flows – Thank Goodness The other day, a Tanzanian elderly man walked into my office. With him was a former student of mine, now a professional colleague. I had not seen the guy in years. I did get up to welcome them and whilst still standing, my former student and I reminiscent over an accident that almost took both our lives some thirty years ago during night training exercise. He introduced the Tanzanian, who is the CEO of a company in Nigeria, as his uncle. Their mission was for the school to do a letter to the Nigerian High Commission in Dar es Salaam, Tanzania, to ascertain the son of the CEO as a current student of the school. The lad had travelled home to Tanzania for Christmas break, but his Nigerian visa ran out while there. I thought the duo didn’t have to drive down for that, but they had been stalled at every angle up till then. The CEO, it turned out, has been in Nigeria for over 28 years and had witnessed the transmutation of Nigeria, economically and socially. Besides, obtaining Nigerian visa outside of the country could be the most daunting task: if you know what I mean: if you are unlucky, you could be asked to bring a letter from God – I am only kidding but we all laughed. Whilst documents were being sought and the desired letter being prepared, our discussions soon shifted to the state of our country – the economy. I asked if the current high cost of forex (sic) is not affecting his business. The CEO is lucky, there is a high demand for the products of his company in the neighbouring states and they pay in hard currencies, which are deposited in his company’s domiciliary accounts in Nigeria. That takes care of his business spare parts and raw materials procurements. However, he lamented that it behoves any nation to abandon the aspirations of its age-working force – a telltale of what he observed on his way here. That was sweet to my ears because this is what I have realised long ago and have tried to drum into the ears of some of my countrymen through writing. The massive joblessness is the result of the allocation of one vital economic tool, the forex, which is left to auctioning and Russian roulette process. He could not understand why forex allocation is not tied to job and wealth creation. The development of Nigeria hinges on that allocation and until that is realised, the drift will continue, our past experience in the early 80s in fiscal control, notwithstanding. My last two submissions in the Village were about the wrong economic train. I had campaigned for Tax Reform as an alternative to fund our public treasury and not the Bureau de Change activity of the Central Bank of Nigeria. It is apparent that many Nigerians do not understand what is going on. The deficit in this year’s budget is what is driving the naira crazy. It is the reason for the seemingly official devaluation of the naira. The road to fund the budget, as it were, is through the foreign exchange market (exchange of naira for the petrodollar) and not though conventional taxation. Having said that, the efforts of the Federal Inland Revenue Service (FIRS) lately, about e-payment is commendable and not late, but too little. The e-payment according to government will track the earnings of those doing business with government (workers and contractors) and administer taxation accordingly. Good, but what about the informal sectors that constitutes close to 70% of the economic activities in the country. The sensitisation of Tax will require more arguments than e-payment. There should be a national debate and awareness drive about tax and the reason why development is stymied thus far without tax reform. My guest heaved and said, ‘The oil still flows even if it’s still a trickle – thank goodness!’ What happens to the government treasury when there is no more oil money to exchange with the naira in our pockets? Is it when the oil has stopped flowing that the government will start chasing tax dodgers? When Obasanjo withheld Lagos State’s monthly allocation for the local governments, Lagos State raised its internally generated revenue tenfold. Experts for many years have campaigned that the country would need to diversify its economic base in order to survive and prosper. What they have not said loudly is, ‘Stupid, you need to diversify the public treasury funding more than anything.’ Clinton, in 1992, while campaigning for the U.S. presidency had a slogan “It’s the economy, stupid”: we more than need that slogan now. Sometimes I wonder if my reasoning is weird and if so you should have sympathy for me. However, our economy is managed by those that cannot be described as imbeciles - with due apology. It is not rocket science that more workers, in the economy, will translate to more revenue for government through tax. By not biasing the oil receipt in favour of job and wealth creators we are shooting ourselves in the foot. One possible suggestion is for users of forex to bid for the hard currencies based on the number of jobs to be created and the value to be added to the national wealth. I have said this before and I will say it again. If one considers the number of workers required to man a warehouse containing goods worth 1 billion naira and compare it with the amount of workers to be employed to manufacture the same goods worth 1 billion naira in the factory, one will understand why many Nigerians are roaming the streets in pursuit of jobs. The government policy is mercantile and does not favour factory floor option. It is apparent that mercantile option creates little jobs and adds little value to the economy. A trader does not add value to the goods he sells, only commission. He buys goods at a price and adds his profit with no value added. However, because of the bidding process required to have access to the country’s petrodollar, the trader has an edge over the manufacturers, farmers, educationists and many other wealth creators that will add value to the economy. My point is that without precluding the funding of our public treasury, only the traders as it were, have the excess money to outbid the wealth creators at the foreign exchange market because the traders have most probably been under taxed. When we consider dynamism also, the traders have a higher turnaround time and in doing so, will outbid the rest of the economy at that market. With less emphasis on affordability to access forex, and more on wealth creation, the sky will be the limit for Nigeria’s economy – global meltdown notwithstanding. Samuel Akinyele Caulcrick, Zaria.
|
|||||||||
# 
Your Comments
Please make The Square an enjoyable experience for everyone by refraining from gratuitous ad-hominem contributions, defamatory comments and off-topic posting. Such posts will be removed.