From Uche Usim, Abuja
Last week’s exposé on the rotten underbelly of the Nigerian economy by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, was a horror foretold by economic watchers and merely confirmed closet rumours that Nigeria was on the speed lane to becoming a failed state.
This comes amid a remarkable decline in the revenues disbursed to the states by the Federal Accounts Allocation Committee (FAAC) in recent months; a development that has swelled their debt to the Central Bank of Nigeria (CBN) to N1.24 trillion.
Worse, the Nigerian National Petroleum Company Limited (NNPC), the erstwhile cash cow of the nation and major FAAC funder, recently completed its metamorphosis to a limited liability company with a private sector orientation. This shuts off its monthly FAAC remittances, a development that would further jolt the states that have become addicted to federal handouts.
More so, a former Acting Accountant General of the Federation, Mr Chukwuyere Anamekwe, on June 14, said Nigeria’s revenue generation crisis has led to heavy borrowings to pay salaries, describing it as worrisome.
Experts insist that borrowing for consumption rather than production was akin to signing up for euthanasia.
To worsen the narrative, the Finance Minister, at a recent Public Consultative Forum on the draft federal government 2023-2025 Medium Term Fiscal Framework & Fiscal Strategy in Abuja, disclosed that Nigeria recorded a N3.09 trillion deficit in its 2022 budget operations between January and April.
Specifically, she stated that Nigeria’s debt service cost surpassed its revenue in the first four months of the year. Notably, debt service gulped N1.94 trillion between January and April 2022, against a retained revenue of N1.63 trillion.
Economic analysts insist that with a N41.6 trillion debt overhang amid low productivity; addiction to importation, inflation at five-year high at 18.60%, a profligate civil service design, suffocating debt servicing, unbridled corruption, high unemployment rate, weakened private sector, decayed infrastructure and blooming insurgency, the country was heading to the abyss.
They appreciated the Minister for brushing aside official pretences and laying the cards on the table, especially now that many Nigerians and state actors are fixated on the 2023 general elections, while the economy drifts deeper into deterioration.
Political activities have mopped up the available foreign exchange, leading to scarcity and tremendous pressure on the naira that eventually crashed to an all-time low of N710/$1, last week.
Nonetheless, to tow the country out of the basement of ruins, an economist and 2019 Nigeria Presidential candidate for Abundant Nigeria Renewal Party (ANRP), Mr Tope Fasua, told Daily Sun that the federal government should immediately build an elite consensus to save the country. “This will mean getting elites to make tangible and visible sacrifices in monetary terms and otherwise including paying their taxes and making good amounts owed to the Asset Management Company of Nigeria (AMCON) and other government bailouts. Enforce recovery of AMCON outstandings.
“Technically close down the economy by imposing higher tariffs on luxuries and also introducing a luxury tax that has long been in abeyance. More items should be added to the CBN no-fx list”, he said.
Fasua also tasked government leaders to devise tech-driven means of tackling corruption especially in the Customs, tax agencies and other parastatals. He further called for the commissioning of an independent audit of all revenue agencies and discipline those found culpable of detaining or diverting government funds, while a process of recovery of funds must commence.
“Commence incentivization and financing of cottage industries all over Nigeria targeted at ensuring zero post-harvest losses and adding value to all agricultural products.
“Get students in higher institutions to be part of the infrastructural building, especially in the power and works sectors by being part of construction to obtain practical knowledge and be part of the solution to pressing national problems.
“Start a massive programme of mass mobilisation of Nigerian youths around the security challenges by employing millions into intelligence and security services as well as reorientation and peace building.
“Launch a rescue fund by the elites and other contributors, targeted at specific projects in the economy. Also raise a N30 trillion rescue bond side by side for 5,10, 20 and 30 years for infrastructure and cottage industry establishment targeting AfCFTA”, he advised.
In his own submission and suggestion, Nigeria’s first Professor of the Capital Market, Prof Uche Uwaleke, reckoned that the Nigerian economy was currently challenged by rising inflation, tepid economic growth, exchange rate volatility, widening budget imbalance/deficit, increasing poverty, unemployment among others.
“The way forward is fiscal and monetary policy synchronisation involving: ensuring increased power supply through decentralization and encouraging mini and off-grid solutions.
“Ensuring availability of petroleum products by decentralizing refining, encouraging modular refineries and privatising government refineries.
“Actively engaging the private sector in massive infrastructure projects especially roads and railways.
“The CBN to scale up its development finance interventions in agriculture and Micro, Small and Medium Enterprises (MSMEs) after a thorough evaluation of existing ones.
“Reforming the education system with emphasis on technology and skills acquisition”.
Dr Oni Gbolabo, university lecturer, who also weighed in on the rapid naira depreciation said it was nonsensical for a country where over 500 industries died within 30 years to complain of depreciation of her currency.
“We keep killing local industries and expect policies to make it up. It’s a joke. A country where someone carried $2+billion simply to be shared is already a doomed one in terms of monetary policy and value.
“A country that favours importation over local production is doomed because it creates employment for another country while sacking her own citizens. Some people are working in Michelin and Dunlop somewhere, yet we use the tyre here. Don’t tell me about the principle of comparative advantage here. It’s not applicable.
“A country that exports all raw materials without adding value is shameless to talk of depreciation of currency, to later re-import finished products of that material is the peak of daftness. A bag of cocoa will go for like N1 million but when it is processed it will be worth around N7 million. Even farmers who produce raw cocoa can’t buy chocolate.
“A country that has arable land, teeming idle youths and still complaining of hunger should not talk about currency depreciation. It’s annoying”, he said.