Africa’s most populous country’s economy is crippled and unable to feed its more than 220 million people, with more people falling into a poverty trap every day. The evidence of this dysfunction is quite alarming, but unfortunately leaders are either largely unaware of this malaise or unwilling to do anything about it. Nigerians are being hurt in unimaginable ways, both in business and in their careers. In Nigeria, four out of every five companies started die within the first three years. Global data suggests that newspapers in Nigeria face seven times more hurdles to survival than their European counterparts, for example. This should make life easier for small and medium-sized businesses, which face endless struggles and some even come under scrutiny from the government. The small business owners installed posters and banners in front of their shops at a cost of N185,000. A few days later, officials from the Lagos State government came and demanded various taxes amounting to over N450,000. Nigerian exporters say they need more than 20 approvals to ship their cargo overseas. More than 70% of these approvals do not apply to any country on the planet, and it can take up to a month for exporters to receive approval.
Nigeria’s leaders are working to attract investment to the country, but pay lip service to addressing structural imbalances in the economy that are driving investors away and forcing some domestic investors to exit. It is said that there is no other way than that. While the main cause of the economic dysfunction is believed to be the intolerable exchange rate depreciation and stifling levels of volatility, there are other serious challenges facing the Nigerian economy.
“Nigerian exporters say they need more than 20 approvals to send their cargo overseas. More than 70 percent of these approvals do not apply to any country on the planet, and exporters do not have the approvals. It may take up to a month to receive it.”
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More than a decade ago, a young Nigerian professional who spent a year abroad in Kenya discovered that he could get his N2 for just one Kenyan shilling. Current exchange rate is 1 Kenyan Shilling to N13. This erosion of value is prompting multinational companies to leave Nigeria. According to Taiwo Oyedele, chairman of the Presidential Committee on Fiscal Policy and Tax Reform, the math doesn’t add up. Last year, Nigeria received billions of dollars in net foreign exchange inflows, but during the same period the local currency suffered its biggest depreciation in recent history. Mr. Oyedele said the big problem was the large illegal demand for dollars. According to past media reports, many of Nigeria’s state governors wait for their monthly allocations from the FAAC and then head to the BDC to convert their allocations into dollars. Regardless of what the monetary authorities do, this fraudulent demand for foreign exchange is sure to continue. In fact, it’s like chasing a shadow.
The relationship between Nigerians and the Nigerian government is ruled by a great deal of mistrust, meaning that those who can pay taxes avoid paying them or collude with tax officials to pay far less than the actual tax rate. I am doing it. As a result, Nigeria’s personal income tax collection is a fraction of what is collected under the same tax chief in Kenya and South Africa. This is true despite Nigeria’s low tax rate. In Kenya, the monthly salary before taxes is up to 282,000 Naira, while in South Africa the monthly salary in the tax net is 660,000 Naira. In Nigeria, if you earn 30,000 naira a month, you are eligible to pay taxes. According to Oyedele, this doesn’t work. For him, a country cannot become rich by taxing poverty.
“Recently, it was discovered that about N1 trillion worth of federal government assets in Nigeria were registered in individual names with the CAC. That is the extent of public official corruption in Nigeria.”
Leaks in other regions are also mysterious. For example, Nigeria’s total annual import value is several times that of Kenya, while the customs duty collection by Kenya’s customs is N8.9 trillion, or three times that of Nigeria.
Nigerians have been led to believe that their country is rich, but there is little data to support this belief. While South Africa collects the equivalent of N50.5 trillion in income tax each year, Nigeria collects less than 5 percent of that, while Kenya’s personal income tax collection is as much as Nigeria could collect in a year. twice as much.
Another form of dysfunction in the Nigerian economy can be seen in the way the country manages its resources.
Related article: Nigeria drags to unlock 180 trillion naira assets as debt piles up
Last week, Business Day reported that Nigeria has amassed a large amount of unused assets, estimated at N180 trillion, but leaders are dragging their feet to release them even as public debt piles up. Ta. Dead assets are national assets that generate income but do not increase the country’s productivity or wealth. In his book The Mystery of Capital, Spanish explorer Hernando de Soto explains that dead capital has great economic growth potential for a country with economic challenges like Nigeria. are.
Bringing this closer to home, Oyedele said that in a more transparent and efficiently run system, national oil company NNPC and its subsidiaries should pay between $18 billion and $20 billion in taxes to the national treasury annually. I’m thinking. Contrast this with today’s reality. The NNPC says it owes a large amount of money to the federation.
It was recently discovered that approximately N1 trillion worth of federal government assets in Nigeria were registered in individual names with the CAC. That is the extent of corruption among public servants in Nigeria.
There are 774 local governments in Nigeria, but none publish their annual budgets online so people can see how they utilize the huge allocations they receive each month from the FAAC . What’s worse, Nigerians don’t question or try to change this behavior. Meanwhile, South Africa has an online portal called Municipal Money that brings transparency to sub-regional governments and their spending patterns. Nigeria and Nigerians still have much work to do to make our economy less dysfunctional and work for our people.
Titi Omobude is an analyst.
