Business

Awodun: Nigeria should adhere to competence to exit budget deficit

Professor Muritala Awodun, Chief Operating Officer, CSDC Consulting Enterprise Solutions and founder/CEO, Fiftyfifty Institute Limited, in this interview with SUCCESS NWOGU, speaks on Nigeria’s faulty budget cycle and other economic

 

 

Nigeria has been running a deficit budget for some years, do you think this is the best for the country?

 

Obviously not, but because we found ourselves in a situation where our present crop of managers of the nation’s resources lack what it takes to be productive and translate the national resources towards productivity, we are where we are.

 

When you produce more than you consume, you will obviously have excess, but in a situation where you consume more than you are producing, what you have is a deficit. You borrow to cover your excess expenditure because you have not produced enough to earn enough to cover your blotted consumption.

 

What are the factors that made the country run deficit budgets?

From the local government to the state and the Fderal Government, we concentrate on expenditure, expenditure and expenditure, particularly recurrent expenditure.

Go and check all our budgets, at all levels, the recurrent is in the range of 65 per cent to 95 per cent. How many productive capacities are we creating at the local, state and national levels on a year-by-year basis?

We are not seeing the problems as problems because once the various governments pay salaries of the civil and public servants and are able to run government overheads with these humongous ratios of revenue, they ascribe to themselves success and we all clap for them. Nobody asks questions in relation to how and what they have done to create jobs directly or indirectly.

We are too good to swallow their excuses, which are full of lack of ideas on what and how to solve the problems in the first instance. We are as ignorant as the people we put in power to manage our collective resources on our behalf. There are pockets of them that are good and capable of doing very well, but they are not given the opportunity or not listened to.

Most of our bests are watching, while the majority of our worst are striving and struggling to get to power, even when they know next to nothing about how to solve the problems of the nation.

What qualifies people to serve in government in our country is how long they have been in the political system and loyal to the  predomipowers that be than how competent and capable they are. We promote loyalty, patronage, ethnicity and religion against competence, capacity, character and courage.

 

What are the solutions to this deficit budget cycle?

We must break the cycle of mediocrity that has become the bane of our nation and promote competence so that those who know what to do and how to do it are given the opportunity to come and help fix the nation.

Otherwise, we will end up not having a nation to call our own.

 

The Minister of Finance, Mrs Zainab Ahmed said that Nigeria’s budget for petrol subsidy for 2022 is N6.71 trillion. Is this not bleeding the  nation?

What is the import of this to national development and what strategies should the Federal Government adopt to address the situation?

 

The politics of subsidy in Nigeria is one that is only used to exploit and pauperize the people of Nigeria. From government to government, the figures have refused to stop rising and the permanent solutions to ensuring that this problem disappears are not being pursued.

 

The nation prefers to continue to pay subsidies to themselves (through government cronies) under the pretext that they are doing so to cushion the effects of prices of petroleum products when actually they know that what will really cushion this effect is the ability of our nation’s refineries to work or encouraging new refineries to be built to meet up with the local demands.

 

Rather than come up with policies that will make this happen, they have continued from 1999 to date to pursue what they consider as the easy way out by importing petroleum products and paying the importers subsidies for real and fictitious imports now running into trillions that is definitely not sustainable. We are a nation of deceitful people. We have had managers of our nation’s resources who either know not what to do (as they lack in competence and capacity) or know what to do but lack the will to do it (which has to do with courage).

 

These three Cs are the undoing of our leaders that has brought us all (as a nation) to our knees. The ultimate of it all is the character of our leaders. As we go into choosing the next leadership, from state to federal, let us be mindful of their characters, competencies, capacities and courage at every level of governance, if we must get the desired change and turn around our fortunes for the better.

 

Why some people say that there are multiple taxes in Nigeria, others said no. What is your position and reasons?

As a nation with multiple levels of government, the multiplicity of taxes is not what we should be debating, whether there is or not. It is also not a matter of why are there multiple taxes.

What is important is that, in this age and time, we should be able to come up with a way to consolidate most of these taxes and subsume those considered obviously duplicated so that the taxpayers can conveniently be made to pay their taxes, and those taxes applied appropriately for the provisions of social goods and services for the betterment of the welfare of the people.

 

The nation is long overdue for consolidation of our taxes.

 

The World Bank’s World Outlook for 2020 shows that Nigeria, with revenue to Gross Domestic Product, (GDP) of 6.3 per cent, was ranked 194 of 196 countries. How do you assess this situation?

The question here is simple. We are consuming more than we are producing. GDP is gross domestic product, which is an aggregate of all production in the economy. When you produce, it obviously translates to (potential) income. However, the revenue to GDP ratio in question is the revenue of government (which is predominantly tax revenue) compared to GDP.

Two issues arise from the low level of our government (or tax) revenue to GDP and these are (i) we are not producing as much as we can potentially do, and (ii) government is also not earning as much revenue (taxes) from the productions (incomes) as possible. So, we should endeavour to encourage production as a nation. We should look inwards and endeavour to produce what our people want to consume so that our GDP could increase.

Secondly, we should revisit the processes of government revenue mobilisation (collection) as we have allowed so many loopholes that have made it practically impossible to mobilise all the revenues of government into the coffers of government appropriately.

At all levels of governance in Nigeria, there are leakages that could bring about, at least, double the revenue that accrues to government presently, under any serious (courageous) administration.

 

Is it true that relative to many other developing countries, Nigeria’s revenue is low?

If yes, what should be done to address this situation?

In relative terms, this is correct and the people in government know this. What is lacking is not the knowledge of the problem but the knowledge of the solutions, in some cases and the will power, which I earlier referred to as the courage to act and take decisive steps to bring about the required changes. Addressing the problem of leakages in the processes is first and foremost the way to go that will surely double the revenue of government if decisively handled.

That is a growth of government revenue in waiting (like a low-hanging fruit) that will not in any way affect the downtrodden masses, but the supposed elites that are beneficiaries of these leakages.

A good example is what the government of Governor Abdulfatah Ahmed did in Kwara to transform the revenue generation process in the State between 2015-2019. Because I was involved, I know it was a definitive, decisive and courageous step to change the people, process, technology and infrastructure of the state revenue mobilisation with a reformed Kwara State Internal Revenue Service (KW-IRS), and without any form of an increase in taxes, that bold step resulted in a significant rise in the IGR of Kwara State from N7.2 billion in 2015 when we started the process to N17.4 billion in 2016, N19.6 billion in 2017, N23.1 billion in 2018 and N30 billion in 2019. The entire state, and perhaps the country, knew that something significant happened in the state because government knew the problem, knew the solution, got the right people to drive the reform, was courageous to implement the reform and stood by it, despite the fight back.

The state is better for it because that institutional reform remains second to none in the history of the state’s internally generated revenue.

 

Many sub-nationals or states depend on the Federal Government or wait for the Federation Account Allocation Committee (FAAC) for revenue. Is this sound?

What should they do to develop their IGR? Waiting for FAAC is not sustainable and I have said this over and over again. Any state that is not taking steps now to address its internal revenue generation process will suffer in years to come. It is not enough to get the collection process right, states must begin to think of how to internally create wealth within their states through the various comparative advantages available in each state. States should begin to think out of the box for the sustainability of their states.

The managers of the affairs of our states should move from mundane governance of paying salaries and maintaining the status quo to coming up with forward-looking developmental agenda that will be inclusive and capable of addressing the problems of production, employment and revenue in their states. The era of spending 65 to 95 per cent of the state revenues on maintaining the governance structure is coming to an end, and very soon too.

The World Bank Fiscal Year 2021 audited financial statements, known as the IDA financial statement, showed that Nigeria was rated fifth on the list with $11.7 billion IDA debt stock as of June 30, 2021. But this is a nation with incredible human, material and mineral resources but regrettable still with infrastructure deficit? How do you feel and how do you assess this development?

What should be done to get out of it? In fact, the June 2021 IDA Financial Statements, which put Nigeria at the fifth position with $11.7 billion are not as worrisome as the recently released June 2022 IDA Financial Statements that now put Nigeria at the fourth position with $13 billion debt stock. It is even more worrisome that while the top three nations (India, Bangladesh and Pakistan) made efforts to reduce their debt stocks between June 2021 and June 2022, as evidenced in the statements, Nigeria went ahead to increase her debt stock by a stagger-ing $1.3 billion over the period to take over the fourth position from Vietnam that also reduced her debt stock.

It only goes to show that we are not making any efforts toward resolving our debt problems, rather we are going ahead to accumulate more debts. I will not be surprised if, by this time next year, the figure would have climbed further to above $15 billion just for our World Bank debts alone.

The present government is bereft of solutions and tired, as the president boldly said a while ago, just waiting for the elections to come and go, and handing over the affairs of the nation to the winners of the 2023 elections to begin to find solutions. As it is being drummed into our ears that the president has tried his very best with his team, and is just hanging on there. Whether this best is good enough or not is completely a different ballgame.

We are just unfortunate as a nation because we deserve better than we are getting, and everybody knows.

 

Nigeria has been losing huge revenue and has not been meeting its OPEC quota due to oil theft, vandalism and divesting of international oil companies. What is the solution?

 

Government knows the problems and they also know the people behind these problems, just the same way they know the people behind the insecurity problem, but because they are ‘untouchable’ government is looking away while our common resources are being carted away.

How else do you explain a situation where we have a government and some people are controlling our resources while some others are tormenting our nation, with government doing next to nothing for several years?

 

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