Buhari’s N8trillion Hat-Trick! – 1
It is yet in the realm of rumours. But its doable. And if it is done, it would perhaps be a masterstroke for this administration. One of Buhari’s adversaries criticized the possibility of Nigeria doubling its budget by implementing an N8Trillion war-chest next year. He asked if we had put in place as president, a […]
It is yet in the realm of rumours. But its doable. And if it is done, it would perhaps be a masterstroke for this administration. One of Buhari’s adversaries criticized the possibility of Nigeria doubling its budget by implementing an N8Trillion war-chest next year. He asked if we had put in place as president, a ‘Professor Peller’ (that famous Nigerian magician). I believe he is not too far from the truth. But in a positive way, Buhari may just conjure up a rabbit from his long top hat with this upcoming proposal. Some people say he looks the part of a magician; tall, slim, with a broody look and a mysterious demeanour, preferring to speak little if at all. A popular columnist described Buhari as a chess master last week.
Why may Buhari successfully pull off this hat-trick?
First of all, Nigeria has the money to budget that much. Secondly, the leakages are being blocked. Thirdly, Nigeria’s budget has always been so small compared with its capacity, its GDP levels, its revenue potentials and most importantly perhaps, compared with all its neighbours. This is a matter closely linked with the concept of Fiscal Productivity – a concept defined by a scholar and friend, Dr N. N Susungi, as the ratio of a country’s tax revenue to its GDP. Nigeria has the lowest ratio in the world. The country just budgets what amounts to peanuts each year, compared with its GDP, or its real earnings. We shall explain this below.
SO WHO STOLE NIGERIA’S TRILLIONS?
On the 8th of February this year, in the heat of politicking for the presidential elections, I had cause to publish an article titled; So Who Stole Nigeria’s Trillions? See <http://dailytrust.com.ng/sunday/index.php/global-connection/19549-so-who-stole-nigeria-s-trillions>. It was on the back of serious allegations levied by the former CBN Governor, now Emir Muhammadu Sanusi II, to the effect that some $20billion was missing from the coffers of the nation. Another cerebral gentleman, Professor Charles Soludo, had weighed in and probably stepped up the heat, that Nigeria had lost about N30Trillion to mismanagement, fraud and embezzlement within a four years period. Because these two men had managed the nation’s finances at a very high level, I naturally took them serious and examined what exactly they were trying to say; especially Soludo’s fantastic intervention.
Around the same time, the Federal Inland Revenue Service (FIRS) announced its performance for the year 2014, which was N4.69Trillion. See <http://www.thisdaylive.com/articles/firs-generates-n4-69tn-revenue-in-2014/200484/>. The entire federal budget for the year 2014 was N4.695Trillion, which was almost exactly what the FIRS collected, even though FIRS collection gets shared among three tiers of government. The government of the day explained that its entire revenue was N10Trillion, N3.73Trillion of which was due to the Federal Government while the balance was shared to other tiers of government. For the year 2014, the federal government had a total revenue of N3.73Trillion but spent N4.695, thereby incurring a deficit of almost N900billion which had to be financed through borrowing.
The question reared its head as to whether FIRS generated almost 50% of the nations total revenue. This couldn’t be so, given that Nigeria parades hundreds of revenue-generating departments and agencies, which represented it in almost every facets of our lives. What was happening to those monies? What was happening to funds generated by NNPC, NPA, NIMASA, FAAN, NCAA, Nigerian Customs, Nigerian Immigrations and many more? As a matter of fact, for that same year 2014, the Customs projected a revenue of N2Trillion but managed an Actual of N977billion. See <http://sunnewsonline.com/new/customs-generates-n977-09bn-revenue-in-2014/>.
So for 2014, between the FIRS and Customs, a total revenue of N5.6Trillion was generated. If Nigeria could file in what the other large agencies had done, Nigeria could potentially be a N20 – N30Trillion revenue country and thus this Buhari magic may be easier than we think. Nigerians realized early this year that our federal government was seriously under-budgeting and that many revenue items were flying under the peoples’ radars. What was more, there were many extra-budgetary transactions, including the now-famous ‘service-wide’ votes from which trillions of naira is spent yearly at the discretion of the president.
Before I go on, it should be noticed that the FIRS performance is hampered by:
1. Fraud – there are syndicates run by Nigerians whose stock in trade is to waylay tax deduction cheques and divert through sundry third party accounts. E-banking has reduced but not totally eradicated this.
2. Tax evasion – it is still said that Nigerians don’t pay taxes. And that is true, with top earners and heavy cash movers being the biggest culprits. There are several schemes devised by the government to extract their taxes anyway; such as VAT, Withholding Tax, Education Tax and so on. But Nigerians aren’t paying more than half what we should. If played right, and with sincerity and performance, FIRS collections could be bumped up another 100% to say N8Trillion.
3. Waivers – Under the last regime, this became a scandal, as oil companies got tax rebates, while importers of luxury goods got import duty waivers because of their closeness to government.
The Nigerian Customs Service too, could have done much better but for the usual problem of corruption and waivers from high places.
As for NNPC, which oversaw the production of 2.5million crude oil barrels per day for Nigeria, albeit under Joint Venture or Production Sharing Agreements, the story is out there in the open. The issue of Crude Oil Swap contracts still rages. Whereas crude oil prices fell to about $50 per barrel (about 40% drop in 2014), the corruption in that sector is best imagined. Still, the sale of crude oil could have netted Nigeria N1 or N2Trillion during the year, since Petroleum Profit Tax (paid by oil companies producing within Nigeria) is already reported by the FIRS in its global figure.
To be continued…