Like everyone else, the New Peoples Democratic Party
wants to know where money accruing to the Federal Government, or more
appropriately, the Nigerian people, goes. Apart from brazen theft, a lot
of it goes out through capers like the loading of public works
spending. To accomplish this, most Nigerian ministers or commissioners
for works are usually trusted loyalists of pilfering heads of
government; their major assignment being to maintain sweetheart
relationships with those money siphons called construction firms.
The New PDP
alleges that government made $1.05bn in July 2013. Government believes
it’s even more, $2.69bn, and further disclosed a receipt of $20.09bn
revenue between January and July 2013. Yet, state governments are angry
with the Federal Government over accumulated shortfalls in their
allocation from the Federation Account.
Why a shortfall, despite this crude oil
revenue, and additional revenues from customs and excise duties,
personal income tax, company tax and Value Added Tax? The answer is
simply because government bankrolls a huge bureaucracy. Money is never
enough because the bills of the Federal Government, the 36 state
governments, the Federal Capital Territory and the 774 local
governments, their ministries, departments and agencies, are paid from
one source — the Federation Account, which warehouses all monetary
accruals to government. Money gets released into the system as
government workers’ salaries, contractors’ fees, and ex-gratia awards
and donations to sundry interventionist schemes. Because a large portion
of government outlays goes to recurrent expenditure, you could say that
Nigerians practically live on the dole.
The other drainpipe is the incredible
amount of interest that the Central Bank of Nigeria carelessly causes
the Government to pay for borrowing its own money that is sitting idle
in the vaults of commercial banks. Through Treasury Bills and other
municipal bonds, money accruing to government from the Federation
Account, and receivables from taxation and utility charges, is put
through a round-tripping of sorts, to the detriment of the national
exchequer. There is no doubt that these financial instruments are
legitimate tools for mopping up liquidity to execute the CBN’s
monetarist policies. There is also no doubt that much of the funds
raised through these instruments are used for white elephants, through
which crooked public servants (some politicians have claimed) derive
funds to finance private banks, hotels, shopping malls, airlines and
private estates. Only thieves can trace the invisible trail of other
thieves on a rock.
If you don’t know where the portion of
Nigeria’s crude oil money that government cannot be accounted for goes,
you will have to read the lips of the Group Managing Director of the
Nigerian National Petroleum Corporation. He reports that shortfall in
crude oil revenue is due to pipeline vandalisation and crude oil
bunkering. He claims that crude production has tanked from a projected
2.3 million barrels per day to 1.6 million. Those who are savvy in oil
matters valued the loss between 2012 and 2013 at about $1.29bn.
Government admits that between August and September 2013, Nigeria’s
external reserves dropped by $1.33bn — from $47bn to $45.67bn. Oil
bunkering has become staple business in Nigeria. In an embarrassing
outing on the CNN television network earlier in the year, the
President showed a helplessness in combating bunkering. He seemed to
think that by accusing foreign collaborators of the illegal trade, he
could abdicate responsibility, and whip up sympathy.
This obviously is farfetched.
The President must realise that he is
responsible for stopping the cartel that engages in illegal oil
bunkering. He must also stop wringing his hand, and positively find a
way to get domestic refineries to work efficiently. Mr. President must
be reminded that the man who adds value to a primary product, like crude
oil, will inevitably control that industry, and cream off its profits.
That is the law of the market. John D. Rockefeller found a way to refine
crude oil, and his heirs still enjoy the boon through substantial
holdings in Exxon, Mobil and Chevron. Nigeria must generate credible
capacity to refine its crude oil. Those rogue international businessmen
who buy crude oil from the bunkering cartel are merely exploiting the
weakness in Nigeria’s production chain.
Criminal negligence that allowed
Nigeria’s values and infrastructure to go to the dogs, also caused its
traditional agricultural mainstay to shrink. This reduced the nation’s
supply of staple food as well as revenue from cash crops. Worse still,
its freebie petrodollar income is squandered on importing, not only
essential food items like rice, fish and poultry (which it has capacity
to produce), but also in indulgences like Pringles and toothpicks. This
profligate binge has dropped Nigeria a few notches from mere economic
stagnation to the low of managing the twin scourges of balance of trade
and external reserves deficits. If you discount crude oil exports that
fetch about 90 per cent of foreign trade revenue, the balance of trade
scale is precariously skewed against Nigeria.
A Federal Government spokesman (who
certainly wouldn’t like to be considered a proxy of cement magnate Aliko
Dangote) recently announced that importation of cement into Nigeria
dropped by 51 per cent between 2011 and 2012. That is to say, local
production of cement is picking up. But then, an awful lot of
unprocessed brown sugar comes to Nigeria from Brazil, even if the same
quantum of coffee does not. Nigeria also pays a huge import bill, from
its dwindling crude oil revenue, on other commodities such as flour,
salt and refined petroleum products. This adversely affects Nigeria’s
ability to reinvest. Everyone in Economics 101 class knows that when you
fail to invest, but fritter away your resources on consumptions, you
are trading away your future income.
Do you know that those businesses that
generate those, more apparent than real, increasing figures of Gross
Domestic Product and growth rate that Government grandly reports are
foreign-owned? They are vehicles for spiriting oil money out of the
country. It is instructive that the Federal Government admits that
Foreign Direct Investment reduced from $8.1bn in 2011 to $7.1bn in 2012.
The Federal Government has a foreign collaborator, in a woman (who
shall remain nameless). She works for a London investment firm, and
regularly makes appearances in the media to spin every positive yarn she
possibly could about the health of the Nigerian economy. If you look to
see the reflection of these positive claims on Main Street, Nigeria,
you will be hard put to find any. Unlike Lagos money that stays in
Lagos, money made in Nigeria by the foreign investors is repatriated
overseas.
These foreign-owned businesses, and
their Nigerian fronts, run loops through dividend warrants,
over-invoicing of imported raw materials, other consumables and
machinery, and an inflated overseas counterpart remuneration of
expatriate staff, to remit profit abroad. The foreign principals hold
majority shareholding in these companies, using some fiduciary or shell
companies floated in any of the international tax havens such as the
Cayman Island, Liechtenstein and the Bahamas. A check will reveal that
the owners or technical partners of firms in Nigeria’s fastest growing
economic sectors — petroleum, telecommunications, Internet Service
Providers, construction firms and importers or processors of commodities
— are foreigners.
Nigeria’s money, in case you haven’t
noticed, fritters away through brazen corruption, a bloated government
bureaucracy, stealing of crude oil, a profligate import regime and an
unrelenting capital flight.
...so whats you take?....that's the way...the COOKIES...crumble for Nigeria!...hmmn!
Government magic!
A contribution by Lekan Sote for the Punch Newspaper this week on October 8th.
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