Nigerian economy: Between economists and “laymen”

…also published in Daily Trust

Over the decades, successive Nigerian governments have always resorted to the introduction or enforcement of one set of revenue generation boosting measures, or another, to prevent further deterioration of the country’s ever-deteriorating economy. However, the poor have always ended up worse off.  

With the controversy triggered by the federal government’s current drive to boost revenue generation in the country, there are all sorts of analyses and solution proposals to the country’s persistent revenue deficit and the associated economic crisis, which further highlight the subtle but unmistakable mutually dismissive attitudes between Nigerian elite economists and experienced economic observers who aren’t formally trained economists.

With their characteristic know-it-all demeanour, Nigerian elite economists have always advocated strict compliance with textbooks economic theories to address the country’s economic challenges dismissing any contrary views as layman’s opinions.

Equally, on their part, economic observers dismiss Nigerian economists as being too literalist to see beyond the neoliberal Washington Consensus-dictated economic policies, who also cannot come up with homegrown economic ideas and measures creative enough to address the country’s peculiar underlying economic challenges.

Anyway, what’s quite obvious in any case is that Nigeria’s underlying economic challenges are never that intricate after all. They don’t’ require any unnecessarily sophisticated academic analyses to identify and address. However, the myth that the country is rich or even extremely rich, as many Nigerians assume, must be corrected to face reality, so that appropriate economic policies could be conceived and pursued accordingly.

The widespread assumption that Nigeria is rich isn’t strictly accurate. In reality, it’s only potentially rich, very rich for that matter, given its immeasurable economic potential, which, however, have to be appropriately developed, managed and maintained to result in real and sustainable wealth that guarantees economic prosperity.

Most Nigerians confuse this potential with real wealth, which explains this erroneous assumption. For instance, with a population of arguably almost 200 million, a budget of less than 34 billion USD, which President Buhari recently presented to the National Assembly for the year 2020, and which is, by the way, the largest ever, is simply too meager to reduce poverty let alone result in any noticeable economic prosperity in the country.

This is even if the whole amount is generated and no budget deficit is recorded; and also even if the whole amount is invested judiciously and transparently, which is never achievable in the country at least now and in the foreseeable future. Because budget deficit would almost certainly be recorded as usual, which means fewer funds available.

Besides, with the country’ unjustifiably huge recurrent expenditure and debt servicing costs, which consume over half of the country’s total projected revenue, one can imagine what’s left for the provision of infrastructure projects and other public services necessary for economic development. Yet, a significant portion of it ends up stolen through various means of systematic misappropriation, e.g. disproportionate project cost inflation, kickbacks, fraud etc.

This also explains the pervasive culture of tax evasion in the country, which, by the way, isn’t necessarily out of greed only, but also because people understandably assume that the money would almost certainly end up squandered or misappropriated altogether with impunity across various government institutions. 

Individuals and corporate entities, therefore, pay tax only when they have exhausted all possible tax evasion tactics. Yet, they compromise tax collectors, falsify or tamper with relevant documents to pay far less than what they are supposed to pay.

Though the average person anywhere in the world would want to evade paying tax anyway, his inclination to do so is hugely lessened if not eliminated when he enjoys quality public services worth his tax.

In many countries, an individual pays up to 30% or more of his income in taxes, yet he never complains, because, in return, he feels safe and well secured all the time thanks to efficient security measures in the country; as he also takes quality basic education for his children, good healthcare services, reliable utility services supply etc., for granted.

Whereas, his counterpart in Nigeria, and though may not be paying as much, isn’t only deprived of all these services, but is also made to helplessly watch how corrupt government officials and their accomplices in the private sector enjoy extravagant lifestyles with public funds, which the tax extorted from him constitutes part of. This is after all the amount of public funds appropriated for the entitlements and allowances of top civil servants and political officeholders, and their payouts and life pensions, is already grossly disproportionate compared to the state of country’s economy and the average standard of living in the country.

In a nutshell, therefore, it’s a question of trust. The average Nigerian understandably distrusts his political leaders and government officials.

Anyway, instead of the endless, costly and indeed unnecessary elite brainstorming sessions ostensibly to come up with economic reforms and recovery policies, Nigerian leaders should prove their supposed commitment in this regard by making some harmless concessions. They should, for instance, do away with all laws and administrative policies that entitle them to their disproportionately huge allowances and other costly privileges at the expense of the poor.

While this will restore a great deal of public trust in them, their commitment to eliminating corruption and impunity without discrimination or favouritism will certainly earn them full public trust, which will motivate everybody to willingly pay his tax and contribute towards building a politically stable and economically prosperous Nigeria.