Friday,
September 2, 2016
At
last, the Federal Government admitted what everybody knew, concerning the state
of the country's economy: Nigeria is in the depth of recession. The frightening
aspect is not just that there is economic decline. The main issue is this:
"It's the worst possible time for us," as the Minister for Finance,
Kemi Adeosun, declared.
Yes,
it is now official that Nigeria, the most populous black nation in the world, a
country blessed with natural and human resources, a nation rated, during
independence, as one of those that had prospect for greatness, and a country,
which had the potentials of rising above its challenges to economic and
political prosperity, is in deep economic trouble. Now trade and industrial
activities have reduced. The Gross Domestic Product (GDP) growth rate has taken
a slide. Unemployment rate has gone above the roof, with millions of Nigerians
jobless. Inflation has hit the 17 per cent mark. The cost of living is too
high. And the standard of living is in the lowest ebb.
To
be sure, the report on the state of the nation's economy, released by the
National Bureau of Statistics (NBS), is damning. The report, apart from the
above negative indices, also revealed that Nigeria recorded its worst decline
in investment inflow, with foreign direct investment, portfolio investment and
others rapidly heading south. The way it is, Nigerians, as a people, have to
suffer, in the face of increasing hardship.
I
must say that the NBS report and the official declaration that the country is
in recession is not anything surprising. There have been indications that the
country's economy was in bad shape, far beyond the earlier declaration by
President Muhammadu Buhari and some government officials that Nigeria was
broke. With the price of oil falling steadily, the country not meeting its oil
production quota, caused by the activities of militants in the South South and
the country still export-dependent, wherein scarce foreign exchange is blown to
bring in goods that should, ordinarily, be produced in the country, there is no
way the current result would not have sufficed. This is made worse by the fact
that there has not been any clear economic policy of the President Buhari
administration, through which economic growth or reflation could be achieved.
What we have heard, in more than one year, has been fight against corruption,
without any concurrent programme to reengineer the economy and increase the
productive rate of Nigerians.
Sadly,
in the midst of economic recession, the Federal Government could only think of
increasing taxes, as one of the ways out. This, to me, is a measure to generate
money for the running of government and not, necessarily, to cause a rebound of
the economy. For the avoidance of doubt, the Federal Government is proposing
imposing telecommunication tax of nine per cent on every Nigerian, irrespective
of class or social status. When imposed, for every money spent in
"recharging" a telephone, Nigerians pay government tax. Also, the
idea of transportation tax, wherein toll gates could return, for motorists to
pay at every toll point, has been mooted. There are also indications that the
Value Added Tax (CAT), which is five per cent of the value of all purchases,
could be increased to 10 per cent. And there are other sundry taxes, like
income tax or Pay As You Earn (PAYE) as well as radio & television tax,
among others.
When
Nigerians pay more taxes, government generates more money. However, the burden
is on those who pay taxes, while government, which receives them smile to the
banks. When Nigerians pay telecommunication tax, transportation tax, higher
VAT, radio & television fee/licence, among other taxes, the burden would be
on them. Their income will reduce. Their spending ability will decline. It is,
indeed, worse that taxes are being multiplied at a time of economic recession,
when the income of individuals are reducing in value, when salaries are not
paid, both in the private and public sectors, when school fees are going up and
when the prices of essential commodities are rising.
I
have wondered why governments find pleasure in increasing the burden and
sufferings of the people, in the name of solving economic problems. Now, the
country is not getting enough income from oil, due to global drop in prices.
The country is not exporting anything and, therefore, will not earn foreign
exchange. It is curious, therefore, that government's only proposal to overcome
these challenges is to tax the people and make money from them. Government
wants to feed on the blood of Nigerians to survive and make ends meet. This, to
say the least, is intellectual laziness. It is part of the voodoo economics,
which we usually apply in government that does not yield much result. Such
measures would never solve the economic problem of the country.
What
government needs, at a time like this, is to evolve a sound economic programme,
which will have both short term and long term results. Government had said that
diversification is the pivot of its economic revival and, therefore, efforts
are being made to boost agriculture. This is good. However, it is not only
agriculture that would turn around the economic fortunes of the country. It
would boost food production, quite all right. But this is not enough to cause
economic buoyancy. The pertinent question is: What is the fate of
industrialisation in government's economic programme? At present, industries
are dying. Jobs are being lost. This trend must be arrested. The government
should help industries to bounce back and by so doing, there will be
employment. There will also be liquidity, as people earn salaries and spend
money.
The
Federal Government is in a position to help industries and industrialists
bounce back to business, which will, in turn, help the economy. Has anybody
thought about giving the industries bailout? This is what the country must
consider. When United States President, Barrack Obama, came to power, during
the economic meltdown that hit the world, United States companies were
comatose. As part of his revival programme, President Obama gave them bailout, called
stimulus. He extended loan to the companies, which helped them to come back to
business. Today, some of those companies that were having financial crisis
have, using Obama's stimulus, bounced back. This is an option that the Buhari
government has to consider.
Industrialisation
will help the economy more than taxation. While multiple taxation gives
government income and impoverishes the people, industrialisation will create
jobs and revenue for all stakeholders: Government, employees and employers. To
help industries, government should also take measures to address the energy
crisis in the country. One way of doing this is to sort out the Niger Delta
crisis. Agriculture and industrialisation are important in economic revival.
Solid mineral exploitation should not be wished away. And petrochemical is very
important. These are the sectors that would pull Nigeria out of recession.
Taking
all these together, I am persuaded that government should spare the people more
hardship. At a time when salaries, for those who are fortunate to be paid,
cannot take any worker home, when those in business are not doing much, and
when the economy is generally bad, what the people need is respite. Increased
taxation will be too much of a punishment.
SOURCE: THE SUN.