Does Nigeria Need a Revenue Crisis?

Guest Columnists

I am thinking about a situation when crude oil prices do not exceed 40 US dollars a barrel and the demand for Nigeria’s oil drops, partly because the US (a country that imports about 40 percent of Nigeria’s crude oil) cuts down significantly on imports of the product from Nigeria as from other exporters of crude oil to that country. I am thinking about the time when the game that our rulers engage in so blatantly with impunity, which is called Oil Bunkering, turns out to become more deadly than we are made to believe. I look forward to that situation when the revenue of Nigeria cannot support the constitutional allowances and remunerations that Nigeria’s rulers award themselves. Would it not be interesting to see scavengers of Abuja scamper away because the honey pot is wiped clean? Board members of many redundant and unprofitable government corporations shall find nothing to satisfy their lusts with. State governors shall be hard pressed for their lack of ingenuity and creativity as they cannot cope with riots in their states caused by a genuine inability to pay the salaries of generally unproductive government workers. Abuja cannot help then. The center will not hold, and the attraction of this union shall rapidly wither away.

Since I was a young boy I have heard the idle affirmation of Nigerian rulers about “the need to diversify the economy.” But where is the will or the motivation? The will is not there in our rulers because there is no necessity; and there is no necessity while the black gold flows continually and customers are not lacking, who are willing to provide the soliloquizing pill to deaden any sensitivity towards the danger the country faces should it continue to rely heavily on one product as a major revenue source. I should think that Nigerians who know about the real and potent trials of the present lack of patriotic governance ought to ponder ways to bring about the right deeds of governance or force them.

The 2013 federal budget proposal that has already been presented to the national legislature by President Jonathan reveals three present problems with Nigeria: First, the amount of revenue Nigeria should legitimately expect next year is not fully covered in the proposal. Two, the federal government is still acting as though there is no urgency for increased capital votes for expenditure on infrastructural development, education for the future challenges of new technology, welfare programs such as public housing in partnership with local governments (See the fourth schedule of the 1999 constitution which makes building and maintenance of houses for the poor and infirm mandatory for local councils), and on strategic partnership with state governments on projects and programs that will reduce unemployment. Three, there is no evidence that the federal government is eager to cut down on big government by implementing the recommendations of the Orosanya’s committee it had set up, which include either complete scrapping of redundant departments and agencies or merging some of them that perform duplicate functions. The budget proposal is silent on shrinking of the size of government in any form or shape.

 Let us take the average price for crude oil for 2012, which is about 100 US dollars per barrel. If we assume this average for 2013 also and the proposed crude oil production of about 2.5 million barrels a day in 2013, an income of 250 million US dollars a day for Nigeria and oil companies is expected. According to Dr. Ngozi Iweala, Nigeria’s Minister of Finance, 57 percent of crude oil money goes to Nigeria while the oil companies take 43 percent. This translates to about 52 billion US dollars for Nigeria or 8.1 trillion naira. If the revenue collected by the Federal Inland Revenue Service (FIRS) so far in 2012 is considered as a benchmark (FIRS announced tax revenues of 3.81 trillion naira by October 2012, with one more quarter to go) for 2013, we can safely conclude that the total estimated revenue available to Nigeria from crude oil sales and taxes collected by FIRS in 2013 is more than 12 trillion naira. But President Jonathan laid before Nigerians a budget proposal for 2013 with a declaration that estimated revenue accruable to Nigeria in 2013 was only 10 trillion naira, out of which the federal government’s share was about 3.9 trillion naira. I am concerned about the math here; it just does not add up! Secondly, the president was silent about revenue from Nigeria’s investment in gas (the NLNG project). Nigeria controls 49 percent of the NLNG project and produces about 10 percent of world’s gas production. Why has the Jonathan government kept the revenue from gas sales from its employers, the Nigerian people? This lack of transparency is not acceptable, and our legislators must ask those relevant questions. They must unearth revenues that the federal government keeps away from both the state and local governments. An insidious conspiracy of fudging figures is going on while Nigerians who know don’t talk and those who don’t know don’t ask. Nigeria does not need and cannot afford a deficit of about 1 trillion naira while insufficient information is given about the true size of Nigeria’s expected revenue.

Does Nigeria need a revenue crisis to reveal information about our genuine revenues that is kept from our prying eyes? We are told how 400,000 barrels of crude oil are stolen daily! Don’t we have government anymore, or are those figures spouted out just to hide what is stolen by the kleptomaniacs in public office under some innocuous headings? Most probably, it would not move relevant government officials to resign, and neither would they lose their jobs should that figure rise to even 1 million barrels a day in the near future. The secrecy about our nation’s revenues, which is continually being spun by the PDP government, has come to be accepted as a difficult mathematical open problem that no polymath is presently inclined to consider. We must consider this problem. We need to resolve this seeming puzzle.

Do you know that the federal government proposes only 1.5 trillion for capital expenditure in the 2013 budget? And do you know that 1.03 trillion naira is the deficit? What that means is that only about 500 billion naira out of the revenues of Nigeria will be spent on things that Nigeria needs to meet the Millennium Development Goals (MDG). If you don’t cringe then I wonder if you understand what I am talking about. Our legislators need to get experts to educate them about the futility of Mr. Jonathan’s budget proposal; how it lacks truthfulness, vision, rationality, and transparency. A revenue crisis may hit Nigeria very soon, and necessity shall be placed on Nigerians to choose leaders who have a heart for the people. We can’t afford anymore leaders who are never alarmed by their incompetence and lack of empathy for the people.

Leonard Shilgba is an Associate Professor of Mathematics with the American University of Nigeria ( ) and Chair of the Middle Belt Alliance ( )

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