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Nigeria: How Poverty Worsened Despite Nation’s N28.58 Trillion Revenue

September 23, 2019

This followed the report by the Nigeria Extractive Industries
Transparency Initiative (NEITI) showing that N28.58 trillion was
remitted to the Federation Account between 2012 and 2016.

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Stakeholders in the economy have expressed worry about the disparity
between huge government earnings and growing poverty in the country.

This followed the report by the Nigeria Extractive Industries
Transparency Initiative (NEITI) showing that N28.58 trillion was
remitted to the Federation Account between 2012 and 2016.

NEITI’s latest Fiscal Allocation and Statutory Disbursement (FASD)
Audit report for the period shows that of the N28.58 trillion, mineral
sources contributed the highest sum of N18.15 trillion (after
deductions for joint venture cash calls and subsidy claims),
representing 64 percent of the total earnings. This was followed by
non-mineral source (N6.68 trillion), representing 23 percent, while
Value Added Tax (VAT) was N3.73 trillion, representing 13 percent.

A year-by-year breakdown of the total remittances showed that N4.19
trillion was remitted in 2012; N4.73 trillion in 2013; N4.69 trillion,
2014; N2.89 trillion, 2015; and N1.65 trillion in 2016.

An analysis of the N18.16 trillion mineral revenues shared among the
three tiers of government showed that the federal government received
N8.32 trillion from 2012 to 2016; the 36 state governments shared
N4.22 trillion, and the 774 local government areas got N3.25 trillion.

This is exclusive of the N2.36 trillion 13 percent derivation to the
oil, gas, and mining producing states, The Guardian reports.

The report also disclosed that from the share of non-mineral revenue
of N6.68 trillion, the federal government received N3.52 trillion, the
36 states got N1.79 trillion, and the local government areas took
N1.38 trillion.

The total VAT revenue of N3.73 trillion was shared as follows: Federal
Government (N560 billion), 36 states (N1.88 trillion) and 774 local
governments (N1.31 trillion).

“Unfortunately, the country remains economically dependent on
less-endowed countries because of the less than optimal use of natural
resources, made up mostly of products from the extractive industry,”
said Prof. Segun Ajibola, former president of the Chartered Institute
of Bankers of Nigeria.

He further blamed the country’s slow growth and development on its
“perverse spending pattern, corruption in high places and misplacement
of priorities.”

On his part, Prof. Adeola Adenikinju regretted that a few privileged
people were mortgaging the nation’s wealth. The director, Centre for
Petroleum, Energy Economics and Law (CPEEL), University of Ibadan,
noted that without a corresponding increase in other assets such as
human capital, physical capital and financial capital, the living
standards of future generations could be jeopardized.

“It is sub-optimal to look for an increase in revenue through the
expansion of taxes without first resolving the inefficiency and waste
in the use of existing revenues. We live in a country characterized by
heightened insecurity, dilapidated infrastructure, mounting
unemployment and poverty, and decline in many welfare indicators. We
need, as a country, to reflect and recalibrate our development
strategy,” he said.

Idayat Hassan, who is the director, Centre for Democracy and
Development (CDD), maintained that the offices of elected persons were
costing the country a fortune. According to her, “Things have to
change because 20 years of democracy is enough time for the citizenry
to enjoy the dividends of democracy.”

Dr. Ndubuisi Nwokolo, Senior Policy, and Research Lead at Nextier SPD,
an international development consulting firm, took Hassan’s
observation further, noting: “The cost of sustaining our bureaucracy
is obviously very high. For instance, the 2019 budget has
non-recurrent expenditure such as salaries, overheads, and other
recurrent items account for 46 per cent of the total expenditure of
N8.92 trillion.

“Considering the level of poverty in the country and the fact that the
government is the highest employer, it may be wrong to cut down the
size of bureaucracy without having a strong and robust private
sector-driven economy, which can employ the majority of its citizens.”

Similarly, Managing Partner, Chancery Associates, Emeka Okwuosa, said:
“The cost of governance has to be drastically whittled down.
Bureaucracy has to be streamlined and we have to intensify the fight
against corruption. We have to change our mindset about governance and
start realizing that we are servants of the people and not vice
versa.”

But a former Chairman of NEITI, Ledum Mitee, had words of advice for
the watchdog agency. Figures of monetary allocations for projects
should be linked to what has been achieved, he suggested.

“That was why during our time in NEITI, we published the first Fiscal
Allocations and Statutory Disbursements Audit, which tracked the
extractive revenues to the actual projects. I would still recommend
that report to the national and state Assemblies and other
stakeholders. I would further recommend that NEITI embark on such
exercise and improve on it, and also include local governments into
such audits as was approved by the Jonathan administration.”

According to Mitee, it is important for citizens to use such results
to hold governments accountable. If citizens do not pressure
governments on the outcome of works by NEITI and other agencies, the
expected benefits might not be achieved, he added.

In another comment on the nation’s economy, Prof. Pat Utomi urged the
government to be discreet about pursuing revenue. “There is, of
course, the tax angle. Revenue does not make a nation wealthy. What
makes a nation wealthy is a production. With the way we are chasing
revenue, we will prevent people from producing and ultimately
democratize poverty,” he said.

The professor of political economy disclosed this during the
‘Empowered to Break Frontiers’ workshop organised by the Redeemed
Christian Church of God, Faithful Chapel, Lagos, at the weekend.

Topics
Poverty