By Lekan Sote
The Nigerian elite have consistently demonstrated a lack of compassion and empathy for the toiling masses of Nigeria, or “the lumpen proletariats,” as the likes of “old skool” Marxist Kayode Komolafe, now reinvented as Deputy Managing Director of ThisDay Newspapers, would have said.
It is increasingly looking as if the elite use the instruments of state to forever impoverish the masses of Nigeria, and keep them vulnerable. There are many instances of deliberate violence done to the economy and general well-being of poor Nigerians.
The political elite abdicated responsibilities for creating an enabling environment that would create employment for the people, and bestowed the obligation on the ill-defined private sector which has no infrastructure to back up its ventures.
Mass unemployment, as you know, leads to mass poverty. You may have heard that the rich sometimes deliberately inflict more poverty on the poor, so that contest and competition for political and economic power are kept beyond the poor. Some rich Nigerians actually ask, who will be the hewers of wood and drawers of water, if the rank of the middle class expands.
If you cast your mind back, to the history of state engagements with the poor in Lagos State, for instance, you will recall sundry occasions where various task forces seized, or destroyed outright, the goods of hawkers on Lagos streets.
How governments came to the conclusion that confiscating or destroying the wares of poor Nigerians is the solution to environmental problems is beyond comprehension. By the way, arguments that hawking is not allowed on the streets of North American and European cities are nothing but a lie.
Newspapers, fruits, and carnations are sold on even the swankiest sidewalks that have been deliberately expanded to accommodate pedestrians and hawkers of all kinds of wares in the biggest cities.
Nigeria’s unemployment rate of 37 per cent is one of the highest in Africa, and it mostly affects young people. The National Bureau of Statistics admits that unemployment that stood at 12.6 million towards the end of 2017 – in the middle of what former Minister of Finance, Kemi Adeosun, described as technical recession – increased to 20.9 by mid-2018.
Yet, Nigeria’s beleaguered, ill-funded, tertiary institutions, that government has not equipped to educate anybody, are churning out roughly 500,000 unskilled graduates, most of whom are unemployable, every year.
The World Bank Enterprise Survey reports that as many as 322 Organised Private Sector companies in Nigeria shut down between 2009 and 2014. If you included informal business entities that quietly went burst, it would be dreary indeed. Another 1,136 OPS companies are about shutting down.
These shutdowns occur because of very harsh business environment, despite government’s claims to the contrary. These include hostile laws, infrastructure deficit, multiple taxation, crime and insecurity issues, weak law enforcement system, and political conflicts along religious, ethnic and regional lines.
When talking about multiple taxation, you have to examine the wisdom in raising the Value Added Tax from five per cent to 7.5 per cent. A former Minister of Finance Anthony Ani is of the opinion that government should expand tax collection laterally, and not vertically.
What this means is that government should rather expand the tax dragnet to include many more taxpayers, than to raise the tax payable by those who already pay tax; it’s another way of saying you shouldn’t kill a willing horse. This new tax regime that is already in the works is guaranteed to further impoverish the poor.
You need to know that the National Assembly, that initially appeared to have rejected the move to raise VAT had already succumbed to pressures from the executive arm, and is going to pass the enabling law as it considers the 2020 Budget Bill.
This All Progressives Congress Federal Government must be wary of tired unimaginative servants who chose to mislead any unsuspecting government, in order to hide their incompetences.
Many are the failures of governance caused by bumbling civil servants who mislead political office holders who do not know any better. They assume false airs of knowing it all, and political office holders fall for their act.
Former military Head of State, General Yakubu Gowon, after finally realising how mischievous and incompetent civil servants could be, once asked critics to blame his advisers for his shortcomings.
A government that does not have a full grasp of the problems is as good as the counsel it gets from civil servants.
Imagine the extent of sloppiness in the listing of Tijani Yusuf as Special Assistant to the President on General Duties, in November, whereas his death was announced in July by the Special Adviser to the President on Media and Publicity, Femi Adesina.
Something else that cripples business in Nigeria is the excruciating lending rate, and the crippling exchange rate: Both straight away put Nigerian manufacturers at a grave disadvantage, ab initio.
If, in a global village, the Monetary Policy Rate of the Bank of England is 0.75 per cent, whereas that of the Central Bank of Nigeria is 13.50 per cent, the Nigerian entrepreneur already lost the competition even before the inevitable spread.
And, despite the six per cent intervention loan that the Federal Government provided for the revival of Nigeria’s textile industry, there is hardly an appreciable impact, simply because of inadequacy of requisite physical infrastructure, coupled with essentially unimaginative macroeconomic policies.
An exchange rate that puts the naira at a 360 per cent disadvantage against the dollar aids capital flight. This reminds one of the economic concept of “funny money,” or artificially inflated currency, with its devastating inflationary effect on poor people’s purchasing power.
A sharp dagger, riven into the well-being of Nigerian citizens is the recent announcement by the CBN that the Treasury bills will no longer be available to individual investors through the Open Market Operations auction.
The logic for restricting investments in Treasury bills to corporate investors is not exactly clear. If Treasury bills are oversubscribed, as well-coordinated media hypes have shown in recent weeks, the measure should have applied to all investors.
If the restriction of Treasury bills auctions to corporate investors is informed by the ease of collection of tax revenue, government could impose a Withholding Tax to be deducted and remitted by the banks.
Though Treasury bills investors, who went on the rebound, invested N300bn in the stock market, it won’t translate to more liquidity for the equities traded, because it is neither Initial Public Offers nor Public Offers. That’s not the investment the CBN is talking about.
Remember that banks that compulsorily issued POs to raise equities as required by the Chukwuma Soludo CBN, pooped because they didn’t quite have real sector companies to borrow their increased cash cache.
Also, funds converted from the CBN Treasury bills into bank fixed deposits won’t necessarily be borrowed by Corporate Nigeria, even with the CBN’s sanction against banks that fail to meet their loans quota. With Nigeria’s dysfunctional infrastructure, the CBN may have to mop up the funds again.
This CBN policy will pauperise retired members of the middle class, who are wary of investing in the highly volatile stock market, or are too old to venture into new start-ups. The CBN needs to rethink its strategy if it is not to return middle class Nigerians into poverty.
That would compromise President Muhammadu Buhari’s quest to bring more Nigerians into the middle class.