… Increased investment in social sectors, infrastructure needed to avoid current shaky economy in 2023
…Requests for physical submission of documents to FIRS, SIRS retrogressive, cumbersome, counterproductive
…CBN’s Naira redesign, cash withdrawal limit policies great, but wrongly timed
… External, domestic borrowing to finance budget deficit creating more economic challenges
Ahead of 2023, a development and economic expert, and the Founder of Amaka Chiwuike-Uba Foundation (ACUF), Dr. Chiwuike Uba, has said that an evaluation of Nigeria’s economic performance in 2022 shows that policies of federal and state governments were poor, abysmal and retrogressive.
Dr. Uba in a statement emailed to ASHENEWS on Saturday, lamented that the Federal Inland Revenue Service (FIRS) and State Inland Revenue Service (SIRS) were yet to fully embrace digitization as business owners and organizations are still expected to physically visit the offices of the revenue agencies with documents, instead of making electronic transmissions.
He however advised the federal government to avoid the current shaky economy in 2023 by increasing investment in social sectors and the infrastructure needed to promote and protect investments if the economy is to be repositioned in 2023.
“Progressively, the year 2022 will soon end after the Christmas holiday celebration. As expected, many people in the Christmas frenzy are shopping and spending their limited resources without taking into account the core expenses of 2023. The attitude of Nigerians towards their future reflects the attitude of governments towards the national economy and the welfare of citizens.
“First, it is important to congratulate President Buhari on some of the successes in 2022. Although based on evidence and other economic indicators, Nigeria’s economy is struggling and heading towards the rocks. The completion of the second Niger Bridge, the Abuja-Kano and Lagos-Ibadan expressways is highly commendable.
“The recovery of more than USD$322 million and the determination of the enforcement of the arbitrary award of USD$10 billion to P&ID strengthened the government’s position in the fight against corruption. In addition, it is worth mentioning, among other accomplishments, the settlement of billions of dollars’ worth of adverse claims on the Ajaokuta steel plant.
“At the State level, there have also been some achievements by some State governments. The ongoing infrastructural development in Imo State has the capacity to turn around the economy of the State in a few years’ time.
“For the most part, Nigeria’s economy did not do well in 2022. It is therefore urgent to put in place a policy and interventions to reverse the economic collapse and avoid the continuation of this ugly past in 2023. In particular, between Q1 2022 and Q3 2022, agricultural and services growth rates declined by 58% and 6% respectively. Overall, the non-oil growth rate decreased by 30% and the oil growth rate by 13%.
“The real GDP growth rate at basic prices decreased by 28% from 3.11% in Q1 to 2.25% in Q3. In the same vein, real GDP growth at market prices fell by 34% from 3.60% in Q1 to 2.28% in Q3. Export declined by 16.4% from N7.1trn in Q1 to N5.9trn in Q3, non-oil export declined by 38.8% from N715bn in Q1 to N437bn in Q3 and crude oil export by 17.1% compared to 13.8% decline in non-crude oil export during the year.
“How can the economy be okay with over 133 million Nigerians into multidimensional poverty, which is nothing but abject poverty and a misery index of 62.79 points in July 2022? Insecurity and oil theft have to be dealt without further delay if Nigeria’s economy in 2023 will fare better.
“The continued use of the CBN’s ways and means, external and domestic borrowing to finance the budget deficit, has created more economic challenges. Unless this trend is reversed, Nigeria’s economic difficulties will worsen in 2023. Evidence shows that the increase in ways and means has contributed to around 40% of the money supply, which in turn contributed 7.60% to inflation.
“Over 70% of current inflation rate in Nigeria is driven by the exchange rate (depreciation of the Naira), with diesel and aviation accounting for over 11% and about 7% by other exogenous shocks. The contribution of money supply to inflation is below 10 per cent, yet the policy direction of the CBN largely focuses on the money supply, without the effort needed to address ways and means and the question of the exchange rate and Naira depreciation.
“The redesign of the Naira and cash withdrawal limits are, without any doubt, good policies geared towards the migration of transactions from physical money to electronic money. If well managed, digital and electronic transactions will create a better audit trail for tax, accounting and security. However, the timing of policy issuance and implementation is not the best option for the nation’s social and economic development.
“The infrastructure and platform necessary to effectively and efficiently implement the policy is not currently in place in an adequate manner. Market frictions and distortions/disruptions to electronic banking services (poor banking networks, unreliable electricity and telecommunications services) have not been addressed. In most cases, it takes months for banks to solve and reverse failed transactions. Furthermore, given the large and growing army of illiterates in Nigeria, appropriate awareness and education should have preceded the launch and implementation of the policy.
“The short transitional period for the redesigned currency, while not the best strategy, can help prevent asset bubbles by slowing the flow of black money into the sector. Old banknotes not deposited in banks will become useless at the end of January 2023. Nigeria currently has more than 28 million housing deficits, and many Nigerians are homeless and sleeping beneath the bridges and uncompleted buildings. Yet there are a lot of empty, unoccupied and dilapidated buildings scattered throughout Nigeria because most of the black money is channeled into real estate.
“To improve and enhance property tax revenues, the federal government needs to work with sub-national governments to implement property registration and property taxes, to discourage speculative buyers as well. Every property should be linked to TIN, BVN and NIN for correct property identification and ownership linkage.
“As the expression goes, the future is digital. FIRS and the 36 SIRS states have done a lot in this area and should be commended. Nevertheless, it is very discouraging to ask businesses and individuals to submit physical documents and open files at the respective FIRS and State tax offices when it is possible to do so electronically. The FIRS and all SIRS should digitize their systems to allow for the creation, submission of documents and account updates without the taxpayer physically going to tax offices.
“It is regrettable that the federal government is not able to account for stamp duty revenues, which are deducted electronically from customers’ bank accounts. This brings to light the amount of lost income and waste in Nigeria. Not surprising that an Accountant General could steal over N109 billion in Nigeria. Only God knows how much revenue the government has lost from other MDAs.
“Nigeria’s current educational system is not innovative and does not rely on entrepreneurship, critical thinking and problem-solving skills. On average, ASUU has spent 34% of total academic days, representing more than 3 days in every 10 working days being on strike since 1999. The future of the Nigerian economy is supposed to be knowledge driven. Unfortunately, the acquisition and development of the needed knowledge is being hampered by the unfolding paralysis, occasioned by poor basic education and incessant strikes at tertiary education level. Policies cannot be understood or properly accepted by an illiterate population. In the same, while primary healthcare centres (PHCs) represent over 85% of the over 39,000 hospitals and clinics in Nigeria, about 90% of these PHCs are not functional. These situation needs to be reversed in 2023, irrespective who wins the elections.
“To avoid the current shaky economy in 2023, there is a need to increase investment in social sectors and the infrastructure needed to promote and protect investment. This is more important and better that than the current CBN’s resort to ‘dash’ or ‘pump’ money into few selected private companies.
“Most businesses require a good business environment, electricity, security and a decent transportation system. The deception perpetuated by the government at various levels in the budgetary process should be discontinued. What is the essence of having a higher proportion of capital budget in the total budget, when it is obvious that the money will not be properly spent on capital projects? In reality, the actual spending of governments shows that more money is spent on recurring expenditures (including interest on debt payments) than on capital expenditures at the end of each year.
“In addition, in 2023, the President, the governors of the States and all persons appointed by the government must put an end to the luxuriance in office and the globetrotting, which are at the expense of the State. The National Development Plan should be inclusive and integrated with all the State Development Plans to avoid duplication of efforts and projects. The nation has witnessed so much waste of resources and theft of public funds due to the lack of inclusiveness, policy integration and coordination. To counter current paralysis and better serve society, Nigeria needs to transform itself to become more productive in 2023. To this end, Nigerians should vote for candidates with character, competence, capacity and courage in the 2023 elections.
“To demolish the culture of impunity, lack of accountability and entrench effective checks and balances, Nigeria needs those with the courage to catch and publicly disgrace public fund thieves. Nigeria needs good managers of resources, not those that have the records and/or propensity to damage and squander state resources. Nigeria needs leaders with the capability and courage to catalyze cultural change in governance and leadership and the adoption of a more responsible culture. Finally, Nigeria’s economy beyond the 2023 elections should be inclusive rather than left entirely in the hands of politicians. Transparency needs to be embedded in the system to promote the demand for accountability from the claim holders, which are the citizens,” Dr Uba said.