Nigeria’s dwindling oil revenue and the need to harness other resources
By Mustapha Sumaila of the News Agency of Nigeria (NAN)
Over reliance on crude oil earning as revenue by successive government owing to the neglect of agriculture, manufacturing, solid minerals and other abundant natural resources had taken the country backward in its development stride.
Before oil was discovered in the country in 1956 at Oloibiri now in Bayelsa state, agriculture was a major and main source of revenue but was quickly abandoned and neglected to embrace “the cash cow”.
The saying that crude oil as source of revenue is not sustainable is evident during this COVID-19 pandemic where the prices of oil crashed to as low as 15 dollars per barrel from its top average of 55 dollars.
The crash of oil price compelled many nations of the world, including Nigeria, to review their budgets downward to suit the reality of the economy occasioned by the pandemic.
Diversification of the economy has been a rhetoric in the country until recently when reality dawn on Nigeria, that its survival as a nation cannot depend on oil, it has no option but to follow the trend to pursue non-oil revenue for a better future.
In the past, Nigeria was known for agriculture where different regions in the country were cultivating various crops like Groundnuts, Cottons, Cocoa, Oil palm and rubber among others for domestic use as well as for exportation.
There is no gainsaying that diversification of the economy in the country was elusive until the present administration came on board and showed a lot of zeal and commitment to agriculture following various interventions by the Central Bank of Nigeria (CBN) in the sector.
No doubt that the CBN’s interventions in the sector in the last five years had helped to salvage the economy especially during the pandemic.
The data released by the apex bank indicates that about N479 billion has been expended so far under the CBN’s Anchor Borrowers Programme which has facilitated cultivation of some selected crops in the programme.
Some experts who reacted on this are of the view that Nigeria must do more to turn back the hands of time in revenue generation and do it in old ways where agriculture and manufacturing sectors were promoted and given desired attention.
The President of the Oil Palm Growers Association of Nigeria (OPGAN) Mr Joe Onyiuke said there was no alternative to agriculture in terms of wealth and job creation.
Onyiuke noted that the country was better when all the cash crops like oil palm, cottons, groundnuts and rubbers among others were exported for foreign exchange.
He however commended President Muhammadu Buhari and the CBN for empowering smallholder farmers under the Anchor Borrower Programme (ABP) across the country.
“We need to bring oil palm back to the original status as it used to be a major foreign exchange earner for this country.
“Imagine, other countries that came here to take our seeds today are doing much better than us and are even earning much more than we earn on crude oil.
“If we don’t take time in this country, a time will come when people from other countries like Indonesia and Malaysia will come here and buy all the lands because they have stopped them from expanding there,” he stated.
Similarly, Mr Lukman Kareem, a tax expert said the country had made the best use of tax revenues in the past years especially 70s and early 80s.
Kareem explained that then citizens were also willing to pay taxes as everyone benefited one way or the other from the revenue collected from taxes owing to transparency and accountability exhibited by administrators.
The expert recalled that tax revenue in the 70s, 80s and early 90s was accounting for an average of 27 per cent of total revenue generated.
He said then civil servants were more productive and revenue collection as well as rendition was top-notch compare to now where some revenue collected was either being mismanaged or misappropriated.
“Though considering the prices of goods and exchange rates, tax utilisation now may seems better, but the reality still remains that tax revenues now are like 1000th percentile of what was obtainable then.
“If the pace at which tax is being administered then continued till present day, I doubt if Nigerians will be willing to relocate abroad.
“United Kingdom basically survives on tax and residents are willing to pay despite the high tax being paid by citizens of the country though the government over there take citizens’ welfare and wellbeing as primary responsibility.
“The cost of governance in Nigeria is too high and unless and until it is reduced to the barest minimum and making it look less attractive to citizens, we will continue to have issues in proper governance and accountability,” he explained.
Meanwhile, Kareem noted that in order to boost revenue from taxes, government should make tax collection and administration transparent and equitable.
According to him, it is unfair to spend tax payers’ money in the payment of furniture allowance to political office holders.
“If the government can solve just electricity problem today, revenue from taxes will obviously increase, not to talk of a good road network, Nigerians are willing to pay toll fee for a good road, and it was done in the 70s and citizens paid wilfully.
“Nigeria as a country can survive on tax aside oil revenue. If only we can reduce our cost of governance and encourage local contents to thrive.
“All we need right now is a change in orientation by our leaders in the helm of affairs as well as the subjects, the citizens, doing that, we will make Nigeria great again”.
Speaking recently on the sharp drop in oil revenue, the Executive Chairman of Federal Inland Revenue Service (FIRS), Mr Muhammad Nami, said with the pandemic that had consistently crashed the prices of oil globally, Nigeria must shift attention from oil to non oil revenue.
Nami stated that non-oil tax receipts had consistently contributed 75 to 90 per cent of total tax revenue in recent months due to the dwindling oil revenue.
He explained that in spite the national and global economic upheaval caused by the COVID-19 pandemic, the service had continued to record significant increase in collectable tax revenue from the non-oil sector of the economy.
According to him, out of N490 billion collected by the service as of July, only N52 billion was from the oil sector, with the rest coming in through non-oil receipts.
The FIRS boss attributed the increase in the non-oil sector receipt to reform measures introduced by the FIRS Board and Management as well as the renewed vigour in the service workforce.
Meanwhile, Mr Isa Aremu, the General Secretary, National Union of Textile, Garment and Tailoring Workers of Nigeria (NUTGTWN), lamented the closure of hundreds of textile factories, which used to employ “millions of workers, more than the workforce of the Federal Government in the 70s and 80s.”
Aremu said for Nigerian economy to come back to live, unemployment challenge must be tackled and Cotton, Textiles and Garments (CTG) sub sector is key to boost employment in the country.
He, however, commended the textile-friendly policies of the Buhari-led administration, such as the interventions by the CBN and the Executive Order by the President on the use of local garments by uniformed organisations, among others.
Aremu stressed the need to tackle the high incidence of smuggling of textiles, in order to protect the sector as well as boost job creation.
The activist said the recent signing of MoU between the CBN and some major stakeholders was a gradual effort aimed at lifting the sector from the state of hopelessness to hope.
****If used, please credit the writer and the News Agency of Nigeria (NAN)