It should be obvious by now that Nigeria can no longer make the journey to prosperity on the fossil economy; badly needing a new fuel to create a modern society.
Coronavirus has ravaged the Nigerian economy, to the extent that the country now prints money to give little sparks of energy to a flagging system.
There is no economic agenda that will work without a significant injection of revenue from new sources.
There is high unemployment, the like of which we have never experienced.
By some estimates, the unemployment rate is somewhere in the region of 30-40 percent of the population.
That means as many as four out 10 Nigerians could be waking up with nothing in the world to do or eat. Having more than 30 per cent hopeless patriots among us is too scary to even contemplate.
Nigeria is not just faced with these immediate challenges.
It is becoming clear that in the approaching years, a decaying infrastructure, an exploding population, poor education and healthcare systems, and climate change will form a perfect storm over the country.
The nation needs a big injection of cash to help pay for necessary spending.
With oil revenue falling in droplets, it can no longer be business as usual for our lazy leaders.
The days of convergence on Abuja to share the national loot are about over.
The picture of state governors sitting round the table in Aso Rock to share the cake is fading.
The nation’s fattest cow, the Nigerian National Petroleum Corporation (NNPC), has just said there is no milk in its breast for a while.
That cow is aging, sick and unable to nurture the corrupt economic illiterates in power.
A country that has for nearly five decades lived on oil is facing the reality of a new life – a life without cheap money.
We are piling up loans after loans as a means of escape, and the apex bank has admitted that it has been financing a broke nation through its printers, implying that we are spending the money that did not exist
This is the day that we expected to come but have not prepared for.
We have been profligate with oil income in Nigeria and have wasted numerous opportunities to remake the economy.
The result is that Nigeria has to deal with the consequences of reckless spending now.
But instead of getting down to brass tacks, it is confounding to see the government taking the easy path of begging and printing money to survive.
We are piling up loans after loans as a means of escape, and the apex bank has admitted that it has been financing a broke nation through its printers, implying that we are spending the money that did not exist.
The current approach is a road to perdition.
Nigeria is headed towards a dangerous and harmful financial storm. Common sense should dictate that a something different is required to avoid an impending economic collapse.
Strong leadership, a clear vision, perfect planning and pragmatic solutions are urgently needed but are in scarce supply.
What Nigeria needs is a new economy that is no longer built on the free gift of nature; but on hard work, wisdom and a common purpose to construct from the sweat of our brows.
Great nations have never been built upon free money only. Where nature has been generous, natural endowments become just an engine for development. It is almost impossible to sustain economies on natural resources alone.
If Nigeria were an Algeria, Libya, Equatorial Guinea or Saudi Arabia, it may have lived longer on oil alone; but an exploding population puts pressure on the source of revenue to the extent that reliance on oil is unsustainable.
Even nations like Saudi Arabia and UAE have learned to diversify.
Nigeria has a few options through its economic quagmire, but there is a particular one that is often overlooked – taxation.
Compared to the more prosperous nations, Nigerians are paying too little to sustain an economy. The highest marginal individual income tax rate is 24 per cent, which the rich hardly pays.
In the United Kingdom, the highest rate is 47 per cent, while the US has a rate of 51 per cent. Germany levies 47.5 per cent, The Netherlands has 49.5 per cent, Israel has 50 per cent, Italy has 47 and Japan levies 56 per cent. It is 44.5 per cent in Canada and South Korea levies 42 per cent for the highest bracket.
Even among African nations, the Nigerian affluent pay among the lowest rates.
Congo levies 40 per cent, Gabon 35 per cent, Kenya 30 per cent, Morocco 38 per cent and Senegal 50 per cent.
The country is virtually a tax haven for everyone, but the rich pay almost nothing.
We moan about the state of public infrastructure when Nigerians pay next to nothing in taxes. Development should be financed through tax income.
More worrying though is that we have a community of prosperous individuals who pay absolutely nothing but feast upon the poor.
The wealthy in Nigeria pay too little, when they pay at all; but the same individuals pay a lot quite frequently in the other nations where they have invested.
A World Bank report says less than 30 per cent of Nigerians pay tax, showing the country as having one of the lowest tax-to-GDP ratios anywhere – around six per cent in 2016.
The tax-to-GDP ratio in South Africa was 29 per cent, Ghana 18%, Egypt 15 per cent and Kenya 18 per cent, says the Organisation for Economic Co-operation and Development (OECD).
A report by the accounting firm, PWC, says that nearly half of Nigeria’s tax payers are in Lagos.
It wrote, “According to the Joint Tax Board, there are ten million people (precisely 10,006,304) registered for personal income tax purposes in all the states of the federation including the FCT. Out of this, about 4.6 million or 46% are registered with the Lagos State Internal Revenue Service (LIRS) indicating an average of 153,000 or 1.5 per cent per state for others.”
Of the collections, only a drop come from the super-rich. Former Director-General, Budget Office, Mr. Bode Agusto, revealed that wealthy Nigerians are the biggest tax evaders. “The biggest culprits with respect to tax evasion are the wealthy 0.1 per cent of the population (or 200,000 individuals) who ought to self-assess themselves to tax but fail to do so. The focus should be on them, not businesses and those in employment who are already largely compliant.”
As the nation nears the fiscal cliff, it is time to ask why wealthy Nigerians have been having a free ride. Why should affluent Nigerians be piling up Porsches and Ferraris, foreign citizenships and homes abroad, expensive medical trips and vacations, when they do not pay the nation that feeds the wealth?
Economic inequality has been widening but never as much as it is today, with 90 million living in poverty while the rich display immoral affluence.
The tax system that completely ignores the fact that some people are rich enough to carry much of the economic weight is no longer relevant.
I advocate that everyone who is able to pay tax should be assessed and forced to pay, but that the rich should pay even a lot more to dig Nigeria out of the economic mess introduced by decreasing oil revenue.
It is time to review the capital market and directly deduct from the accounts of those who have gained the most from the prosperity of the last two decades.
The World Bank recommends that to have meaningfully economic growth, each country should have a tax revenue that is not less than 15 per cent of national income. To reach that level, the rich must chip in.
Apart from a lack of infrastructure to collect taxes, Nigerians evade taxes because of manifest corruption and failure to see tax money at work.
I get it. Corruption will always be an issue in governance. However, if people pay, it may actually become a stimulus for the citizens to become a watchdog on corrupt public officials.
But if everyone else cannot pay, those earning more than 100 million per year, those flaunting wealth on social media and parties, those importing expensive cars and riding helicopters and airplanes, enjoying expensive vacations in choice resorts and buying foreign citizenships must be made to pay to repair the damage that many of them contributed to.
The class that has done really well has an obligation to lift everyone else up.
It is becoming disgusting to see the display of wealth in front of millions of poor people.