Feature/OPED
History, Recession and a Sector in Progressive Decay
By Jerome-Mario Utomi
You cannot bring about prosperity by discouraging thrift. You cannot keep out of trouble by spending more than you earn. You cannot build character and courage by taking away man’s initiative and independence. You cannot help men permanently by doing for them what they could and should do for themselves. -Abraham Lincoln
Two days after the National Bureau of Statistics (NBS) announced on Saturday, November 21, 2020, that the Nigerian economy has slipped into its second recession in five years, and the worst economic decline in almost four decades as the gross domestic product contracted for the second consecutive quarter with the nation’s GDP recording a negative growth of 3.62 per cent in the third quarter of 2020, I stumbled on two opposing views about history.
The first emphasized the views that history promotes scepticism, a questioning attitude or doubt towards one or more putative instances of knowledge which are asserted to be mere belief or dogma, and sharpens one’s critical minds which give room for assessing programmes of development with reference to their historical antecedents.
For the other, history is a storehouse of practical lessons in human activities. To drive the argument home, it submitted; If Africans and, in fact, Nigerians could truly retain the knowledge that they were enslaved and colonized, they will strive to be developed and independent so that it will not happen again,
Without a doubt, it is a perfect disclosure. But the example is so ‘horrendous’, in parts, because they are the direct opposite of what Nigeria is all about. Here, it is always ‘convenient to forget and uncomfortable to remember’.
In line with the above piece of information, President Muhammadu Buhari on Monday in Abuja said that the downturn (recession) was caused by the COVID-19 pandemic including lockdowns, disruption in global supply chains, business failures and rising unemployment.
Mr President, who was represented by Vice-President Yemi Osinbajo, stated this while declaring open the 26th Nigerian Economic Summit with the theme Building Partnerships for Resilience and jointly organized by the Nigerian Economic Summit Group (NESG) and the Ministry of Finance, Budget and National Planning.
Peripherally, Mr President’s points look valid considering the fact that oil production fell to 1.67 million barrels a day from 1.81 million barrels in the previous quarter, and according to reports, the lowest since the third quarter in 2016 when the economy last experienced a recession. This is made worse by the awareness that crude oil accounts for nearly 90 per cent of Nigeria’s foreign exchange earnings.
It is, however, significant to underline, before going further the fact that this opinion article is written not to pass judgement against or wholeheartedly approve and endorse his claim but to consider and set record straight about how the rise of obnoxious policies/decisions lavishly made since 2015 serve only to exacerbate the decline of the nation’s economy and jeopardizes our democracy.
With the above highlighted, let us focus on and be guided by some specific comments credited to well foresighted and quietly influential Nigerians that reacted to the latest economic downturn.
To some, it is no surprise Nigeria entered yet another recession. Their argument is hinged on the premise that until Nigeria is led by an intellectually competent leader, with visionary politics backed by sound economic thinking and knowledge, the economic transformation will remain a dream. It’s for citizens to do the needful.
To others, “Recession didn’t just happen. People looted Nigeria into recession. The same people are regrouping for 2023.”
For the rest, for Nigeria to pull itself out of this economic recession, the second in the last 5 years, there’s a compelling need to cut the pork out of the budget and expenditure at all levels of government and redirect the economy from a wasteful consumption-based one to a productive economy.
Like faith which is a belief in things not seen, there are accompanying reasons and ingrained truth in the above arguments.
In the opinion of this piece, one silent point fuelling recession and economic stagnation/retardation in the country is the reality that the managers of our nation’s economy have continued to go against the provisions of the constitutions as an attempt to disengage governance from public sector control of the economy has only played into waiting hands of the profiteers of goods and services to the detriment of the Nigerian people.
While the nation continues to lie prostrate and diminish socially and economically with grinding poverty, the privileged political few continue to flourish in obscene and splendour as they pillage and ravage the resources of our country at will.
Supporting this assertion is the latest Ibrahim Mo Index of African Governance (IIAG) which reportedly scored Nigeria an embarrassing 26/100 for corruption in state institutions and 25/100 for corruption in public procurement.
Whilst the report went head to ranks Nigeria 34th out of 54 for overall governance and highlights “increasing deterioration” in the governance of our nation, it pointed plenty of “warning signs” for Nigeria, including the following scores: 21/100 for a functioning criminal justice system (ranking in the lowest-performing quarter of nations); 25/100 for political party financing; 30/100 for disclosure of financial information; 35/100 for law enforcement; 32/100 for equal political power (ranking us 38th out of 54).
Certainly, a striking human tragedy deepened by the awareness that it was avoidable. But more important than all of this regret is the realization of the fact that we were warned with mountains of evidence that recession was coming, yet, our leaders who are never ready to serve or save the citizens ignored the warnings describing it as a prank.
The World Bank gave a forecast that the Nigerian economy will contract by 3.2 per cent in 2020, assuming the spread of COVID-19 is contained by the third quarter. The International Monetary Fund forecast a contraction of 4.3 per cent.
In the same vein, a reputable media organizations in the country in one of its editorial comment early this year drew our attention to the sad reality that Nigeria would be facing another round of fiscal headwinds this year with the mix of $83 billion debt; rising recurrent expenditure; increased cost of debt servicing; sustained fall in revenue; and about $22 billion debt plan waiting for legislative approval.
It may be worse if the anticipated shocks from the global economy, like the Brexit, the United States-China trade war and interest rate policy of the Federal Reserve Bank go awry.
The nation’s debt stock, currently at $83 billion, comes with huge debt service provision in excess of N2.1 trillion in 2019 but set to rise in 2020. This challenge stems from the country’s revenue crisis, which has remained unabating in the last five years, while the borrowings have persisted, an indication that the economy has been primed for recurring tough outcomes, the report concluded.
Similarly, the Nigeria Extractive Industries Transparency Initiative (NEITI), a while ago told Nigerians that the nation loses about $4.1 or N123 billion annually due to poor crude oil production metering, stating that unless the government takes appropriate measures, limitations in the metering of crude oil production will continue to pose a serious threat to the nation’s revenue target.
Regrettably, Nigeria is the only oil-producing country without adequate metering to ascertain the accurate quantity of crude oil produced at any given time, the report concluded.
From the above accounts, we don’t need to be economic buffs to know that a country that services its debt with 50 per cent of its annual revenue has become a high-risk borrower. What the above tells us as a country is that the recession did not take the nation by storm. It announced its coming and we read the signs.
And the nation will continue to have its head stuck in recession mud until leaders recognize that as a nation, our economy is in progressive decay not because of our geographical location or due to absence of mineral/natural resources but because they failed to take decisions that engineer prosperity.
As this piece may not unfold completely the answers to these challenges, there are a few sectors that a nation desirous of development can start from. And the first that comes to mind is the urgent need for diversification of the nation’s revenue sources. Revenue diversification from what developments experts are saying will provide options for the nation reduce financial risks and increase national economic stability: As a decline in particular revenue source might be offset by an increase in other revenue sources.
In conclusion,, as the nation continues to bear the present challenge, it is important to inform Nigerians who witnessed recessions in 1984 but ignored the lessons to wonder in dilemma, that like every other socioeconomic challenge, corruption and lack of creative leadership that breeds recession will be difficult to fight or meaningful changes implemented on the nation’s political shore when the individuals/institutions who are the cause of the problems in the first place are still around. And attempting to engineer prosperity without confronting the root cause of the problems and politics that keep them going in the writer’s views is unlikely to bear fruits.
Nigerians need initiative and independent minds to do this as we cannot solve our socio-economic challenges with the same thinking we used when we created it.’
Jerome-Mario Utomi is the Programme Coordinator (Media and Public Policy), Social and Economic Justice Advocacy (SEJA), Lagos. He could be reached via [email protected] or 08032725374.
By Luke Kyohere
The global payments landscape is undergoing a rapid transformation. New technologies coupled with the rising demand for seamless, secure, and efficient transactions has spurred on an exciting new era of innovation and growth. With 2025 fast approaching, here are important trends that will shape the future of payments:
1. The rise of real-time payments
Until recently, real-time payments have been used in Africa for cross-border mobile money payments, but less so for traditional payments. We are seeing companies like Mastercard investing in this area, as well as central banks in Africa putting focus on this.
2. Cashless payments will increase
In 2025, we will see the continued acceleration of cashless payments across Africa. B2B payments in particular will also increase. Digital payments began between individuals but are now becoming commonplace for larger corporate transactions.
3. Digital currency will hit mainstream
In the cryptocurrency space, we will see an increase in the use of stablecoins like United States Digital Currency (USDC) and Tether (USDT) which are linked to US dollars. These will come to replace traditional cryptocurrencies as their price point is more stable. This year, many countries will begin preparing for Central Bank Digital Currencies (CBDCs), government-backed digital currencies which use blockchain.
The increased uptake of digital currencies reflects the maturity of distributed ledger technology and improved API availability.
4. Increased government oversight
As adoption of digital currencies will increase, governments will also put more focus into monitoring these flows. In particular, this will centre on companies and banks rather than individuals. The goal of this will be to control and occasionally curb runaway foreign exchange (FX) rates.
5. Business leaders buy into AI technology
In 2025, we will see many business leaders buying into AI through respected providers relying on well-researched platforms and huge data sets. Most companies don’t have the budget to invest in their own research and development in AI, so many are now opting to ‘buy’ into the technology rather than ‘build’ it themselves. Moreover, many businesses are concerned about the risks associated with data ownership and accuracy so buying software is another way to avoid this risk.
6. Continued AI Adoption in Payments
In payments, the proliferation of AI will continue to improve user experience and increase security. To detect fraud, AI is used to track patterns and payment flows in real-time. If unusual activity is detected, the technology can be used to flag or even block payments which may be fraudulent.
When it comes to user experience, we will also see AI being used to improve the interface design of payment platforms. The technology will also increasingly be used for translation for international payment platforms.
7. Rise of Super Apps
To get more from their platforms, mobile network operators are building comprehensive service platforms, integrating multiple payment experiences into a single app. This reflects the shift of many users moving from text-based services to mobile apps. Rather than offering a single service, super apps are packing many other services into a single app. For example, apps which may have previously been used primarily for lending, now have options for saving and paying bills.
8. Business strategy shift
Recent major technological changes will force business leaders to focus on much shorter prediction and reaction cycles. Because the rate of change has been unprecedented in the past year, this will force decision-makers to adapt quickly, be decisive and nimble.
As the payments space evolves, businesses, banks, and governments must continually embrace innovation, collaboration, and prioritise customer needs. These efforts build a more inclusive, secure, and efficient payment system that supports local to global economic growth – enabling true financial inclusion across borders.
Luke Kyohere is the Group Chief Product and Innovation Officer at Onafriq
In a heartfelt statement released today, the Conference of Nigeria Political Parties (CNPP) has extended its warmest congratulations to Ghana’s President-Elect, emphasizing the importance of learning from Ghana’s recent electoral success as Nigeria gears up for its 2027 general elections.
In a statement signed by its Deputy National Publicity Secretary, Comrade James Ezema, the CNPP highlighted the need for Nigeria to reclaim its status as a leader in democratic governance in Africa.
“The recent victory of Ghana’s President-Elect is a testament to the maturity and resilience of Ghana’s democracy,” the CNPP stated. “As we celebrate this achievement, we must reflect on the lessons that Nigeria can learn from our West African neighbour.”
The CNPP’s message underscored the significance of free, fair, and credible elections, a standard that Ghana has set and one that Nigeria has previously achieved under former President Goodluck Jonathan in 2015. “It is high time for Nigeria to reclaim its position as a beacon of democracy in Africa,” the CNPP asserted, calling for a renewed commitment to the electoral process.
Central to CNPP’s message is the insistence that “the will of the people must be supreme in Nigeria’s electoral processes.” The umbrella body of all registered political parties and political associations in Nigeria CNPP emphasized the necessity of an electoral system that genuinely reflects the wishes of the Nigerian populace. “We must strive to create an environment where elections are free from manipulation, violence, and intimidation,” the CNPP urged, calling on the Independent National Electoral Commission (INEC) to take decisive action to ensure the integrity of the electoral process.
The CNPP also expressed concern over premature declarations regarding the 2027 elections, stating, “It is disheartening to note that some individuals are already announcing that there is no vacancy in Aso Rock in 2027. This kind of statement not only undermines the democratic principles that our nation holds dear but also distracts from the pressing need for the current administration to earn the trust of the electorate.”
The CNPP viewed the upcoming elections as a pivotal moment for Nigeria. “The 2027 general elections present a unique opportunity for Nigeria to reclaim its position as a leader in democratic governance in Africa,” it remarked. The body called on all stakeholders — including the executive, legislature, judiciary, the Independent National Electoral Commission (INEC), and civil society organisations — to collaborate in ensuring that elections are transparent, credible, and reflective of the will of the Nigerian people.
As the most populous African country prepares for the 2027 elections, the CNPP urged all Nigerians to remain vigilant and committed to democratic principles. “We must work together to ensure that our elections are free from violence, intimidation, and manipulation,” the statement stated, reaffirming the CNPP’s commitment to promoting a peaceful and credible electoral process.
In conclusion, the CNPP congratulated the President-Elect of Ghana and the Ghanaian people on their remarkable achievements.
“We look forward to learning from their experience and working together to strengthen democracy in our region,” the CNPP concluded.
By Kenechukwu Aguolu
The proposed tax reform, involving four tax bills introduced by the Federal Government, has received significant criticism. Notably, it was rejected by the Governors’ Forum but was still forwarded to the National Assembly. Unlike the various bold economic decisions made by this government, concessions will likely need to be made on these tax reforms, which involve legislative amendments and therefore cannot be imposed by the executive. This article highlights the purposes of taxation, the qualities of a good tax system, and some of the implications of the proposed tax reforms.
One of the major purposes of taxation is to generate revenue for the government to finance its activities. A good tax system should raise sufficient revenue for the government to fund its operations, and support economic and infrastructural development. For any country to achieve meaningful progress, its tax-to-GDP ratio should be at least 15%. Currently, Nigeria’s tax-to-GDP ratio is less than 11%. The proposed tax reforms aim to increase this ratio to 18% within the next three years.
A good tax system should also promote income redistribution and equality by implementing progressive tax policies. In line with this, the proposed tax reforms favour low-income earners. For example, individuals earning less than one million naira annually are exempted from personal income tax. Additionally, essential goods and services such as food, accommodation, and transportation, which constitute a significant portion of household consumption for low- and middle-income groups, are to be exempted from VAT.
In addition to equality, a good tax system should ensure equity and fairness, a key area of contention surrounding the proposed reforms. If implemented, the amendments to the Value Added Tax could lead to a significant reduction in the federal allocation for some states; impairing their ability to finance government operations and development projects. The VAT amendments should be holistically revisited to promote fairness and national unity.
The establishment of a single agency to collect government taxes, the Nigeria Revenue Service, could reduce loopholes that have previously resulted in revenue losses, provided proper controls are put in place. It is logically easier to monitor revenue collection by one agency than by multiple agencies. However, this is not a magical solution. With automation, revenue collection can be seamless whether it is managed by one agency or several, as long as monitoring and accountability measures are implemented effectively.
The proposed tax reforms by the Federal Government are well-intentioned. However, all concerns raised by Nigerians should be looked into, and concessions should be made where necessary. Policies are more effective when they are adapted to suit the unique characteristics of a nation, rather than adopted wholesale. A good tax system should aim to raise sufficient revenue, ensure equitable income distribution, and promote equality, equity, and fairness.
-
Feature/OPED5 years agoDavos was Different this year
-
Travel/Tourism8 years ago
Lagos Seals Western Lodge Hotel In Ikorodu
-
Showbiz2 years agoEstranged Lover Releases Videos of Empress Njamah Bathing
-
Banking6 years agoSort Codes of GTBank Branches in Nigeria
-
Economy2 years agoSubsidy Removal: CNG at N130 Per Litre Cheaper Than Petrol—IPMAN
-
Banking2 years agoFirst Bank Announces Planned Downtime
-
Sports2 years agoHighest Paid Nigerian Footballer – How Much Do Nigerian Footballers Earn
-
Technology4 years agoHow To Link Your MTN, Airtel, Glo, 9mobile Lines to NIN