Import Of Obaseki’s Speech

The world has changed. Nigeria has changed. The economy of Nigeria is not the same again whether we like it or not. We have been managing since the civil war. We say money is not our problem. As long as we are pumping crude oil every day there will always be money. So, we have run a strange economy, a strange presidential system. Everywhere else, the government relies on the people to produce taxes, they collect taxes and it is the taxes they use to run the local, state and federal government.
But the way we run Nigeria and subsequently the political parties up till now is that it does not matter. The country can go on holiday; the country can go and sleep. At the end of the month, we all just go to Abuja and we collect money and we come back and we spend. We are in huge financial trouble. First, what we used to rely on, crude oil, forget what you are seeing now as 60, 70 dollars per a barrel. It is only a mirage. It’s only a question of time because the major oil companies – Shell, Chevron are no longer investing as much in oil. Chevron is now one of the world’s largest investors in alternative fuel. Shell is pulling out of Nigeria.
So, in another year or so, where will we find this money that we go to Abuja to share? Last month, the Federal Government printed an additional N50 to N60 billion to top up for us to share. This April again, we will go to Abuja, we will share. By the end of this year, our total borrowings is going to be within N15 to N16 trillion. You can imagine a family, you don’t have money coming in, you’re just borrowing and borrowing and borrowing without any means or idea on how to pay back and nobody is looking at that. Everybody is looking at 2023.” – Godwin Obaseki, Edo State Governor
Yes, it is a long quote but I had to insert it because within these few lines lies the major economic problem of the nation. Of course, Obaseki having been in power for over four years cannot be exonerated from the quantum mess in the country. The economy of Edo State may have nosedived during his administration as claimed by the leadership of APC in the state, but did he hit the nail on the head? Yes, he did. Is the speech a wake-up call? Definitely!
I think it’s high time Nigerians, both in low and high places began to tell ourselves the stack naked truth and stop all the lies and cover ups that are doing the country no good. We all are in this sinking ship and if we fail to realize it or continue to pretend that all is well, when the ship sinks, we will all go down. We cannot continue on the unprogressive lane we have been for decades and expect the country to grow.
Several economic experts have warned time without number about the nation’s over dependence on oil and the danger it portends to the economic growth of the country yet no concrete measure is seen to have been taken to change the narrative by successive administrations. The manufacturing sector is almost dead. The agricultural sector is in bad shape. Even those that have been keeping the sector alive and some other persons that try to go into agriculture are discouraged by the unending insecurity in the country.
The most worrisome issue raised by Obaseki is the revenue sharing method. Our federation is such that monthly revenue accruing from oil, corporate taxes, VAT, customs, and other levies are shared across the three tiers of government- federal, state and the local governments after 13% of any revenue made from natural resources is paid to the origin states of those resources and other deductions associated with collecting revenues is made. In line with the sharing formula, the federal government takes 52.68%, the states share 26.72% while the local governments get 20.60%. Each state gets its own share of the revenue based on a “Horizontal Allocation Formula” with a few factors put into consideration.
With the assurance of the monthly income, many states hardly look inward for other sources of income. Reports have it that up to 14 states fund at least 90% of their budget with their FAAC allocations. With the dwindling oil revenue, the FG may resort to printing more money to be shared as revealed by Obaseki or continue borrowing from countries across the globe and from within. A recent report of the National Bureau of Statistics (NBS) reveals that the country’s total public debt stock, constituting of external and domestic debts stood at N32.22 trillion ($84.57 billion) as at September 30, 2020, indicating an increase of N6.01 trillion within a year. The worst is that there is little or nothing to show for these huge borrowings both at the federal and state levels.
These should be of great concern to any well-meaning Nigerian especially the policy makers who by now ought to be working on policies that will result in a paradigm shift in the country. Gov. Obaseki’s suggestion of raising internally generated revenue through taxes is not a bad idea provided those saddled with that responsibility will be sincere and the money will be judiciously used.
Some analysts have also posited that the current system of government in Nigeria is very expensive and wasteful saying that instead of the presidential system, the country should go back to regional system of government which allows various regions to grow at their pace and engenders competition among the regions. Certainly, that is the way to go. Let the geo-political zones think outside the box, using their abundant natural resources and other endowments to develop themselves. They should be paying stipulated percentage of their income to the federal government instead of the other way round.
It is also imperative that urgent and due attention be paid to the development of the agricultural, manufacturing and other sectors of the economy as well as the revitalisation of all the dead industries across the country. Adequate measures should be taken to tackle the heightened insecurity challenge in various parts of the country because, without security, all plans towards having a better country will be futile efforts.

By: Calista Ezeaku