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Published On: Tue, May 6th, 2014

Re-appraising the rebased GDP

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By Donald Ikenna Ofoegbu

Today we have a rebased-GDP that has catapulted Nigeria to the position of the largest economy in Africa with a GDP of $510billion. This has placed us amongst the fastest growing economy in the world. However, such growth has not translated into development as the above abridged reality suggest otherwise. The rebasing of the GRP was long overdue and deserves commendation, but the bulk of the work remains undone. The rebased GDP ought to have been reflected into sector development and improved welfare. The Vision 20:2020 envisages a transformational growth which can be seen in the vital sectors of the economy and translated in an improvement in the Human Development Index. In achieving the vision 2020 there are guidelines prescribed by the Vision 2020 documents and other enabling acts, which requires a committed and disciplined application by all stakeholders. Overtime, the contrary persist in the pursuit of the vision as governments at all levels have contributed to killing the vision through irresponsible fiscal prioritization.

For instance, both state and federal governments budget are dominated by government operating and personnel cost, instead of a reasonable proportion to capital infrastructural projects. Currently the operating and personnel cost of government is over 70% of the entire budget, while capital budget have hardly exceeded 26%. Aside the low infrastructural appropriations, capital budgets are far from full-utilization. Official figures released from the Budget Office of the Federation, shows that only 51% of the budgeted sum for capital infrastructure provision and maintenance was used in 2012, and 45.7% as at September 2013.

For the rebased GDP to have any impact on the entire society there is need for the redistribution of wealth amongst the people. An equitable fiscal system must be put in place: the PAYE system must be fully and widely enforced; Properties that are hardly occupied around the country should be taxed, as well as all corporate bodies and political office holders (in which case a disclosure of remuneration must be enforced). This would require a strengthening and empowering of the Federal Inland Revenue Service (FIRS) to enforce collection; as well as cooperation with the Corporate Affairs Commission (CAC) to ensure compliance.

Areas of revenue leakage need be plugged; the government need to be true and serious in their fight against oil theft and vandalism; oil cabals should at least be named and shamed, if not booked and jailed. The construction of local refineries relative to sizes should be the agenda of all administration, as the current subsidy scheme seem to be bloated with scams. The Petroleum Industry Bill (PIB) which is long overdue should be signed into law. Waivers of custom duties should be abolished as developmental funds are wasted in the name of preference.

Funding commitment need be focused to the agricultural and manufacturing sector as the re-basement suggests. Funding of these sectors need to be tilted towards mechanisation and infrastructure development; for instance factory and processing plants should be erected to engineer the extension of agricultural value chain. This will create more jobs for Nigerians, reduce the over-dependence on oil; cure the effects of Dutch disease, cut down import dependency as more made in Nigeria products come to existence. This effort must be guarded with the right trade policies which must protect the Nigerian manufacturer at all cost. There is also a crucial need to achieve steady power supply; the DISCOs and Transmitting companies need to upgrade their services; improving electric facilities through financial sourcing of floated of securities. This will ensure the needed available long term financial leverage as well as increase ownership by Nigerians.

Intervention schemes such as the SURE-P should be focused on stand-alone-projects against merging with existing projects. Synergising the SURE-P to the federal government projects makes the outcome and impact of the intervention to be rather unclear and questionable especially in the areas of infrastructure. Hence the SURE-P infrastructure projects can be limited to educational infrastructures, health facilities, as well as agricultural projects; along with the social safety nets.

The Nigerian budget process should be timely and participatory in accordance with the fiscal responsibility act. Still on the budget, the cost of governance should be prune down as annual budgets are over-blotted with frivolous and wasteful line items such as the Security Wide votes. These ought to be abolished and channelled into priority areas like the infrastructure, security and defence. According to the Economist Magazine in July 15 2013, Nigerian legislatures are the highest paid in the world; making political offices a do or die affair; susceptible to adverse selection. Such remuneration is not commensurate with Nigeria’s state of want. Despite clamours and appeal to the Revenue Allocation Mobilization and Fiscal Commission (RAMFAC) upon whose shoulder lies the responsibility to restructure the remuneration packages of the public and political office holders, the agency seem rather handicapped, hence, a wider income inequality. This ought not to be.

Finally, the rule of law must be upheld. Nigeria must rise to the point were no individual citizen or group stand supreme over the nation or her constitution. Full and stiffer sanction must be played out on offenders; the common practice of plea bargain should be eroded from the constitution and all acts. The Judiciary must be given independence from the executive; from the selection of judges by the governors/presidents to their daily judiciary proceeds. Such autonomy must be granted to all other government agencies. Citizens must also learn to be responsible and inquisitive into the affairs of the government. For Nigeria to attain higher development, the governments at all levels must be fiscally responsible; having an existing fiscal commission to oversee this.

 

Donald IkennaOfoegbu is a public finance expert/researcher, Centre for Social Justice

 

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