It is not news that Nigeria is in dire financial straits. In 2017, the country ranked 152 out of 188 countries on UNDP’s Human Development Index ranking with Lagos, the country’s commercial capital gracing the list of the 10 least livable cities in the world according to statistics released by Economic Intelligence Unit in August 2017. Is it not despicably embarrassing that 10.5 million Nigerian children are still out of school? One in every five children under the age of 5 in Nigeria will not live to see their 5th birthday and today alone, 145 Nigerian women of child bearing age will lose their lives as Nigeria has the second highest maternal death rate in the world.
With a debt profile of over N20 trillion and the ratio of debt to Gross Domestic Product standing at 24.1% as of January 2018, it has become increasingly difficult for Nigeria to fund development projects and programs. Moreover, the decision of some developed countries to cut down official development assistance (ODA) to developing countries makes it urgent for countries like Nigeria who rely a lot on foreign aid to look for innovative ways to fund their own development.
To eventually attain the height of economic sustainability which is defined as “the ability to support a defined level of economic production indefinitely”, the first step exigent for Nigeria to take is to curb illicit financial flows. A high-level panel on illicit financial flows (IFF) chaired by former president of South Africa, Thabo Mbeki revealed that Africa loses about $60 billion to illicit flows annually with Nigeria and South Africa being the biggest losers.
The act of illegally taking out wealth and income generated in Nigeria to other countries is as old as the country itself. Despicable activities like transfer pricing, tax evasion, bribery and kick-backs have extremely drained the economic resources of Nigeria and that of other African countries. Apart from undermining national development efforts, IFFs also erode social values.
It is impossible to stop illicit financial flows totally. However, by digitising our payment systems, revising our anti-money laundering laws, strengthening the capacity of institutions like Economic and Financial Crimes Commission, forging cross-border cooperation through the African Union and ECOWAS for tracking and recovering stolen fund, we can reduce illicit flows to the barest. In the words of Mario Marcel, “Good governance cannot flourish in environments plagued by illegal practices and dirty money”.
Moreover, blessed with an abundance of raw materials and human resource, Nigeria has no excuse to be industrially backward. With a surging youth population, it is imperative for Nigeria to grow her economy at an increased rate to forestall the imminent social friction that hallmarks youth unemployment. To move from being a consumer nation to becoming prosperous through production of goods, Nigeria needs to invest in technology transfer and STEM education. In addition, there’s a need to promote and patronise locally manufactured goods; however, local manufacturers must ensure that these goods meet required standards. The government’s role in all of these is to enact industry friendly policies that will ensure that manufacturers reap reasonable profits.
President of Manufacturers Association of Nigeria, Dr. Frank Jacobs made it known in 2017 that the amount of money spent by Nigerians to import goods from China between 2013 and 2017 is enough to finance Nigeria’s 2013 federal budget.
Many Nigerian manufacturers believe that the rate at which Nigeria imports goods from China contributes majorly to the closure of Nigerian industries. Goods imported from China into Nigeria include machines, textiles and even toothpicks.
Another irksome challenge that needs to be tackled is tax evasion as we cannot wish away the fundamental role that taxation can play in galvanising development. This underpins the fact that Nigeria like other developing countries do not keep up-to-date tax records which is seriously hurting the country’s finances. It has also been established that due to Nigeria’s weak capacity, some huge corporations continue to exploit the gaps in our tax system to evade taxes running into millions of dollars.
An audit conducted by Nigeria’s former finance Minister Ngozi Okonjo-Iweala showed that about 75% of registered firms in Nigeria were not in the tax system. Strengthening tax institutions, building the capacity of tax administrators, setting up computerised systems that make it easy for people to enroll on the tax database and pay taxes while reducing political interference will all go a long way in boosting Nigeria’s resource mobilisation efforts.
Most importantly, without viable governance structures, all national development plans and action are doomed from the start. One of the major factors that makes an environment attractive to investors is the respect for rule of law. It is also of equal importance for governments to proactively manage and curb violence and social tensions in their territories as it is an enduring truth that where there is no peace, prosperity will always be elusive.