Nigeria's Post-Election Financial Realities

Abstract

Nigeria faces a paradox of having Africa’s biggest economy but not Africa’s biggest government revenue. While Nigerian economy is about 155.4 percent of South Africa’s economy, the revenue generated by Nigerian government is only about 79.5 percent of the revenue generated by South African government. The total revenue in the Nigerian federation account has been 12 percent of GDP, compared to minimum government revenue of 25 percent of GDP in Africa’s next five largest economies: South Africa, Egypt, Algeria, Angola, and Morocco.The stark fiscal reality is that Nigerian government currently has less than half of the revenue required to deliver quality governance. Little wonder that health, education, security and basic infrastructure services provided by Nigerian government are very poor. However, revenue leakages through crude oil ‘theft’, spurious petroleum ‘subsidy’ payouts, abuses of tax/import-duty waivers and too much ‘autonomy’ for revenue collecting agencies is the bane of Nigeria’s revenue inadequacy.Nigeria needs to put an end to crude oil theft, stop all petroleum subsidy payments, streamline tax/import-duty waivers, amend existing laws to abolish the autonomy granted revenue collecting agencies and create a single-treasury-account for all types of government revenue, with all government ministries, departments and agencies included in a single appropriation process to ensure adequate resources for good quality governance. In addition government should rely on self-funding mechanisms for developing nationwide rail network and related infrastructure systems.Financial intermediaries and markets are contributing their bits in mobilizing the financial assets required for Nigeria’s growth and stability, but Nigerian government has to pull its weight as an independent attractor of foreign capital, and also court investors more actively by liberalizing growth enabling sectors, getting out of the way, making necessary arrangements to provide concrete assurances of stability, and being more conscious of the sensitivity of inward investment to realities of, especially government’s pronouncements about, the fiscal situation.