Let’s generate output to earn income

Sheriffdeen Tella

Since the discovery of oil in commercial quantity and the subsequent payment of royalties by multinational corporations, the Nigerian government has learnt the easy way of making money or earning income. The economy has always been run as a rent-seeking entity and thus becomes a ‘rental’ economy; which depends on rents from oil rather than engaging in production to survive. Most of the time, the focus has been on the accounts from the Federal Inland Revenue Service, the rent collector, but when that is not meeting up, the country turns to the debt market.

The Nigerian economy is always regarded as a mono-economy even though the rebasing of the national statistics in 2014 shows that there are new areas of significance in the contributions to the economy, besides oil. In the rebasing statistics, the size of the economy increased significantly to about 89 per cent of the initial value and thus moved the Nigerian economy from second biggest to South Africa, to the biggest economy. Oil revenue remains the dominant source of income for the economy, notwithstanding the structural or physical diversification shown by the rebasing.

Rebasing an economy simply implies revaluation of the GDP with a more recent base year to keep up with the evolution in prices. In the case of Nigeria, the base year was moved from 1990 to 2010. The estimate of the total GDP of the Nigerian economy moved from US$270 billion to US$510 billion at the 2014 exchange rate. The important thing was that sectors like telecommunication and entertainment (Nollywood) became more important than hitherto estimated. The telecommunication industry accounted for more than a quarter of the increase in the GDP estimates. Commerce also increased while the proportion of oil reduced by 14 per cent or more than half of what it used to be. The implications are that productive sectors, which are linked to the private sector of the economy, increased in value while the rental public sector contributions declined. That is the nature of returns on work or efforts that generate output and returns on rent-seeking efforts.

In the civilian era, throughout the period from the Olusegun Obasanjo administration to Goodluck Jonathan, oil prices and outputs were rising, and rental income in the form of royalties was also rising, leading to the neglect of the productivity income and the factors that promote productivity. The governments, all the while, failed to develop human capital that can easily take over production from the multinational corporations if and when they decide to go or fail to deliver the quantity we require. This was a Nigeria that made lots of progress in production in the First Republic when incomes were derived mainly from agriculture. The days of groundnut pyramid, cocoa, cotton, rubber produce, and palm oil products with slow but sustainable growth were gone. That orientation gave way to the rapid but sustainable growth of the rent-seeking economy.

Whenever the rent-seeking economy gets a knock from a rapid fall in oil prices and the national income falls substantially, the rest of the economy becomes sickly and enters trauma requiring the dosage of therapeutic actions like borrowing instead of shifting to increase output and incomes in other sectors. If the knock becomes prolonged, we start seeking interest-free loans.

In the Muhammadu Buhari era, when prices of crude oil plummeted and output fell continuously, instead of encouraging production in the oil sector, developing steel production and raising outputs in the agricultural sector to reduce imports of food and raw materials, the government rushed to the domestic and foreign credit or loan markets for succour. Why have we not been able to bridge the gap left by multilateral oil corporations? Why have we not been able to solve the electricity problems? Why are we witnessing a continuous fall in agricultural production? It is because we do not think of how to solve the problem productively but how to sidetrack the problems from the easiest means, even if temporary.

The Nigerian National Petroleum Company Ltd, a private sector enterprise as we are made to believe, is perching on the Dangote refinery as a shareholder rather than establishing its refinery to compete with other domestic oil refineries. It established the sales of petrol through franchises or rent-seeking modus operandi. The company already has its projected profit profile and all it needs to do is to increase the prices of its products to meet the target.

The electricity generation and distribution companies have profiles of profits and without concern for improving outputs, they must meet the target through increase in prices, with the understanding that they will have the tacit support of the government whose interest is also to meet the target of projected incomes with productivity. How many new investments have the generation and distribution companies made since the commercialisation and privatisation of the electricity industry? By how much has the structure of production in the sector changed?  How many megawatts of electricity have they added since the transition?

South Africa has added over 10,000 megawatts of electricity in less than two decades. It generates electricity from hydro, nuclear, renewables, coal, et cetera. Only one company, Escom, has been powering electricity in South Africa since 1923. It continues to improve output and charge appropriately. The company provides 50kwh per month of free electricity for citizens before charging for extra units at approved tariff rates. Nigerian electricity companies want to charge appropriately without supplying electricity efficiently.

While Muhammadu Buhari’s rent-seeking mentality revolved around borrowing from various sources, the Tinubu rent-seeking mentality revolves around income generation through taxes and levies. Each MDA is seen as an income-generating or profit centre.  While it is taking the government almost a year to arrive at a minimum wage for workers in the face of the high cost of living or falling standard of living since this government came on board, it does not take the government time to introduce some measures to extract money directly or indirectly from the citizens.

The government supports increases in charges on electricity, telecommunication, banking services, et cetera, with the belief that the increase in incomes from such charges will result in high corporate income tax returns to the government. The government was not concerned about the outputs of these agencies. Workers have been suffering from government policies. Since the removal of fuel subsidy and the merging of exchange rates, prices continue to rise but the government does not care about the sacrifice labour has made, only for it to offer N48,000.00 as minimum wage. Salaries and allowances are major factors enhancing productivity but N48,000.00 cannot improve productivity and outputs in any way. The Nigerian government must think and work on output generation to derive income rather than a rent-seeking mentality through royalties, debts and/or taxes.

It is probably the rent-seeking mentality that has made an enlightened Speaker of a state House of Assembly think that the best way to assist some teenage female orphans is to marry them off and make them dependent on their husbands for survival. That is a way to start seeking pleasure in the bodies of these young girls instead of assisting them to develop skills that can make them productive for themselves and the economy. He wants to increase the country’s population rather than the stock of human capital. He never thought that he could make them productive through human capital development by sending them to schools or for some training to acquire education or some skills. That will not only give them meaningful lives but also the spillover effects on the nation’s basket of human capital. What happens to the males? They have no pleasure to offer to satisfy some conjugal bliss.

Unfortunately, some Islamic clerics and even top echelon of the learned profession are out to defend the action of the Speaker on Islamic grounds even when the first five verses of the Holy Quran as revealed to the Holy Prophet Muhammed said, “Read (O prophet), in the name of your Lord, who created; created man from a clot of congealed blood” Surah Al-Alaq or Quran Chapter 96. The Quran emphasises education over and above marital issues. The Speaker and his cohorts are eager to take advantage of the innocence of the orphans to satisfy their appetite for conjugal bliss! We can pray that God saves the poor from our leaders and probably, our elites.