The 2016 Nigerian National Budget will be funded by 20% oil money, 40% loan money (which will also be repaid with oil money) and 40% taxes (majority of which will be generated from import duties). Technically, oil is still funding over 60% of our budget. And in overall, 70% of the entire budget will be going into paying a bunch of unproductive civil servants that are not even capable of generating 20% of what they earn as monthly salaries from the Federal Government. Is such a country ready for diversification?
The same pattern applies to the State Governments.
First, the first 20% anticipated oil revenue is now under threat. This automatically affects the second 40% loan revenue, how? Nobody gives loan to a country that is not credit worthy. We have been able to borrow in the past because we had been adjudged credit worthy due to our large reservoir of crude oil & natural gas. With the uncertainty facing crude oil prices, can the World Bank and IMF still consider Nigeria as a credit worthy country? I doubt. Have we even finished paying the old debts? No.
Now to the last source of funding for the budget; taxes. I do not know how much exactly Nigeria makes from income tax, VAT and other productive sources of taxation. However, I know that customs duty contribute the bulk of our revenue in taxation. Revenue generated from Customs duty is blood money! How? While the CBN is insisting that Nigerians should stop importing products, the Federal Government is hoping that importation should in fact increase so that more revenues will be generated from income duties. In fact, the new customs boss has been celebrated as generating over 900billion Naira in just seven months; blood money made by the FG as a result of our inability to be locally productive! Depending on this kind of revenue is relying on contradictions but it is real; Nigeria is a contradiction itself! Hopefully, Nigerians will continue to import massively and the government knows this and it is ready to make money out of this even though it continues to pretend in rhetoric that it wants importation to be reduced.
If you look at the major ways Nigeria makes her money, you will see that the future is not bright and that Nigeria is inadvertently responsible for Her own underdevelopment.
What then is the way out, how do we diversify, how do we wake up this big for nothing giant of Africa, how?
First, we must discard this skewed, flawed, corrupt, unitary ‘feeding bottle’ federalism that we currently practice and agree to #RestructureNigeria into a competitive, efficient, productive, competitive, and locally driven #TrueFiscalFederalism.
There are so much monies at our local markets, local motor parks, local businesses, etc., that are going into private pockets because we do not have locality government to collect, manage and make good use of such funds. If we are able to empower local communities and let them know that their basic needs are tied to their local level of productivity and taxation, you will see seriousness in the country. You will see that Nigeria can actually fund her budgets from just internal taxation alone.
Until then, lets continue to deceive ourselves.