Nigeria’s former vice president, Atiku Abubakar, on Wednesday gave his perspective on why the country’s economy is broken, and what the leaders must do to fix it.
Abubakar said the country may wait for long and may not be able to fix its economy, if its leaders wait for oil price or crude exports to rebound.
Abubakar blamed the current economic crisis on the country’s economic model, which he said wasn’t working.
He said the pathway to fixing the economy was “to restructure our government finances so that we politicians have a real incentive to create a more conducive business environment.”
He spoke in Lagos during the investiture ceremony of the ninth president and chairman of Council of the Chartered Institute of Stockbrokers.
He said constant complaints about oil price, oil pipeline vandals and lack of funds were distracting the nation from facing the real economic challenges.
Abubakar admitted that hostile crude oil market and corruption in government hurt the economy, but said that, “Our biggest problem is our addiction to oil revenues; the belief that we are doomed unless oil flows and oil money fills the Federation Account for our tiers of government to share.
“Another related, and flawed, belief is that the federal government alone is the only force, the know-all, be all, and do all that would direct and bankroll the diversification of our economy.
“And we have convinced ourselves, again wrongly, that the only reason that the federal government is unable to spend money to do all we expect it to do is that the money has been stolen. We must erase that mindset in order for us to begin to climb out of our current depths,” he said.
Instead of looking at oil money as what was required to diversify the economy, the federal government must work out ways to empower the private sector to grow the economy and create jobs, he said.
“I don’t mean selecting a few companies deemed worthy of government support. No, we need radical reforms that streamline our bureaucracy and eliminate rules and regulations that stifle innovation.
“We also need robust management processes that ensure that public money buys us better infrastructure, education outcomes and healthcare. Our most valuable resource is not our oil; it is our people. All of our people.
“The good news is that most Nigerians have forgotten about the oil money and moved on with their lives. The bad news is that our governments and political leaders don’t seem to have noticed that shift,” he added.
He recounted how non-oil sectors contributed significantly to the country’s GDP in the past, even though, as he put it, “the move away from oil hasn’t reached all parts of our economy.”
He said he was, however, worried that even though oil receipts have dropped from a long term average of about 70 per cent of federal government revenue to about 50 per cent in the first half of 2016, non-oil receipts were also falling fast.
“Between January and June, the federal government collected 1.2 trillion naira in VAT, corporate taxes, customs and excise duties, and various other levies – 13% (or N150 billion) less than it collected over the same period in 2015. Corporate income taxes dropped by 40% over the past two years.
“This worries me because I think one of the main reasons why we are suffering, the reason why we are so vulnerable to swings in the oil price, and one of the reasons why we can be held hostage by those willing to blow up export pipelines is that unlike our private sector, our governments have not really embraced diversification.”