To reduce future debt servicing bill, the Federal Government got the Central Bank of Nigeria to crash interest payable on Treasury Bills, then raised Value Added Tax from five per cent, to 7.5, per cent, to raise its revenue profile.
But strangely, the same cash-starved Federal Government is shaving duties on imported cars from 35, to five, per cent, with the outlandish explanation that this will lead to a reduction in cost of transport, and positively reflect on cost of food.
Also, the Federal Government is thinking of selling off non-oil assets to fund the 2021 Budget. Funds from “Ancestor” Sani Abacha are thinning out as his family want the courts to unfreeze foreign bank accounts traced to him.
Among assets slated for sale –to improve government cashflow in the immediate term– are electricity Integrated Power Plants in Geregu, near Lokoja, in Kogi State, Omotoso, in Ondo State and Calabar, in Cross Rivers State.
These should fetch N434 million. But when you consider the parlous state of the economy, untidy sales, administrative bottlenecks and the dismal performance of the IPPs already sold, you won’t expect too much proceeds from the sales.
In addition, government will concession the National Arts Theatre, Iganmu, National Stadium, Surulere, and Tafawa Balewa Square, Onikan, all in Lagos State. Others are, Moshood Abiola Stadium in Abuja and River Basin Authorities across the country.
If you think the disclosure by Oscar Onyema, Chief Executive Officer of the Nigerian Stock Exchange, that the Federal Government alone raised N2.36 trillion, or 92 per cent, of total bonds issued in 2020 indicates that government is desperate for cash, you are correct.
To give teeth to its plan to twist the eminent domain concept to access unclaimed dividends and deposits in dormant bank accounts of Nigerian citizens, the National Assembly passed the Finance Act 2020 and the President, Major General Muhammadu Buhari (retd), hurriedly signed it.
The Act provides, among other things, that any unclaimed dividends of public limited liability companies and any unutilised amounts in dormant bank accounts shall be transferred into the Unclaimed Funds Trust Fund, for where government can borrow.
In addition, Section 382(2) of Nigeria’s Companies and Allied Matters Act allows issuing houses to retain unclaimed dividends and make beneficial investments with the funds after a period of 15 months.
At the moment, the amount of money in dormant bank accounts is N737.5 billion and total unclaimed dividends is N158 billion, both totalling N895.5 billion. Whereas, the projected deficit of the 2021 Budget is N5.20 trillion, roughly 38.27 per cent of the 2021 Budget. It also about 3.64 per cent of the 2021 projected Gross Domestic Product.
Bank accounts that have become dormant are those upon which there have been no activities –of deposits or withdrawals– for a period of three to five years, safe for payment of interests credited into savings accounts. Such accounts are expected to be turned over to the state treasury.
The procedure is called “escheating,” which Chambers Oxford Dictionary defines as “property that falls to the feudal Lord (in bygone European realms, where the lords owned the land and the serfs), or to the state for want of an heir, or by forfeiture, plunder or gain.”
Government doesn’t seem to understand that the unclaimed dividends come as a result of poor information from companies to the beneficiaries, and that the dormant bank deposits occur because depositors don’t know where to invest their money because of government’s inappropriate macroeconomic policies.
Governance is becoming more and more unimaginative as state actors only take advantage of the obligation of the citizens to provide ways and means to support governments, through sundry taxations, philanthropies and voluntary services.
The 2021 Budget is N13.588 trillion, N505 billion above the N13.082 trillion in 2020 Budget that failed in the most part because of the COVID-19 pandemic and the consequent lockdown. Of the N7.886 trillion expected revenue, N2.01 trillion will be coming from oil sales and another N1.49 trillion is expected from non-oil revenue.
You may want to know that about 1.86 million barrels of oil is projected to be produced daily. This is inclusive of 300,000 to 400,000 barrels of condensate. The projected price per barrel is $40, far below the price some four or five years ago.
The amount earmarked for debt servicing in the 2021 Budget is N3.124 trillion, which is about 20 per cent of the budget and an increase of N445.57 billion to the N2.68 trillion budget deficit of the rested 2020 Budget.
In the end, N3.27 trillion was expended on debt servicing, according to Zainab Ahmed, Minister of Finance, Budget and National Planning. This may get worse in the unsure 2021.
The National Bureau of Statistics revealed that Company Income Tax dropped, by N120.29 billion, from N416.01 billion in the Third quarter, to N295.72 billion in the Fourth Quarter, in 2020.
According to the Debt Management Office, a total sum of N31.009 billion was owed by the three tiers of government in foreign and domestic debts as of June 2020. This is scary when you consider that government revenue continues to suffer persistent shortfalls.
These dismal statistics inform the rogue policy of the regime of Buhari. It also shows that the regime is at its wits’ end and has no more to offer from its bag of tricks.
One would like to ask this regime where it expects to rack up free funds to shore up budgets from 2022 and beyond, after it has wiped off deposits in dormant bank accounts and unclaimed dividends for the 2021 Budget.
Members of Nigeria’s political elite, from every hue of ideology or lack of ideology, continuously demonstrate abject lack of appreciation of the political and economic quandary that Nigeria has sunk into.
And that is a big stumbling block in the way of political and economic recovery for the nation. All they do is tax and spend on a bloated government structure that hardly works in the people’s interest.
One often wonders if they understand the concept of social legislation, which promotes laws and policies to improve the living conditions of the people and guarantee citizens’ protection against hazards like insecurity, unemployment, illness and vicissitudes of old age.
When presenting the 2021 Budget proposal to the National Assembly, President Buhari enumerated expenditure items such as non-debt recurrent costs; personnel costs, pensions, gratuities and retirees’ benefits; overheads; statutory transfers; sinking funds to retire mature debts.
Most of these are evidence of a bloated bureaucracy. It’s important to note that expenditure on capital projects is N3.85 trillion, which translates to a mere 29 per cent of the N13.588 trillion 2021 Budget.
See, the first set of assets that government should have sold off are the Nigerian National Petroleum Corporation’s drainpipe refineries that lost N152.08 billions in the last 15 straight months. So much money is voted for their operations every year, yet they are neither productive nor profitable.
In addition, government needs to take a second and hard look at the recommendations of the Oronsaye-led panel that some Ministries, Departments and Agencies should be scrapped, merged, or downsized.
Nigerians must openly protest and resist the plan to take away their private funds by clueless state actors that are always seeking the easy way out. They must not be allowed to shift the burden of governance to the people.
