Transcript
Speaker: Good day.
Speaker: This is Balance and Beyond, a policy focused podcast that is powered by Ideas Untrapped.
Speaker: So what we are trying to do is to focus upon the pressing ideas that we hope that
Speaker: Nigerians should be or might be focused upon and which are not being discussed in an explicit way within the campaigns or in a coherent way often within the manifestos of the four viable and major presidential candidates in Nigeria's election which is to happen at this point in a few days in late February 2023.
Speaker: Today, we actually have an extraordinary guest.
Speaker: It's Mr. Oidele is the fiscal policy partner and Africa tax leader at PwC.
Speaker: He is an author, a policy analyst, and an extremely incisive and acute commentator on finance, business and economics matters.
Speaker: But in particular today, we wanted to talk about the fiscal situation of Nigeria and the tax situation of Nigeria.
Speaker: Anyone who runs a business like I build infrastructure for a living will have noticed the kind of what you feel is the rapaciousness of the tax man of late.
Speaker: And also experience that you don't necessarily feel as if you're getting bang for your buck, even when you do pay the taxes.
Speaker: On the show, we talked about the fiscal situation a bit.
Speaker: We had Michael Farmer Osteers a couple of episodes ago, and he painted this really grim picture, the fiscal situation of the country.
Speaker: One persistent question to my mind that has been coming up that I suspect will come up, which I would like you to clear up for us, is yes, the debt situation is bad.
Speaker: We know how large the deficit
Speaker: has done in the last seven years going forward.
Speaker: So the question of revenue then keeps coming up, you know, because some people say that, oh, we have a revenue problem.
Speaker: They are not raising enough revenue.
Speaker: And what the next administration should prioritize is to find more ways to raise more revenue.
Speaker: which then means, we have seen it also in the last couple of years, raising taxes, introducing additional taxes to the existing corpus.
Speaker: So, clear this up for us.
Speaker: Do we have a revenue problem?
Speaker: What exactly does it mean having a revenue problem, at least in the fiscal context of Nigeria?
Speaker: And is that true?
Speaker: Or do we just simply have a spending problem?
Speaker: Or like Andrew has also said that we have a growth problem.
Speaker: We are not growing enough because when you grow, that's when businesses grow enough to pay taxes.
Speaker: So clear this up for us, please.
Speaker: Yes, that's an interesting question.
Speaker: And, you know, I really just hope that very soon in my lifetime, we get to a point where in a political setting such as this time, matters of taxes will take the front row seat that they truly deserve.
Speaker: So what you observe in all developed countries is that this conversation is very important because it's at the heart of the social contract.
Speaker: Essentially, you have people who are applying to be employed to use our common resources to take care of us.
Speaker: That's really what governance is all about.
Speaker: Sadly, that's task culture, the understanding of it and task morale is generally very low.
Speaker: But I have to say also that in my career, in over 20 years now, I have seen some progress in terms of focus on tax matters.
Speaker: So kudos to you guys for spotlighting this very important topic.
Speaker: Now to your question, I think that debate is always very interesting, whether we have a revenue problem, a debt problem, a spending problem, a growth problem.
Speaker: The way I'd like to summarize it is that we have a revenue mismanagement problem.
Speaker: And the reason why that summarizes it for me is that on one hand, Nigerians are actually paying a lot in taxes.
Speaker: Our government is collecting so little.
Speaker: Why?
Speaker: Because we have created a lot of leakages, a lot of corruption.
Speaker: a lot of inefficiencies between what the people pay and what government collects, at least officially, which is what is then available to take care of the people.
Speaker: So on the average, you find a small business would easily pay 40 different taxes.
Speaker: There was a video I shared on my social media a few weeks back.
Speaker: You know, this was just a holiday break.
Speaker: We were just trying to transport food items.
Speaker: from one state to another and having to pay 73 different taxes, 73, 1,500, 2,000, 3,000, 1,500.
Speaker: I saw that.
Speaker: I told all the licenses, local government licenses.
Speaker: Yeah, you know, it's insane.
Speaker: When you add that up, you easily cross 200,000.
Speaker: For what?
Speaker: And then we are surprised why.
Speaker: But it seems like the process is even more than the money, right?
Speaker: If there was one place where you could just pay 200,000 and go on your way, fair enough.
Speaker: complying with those particular multiple layers of taxation is almost more burdensome than the money itself because otherwise you just factor in your budget.
Speaker: Am I?
Speaker: Yeah, yeah, you're right.
Speaker: You're right.
Speaker: So you have the problem with multiplicity of those taxing.
Speaker: and then you have multiplicity of collecting agencies.
Speaker: And sometimes the guys who are even collecting these are not state actors.
Speaker: They are not state actors that have been empowered directly or indirectly by politicians to harass people such that a lot of those monies don't even get into the government covers in the first place.
Speaker: So what that means is as of today, if every Naira that is paid by Nigerians, by small businesses, by large corporations, everyone paying taxes in Nigeria, if all of that money gets into government, Nigeria will have a surplus budget even as of today.
Speaker: Right.
Speaker: Guaranteed.
Speaker: I have no doubts in my mind.
Speaker: You don't need to look far.
Speaker: In the 2023 budget alone, the federal government has 63 government-owned entities, you know, MDAs, that have been given revenue targets.
Speaker: Some of them collect their revenue in dollars.
Speaker: Until about two years ago, they begged them to even, you know, remit 20%.
Speaker: within a government, other sub-governments, that they can run whatever they like, charge people how much they want, spend it as they please.
Speaker: That's why you see them building massive buildings.
Speaker: The most expensive buildings in Nigeria are owned by government-owned enterprises, by MDAs.
Speaker: What's an example of such an institution, please?
Speaker: So you have first NDDC.
Speaker: So NDDC, I would imagine these guys get trillions of naira every single year, trillions.
Speaker: They charge 3% on the budget of oil and gas companies in the Niger Delta, right?
Speaker: and then they get some allocation, they get a percentage of federal accounts.
Speaker: If you leave that and you go to NEMASA, NEMASA charges in dollars, MPA, NCC.
Speaker: I can continue like that.
Speaker: There's so many all over the place, everybody trying to collect amounts of, you know, one levy or the other, and it's not reflecting in government's revenue.
Speaker: And then we just continue like this is supposed to be normal.
Speaker: So that revenue mismanagement problem is the reason why we then have a debt
Speaker: because the money is not there to spend, you then start borrowing, right?
Speaker: If the borrowing is not coming as fast or it's not easy, then you have the CBN to print it.
Speaker: And then you're surprised that there's inflation.
Speaker: Now you've created scarcity of Naira that is now affecting the poorest people more than the politicians.
Speaker: Now it might be completely unnecessary, right?
Speaker: All the data shows that Nigeria actually has one of the lowest quantity of currency in circulation of any country in the world.
Speaker: currency in circulation is less than 2% of our GDP.
Speaker: US is about 10%.
Speaker: Even India after the monetization in 2016, they are now at about 2.9%.
Speaker: And you could be able to target these criminals, corrupt politicians, bandits, and kidnappers easily because they don't move around.
Speaker: They're not spending $20,000 or $30,000.
Speaker: They're spending large amounts of money.
Speaker: They have loads of money in
Speaker: hundreds of millions and billions of naira.
Speaker: It's easy to target them while you protect the vulnerable people.
Speaker: So, but back to the question again, you then have a revenue problem because you mismanage the little you have, then you create a debt crisis because not only are you borrowing, you are borrowing for the wrong things, wrong priorities.
Speaker: Wistful spending, even when you spend the money for what you consider to be a credible project, it takes forever.
Speaker: If you are in Lagos, Ibadan, Expressway, trying to construct it for 12 years, in my view, imagine if that was a private sector project, you have been extremely inefficient and wasteful because people have not benefited.
Speaker: In fact, they have suffered for 12 years.
Speaker: You have borrowed the money, you are servicing it, yet the road is not ready, right?
Speaker: So put all of this together and you come up with this one conclusion.
Speaker: It's just mismanagement.
Speaker: That's the problem we're having.
Speaker: And until we fix that mismanagement, whether you grow or not, you know, Andrew is right.
Speaker: Growth helps you when you have finished plucking the low hanging fruits.
Speaker: So you need growth to now move to the next level.
Speaker: My view is even that the low hanging fruit is all over the place, right?
Speaker: So we haven't even finished with that, you know.
Speaker: So the problem in the immediate term is not growth, it's mismanagement.
Speaker: This is really teaching me and I have to ask you because this is what you do.
Speaker: I read some of your reports.
Speaker: I read the latest business card that you led with PWS.
Speaker: It was in December or November.
Speaker: The granularity of the details are made
Speaker: So you study this problem.
Speaker: Now, when you see some people make what I can charitably call deceptive arguments, I don't want to mention this, we'll then take this deceptively simple aggregate measures like revenue to GDP ratio.
Speaker: to say or imply that Nigerians are not paying enough taxes, government is broke, and hence the solution is to collect more, more, more, more.
Speaker: So how does this
Speaker: I wouldn't say it's wrong.
Speaker: I'll say it's a different perspective, right?
Speaker: And sometimes if you look at the data from the outside, you may see stuff that are very different.
Speaker: So this is very similar to what we hear from the IMF.
Speaker: It's very similar to what you hear from the World Bank, right?
Speaker: Even though they have offices in Nigeria, but you can't... I think Razia Khan was taking this point.
Speaker: be such a distortion.
Speaker: It's easy to fly in that, oh, consumption taxes in Nigeria are not sufficiently high, right?
Speaker: But in here and work here and
Speaker: completely crazy about that because Razia had a tweet and she said that, oh, Nigeria's credit rating would go up immensely if we raise consumption taxes to 15%.
Speaker: You know, those are the things I call, you know, textbook solutions, right?
Speaker: So you've been to Harvard, you've been to all these Ivy League universities.
Speaker: You're likely to take those global theories and, you know, practices and want to apply it everywhere without looking at the context, right?
Speaker: So one thing I've said to the IMF, for example, is when they say our consumption tax rate is low, one of the lowest in the world, I say, well, you're looking at the headline rates, right?
Speaker: It's 7.5% and it appears like one of the lowest.
Speaker: But I can tell you, being an expert who works and lives here, right?
Speaker: I know that in Nigeria, our VAT system, you don't get input credit for services.
Speaker: You don't get input credits for investments and assets.
Speaker: That's different from over 100 other countries around the world.
Speaker: So it's 7.5% in Nigeria, but it feels like 15% already.
Speaker: So if somebody is saying to you to raise it to 15%, they just want to kill businesses because they don't know what that means in terms of the burden that you have to bear.
Speaker: On top of that, you finish paying the statutory taxes to government and you have huge amounts of implicit taxes you have to pay.
Speaker: So energy prices went up last year by almost 400%, particularly for diesel between January and December from manufacturer.
Speaker: My wife runs a small business and her bill for diesel alone quickly exceeded the salary of almost 20 staff, right?
Speaker: So, and I said, well, energy crisis was a global problem, but I don't know of any country where the bill went up by 400% if there was power from the grid and it
Speaker: stable max you have an increase of 100 percent so in nigeria if i have to incur 400 i've just paid an extra 300 in implicit tax not to talk about the roads you have to fix not to talk about providing your own water that is more expensive not to talk about security that people have to provide in their ex-state and wherever they live and the list goes on and on right
Speaker: So the problem with Nigeria tax system is not a problem of increasing tax rates.
Speaker: It's certainly not a problem of introducing new taxes.
Speaker: In fact, what we need to do is to repeal many of the taxes.
Speaker: It's interesting to know that officially there's a law called Approval of Levies and Taxes.
Speaker: It has about 63 different taxes collectible by federal, state and local governments.
Speaker: Unofficially, we have over 200 other taxes.
Speaker: Now, interestingly, about 98% of revenue collected in Nigeria from taxes across all levels of government come from less than nine taxes.
Speaker: And I said to myself, imagine that we have a bill today at the National Assembly that says we have identified these 55 taxes that are creating more problems than solutions.
Speaker: and we'll repeat all of them and replace with one tax, right?
Speaker: Like what Timmy said, and see how people will react to that.
Speaker: The people will pay less.
Speaker: The federal allocation, like it's one tax.
Speaker: Yeah, exactly.
Speaker: And then you share it.
Speaker: That's what you do already.
Speaker: You have the federal accounts.
Speaker: Right.
Speaker: My view is that look at the mission.
Speaker: You can call them castle taxes or property taxes.
Speaker: At the state level, collect personal income tax and consumption tax if you decide it properly.
Speaker: Okay, please.
Speaker: What are the nine worthwhile taxes?
Speaker: So the nine worthwhile taxes in terms of the size they contribute currently is value added tax is one.
Speaker: You have the petroleum profit tax.
Speaker: You have the company's income tax.
Speaker: You have the personal income tax.
Speaker: You have the capital gains tax, which I think if I, you can make that with company income tax to become just one tax called income tax.
Speaker: Uh, you also have, stamp duties and I'll say property tax, you know, so I didn't know whether it's up to nine bucks.
Speaker: You know, I didn't prepare a lease for this conversation, but those are the major taxes, VAT, company income tax, personal income tax, half-target tax, excise duties.
Speaker: And of course you have the import duties for cost terms, right?
Speaker: You know, those taxes are around eight or nine and they contribute, you know, 98, 99% of our tax revenue.
Speaker: So you then have all manner of, nobody even knows.
Speaker: The problem is that nobody can tell you confidently today that these are the number of taxes that people have to pay in Nigeria.
Speaker: Not even knowing where it starts and where it ends in itself is a problem because just imagine an informal sector person trying to make a living.
Speaker: They don't understand all these tax law we are talking about.
Speaker: So somebody shows up every time.
Speaker: If they don't comply, they take their wares, side mirror.
Speaker: They don't even know which law says they should pay or they should not pay.
Speaker: So that's thinking alone.
Speaker: You don't know when you'll be stopped again.
Speaker: Maybe after 15 minutes, somebody will stop you again.
Speaker: You don't know how much they will collect.
Speaker: In itself, it's a headache for the investment environment.
Speaker: And it goes all the way down to even the big companies as to what else are they going to ask me to pay now, right?
Speaker: So those are the major issues with the tax system that I think once you get a proper understanding, I worry that, you know, many of the leaders don't even understand the problems.
Speaker: And if you don't understand the problem sufficiently well, you cannot solve it because you're going to be prescribing a wrong, you know, medication for something like having headache and taking medication for diabetes.
Speaker: Before we move on to the fiscal cliff, is
Speaker: Could one bill passed by the National Assembly solve this particular problem?
Speaker: Could it basically obviate the taxes and levies, etc.?
Speaker: Is there a solution to this?
Speaker: Because one of the things I think about a great deal is the question of what would a new president do?
Speaker: What would be the solution to this particular problem?
Speaker: Yeah, so unfortunately, it's not a solution that can be fixed with just one bill.
Speaker: I think the starting point for whoever wants to do this, and it requires a lot of political goodwill and negotiation.
Speaker: So I think it has to start with the constitution itself.
Speaker: So you have to go into the constitution and limit the number of taxes that can be imposed.
Speaker: So you can recognize the powers of state to impose taxes as well as the federal government.
Speaker: But in my view, you should put a cap that the number of taxis at any time should not be more than a single digit.
Speaker: So that way you limit everybody to nine.
Speaker: That would be a major win, right?
Speaker: What you then do next is to then harmonize who collects the taxes.
Speaker: You know, all the laws where you've created all manners of agencies, by the way, the federal government alone has more than 800 agencies.
Speaker: As we speak, there are more than 80 different bills at different stages seeking to create more agencies.
Speaker: And they have a template.
Speaker: I'm sorry.
Speaker: I'm sorry.
Speaker: Did you say 80?
Speaker: Over 80, actually.
Speaker: It's over 80.
Speaker: So you know we keep saying you have to make an agency... What are some of these new agencies supposed to do?
Speaker: Yeah, no, so if you just think about it in Nigeria, the way these things work, right?
Speaker: So somebody will go and say, we need an agency to take care of the welfare of the people.
Speaker: So there was one they wanted to set up, and they said it was for, I think, a healthcare bill.
Speaker: There was another one for NYSE and they said, well, we need to find a way to fund NYSE.
Speaker: So sometimes when they tell you what they are doing, so the ordinary person, it will seem like, you know, this makes sense until you find out that there are three or four other agencies doing the same thing already, right?
Speaker: And you're just asking yourself, is this a problem of revenue or is it a problem of governance?
Speaker: There are all manners of things all over the place.
Speaker: They keep creating them.
Speaker: And I don't think they're going to stop because for them, it's you know someone, you can lobby, you have the money, they'll give you a bill.
Speaker: It's not rocket science for them.
Speaker: So if you limit the number of taxes in the constitution, then you harmonize the collection of those revenues.
Speaker: What I have said many times, which is what you find in most countries, is that you should only have one revenue agency per level of government.
Speaker: So the federal government should have only one revenue collection agency.
Speaker: Every state in Nigeria should have only one revenue collection agency.
Speaker: So at the federal government level, that should be the FRS.
Speaker: Even customs should be a department under the FRS.
Speaker: That's what you find everywhere.
Speaker: HMRC, South African Revenue Service, Ghana Revenue Service.
Speaker: Kenya Revenue Authority, every other country that I know, almost, right?
Speaker: You know, we went to Rwanda and had some interaction with the revenue authorities.
Speaker: Even if you are paying for international passport, driver license, whatever it is you are paying for, it goes to the revenue authority.
Speaker: And you know, it's easy these days with technology.
Speaker: The money can even immediately be reported on that irrelevant agency.
Speaker: It doesn't have to stay with the tax map.
Speaker: But every agency then focuses on their primary mandates and stop changing taxes they have no capacity to collect.
Speaker: What you also find in Nigeria that happens a lot is these agencies will then go and hire consultants, which is another way of stealing public funds, right?
Speaker: So you hire a consultant to help you go collect the levies and you agree some ridiculous percentage as commission, which you then share.
Speaker: It's 20%.
Speaker: In fact, I've been in a session where the commission that the agent that was collecting it was more than the share of the local government in that tax revenue.
Speaker: I couldn't believe it.
Speaker: And so I was getting that easily, easy money every time.
Speaker: So when you harmonize the collection function, which means all the revenues go through the same government agency, it helps you with transparency.
Speaker: It helps you with efficiency of collection because you have been trained to collect taxes.
Speaker: It helps you to address issues about mismanagement and lack of transparency because you can then pin down everything directly.
Speaker: And it will help you with your tax to GDP ratio because I think that ratio, if everything is done properly today, should be in the double digits, not the 6% we have been struggling with for the past almost 10 years now.
Speaker: Listening to you, I wonder where the low cost of the problem is.
Speaker: And of course, if you are talking about solution, where the low cost of action should originate from.
Speaker: So these bills that creates these agencies and of course the inefficiencies, the corruptions that split them, where do they originate?
Speaker: Is it the national assembly?
Speaker: Is it the executive?
Speaker: And where
Speaker: from if you are going to fix this?
Speaker: I would say it's a leadership problem, right?
Speaker: If there's no leadership, then everybody will do their thing.
Speaker: So National Assembly will do it.
Speaker: By the way, they haven't vetoed any bills since 1999, apart from maybe one or two, right?
Speaker: So most likely you need the executive to still sign before it becomes law while they sign it.
Speaker: So I'll share the blame if we're going to be sharing blame.
Speaker: So I'm going to share it to everyone from the executive,
Speaker: to the lawmakers and to the institutions or the bureaucracy, the civil service as well.
Speaker: And I'll see also many videos of us in the private sector, organized private sector, civil society are not doing enough because we're not even spotlighting these issues.
Speaker: People don't know about them.
Speaker: So for you to solve that problem, you have to have the leadership.
Speaker: And I think that leadership will come most especially from the president of the Federal Republic of Nigeria.
Speaker: In my estimation, about 80 to 90% of how we solve these rests with the president because that leadership has to be provided.
Speaker: Now, in providing that leadership, you then get a team of people to put all the reforms together.
Speaker: Once you have the reform, imagine you present something as an executive bill today, like we've done with the finance bill.
Speaker: It was an idea that came up from the national tax policy that we developed in 2017.
Speaker: So today you take the finance bill to the National Assembly, you amend 10 laws easily.
Speaker: There was a recent bill on facilitation of businesses, right?
Speaker: They amended so many laws with just one bill.
Speaker: You just need something like that for tax reform as well.
Speaker: And once you've done that, you then take the campaign to the subnational level.
Speaker: You already have the structure of the National Economic Council where you have all the governors.
Speaker: There you do two things.
Speaker: One, you try and nudge them to say, this is what is in it for you.
Speaker: And I've said to politicians before a few times that even if you are the most corrupt,
Speaker: play politics with how you generate revenue.
Speaker: It's common sense that I should be as professional and as efficient in generating revenue so that even if I want to steal the money, I have enough to steal, right?
Speaker: Even though I'm not... A prospering economy means more opportunity to bank.
Speaker: Whether you want to steal or whether you want to build for the people, you need the revenue.
Speaker: So why don't you do it professionally and efficiently, right?
Speaker: And then you can do a name and shame list.
Speaker: Once you have that leadership from the center, it's easy to then nudge the sub-national in line because it's easy for you to name and shame them.
Speaker: You can use some incentive to drive them into compliance and all of that.
Speaker: And you can also provide capacity support for them because many of them just don't have the capacity.
Speaker: You know, every single time you have a new governor, they fire whoever is the head of the Evergreen Authority because for them, this is where the money is and it has to be my person that is there.
Speaker: And oftentimes you find these really extremely ridiculous, right?
Speaker: There was a time there
Speaker: the political party of the state as the head of the revenue service.
Speaker: One appointed the deputy governor and said the deputy governor will be the head of the revenue authority.
Speaker: One appointed a medical doctor.
Speaker: I have nothing to, you know, doctors are top-notch professionals, but in matters of tax revenue, I'm not sure that's the right decision to make.
Speaker: So the fact that they don't even understand the issues themselves, and it's not difficult to understand that, is because they themselves have not been paying taxes.
Speaker: If you were following development in the past few months, when it was time for people to buy nomination forms for these different positions all the way to APC of 100 million euro, one of the requirements in the law is that you have to present your tax clearance certificate for you to be eligible for
Speaker: for nomination.
Speaker: And the vast majority of these guys have no tax clearance certificate because they haven't been paying taxes.
Speaker: And guess what the tax authorities did at the state level?
Speaker: Many of them then published a list to say, if you want to be a senator and you don't have tax clearance certificate, come and pay these amounts and we'll give you the certificate to go in context.
Speaker: I was so mad and I said, this is clearing the way for tax evaders so they can preside over taxpayers' money.
Speaker: That's the biggest contradiction you can find anywhere, right, in the world.
Speaker: So I think that wasn't bad enough.
Speaker: Some of the politicians then decided that the leads that were published, for example, somebody was resident in Kano, for example,
Speaker: And they said, well, the lease in Kano is too expensive.
Speaker: Let me go to Jigawa.
Speaker: And they went to another state.
Speaker: They were now doing treaty shopping, tax clearance, certificate shopping to find the lowest amount they needed to pay so they can context, right?
Speaker: In any other country that I know of, that's a big deal.
Speaker: Not only whether you've complied, did you comply on time?
Speaker: Did you comply fully?
Speaker: If the answer is no, you are not even a lease.
Speaker: In fact, you should be in jail.
Speaker: We should be prosecuting you by now.
Speaker: And if you do that alone, you would clean up the political system in Nigeria.
Speaker: It would be like magic.
Speaker: More than 90% of people who are standing for different positions today, if you do a proper screening of tax compliance, they would not be eligible.
Speaker: They would be in jail.
Speaker: I know that would be difficult to implement.
Speaker: Again, this is where my slight libertarian republicanness comes out.
Speaker: Nigerians per statutory provisions, right?
Speaker: Up to 10% of Nigerians tax compliant per statute.
Speaker: If 90% of our politicians are non-tax compliant, but 95% of our citizens are non-tax compliant, it gets to the heart of the issue that I often have with the Nigerian tax system, which is it is functionally too burdensome to
Speaker: to comply with, right?
Speaker: So you can say like, oh, well, it's disgraceful that these politicians are non-tax compliant, but then the people are not either, right?
Speaker: If we went by the statute, right?
Speaker: Like the lady who sells, you know, Indomie and egg in the corner, she's not
Speaker: tax compliant basically in a representative Republic watch our representative not be that and what they are facing is the same thing we all face which is one day when you need to really get something done you face the agencies and you pay your tax
Speaker: greed as a people, whether it's good or not, it's what works or what we do.
Speaker: I'm trying to push back a little bit against the idea that tax compliance is part of the social contract here.
Speaker: I see where you're coming from.
Speaker: I can give you more perspective to that.
Speaker: It didn't used to be like that.
Speaker: Nigeria's tax system was designed in a way that was meant to work.
Speaker: There was a time that
Speaker: If you earn 30,000 Naira per annum, you didn't have to pay personal income tax.
Speaker: one error was stronger than the USD.
Speaker: And then for over 40 years, we did nothing about it.
Speaker: It became meaningless.
Speaker: Some of us had to fight to get that amount to be reviewed about three years ago to now minimum wage, 30,000 error per month.
Speaker: It's exempt.
Speaker: We used to have VAT without any threshold, which means if you were hawking ground knots in traffic, you needed to register for VAT.
Speaker: If you were a work connector, you needed to register for VAT.
Speaker: So I'm saying that
Speaker: You cannot design a tax system to make it impossible for your citizens to comply.
Speaker: And that's what we had for many years.
Speaker: It didn't used to be like that many decades back.
Speaker: When the colonial master designed the system, it had a bit of logic to it in the sense that there's a level you fall below and the last thing you want to bother yourself with is tax compliance because you don't have the capacity to do that.
Speaker: So if somebody is hawking pure water in traffic and they're chasing vehicles in hot sun, right?
Speaker: They're not the type of people that will go and file VXE returns and pay, right?
Speaker: They have no capacity to do it.
Speaker: They can't even keep records to save their lives.
Speaker: So if you then have a law that requires all of them to comply with it.
Speaker: And they also can't spare the time.
Speaker: Yeah, certainly.
Speaker: They don't have the time, right?
Speaker: So that's why in every country around the world, you create a threshold.
Speaker: They will tell you if you are not on the way below this amount, don't worry about VAT because they know you cannot comply.
Speaker: Personal income tax.
Speaker: said that a number of times, you cannot become a rich country by taxing poverty.
Speaker: So countries would establish what is the threshold for poverty and then you say if you end below these amounts, you don't need to pay.
Speaker: I think UK recently increased their loans to about £13,000 per annum.
Speaker: You don't pay personal income tax.
Speaker: So if you want everyone to pay personal encounters, including the maid, including the cleaner, right, including the guard who is earning $30,000 and can barely even feed themselves, it's going to be impossible.
Speaker: They'll violate the law.
Speaker: So at the end of the day for me, that conversation is not a conversation about the general population and how compliant they are.
Speaker: I think it's a leadership conversation, and it has to start from the top.
Speaker: So the leaders are not poor people, which means they have the capacity
Speaker: which means they have the ability to comply.
Speaker: Now, because they want to lead, they have to lead by example.
Speaker: The reason why most American president, apart from Donald Trump, will publish their tax returns is not because there's a law that says they should publish it.
Speaker: For them, it's leadership by example.
Speaker: I'm the CEO of this country, the most powerful, and here is my compliance with taxes.
Speaker: So nobody does that in Nigeria, right?
Speaker: So you have to start from the top and that's really my message.
Speaker: Set it from the top.
Speaker: We're not saying 100%, but if you are 0%, you shouldn't be eligible for any political office in Nigeria.
Speaker: You should be disqualified and prosecuted for not paying your taxes, right?
Speaker: Because that's where they then get into power and they messed up the tax system.
Speaker: Either they are granting their friends on waivers that are ridiculous for things that you cannot explain, or they are creating agencies and they think that businesses have a bottomless course of bringing out money.
Speaker: I've even said before that if someone had taken the time to add up,
Speaker: God, there's 1% here, 2% there.
Speaker: Maybe it has already exceeded 100%.
Speaker: Nobody knows, right?
Speaker: Which means if you have a company that wants to comply with all of them, they will literally be out of business the next day because you're going to pay more than you are getting into your business.
Speaker: So that lack of understanding now then reveals itself in the mismanagement, the revenue problem, the spending problem, and then the debt problem.
Speaker: For most of us Nigerians, we're just living our lives, right?
Speaker: Just how much trouble is the next to the hole in the budget that is going to exist in Nigeria when a new person takes over?
Speaker: The situation is bad already, but if you continue to do what you do now, right, you'll still be fine for another two to three years.
Speaker: Yes.
Speaker: Right.
Speaker: But it's not sustainable, which means you can't do this for another 10 years.
Speaker: Metaphors, we're walking towards a cliff.
Speaker: You haven't fallen over the cliff yet.
Speaker: Yes, but you're getting very close.
Speaker: You're actually getting very close.
Speaker: But some other people can see that we are at the precipice.
Speaker: A few people feel that we've walked off it.
Speaker: We just haven't hit the rocks below yet.
Speaker: Yeah, you know, I like to use data when I say these things, right?
Speaker: So, you know, you get to that cliff in my view when, for example, you're unable to meet your obligations.
Speaker: What are those obligations?
Speaker: You have domestic, you have external.
Speaker: The external one is one that is usually the force to reveal itself when the economy wants to collapse because you cannot print dollars, right?
Speaker: Once you get to a point where you cannot meet repayment obligations and you cannot pay interest on your foreign debt, then that means you're already at the edge of the cliff.
Speaker: But aren't we there?
Speaker: You know the reason why we're not there?
Speaker: If you look at Nigeria's debt portfolio and you look at the external debt portfolio, the external debt portfolio and you look at the maturity and the amount we're paying to service the debt,
Speaker: Our debt service costs on external borrowing is somewhere around $1 to $2 billion a year.
Speaker: Many of those are not due for repayment until 10, 20, 15 years, right?
Speaker: So what that means is, would Nigeria be unable to find $2 billion to pay interest in the next two, three years?
Speaker: The answer is no.
Speaker: The external reserve today is still enough to even do that for the next few years, even if you don't earn any additional income, right?
Speaker: Which is why you see for all of them, why they are downgrading Nigeria.
Speaker: Their concern is not our ability to service our foreign debt.
Speaker: It's about the domestic debt.
Speaker: Now, the reason why the domestic debt will not kill the economy immediately is because you can print in Iran and use it to pay.
Speaker: until you get to a point where you print so much volumes of the naira you become a zimbabwe where the money completely has no value so there was a time when a hundred trillion zimbabwe dollars and i got i got one of you from my colleague in zimbabwe could barely buy a loaf of bread so i gave the guy 10 us dollars and collected that at sylvania because for me it was just it was fascinating in the wrong way that that would happen to any economy
Speaker: So if Nigeria continues to print the budget deficit that we currently have for the next two, three years, we will not get to a crisis level where we can no longer continue and we default.
Speaker: So that's what I mean that we're getting closer to the cliff, but we're not there yet.
Speaker: That's not to say that there's no urgency to do something now because you don't have to wait until the last minute when it may become impossible for you to make corrections.
Speaker: And the consequences and the cost of making that correction may just be long term in nature.
Speaker: Because most people are doom and gloom, but then most people do not have your level of granularity.
Speaker: Someone like me, I hear like, oh, we're in a zero dollar default, and I'm like, panic, sell $95, take the dollars and send them to your Bank of America.
Speaker: I'm trying to tease out a little bit the level of alarm that we should have.
Speaker: And then again, because I always talk about this, it should be like a feature for what we as citizens and what they as candidates should be thinking about when they win the office, whoever it is, what they should be doing.
Speaker: How close are we to the edge so that they understand?
Speaker: Are we green, amber, red?
Speaker: Or where on the spectrum of that are we?
Speaker: And then two, what should they do when they get in?
Speaker: Like, you know, one of the later questions for our guests, if you were the kitchen cabinet.
Speaker: What would you advise?
Speaker: And the reason I ask this is because it's not an irrelevant question.
Speaker: When General Abdus Salaam Abubakar took over unexpectedly from Abacha, 11 men ran the country.
Speaker: And a lot of the things that we have inherited as Nigeria are the legacy of the discussions and the decisions that those men made, right?
Speaker: I'll be honest, my father was one of them.
Speaker: Governor El-Refai was one of them, right?
Speaker: Like the decisions they made at that time have shaped Nigeria as it is right now.
Speaker: The initial decisions that people make when they get onto the reins of power, and the only thing we can be sure of is that when there's a handover, President Buhari will no longer be in charge, right?
Speaker: There'll be a new person with a new team.
Speaker: On this question of this fiscal hole, what should they do
Speaker: That's a very good question.
Speaker: So again, just to say that we're not in a crisis, even though we're in a bad situation.
Speaker: So Nigeria's external debt is about $40 billion.
Speaker: On a normal day, if the economy was doing well, you could borrow that in one year and you'd be fine, right?
Speaker: That's just about 10% of GDP, right?
Speaker: So, and then you spend about $2 billion to service the debt.
Speaker: Some of it is long-term, so repayment is not due now.
Speaker: We will not be in a situation where we can't find $2 billion.
Speaker: The local domestic debt we're servicing, you know, you spend somewhere around $4 to $5 trillion to service it, which is high relative to our revenue.
Speaker: But spending $5 trillion every year for the next 10 years is $50 trillion in a $200 trillion economy.
Speaker: It won't bring Nigeria down.
Speaker: So I'm not trying to downplay the problem, right?
Speaker: I'm just saying that we don't need to be doomsday prophets and become alarmists because sometimes people then panic and make the wrong decisions.
Speaker: We should then be self-fulfilling because you've made people do the wrong things.
Speaker: So having said that, what I think Nigeria needs to do and the next CEO is something I've summarized in two five in addressing this problem.
Speaker: And I had the opportunity to share a debt management roundtable of the NASD was sponsored by OSIWA for West Africa recently.
Speaker: So, five things.
Speaker: One is Nigeria needs to budget better.
Speaker: Budgeting means whoever the next CEO is going to be for Nigeria, you have to adopt zero-based budgeting in reality, in substance and in principle such that every one error is justified.
Speaker: Don't keep building up on past inefficiencies because I gave you 10 billion last year, you add another 10% to it and say that's what you need this year.
Speaker: That's why you see many of the agencies close to December, they are rushing to travel to Dubai to spend money so that they can finish the vote and get more for next year.
Speaker: Then as part of budgeting better as well,
Speaker: is the way we even classify items in the budget.
Speaker: So I would like to see a situation where you have a budget head for human capital development, because our people are too short-term and physical.
Speaker: They want to see bridges they can touch, right?
Speaker: And they're not talking enough about education, especially basic one and basic healthcare.
Speaker: So we need to have a heading for human capital development and have a minimum threshold and there are global standards for us to do that if you want to, that must go into human capital development.
Speaker: Then our capital expenditure today, in my view, is modelled up because
Speaker: We use capital in the sense of accounting definition, but that's not what you need for a country.
Speaker: So if you decide to buy desktop or laptop or iPad for all lawmakers and civil servants, somebody would tell you it's capital expenditure, right?
Speaker: Because it will last more than one year, but that's non-productive in the sense that that's not what we need to stimulate the economy.
Speaker: So you have to then focus on productive infrastructure in your budget and everything else becomes recurrent.
Speaker: Of course, you had debt service.
Speaker: So that proper classification and restructuring of the budget is important.
Speaker: But what is even more important is the priority of spending and the efficiency of what you spend.
Speaker: So that takes me to the next thing about you spend better.
Speaker: You must tackle corruption.
Speaker: You must ensure that there's fiscal exchange to the populace.
Speaker: People are paying taxes.
Speaker: They can't get anything in return.
Speaker: They will do everything to not pay the next one because they'd rather just spend the money to take care of themselves if the state is failing to take care of them.
Speaker: You have to address the issue around tax morale, and it has to be leadership by example that has to come from the top.
Speaker: I want to see the next president demonstrate that leadership in terms of compliance.
Speaker: to get everybody else to do the same thing.
Speaker: We also need to find opportunities for the private sector to play a bigger role in the economy.
Speaker: If you have projects that are self-financing and viable, why is government doing it?
Speaker: Why is the Nigerian government not the one providing only the rate track and allow private sector to run the train services?
Speaker: Why is the Nigerian government trying to do refinery that hasn't worked since 1993 that we know will not work because of corruption?
Speaker: Why is the Nigerian government trying to do Nigeria Air?
Speaker: Why are we borrowing $200 million to fund NTA when you now have all manners of private sector media institutions that are doing an excellent job, right?
Speaker: Take out those inefficiencies since, I think it was 1776, Adam Smith.
Speaker: Whatever the private sector can do better, why is government doing it?
Speaker: Do that and you find that your spending is better.
Speaker: Then you have to collect data.
Speaker: That's number three.
Speaker: Collecting data means you need to reform the tax system.
Speaker: We've spoken about a lot of that already.
Speaker: You need to harmonize the taxes and the tax revenue collection agency.
Speaker: And you have to ensure there's coordination, right?
Speaker: a handshake between fiscal and monetary authority.
Speaker: In many countries, when you are redesigning your currency and doing anything to do with the currency, one of the primary objectives is revenue collection because people are bringing out money that they can't explain where they got it from.
Speaker: You collect your taxes first.
Speaker: That's easy.
Speaker: So the finance minister was not even aware that they were redesigning the currency.
Speaker: And when she said it, they said, well, Mr. President said, I gave the approval.
Speaker: Nobody was talking about approval.
Speaker: We're not denying the fact that you have the powers to approve it.
Speaker: We're saying coordination, bring the tax man along.
Speaker: bring Ministry of Finance along, Financial Intelligence Unit, EFCC.
Speaker: Even the Orientation Agency was not aware, how can they then help people to understand what it is?
Speaker: That coordination is lacking and we need to bring it back, both horizontal and vertical coordination within the federal government structure and then across to the sub-national.
Speaker: Then the fourth one is we need to manage better.
Speaker: So how we manage our revenue is we need to adopt technology that works, not automating inefficiency.
Speaker: Because if you have a manual bureaucratic process that is not working and you just automate it, you're automating inefficiency.
Speaker: I'm saying technology in terms of do we need 10 procedures or we need only one?
Speaker: Do I have to file 15 returns?
Speaker: Can I file one?
Speaker: Do I have to go to the task office physically?
Speaker: Can I use SMS, USSD on my phone?
Speaker: And stuff like that.
Speaker: And I've said to government, you need to start coordinating and connecting the dots for intelligence within the system.
Speaker: So whether you're buying land, government registers it.
Speaker: You're buying a vehicle, government registers it.
Speaker: You want an international passport, you open a bank account, you want to travel abroad, you want to get FX, you're doing email.
Speaker: But almost every economic activity that you do today, government has something to do with it.
Speaker: If you connect that intelligence, what it will tell you is you can call up Taiwo, you're dealing with the system.
Speaker: And you say, well, Taiwo paid 10,000 in tax, but earned 20 million dollars.
Speaker: Mr Taiwo, come and explain why your issues are not hard enough.
Speaker: That's how you raise revenue significantly.
Speaker: And then you have to, as part of managing better, you need to improve your debt management.
Speaker: to ensure that you're not just having an office where they take the instruction to go and raise debts.
Speaker: You need to allow them to be involved strategically with what I call an integrated management system between debts, spending, and revenue.
Speaker: It has to be coordinated.
Speaker: It's not standing in isolation.
Speaker: And you need to comply with legal restrictions and limits.
Speaker: You have the Fiscal Responsibility Act.
Speaker: He says don't borrow more than 5% from CBN in ways and means of your revenue for last year.
Speaker: You keep exceeding it.
Speaker: I don't want this to be like a dry question of policy, but what do we do in that instance where it seems to be, let's call it flagrant lawbreaking?
Speaker: There's a consensus against prosecuting ex-leaders, but it does seem as if this administration and whoever signed it or was responsible has clearly broken the law in that particular instance.
Speaker: We all talk about the fact that, oh, they're trying to
Speaker: regularize the quote-unquote 50 billion of ways that means... Securitize, yeah.
Speaker: Securitize, but as a citizen who now will be expected and whose children and nephews and nieces will be expected to pay back that money.
Speaker: I'm not even saying we don't owe it, but should there not be sanction or something for the people who broke the law?
Speaker: Yeah, you know, in an ideal situation, the answer would simply be yes.
Speaker: Is there a mechanism for it?
Speaker: Like, is there something that we're just not doing?
Speaker: Yeah, there's a mechanism where we just don't trigger it.
Speaker: So, granted, it's impossible to do anything if the president of the country violates the law, right?
Speaker: But you can wait for them.
Speaker: That's what happened to Jacob Zuma in South Africa, right?
Speaker: And this happens in a number of countries.
Speaker: Wait for the president to finish.
Speaker: When they finish, let the law take its course.
Speaker: What I'm still saying is, you know, we have the consequences in the law, including even impeachment.
Speaker: Right.
Speaker: So imagine you have a national assembly that is vibrant and they're there to represent the people, not trying to look for political opportunities.
Speaker: There's nothing wrong in, even if you're not going to go through with it, but you have to seriously start an impeachment proceeding to say you have violated this law and it's not acceptable.
Speaker: Get the person to come and explain, right?
Speaker: So we have to start doing something.
Speaker: And if you're the president and anybody else does it, that's even easier because you're Mr. President.
Speaker: You can find a way to immediately administer the consequences so that everybody knows you can't just violate the law.
Speaker: Because that's what you call anarchy.
Speaker: If you get to a point where you violate the laws like they don't matter, you get orders from the Supreme Court and you ignore them, that's anarchy, right?
Speaker: You can't run an economy or a country like that.
Speaker: Even though I'm not confident that this will be different anytime soon, but I think we can start that conversation by just bringing it to the knowledge and awareness of more Nigerians that this is what we're doing and it is wrong for the following reasons.
Speaker: Rule of law is important.
Speaker: If the law doesn't work because circumstances are very different, go and amend the law.
Speaker: Don't ignore the law and do your own thing as if it doesn't matter.
Speaker: We can sit here and listen to you all day.
Speaker: uh my final comment would be whoever becomes the next president should get you on the phone asap one last question please which is i'm going to ask you on a scale of one to ten where will the next president when they get in finds the exchequer the treasury you know the nigeria situation good question so we already have the budget for 2023 does that have to be implemented or could they throw it out
Speaker: I think if you implement it, you also don't want to give the impression that you can upset everything just because you're the new president, because people want to get their share of continuity and respect, and respect for laws, because it's a law.
Speaker: It was enacted as an appropriation act.
Speaker: So my advice would be to whoever the next president is going to be,
Speaker: Take that budget and run with it.
Speaker: But while you're running with it, lay a foundation for 2024 and going forward in a way that you project that confidence.
Speaker: In fact, if you can bring back confidence, both for the domestic business environment and the international community, you'll be amazed at the amount of dollars that will flow in that direction.
Speaker: if you restore that confidence.
Speaker: Our capital market today is barely $50 billion.
Speaker: It should be close to a trillion dollars.
Speaker: Look at South African capital market, right?
Speaker: And that's because people don't want to invest.
Speaker: Why do they not want to invest?
Speaker: Because the risk-adjusted returns is not what they want.
Speaker: If you can deal with the risk, including policy uncertainty, you bring down the premium that they're looking for and the money will come in your direction and then it will stabilize.
Speaker: So the next government, they should run with the budget, number one.
Speaker: Number two, they need to remove the first subsidy.
Speaker: And I have an idea as to how you can remove the subsidy and see how to protect the most vulnerable people.
Speaker: All the time to agree with you about removing it.
Speaker: So what's the idea about how you can move it?
Speaker: Yes, we are doing a report now in PwC.
Speaker: I think you'll be ready by next week.
Speaker: We'll share with you.
Speaker: But in summary, and you'll be surprised I've been on this for 10 years.
Speaker: I started in 2013.
Speaker: He communicated with Jonathan and Okunjo-Wella at the time.
Speaker: They thought it was a good idea.
Speaker: They didn't do a lot about it.
Speaker: I reached out to Ateido Peter's site because he was a member of the economic management team.
Speaker: He loved the idea and then set up a team that he called G5.
Speaker: It was myself, himself.
Speaker: He brought in the TUC president and NLC president and got a senior advocate of Nigeria.
Speaker: use its influence to get a lot of data.
Speaker: So we had an idea of the number of vehicles in Nigeria, the ones that are powered by diesel, estimates for the ones that are powered by petrol, even gun ports.
Speaker: We had, you know, motorbike, Kana.
Speaker: We had all manner of data that you could work with.
Speaker: And what did we do?
Speaker: Because my idea was, today, the trigger point for subsidy is importation.
Speaker: So which means you don't even have to import.
Speaker: You just need to get the paper signed and you get subsidy.
Speaker: You can import, get the paper signed, get the subsidy and take the fuel to Benary public to go and sell.
Speaker: You can import, get the paper signed and don't beat in the lagoon.
Speaker: You still get the subsidy, which is why nobody knows exactly the volume of what we're consuming.
Speaker: Such a very basic data.
Speaker: So my point is, why don't you move the subsidy points to the pump, right?
Speaker: And then subsidize people who need subsidy.
Speaker: I, Taiwo, ideally don't need subsidy.
Speaker: If I can afford a new car, then I should be able to buy the fuel.
Speaker: So if you think about it, the poorest people in Nigeria, they are touch points with petrol subsidy.
Speaker: It's not that they have vehicles, they don't.
Speaker: 25% of Nigerians can boast of having a TV, a fan, and a fridge.
Speaker: So anybody that has a car, no matter how, you know, I want to say jalopied it is, you know, they are clearly not in the car.
Speaker: Your car will not qualify.
Speaker: No matter how racketed that car is in Nigeria, you're already above 25% of the poorest.
Speaker: And they don't have a better past my neighbor, by the way, unless they're using it for small business.
Speaker: So what it means is their touch point with petrol subsidy is when they get into public transportation.
Speaker: So identify those public transporters already identified by government vehicle license and driver's license.
Speaker: Just add one extra step that they won't even notice.
Speaker: Such that when I present my driver license or vehicle license, it has a ship.
Speaker: That ship is centralized with the central bank.
Speaker: And then the rest of us, you remove the subsidy, the rest of us will pay commercial price plus a small amount.
Speaker: This is Nigeria.
Speaker: Yes.
Speaker: No sanction and no enforcement.
Speaker: people seem to inevitably lead to market failure in this particular country no no this one will not fail you know and i'll tell you the safeguards right so first there was supposed to be a study about the average consumption by these transporters using the capital city because that's where you have most consumption then at the margin of say 10 because what will happen is those guys will buy and they want to go and resell right that's one of the
Speaker: because they already set the threshold.
Speaker: If they keep buying to go and resell, they hit their threshold and they have to pay commercial price for that month and they cannot increase rate because you've told everybody that these public transporters are being subsidized, right?
Speaker: The rest of us will then pay a small amount, maybe two or three Naira per litre to subsidize that goes into that account from where they draw from.
Speaker: So that way, you can remove the subsidy and confidently and sincerely tell the poorest people that they are being protected.
Speaker: For me, that's
Speaker: stopgap measure to full removal because people think that this would make Nigeria come crashing down.
Speaker: It's not anywhere as close to that.
Speaker: Even if you look at the past data of where the price has been adjusted before, this is not subsidized.
Speaker: Mulu in Lagos is run on.
Speaker: The diesel is over 800 and people
Speaker: Yeah, that's what the poorest people use.
Speaker: They're not subsidized.
Speaker: Kerosene is not subsidized.
Speaker: That's what poor people use.
Speaker: Here's the point.
Speaker: They remove the kerosene subsidy.
Speaker: I always think about these stopgap measures in the PMS market.
Speaker: My opinion is that any workaround that you come around with PMS will lead to rampant abuse.
Speaker: You have to think about how they will be able to abuse it.
Speaker: Because what you're saying is that then there will be effectively price control on the rates of transportation because they're getting this concession in P&M.
Speaker: No, there won't be price control.
Speaker: So you wouldn't do anything about that.
Speaker: You said that they wouldn't be able to raise their rates because they are getting this concessionary fuel.
Speaker: No, no.
Speaker: What I mean by that is this, right?
Speaker: So imagine today there's an announcement that says
Speaker: We no longer want to subsidize the rich people.
Speaker: We want to subsidize only the poor people.
Speaker: We have identified that the poor only use Danfo, XYZ, right?
Speaker: And today, these people are 150,000 people across Nigeria owning this amount of vehicle.
Speaker: They have that data.
Speaker: So these people, we have identified them.
Speaker: We're going to give them a debate card and they can even just use SMS if they don't have whatever card it is.
Speaker: So we tell them that we're removing the subsidy, but these guys, we don't expect them to increase their fares because they're still paying the same amount for fuel.
Speaker: You see what I mean now?
Speaker: So you don't expect them to, or you will compel them not to?
Speaker: You can't compel them.
Speaker: But you see, they can then go ahead and double their transports and say it's fuel.
Speaker: I'll be honest.
Speaker: In my own industry, when my input costs went down by 40%, I didn't reduce the prices.
Speaker: Demand was the same.
Speaker: Yeah, no, but it's not about reducing, it's not to increase it.
Speaker: My point is like, you know, if one is depending upon human nature as if it's mechanistic in some way, I don't understand why you wouldn't just remove the subsidy and then do direct cash transfers to the poorest people who
Speaker: No, no, no, that won't work.
Speaker: So removing the subsidy is difficult because you have labor where these guys are fighting for themselves or they make it look like they're fighting for the people, right?
Speaker: Exactly.
Speaker: This is why you need to remove the excuse for labor and the other guys who are fighting government every time they want to remove it, right?
Speaker: Imagine you come up with this policy that says you're going to continue to subsidize the poor people.
Speaker: What would labor say?
Speaker: They then allow you to go ahead, right?
Speaker: Every time you increase the pump price of petrol, you mostly find the transport fare is increased proportionately, if not more.
Speaker: Are you saying to me that fuel cost is 100% of the input cost to transportation?
Speaker: The answer is no.
Speaker: People take advantage of it.
Speaker: Remove that excuse from them as well.
Speaker: So I'm not saying you should tamper with the market functioning.
Speaker: I'm saying you should remove the excuse.
Speaker: For those who have made it impossible for us to remove this subsidy, and that for
Speaker: one or two years and then people now see that well you know the economy actually is better off because of this then you can adjust that amount and phase it out over time so we have to be pragmatic removing first subsidy overnight is going to be tough
Speaker: The labor guys are making a lot from this.
Speaker: Every time you want to remove it, they use it to negotiate.
Speaker: They will tell you we're going to be on strike for two months.
Speaker: It's difficult for any government to survive that.
Speaker: So at the end of the day, they find their ways to get this subsidy to continue.
Speaker: The people who are benefiting in hundreds of billions from this subsidy regime, they are paying them.
Speaker: See, you see Naira scarcity, right?
Speaker: You see everybody that has gone to court and is campaigning against it.
Speaker: What are you saying?
Speaker: They say the poor people.
Speaker: The government has designed this policy to ensure that anybody that needs, say, 50,000 Naira or less can deposit it freely.
Speaker: They can withdraw it freely.
Speaker: It's available.
Speaker: Nobody will say they are fighting for the poor people.
Speaker: But somebody has 5,000 in their bank account, they can't get 2,000 to buy drug for their kid.
Speaker: They went naked in the banking hall.
Speaker: Of course, politicians will take advantage of it.
Speaker: They will say they are fighting for the poor people.
Speaker: Take out that excuse and let's see who they are fighting for.
Speaker: That's really the point about the idea.
Speaker: I mean, Egypt sub-size is the price of bread.
Speaker: Yes.
Speaker: The problem with those conditional transfers is they don't address the problem.
Speaker: You don't have a lot of data in Nigeria.
Speaker: You get it into the wrong hands.
Speaker: Politicians will intercept it, keep 90% to themselves, keep 10% to some of their political supporters, and they'll say to you that they've given it to the poor people, or they'll say they are buying vehicles.
Speaker: So, you know, some of those palliatives themselves are quite suspicious because they don't seem to be addressing the problem.
Speaker: So you want to remove first suspicion and say you buy public vehicles.
Speaker: How does that get to the village where my grandma is?
Speaker: Right.
Speaker: So you have to be.
Speaker: They're going to use it for their own small business.
Speaker: You mean the government people?
Speaker: Yes.
Speaker: Yeah, you know, that's what I'm saying.
Speaker: People don't trust those palliatives because they don't seem like they make sense.
Speaker: So you remove my subsidy and you give me subsidy on break.
Speaker: How does it compensate me?
Speaker: How does it address my problem?
Speaker: How does buying 50 buses in capital cities address my problem in one town in Ijebu or in Zanfara?
Speaker: So if I say to you that whether you're in the village or in the city and you're poor, this is your touch point with petrol and I'm going to take care of that so that you don't feel the maximum impact of the subsidy remover.
Speaker: So that allows me, it gives me the political goodwill, right?
Speaker: To be able to
Speaker: and take away the excuse from everyone who wants to fight me and has the powers to do too, like NLC.
Speaker: Once you cross that hole, if Jonathan had done that, would I remove the subsidy and it won't be a conversation today?
Speaker: Interesting.
Speaker: I need to ask one last question.
Speaker: How bad is the situation in terms of fiscal ability to even move around that the new president is going to face?
Speaker: In terms of the fiscal ability, if you talk about do you have the revenue you can spend?
Speaker: Are you able to meet your obligations as they fold you?
Speaker: I'll say we're still maybe somewhere around 60%.
Speaker: It's not that bad.
Speaker: So it's 6 of 10.
Speaker: Is that what you're saying?
Speaker: Yes.
Speaker: In terms of 10 is the worst.
Speaker: and one is in a very good way, number six.
Speaker: Yeah, we're on six.
Speaker: Okay, because you're the only one who said this.
Speaker: You know, even Dr. Andrew Levin intimated that we were at number eight or nine.
Speaker: No, it's because I have a lot of data about this.
Speaker: Sometimes more than people in government.
Speaker: So in terms of where we are with the fiscal situation and the fiscal space, I'll say six out of 10, 10 being the worst case scenario, where we are in terms of the money
Speaker: is very close to 10.
Speaker: It's like nine.
Speaker: And that's what gives me concern.
Speaker: So if you get the next team of economic managers and a year as CEO, and they provide the good leadership, even that six will continue to move towards
Speaker: I could talk to you all day on every particular niggling issue I have, but I want to thank you.
Speaker: The issues you have addressed are so incisive about the silent things that actually govern how Nigerian blacks work out.
Speaker: We focus a lot upon Christian, Muslim, etc.
Speaker: But the fiscal situation, and we've seen it over the last two election administrations, is what really impacts your life.
Speaker: Energy costs jumping up.
Speaker: Not 100%, but 400% because of policy failures.
Speaker: So you've done such an incisive job helping us navigate through this particular, again, in a non-partisan way, just the way that one should think about it and what one thinks makes sense, whoever ends up as president.
Speaker: Because whoever ends up as president is all of our presidents.
Speaker: So I want to really thank...
Speaker: Mr. Tayo Oyedele, the fiscal policy partner at PwC, but really more than that, is really just so incisive and a true expert on these issues and who has been able to slice through the facts and the hysteria as to Nigeria's fiscal position, as to the position and the imposition of taxes and what the new president could think about and should do next.
Speaker: Thank you.
Speaker: Thank you very much, Toby.
Speaker: Thank you.
Speaker: Thank you.
