Fiscal Issues

So, we have depleted our foreign reserves to defend the Naira (began under Soludo, continued under Sanusi), and to bail out Nigerian banks suffering a home-grown "toxic asset" problem (bank and Stock Exchange troubles started in the Soludo era, expenses to combat the problem occurred under Sanusi).

The Excess Crude Account is mostly depleted. We have budget trouble, arguments between tiers of government over insufficient funds for monthly distribution to the three tiers, questions of sustainability, and doubts about the fiscal health of the states.

In this context, please note three things:

(a) The federal government spends $4 billion a year on the fuel subsidy programme. Rather than earn revenue from taxing the production of refined fuel as well as the domestic and industrial consumption thereof, we suffer diminished federal revenues (by $4 billion) as well as capital flight of what could have been investment funds (this is not just empty rhetoric, as the Nigerian National Petroleum Company is struggling to keep up with its investment obligations, losing money as it does on the front end because of the illogical structure of our oil industry, as well as on the back end when the federal government fails to reimburse it for subsidy-related expenses -- as of the middle of July, the federal government owed the NNPC nearly $8 billion in reimbursements, while the NNPC allegedly owed fuel importers $4.9 billion).

(b) Every day, an estimated 100,000 barrels of Nigerian crude oil are stolen by oil bunkering. If each barrel were sold at $60.00, then oil bunkering is depleting the federal treasury of the taxes, royalties and other revenues associated with sales of $2.19 billion of crude oil. Logically, it is not possible for these gangs to operate so freely and with such impunity, without connections to elite members of the business community, the world of politics and senior officer corps of the military. Our direct losses from theft are in addition to losses from production that has been shut down because of instability and uncertainty; I have no figures for our losses this year, but in the first nine months of 2008 (i.e. at 2008 prices) it exceeded $20 billion. And how do you determine the environmental cost to the Niger-Delta of attacks on pipelines that result in 14,000 tonnes of oil spilled into the delicate ecosystem in 2009, double the amount spilled in 2008, and quadruple the amount spilled in 2007.

The Federal Republic of Nigeria has the second-largest GDP in Sub-Saharan Africa, but we are by no means a "wealthy" country, and our governments are not so rich that they can afford to throw money away.

With an election coming up in 2011 (it will probably be rigged, but thats beside the point), these are the sort of issues that should be central to political discourse (and would be, if we were substantively democratic).