By Simon-Kolawole
In Nigeria, oil is definitely the apple of our eyes — we don’t need to argue over that. But this piece of news should set us thinking once again: Apple, the American tech company, is now worth over $2 trillion. By contrast, the GDP of Nigeria, Africa’s largest oil producer, is estimated at $448 billion. Of course, Apple’s market value and Nigeria’s GDP are not the same measurements. One measures the value of the stock and the other the value of economic activities. However, the real question is: with all our vaunted oil and gas resources, why is our GDP not in trillions of dollars? Why is poverty rate always 70 percent and above? And why is unemployment rate at 27 per cent?
For some perspective, in the 2018/2019 financial year (October to September), Apple’s total revenue was $260.17 billion (about N100 trillion), while in the 2019 fiscal year (January to December), the Federal Republic of Nigeria earned, in total, N4.6 trillion (or roughly $12 billion) from oil exports. I have chosen to focus on one company for the purpose of this discussion so that I do not lose my trail of thought. I have deliberately left out other tech giants such as Amazon, which earned $280.5 billion last year; Microsoft, $143 billion; Alphabet, $161.9 billion; and Facebook, $70.7 billion. These companies are built on the quality of human thinking rather than the quantity of natural resources.
Let us move further a bit. In 2019, Apple paid corporate income taxes totalling $10.481 billion (about 4 trillion). This is outside of VAT, PAYE and other taxes. In Nigeria, the total collection for corporate income taxes from tens of thousands of registered companies in 2019 was N1.5 trillion. In case I am not making myself clear enough: a single American company paid almost thrice the total amount of corporate income taxes that ALL Nigerian companies put together could muster. Some would say it is unfair to compare a global tech giant and the different tax regimes with what obtains in the local Nigerian context, but that would be a complete misreading of the intent of this article.
What am I driving at? This article is a polite reminder that our arrogant and brainless obsession with crude oil in Nigeria will continue to be our downfall. This discussion has been on for ages but our folly has failed to recognise the reality that we are living a fake, unsustainable life. At the slightest opportunity, we flaunt our so-called oil wealth. Our understanding of progress and prosperity is built around oil. For decades, rather than pursue options that will wake up our brains from the doldrums, we keep living from day to day, from hand to mouth, based on the assumptions that we are oil-rich, that low oil prices are only for a while and that another boom is just around the corner.
If we know the damage the petrodollar has done to this country, we should be crying rather than popping champagne anytime crude oil prices rise. It has killed our brains, stifled innovation, stunted our growth, corrupted our democracy, weakened our institutions and destroyed our values. Oil wealth has turned the society upside down, further polarised us along ethnic and religious lines, and created a seemingly unbridgeable gap between the elite and the masses. Our Apples, Samsungs and Microsofts remain unconceived, miscarried or stillborn — because we cannot see beyond our nose and cannot think outside the crude confines of our exaggerated and mismanaged oil wealth.
To be sure, this is not peculiar to Nigeria. Any country that relies heavily or almost entirely on natural resources — rather than human resources — has the tendency to be stuck with underdevelopment. Acclaimed founder of the Organisation of Petroleum Exporting Countries (OPEC) and Venezuelan politician/lawyer, the late Juan Pablo Perez Alfonzo, famously said in the midst of the maddening oil boom of the 1970s: “It is the devil’s excrement. We’re drowning in devil’s excrement… Ten years from now, twenty years from now, you will see: oil will bring us ruin…” In 1976, he warned: “Look at us, we are having a crisis… We are dying of indigestion.”
Professor Mick Moore, a political economist, wrote a seminal article, “Revenues, State Formation, and the Quality of Governance in Developing Countries,” in the International Political Science Review (2004). His propositions capture at least seven political pathologies associated with countries that depend largely on natural resources to fund their budgets. Anytime I think about Nigeria’s arrested development and the deep ignorance that keeps pulling us backward, this article always comes to mind. It provides an important insight into the behaviour of rentier states — states that survive on natural resources, such as oil and diamond. Nigeria is a classic example.
With the oil money, he argued, rentier states tend to have “autonomy from citizens” — that is, the state-citizen relationship is often weak. He wrote: “The state apparatus, and the people who control it, have a ‘guaranteed’ source of income that makes them independent of their citizens. Why listen to citizens or give them any kind of democratic influence over the state? (…) the state can feed itself from mineral revenues or from using those revenues to establish ‘mega-projects’ under state control… It is more efficient to use some revenue to buy off those citizens likely to cause trouble and more of it to support a powerful army and intelligence apparatus that will keep the others in line.”
Another pathology that is relevant to Nigeria in his article is “non-transparency in public expenditure”. Moore wrote: “Where public revenues come from a small number of concentrated sources, such as a few foreign oil companies or a public mining enterprise, it is relatively easy for revenue and expenditure to be hidden from view. If a legislature exists, it has limited capacity to exercise oversight over the state because it has very incomplete knowledge of (let alone control over) the myriad ways in which state and quasi-state agencies raise and spend money. The official ‘budget’ may represent a mere shadow of the true fiscal situation.” Think NNPC.
He also wrote about “vulnerability to subversion” — as we can see with Boko Haram, Niger Delta militancy, banditry and kidnapping ravaging Nigeria. This can be attributed to state neglect of parts of its territory because of their low tax value to the treasury. He argued: “The failure to tax the bulk of the population, and thereby bring them into the ambit of a regular civilian bureaucracy, leaves the state vulnerable to the (armed) organizational challenge of competitors: guerrillas, private armies based on the narcotics and arms trades, and non-state movements of various kinds, including, in contemporary sub-Saharan Africa, autonomous Christian and Islamic movements.”
For us in Nigeria, we have experienced, and are still experiencing, economic pathologies that are as deadly, if not deadlier, than the political ones. A drop in crude oil prices and we are in serious crisis: debts pile up, expenditures crash, foreign reserves suffocate, naira faints, private businesses choke and Nigerians are chucked into the labour market in droves. Our budgets are benchmarked against the price of crude oil. That is about the first thing analysts and commentators look for when the draft budget is presented to the national assembly. You would think that this is a law or a scriptural command. Meanwhile, Apple’s revenue is at least 21 times our oil receipts. What are we thinking?
Of course, someone will read this and say it is because Nigeria does not have “true federalism” and “resource control” that we do not have our own Samsungs and Apples. I am not getting dragged into that argument today. I will just say one thing: most of advanced countries run unitary, not federal, systems. Take away the US, Germany, Switzerland, Australia and Canada and you have a unitary-system dominated list. There is yet no study establishing that practising “true federalism” is the route to human and economic development. But that is an argument for another day. The question for today is: how can we get this oil thing out of our brain? The liberation must start from the mind.
Our journey from underdevelopment will continue to be interrupted for as long as we fail to see that our biggest resources are the human beings. What we should be focussing our energies on are the infrastructure, the policies and the systems that will unleash and support innovation and enterprise. When we create the enabling and productive environment, businesses and citizens can flourish and government will be able to earn tax revenue from the prosperity. If Apple alone can pay corporate income taxes that are more than double what all companies in Nigeria pay, we don’t need to be geniuses to understand that our narrow obsession with oil will keep pulling us into the abyss.
Any economic policy, or political philosophy, that does not prioritise human development will continue to drag us down. Apple, Microsoft, Amazon and the rest of them are products of the human brain, not “resource control” or “federal character”. Building airports and ultra-modern government houses or jet-age secretariats when the education sector is dilapidated physically and intellectually is exactly what we need to keep our people down and keep surviving on oil prices. Any society that treats public infrastructure as luxuries is a society going nowhere, no matter the oil price. We’ve been saying this forever. One day, the scale will, hopefully, fall off our eyes.
Originally published on Thisday
Email: simon.kolawole@thisdaylive.com, sms: 0805 500 1961