In a recent commentary, Reno Omokri made several bold
statements regarding Nigeria’s economy under the Buhari administration,
claiming that the country borrowed more under Buhari than the combined
administrations of Obasanjo, Yar'Adua, and Jonathan. He also critiqued
Nigeria’s fiscal policies, focusing on the failure to float the Naira and
remove fuel subsidies. While there are grains of truth in some of his points,
the economic situation is far more complex than Omokri suggests. His assertions
require a deeper look at Nigeria’s historical, economic, and global context,
supported by facts and figures.
Claim 1: “The Buhari administration borrowed more than the Obasanjo, Yar’adua, and Jonathan administrations combined.”
This claim is partially true, but it oversimplifies the
factors driving Nigeria's borrowing under Buhari's tenure. First, let’s look at
the numbers:
1. Obasanjo Administration (1999-2007): During Obasanjo's
tenure, Nigeria worked hard to relieve itself of significant debt through the Paris
Club Debt Deal, which led to the cancellation of around $18 billion in debt. By
the time Obasanjo left office in 2007, Nigeria's total external debt was
roughly $3 billion, down from over $30 billion.
2. Yar'Adua Administration (2007-2010): Yar’Adua inherited a
relatively low debt profile due to Obasanjo’s successful debt relief efforts.
By the time of his death in 2010, Nigeria’s total debt was under $10 billion.
3. Jonathan Administration (2010-2015): Nigeria’s debt started
rising again under Jonathan, due to infrastructure projects and revenue
shortfalls from the fall in global oil prices. By the end of his tenure, the
country’s total debt had risen to about $63 billion (external and domestic
combined).
4. Buhari Administration (2015-2023): By the time Buhari left
office, Nigeria’s total debt had increased to over $100 billion, driven by the
collapse in oil prices, global economic instability due to the COVID-19
pandemic, and increased borrowing for infrastructure projects like railroads,
roads, and power plants. Buhari's government also faced substantial revenue
shortfalls, pushing it to seek more loans to keep the economy afloat.
So, it’s accurate that Buhari’s government
borrowed significantly more than previous administrations. However, to frame this
borrowing purely as a policy failure overlooks global and local economic
conditions that heavily influenced these decisions. For instance, Buhari’s
tenure coincided with global oil price crashes (particularly between 2015-2016
and 2020), which heavily impacted Nigeria’s main revenue source, given that
over 85% of Nigeria’s export earnings come from oil.
Moreover, the COVID-19 pandemic exacerbated these
challenges, forcing governments worldwide to increase borrowing to
stimulate their economies. In Nigeria's case, the combination of low oil
prices, falling foreign reserves, and global economic instability made
borrowing almost inevitable.
Claim 2: “They did this because they refused to float the Naira and end fuel subsidy.”
Omokri’s claim that the government’s refusal to float the
Naira and remove fuel subsidies was the primary cause of excessive borrowing is
overly simplistic. The decision to peg or float a currency involves complex
trade-offs, and both options come with risks.
1. Floating the Naira:
While floating the Naira could theoretically stabilize
foreign reserves and reduce pressure on government borrowing, the immediate
consequences would likely have been more severe in a country as
import-dependent as Nigeria. A free-floating currency would lead to sharp devaluation,
which Nigeria has already experienced in stages, particularly in 2016 and 2020
when the Naira lost substantial value.
In such a scenario, the cost of imported goods, including
essential items like fuel, machinery, and food, would skyrocket, worsening
inflation. Inflation was already high during Buhari’s tenure, hitting double
digits consistently and reaching over 21% in 2022, partly due to the currency
devaluation that occurred during those years. A fully floating Naira might have
led to inflation spiralling further out of control.
2. Fuel Subsidies:
Regarding the removal of fuel subsidies, this has been a
long-standing debate in Nigeria’s economic discourse. Omokri is correct in
implying that fuel subsidies are unsustainable in the long term, costing Nigeria
over N1.9 trillion ($4.6 billion) annually by 2022. However, the issue isn’t
just a simple matter of removing subsidies. Nigeria’s infrastructure,
especially in transportation and energy, is underdeveloped. Without these
subsidies, fuel prices would likely skyrocket, leading to even higher costs of
living for the average Nigerian.
In a country where the poverty rate hovers around 40%, with 82
million Nigerians living below the poverty line, removing subsidies without
sufficient welfare programs, infrastructure development, or alternative energy
sources would have devastating social consequences. Recent moves to reduce
subsidies under the Tinubu administration are also facing strong backlash,
demonstrating the complexity of this issue.
Claim 3: “Our GDP is not productive enough to sustain fuel subsidy or a strong currency.”
This point, while somewhat accurate, requires context and
nuance. Nigeria's economy is indeed struggling with productivity challenges.
The country has a large informal sector, which accounts for over 50% of the GDP
and is largely untaxed. Nigeria’s GDP per capita was roughly $2,400 in 2022, a
figure that pales in comparison to other African nations like South Africa ($7,055)
or even oil-producing peers like Angola ($3,308).
The low tax-to-GDP ratio, as Omokri mentioned, is indeed
concerning. At 8%, Nigeria has one of the lowest tax revenue rates in the
world. Comparatively, countries like the UK and Germany have tax-to-GDP ratios
of over 30%, allowing them to fund robust welfare states. However, Nigeria’s
low productivity and weak tax base are symptoms of deeper structural
issues—underdeveloped infrastructure, widespread poverty, corruption, and poor
governance—all of which need to be addressed to grow the economy sustainably.
Claim 4: “Nigeria does not have enough oil money to look after 220 million entitled people, of whom less than 10% pay taxes.”
Omokri’s claim about Nigeria’s tax system is partially
correct, but it’s important to clarify that the government’s failure to raise
revenue isn’t just about citizens being unwilling to pay taxes. Corruption,
inefficiency in tax collection, and a largely informal economy contribute to
the problem.
For example, oil revenues used to account for over 90% of
Nigeria’s export earnings, but the share of oil in government revenue has been
falling. Oil now makes up around 65% of government revenues (as of 2023),
leaving the government with fewer resources to meet the needs of its growing
population. With an annual population growth rate of 2.6%, Nigeria is expected
to be the third most populous country in the world by 2050, putting even more
strain on its limited resources.
However, framing this as a problem of
"entitlement" is misleading. Nigerians, particularly the poor and
middle class, have legitimate concerns about the government’s ability to
provide basic services like healthcare, education, and infrastructure. These
are not luxury demands but necessities. The failure to invest in these sectors
leads to poor outcomes—Nigeria’s healthcare system ranks 187th out of 191
countries globally (WHO), and over 20 million children are out of school, the
highest in the world (UNICEF).
Claim 5: “If we do not pay taxes, our government will either borrow or print more money.”
This is a valid point. When governments cannot raise revenue
through taxation, they often resort to borrowing or printing money to finance
spending. The Central Bank of Nigeria (CBN) has indeed engaged in money
printing in recent years, leading to inflationary pressures. In 2020, for
instance, the CBN printed N2.86 trillion through the “Ways and Means” lending
window to finance the federal budget deficit, exacerbating inflation.
However, increasing taxes alone won’t fix the problem. The
Nigerian government must also address issues like corruption, tax evasion, and
inefficiencies in revenue collection. A 2019 report by the World Bank noted
that Nigeria loses an estimated $15 billion annually to tax evasion and
avoidance. Improving tax compliance and reforming the tax system could help the
government raise more revenue without relying solely on borrowing or printing
money.
Claim 6: “Some Nigerians will always have something negative to say about Nigeria and the government.”
While it’s true that political biases can affect how people
view government performance, criticism of the Nigerian government often stems
from legitimate grievances. Issues like corruption, mismanagement, and
inadequate public services are well-documented and affect millions of
Nigerians’ daily lives. For example, Nigeria ranked 150th out of 180 countries
on Transparency International’s Corruption Perception Index in 2022, indicating
widespread public-sector corruption.
Conclusion: A Complex Problem Requires a Multifaceted Approach
Reno Omokri’s analysis of Nigeria’s economic woes touches on
several important issues, but it oversimplifies the challenges and doesn’t
fully account for the complex interplay between global economic factors,
historical debt management, and internal governance failures. While Nigeria's
borrowing has indeed surged under Buhari, this cannot be attributed solely to
policy missteps; global oil price crashes, the COVID-19 pandemic, and
structural weaknesses in Nigeria's economy all played significant roles.
Rather than focusing on “entitlement,” the Nigerian
government must address underlying issues such as tax reform, economic
diversification, and reducing corruption. Only then can Nigeria break free from
its cycle of debt and unlock the potential of its vast population.
