Why do we need government and what is the primary duty of a government to the people? If it is becoming so clear that a government is becoming so self-serving, what should a people that own the government do?
Before I finished writing my piece for last week, it was clear what is going to be the focus of the next.
I was thinking about the subject, Wednesday morning, when a call came from an unknown number. Alhaji Abdullahi Akinsanya – a former Central Bank of Nigeria staff member, as I later discovered by introduction – was touched by the piece, thereby eliciting the call that lasted for about 45 minutes as we bounced opinions on socio-economic and other key issues. He promised me a book, which was delivered.
Upon opening the book: “Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism,” therein is a fitting message about today’s subject. “The country’s (South Korea) obsession with economic development was fully reflected in our education. We learned that it was our patriotic duty to report anyone seen smoking foreign cigarettes. The country needed to use every bit of the foreign exchange earned from its exports in order to import machines and other inputs to develop better industries. Valuable foreign currencies were really the blood and sweat of our ‘industrial soldiers’ fighting the export war in the country’s factories. Those squandering them on frivolous things, like illegal foreign cigarettes, were ‘traitors.’”
It is yet to be seen whether Nigeria’s policy makers are learning anything from the way developed economies fought their own economic battles. Maybe tomorrow we will see some sparks of seriousness about how to develop and grow an economy. As things stand today in Nigeria, it is a case of Akara d’enu akayin, o d’eegun (fried bean cake enters the mouth of the toothless, and turn to a bone).
Nigeria’s economy is in a very dreadful state; and it is a common knowledge that when an economy is battered and in need of urgent resuscitation, what is required is stimulation of economic activities, especially MSMEs, and not mopping up of whatever is left as means to engage in production. Such a time is not a time for money-mongers holding public offices to demand taxes and/or levies that will further reduce available funds required to stimulate business activities, but to look for ways to pump funds that will enable MSMEs bounce back productively.
Having known about the very poor state of the Nigerian economy since COVID-19, it is so surprising that the federal government has embarked on milking the people very aggressively since June 2023 when the present government took the reins of governance. From energy subsidy removal, forex market liberalisation, customs duties, to power sector subsidy removal, almost all government agencies and multinationals are in competition to drain Nigerians of their blood through demands for taxes and levies.
Taxes are leakages to limited capital available for productive activities while subsidy is a boost. A government having a grasp of this will first get the people to a position they can create jobs and generate shared wealth before coming up with demands for levies and taxes. Also, a period of economic depression is not meant for money mongering for public office holders. When revenue generation is affected negatively, it is a time for spending cuts, with serious reduction in recurrent expenses, especially emoluments and overheads. But Nigeria’s officials want to keep up with its profligate spending attitude while squeezing the poor masses and stripping them of their little changes that is not sufficient to put foods on their tables.
If one may ask: why do a people need a government; and what is the primary duty of a government to the people? A people put government in place to maintain social order, and they contribute money (in terms of taxes and levies) to take care of the necessary bills needed for the social order. It is in the maintenance of social order that security of lives and properties are located. That a government will demand payments (or levy) unceasingly for governance and to secure the property of the people calls to serious question what the government is doing with what had already been collected from the people. Nigerians need to demand how their taxes are being spent.
The recent call for cybersecurity levy is a slap too many. About one hundred and fifty years back, the first money transfers happened when telegrams came into existence; and Western Union, a well-known name in the finance world being the first company to send money using telegram. Electronic Fund Transfer (EFT or EMT) is electronic handling of money from one bank account to another, either within a single financial institution or across multiple institutions through the use of machines (computer-based systems) without the direct intervention of bank staff. Its need is to solve the risks associated with moving physical cash and coming in contact with humans. Ordinarily, EFT eliminates human labour and associated risks; meaning what ought to be paid to humans to do the job should be spent on machines to perform better. Therefore, the covenant or contract embedded in electronic money transfer is that of security of fund. One is miffed therefore that it crosses the minds of the policy makers to look again at the direction of the people, or even businesses, to cough out another pay for a service that financial institutions ought to take care of by reasons of law of contract with depositors from whom they take deposits.
The Central Bank of Nigeria that is canvassing for financial inclusion on one hand is superintending the discouragement on the other hands. Going by the amount of charges and deductions going on transaction cycles, no sane person will want to embrace banking in Nigeria, if they can help it. On banking transaction today, Bank Charges such as VAT, stamp duty, sms charges, electronic transfer fee, card issuance fee, card maintenance charge, account maintenance fee, PoS commission, USSD charges, cash deposits charges, outflow/Inflow monthly fees, and other frivolous charges are loaded. Now to have another levy in the name of Cybersecurity Levy of 0.5% added to the rankles to the marrow. Consider a scenario: a business operators sources N100 million from wherever at only-God-knows cost, the money hits his bank account and a levy of N500,000 is removed in the name of a cybersecurity at first disbursement leg. Imagine how much would have been taken part of the money is moved around and before the money is returned to where it is borrowed (plus interest) in an economy that is toxic and very unfriendly to business!
What makes a financial institution qualifies as one? It is security of property they call for – people’s money – and from which they make their own profits as business entities. But banking today in Nigeria, needs urgent attention and serious probing. Money leaks in banks through various surcharges and levies; and the bank owners are celebrating humongous billions of naira as declared profits after tax every twelve months. They smile sheepishly, hugging the celebrity runways while the poor whose few naira notes that passes through the banking system are cursing in torrents.
Does capitalism truly deliver the poor masses to whims and caprices of the nouveau riche? A government that is alive to its duties to the people will not allow this. This is why a government that allow a switch from welfare system to free market system will not permit capitalism at its extreme end of the continuum. A free market system with a soul has to be located somewhere along the line; that is, the government will be watchful not to allow the capitalists drain the people dry in the name of providing goods and services in a free market environment. But where the government is leading in the milking of the hapless people through raising and duplication of taxes, both direct and indirect, to shoot up costs and inflationary trend, and free market players are playing their own games by increasing prices of goods and services in a down economy, then there will be a need to review things.
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Can one declare that it is time to order back to classroom the people in government, especially those in the legislative chambers, to learn one or two things or at least refresh concerning developmental economics?
. Ola Emmanuel is a business planning consultant and founder of Leacent Incorporated Trustee, a network of entrepreneurs and group of cooperatives. He works with a team of international consultants to conceptualise and plan agribusiness and housing projects. As a certified trainer authorised to use the International Labour Organisation’s enterprise development modules, he trains entrepreneurs and organises workshops and seminars for potential and practising entrepreneurs as well as business managers and cooperatives. He also speaks and facilitates at leadership and management workshops on invitation. His book, Business Planning Made Easy: Step by Step Guide On How To Turn Your Idea To Profitable Business’ is the latest of the books authored by him. Tel.: +234(0)9068602954 (call and sms), +234(0)8023257707 (WhatsApp only).