₦airaland Forum

Felixalex:
Weldone economist

Economists have long known about “Dutch disease,” which happens when a country becomes so dependent on exporting natural resources that its currency soars in value and, as a result, its domestic manufacturing gets crushed as cheap imports flood in and exports become too expensive. What the PISA team is revealing is a related disease: societies that get addicted to their natural resources seem to develop parents and young people who lose some of the instincts, habits and incentives for doing homework and honing skills.

Where crude oil (and gas) is the booming export sector, the non-oil export sector may be crowded out by the oil sector and the non-tradable goods sector of the economy. This can happen when the oil revenue windfall increases domestic demand for non-tradable goods and pushes up domestic prices leading to an appreciation of the real exchange rate which in turn reduces the competitiveness of the non-oil export sector. This will in turn lead to a reduction in non-oil exports in both quantum and value terms. the oil windfall may also lead to movement of the factors of production in the economy. For instance, capital and labor (and land) may shift from the non-oil export sector to the oil sector (in order to maintain or increase reserves and production) and the non-tradable goods sector (to take advantage of the growing domestic demand). This explains why the increase in oil prices and the subsequent oil revenue windfall in many oil-exporting countries have tended to depress their non-oil export sector while at the same time generating a boom in both the oil and the non-tradable goods sectors. With capital and labor shifting from the non-oil export sector to the oil-sector and non-traded goods sector, firms in the non-oil export sector are forced to either close down or reduce their scale of operation. the boom in the oil and non-traded goods sector increases the demand for imported goods. This may not be a problem in the short-term so long as the country has enough foreign exchange to pay for the imports. the depression in the non-oil export sector and the boom in the other two sectors have medium to long term implications for the economy because the oil windfall will not be permanent given the volatility, unpredictability and exhaustibility of crude oil. For instance, if there is a decline in oil prices and oil revenue, the lagging and collapsing non-oil export sector will not be able to compensate for the drop in oil revenue while domestic demand for the non-traded goods and imports remain sticky. Consequently, the country will be forced to borrow from the international financial market to compensate for the decline in oil revenue. Over time, external debts will increase and so will the debt service obligations. Even when oil prices go up later and there is another round of oil windfall, it is difficult to correct the earlier damage or distortions created by the initial or previous oil windfall. In some cases, the oil exporting country may be forced to adopt some form of structural adjustment program (SAP) to correct such distortions or imbalances. Some of these SAPs are painful and may increase the prevalence, depth and severity of poverty

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showafrica:
MNK has told everyone that an average Fulani man does not know what economy is. They wake up everyday just to eat and roam about, as far as they eat, that day was successful. So to Buhari and his cabal, as far as they borrow money and eat, the day was successful. This is why there is no Fulani man representing Nigeria outside the country. They practically have nothing to offer. Unfortunately, Buhari will hand over to another Fulani man by 2023.

Very true but another Fulani man in 2023 is a no no, if that happens hmmmmm we are doomed, Nigeria will not survive these killings for another 6yrs

I get it. But when I borrow person big money to go around and be drinking, is the one I don't like.



Use the money for impactful projects.


All the money they borrowed us, we can't pay because we can't even out manufacture anywhere that has electricity and determination. Nigeria is supposed to be out manufacturing Vietnam and even China in many things. Dem suppose dey make Nike and others for Nigeria, then we go mature enter computers, phones, and other leaps.


How can you forget about foundation and just start building high and heavy. Electricity is a starting place, you suppose know.



Even now sef, with all the naija people in yankee leadership, they don't have no way to help you in terms of trade. Is to be begging for trade on your behalf. That is a pitiful condition. Abi na that small small bottle of palm oil, wey na only naija people for that side dey use am. Wetin dem go advocate for.




If all the ebe wey we been dun beg for, been help with all day everyday light, things for dey happen.


Learn from all countries like serious countries. Anything wey naija dey do well, dem go come learn anyhow and any means dem fit.

borrow money to fund expensive government? what about reducing the cost of government. how can presidency spend billions for food alone?? Are we normal at all??

Diversify the economy, its not rocket science.

Sometimes I wonder who inaugurated these set of blockheads to rule the affairs of the most black populous nation.

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captainamiedi1:
borrow money to fund expensive government? what about reducing the cost of government. how can presidency spend billions for food alone?? Are we normal at all??

1.The Presidency is spending less than 100million on feeding alone.

2.While you are right ...the problem is, cuttting the Presdiential budget won't solve our money issues...we need more money in trillions of naira, not billions self

They will borrow until they use the resources of the south and east and west and north as collateral, then we will become slaves and work to pay the debt they incurred for the coming generation.

I agree with Wole Soyinka that listening to Buhari can affect your mental health. This government claimed and carried out the following-
1. Saved billions because of TSA
2. Fighting corruption therefore reduced leakages in the economy..
3. Increased VAT to boost revenue
4. Devalued Naira to remove pressure of supporting the local currency
5. Removed subsidy thereby saving billions
6. Increased electricity tariff by more than 100% over the past 4 yrs.

Same government that has implemented all the above that is expected to free huge monies for the economy is heavily borrowing. Something is wrong somewhere.

The most annoying is that in the mist of all these, Buhari is running the most bloated government in our history and even still expanding it recklessly. So many hands doing nothing. One would think that if you a cash strapped you cut excesses in running government.

It's crazy.

and why is there dwindling revenue? here is why because you know nothing on her to manage and grow anything even an economy. you only came to spend Nigeria 's wealth.

BeeBeeOoh:
Buhari wants to borrow #8bn from domant accounts, same Buhari budgeted #3.4bn for food alone





[s]Is this not the real definition of cluelessness?[/s]

It is simply corruption, the essence of the loan is so they have more to share.

Listen to General Buhari....
......He, however, charged Nigerians to be alive to their tax obligations as taxation is a required sacrifice for citizens of any nation that is serious about development and progress.....

What is sane about sacrificing to pay our tax which we do but you the politicians cannot sacrifice to cut your bloated allowances and salaries...

Racoon:
What about the previous borrowings with chronic debt pillage? Where are all the staggering revenue generations from NPA, NCS, FIRS, NNPC, NLNG, TSA savings etc?

So the next thing is to start borrowing pensioners monies, selling national assets and perhaps the country in order to fund the budget? This is the effect of voodoo Buharieconomics.

Chronic Wailer

SpaceX:
this picture shows buhari doesn't respect his vice? Why Is buhari not on mask? No iota of respect.

Of all the problems in Nigeria, this is your own issue?

Indebtedness is an ugly monster that makes a nation a reproach in the eyes of the international communities.Realising this,0basanjo put in much travelling from nation to nation begging for debt relief and it paid off.A nation enmeshed in indebtedness is not truly independent .How do those nations we borrow from get the monies they lend to us? What is the work of those in economy ministry?

Maybe when Nigera go broke, they will stop misuse of resources.
You borrow because you have hope of repaying. As long as you do not stop corruption in the land and Governors have many fleets in their convoy. You have just begin.

Slackerpenguin2:
It is the sad truth, and it is one reason why African countries borrow...

1.Nigeria relies on revenues from raw materials we sell. Their prices are not controlled by we the seller...they are controlled in London and New York. So when they go down, we suffer.

2.Our major earner is oil.

Here are some figures for your

In 2012...we needed oil to be at 122 dollars per barrel to earn enough. By 2017 that figure had risen to 139 dollars and now it is 133 dollars.

In 2015, oil was at 75 dollars, then went down to 30 dollars in 2016, then went up to 80 dollars in 2018, then down to 24 dollars last year, now it is 50 dollars.

As a result...Nigeria had to borrow. iF WE HAD NOT BORROWED...we would have been in a worse state than we are now....

3.There are ways out of this...

a) Raise the tax to gdp ratio

b) Cut all subsides and allow marketers control the prices of petrol, and DISCOS set the price of power.

Both ideas are not popular with Buhari and company because they are poltically expensive...yet that is the only way to 'start fixing our economy'.

4.If we want to be a major agric producer...we have to start mechanisng our farming sector...and really dealling with insecurity because being a famrer now is not safe in Nigeria.

5.We also have to start regulating our mines, and colelcting revenue from them as well.

All of this problems stems from inept leaders both past and present.Getting Nigeria less dependent on oil is achievable if our government are more focused on the country and less on themselves.

1) By virtue of our position,economy,size, population etc, we should be the port of call for goods coming into west Africa and even some other parts of Africa.But thue to executive corruption, importers avoid ports in Nigeria if they can .How can you spend over 70 percent of cost price to clear and transport your foods from the port?

2) No investments into Nigeria's educational sector-especially in the technology and science sector.Hence,most of our biggest companies employ expatriates who repatriate a huge chunk of their earnings back to their countries ,shortchanging the country.Also we have no government policy on employment of expatriates in the country.

3) no steady power and worst still no tangible road map to steady power supply all over Nigeria. We can only achieve this if states are given freedom to source,build, operate and maintain power plants. This is tied down to unbundling power concentrated at the centre (restructuring).

we can go on and on,but it's a waste of time because their is no political will ,on the part of our elected officials to get Nigeria working-otherwise,how can one explain that despite having 4 refineries, Nigeria hasn't exported or even produced enough oil based products for over 20 years ?

Correct talk

How about you guys cut the cost of governance?

Because of your incompetency

Slackerpenguin2:
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Nice

inept and wicked leader don talk.

eduj:
All of this problems stems from inept leaders both past and present.Getting Nigeria less dependent on oil is achievable if our government are more focused on the country and less on themselves.

1) By virtue of our position,economy,size, population etc, we should be the port of call for goods coming into west Africa and even some other parts of Africa.But thue to executive corruption, importers avoid ports in Nigeria if they can .How can you spend over 70 percent of cost price to clear and transport your foods from the port?

2) No investments into Nigeria's educational sector-especially in the technology and science sector.Hence,most of our biggest companies employ expatriates who repatriate a huge chunk of their earnings back to their countries ,shortchanging the country.Also we have no government policy on employment of expatriates in the country.

3) no steady power and worst still no tangible road map to steady power supply all over Nigeria. We can only achieve this if states are given freedom to source,build, operate and maintain power plants. This is tied down to unbundling power concentrated at the centre (restructuring).

we can go on and on,but it's a waste of time because their is no political will ,on the part of our elected officials to get Nigeria working-otherwise,how can one explain that despite having 4 refineries, Nigeria hasn't exported or even produced enough oil based products for over 20 years ?

Thanks for contributing to the discourse. This and the contribution you responded to provided informed insights.

Many responses so far focused on the borrowing part of the article, with little or no mention of efforts to diversify our revenue and increase tax to GDP ratio. The call for tax responsibility and sacrifice by the President is fine but he and his govt should lead the way by massively cutting cost of governance so people can see what they are sacrificing for.

I share a different view from the one you articulated in point 3 of your write up. I believe there is a reasonable road map by this Govt to attain Power sufficiency. The deal with Siemens is planned to guarantee 7000, 11000 and 25000MW of power by 2021, 2023 and 2025 respectively. Part of the deal is to sell off moribund or non profitable power assets to the private sector to invest in and manage. One of them is the Afam 1-4 turbines sold to Tony Elumelu's company last year. I understand Omotosho and Geregu are next to be sold. That is the way to go, involve the private sector to drive growth. Same for the refineries. I will say, sell the 4 moribund refineries to private companies rather than reviving them. Dangote refinery in Lagos, BUA refinery in Akwa Ibom and the numerous modular refineries now coming on stream will get us to full self sufficiency within 3-5 years time.

To facilitate these private-led growth programs, the market has to be liberalised and subsidies removed. That is a painful thing to do because of price hikes in the short term, but it is the absolute right thing to do for the long term. Reason why the removal of subsidies from fuel and power prices recently is hitting hard. However with patience, private hands will ensure efficient running of these areas of our economy, they will massively invest and bring jobs and prosperity to the country in the medium to long term.

On a final note, govt should focus on plugging tax revenue leakages and expanding the tax base to capture many people in the informal sector not currently paying tax. All in all, it is a mixed bag but more things are looking up and I choose to be more positive.

who send you

NwaNimo1:
https://thenationonlineng.net/buhari-we-borrow-to-finance-budget-because-of-dwindling-revenues/

Let me help u sum this up, the administration is incompetent and corrupt, also full of lie and blame games, that's why they can't perform but rather give excuses and borrow to squander

Omihanifa:
As long as the country keeps relying on Petro dollar and the revenue generating agencies keep underremiting due to corruption the country will continue to borrow to finance its budget

In situation whereby agencies like DPR, NPA, NNPC, FIRS, NIMASA,CUSTOMS & IMMIGRATION generates so much money and they remit so little to the federation account, how can the federal government have money to fund its budget

In 2019 DPR generated ₦2.4 TRILLION and remited only ₦44BILLION and yet nobody was sacked or put under trial

Nigerians want development but a lot of us dont pay taxes.The UK don't have oil,they depend on tax to run the country,a big chunk of footballers wages goes to tax.

keep on borrowing because you don't really have sense,
had it been it was an Igbo man we have as a president by now we would have been producing technologies and different commodities to the European worlds,

China will even be begging us to show them the way,

let every man in this country make it a priority and a responsibility to kick out this buhari this year 2021.

lets speak out for good
after all Donald trump was impeached 2 good times.
and our loving daddy or darling buhari was even rejected by the birds of the air and pigeons.

so who are we not to reject him?

What steps have you taken to cut wasteful spending? little or nothing

No sir, we borrow to finance the budget because your administration, like the ones before it, has failed to diversify the economy, your administration, like the ones before it, has failed at cutting down excessive and reckless spending by government and your administration, like the ones before it, is fantastically corrupt.

Useless govt of self serving THIEVES!