₦airaland Forum

If MDA's are privatised, so workers are reduced, the budget will be reduced, and there will be no need to have oil at historical highs ($140 per barrel).

workers need to be reduced, the whole budgetary system needs to be reformed.

grandstar:
What determines whether your currency depreciates who appreciates isn't whether you produce something or nothing. It is all down to fundamentals.

For instance, if there's 10 trillion naira in circulation and there's $10bn available, the exchange rate will be $1-N1,000.

If the federal government now asks the CBN to print 5 trillion to lend to it to cover thecbudget deficit, there will now be 15 trillion. If the dollars remain constant, the currency will depreciate to $1-N1,500. The excessive use of ways and means, which is the printing of money to lend to the government was a primary reason for the Nairas worsening value under Buhari.

This is 100 percent wrong. Exchange rates change due to many reasons such as interest rates, supply of money, demand for exportable products, sovereign wealth funds (savings in foreign currencies), etc.

Your approach of blaming Buhari for borrowing money and excessively using the ways and means, for the collapse of the Naira is bad.

If you were made president in 2015, what economic steps would you have taken and what results do you think you would have achieved?

Remember that oil prices were low and Nigeria had no savings.

All the factors you mentioned are wrong because Nigerians outside of Nigeria are highly successful people. It is not like the Nigerians living outside of Nigeria were specially selected. Why don't they suffer from poverty like Nigerians in Nigeria?

The direct cause of poverty in Nigeria is the poor management of the exchange rate, and the reason why the exchange rate is poorly managed is that the general population of Nigerians lack knowledge of why the Naira loses value, so they cannot act as a check and balance against the government's rascality.

Nigerians think the Naira loses value because of borrowing money from the World Bank or the IMF. There's the belief that these banks force the Nigerian government to devalue the Naira whenever Nigeria cannot pay its debts. This is false.

In the Naira's history, it has only appreciated during one period, between 2004 and 2008. The unique feature in our currency management was a properly founded Sovereign Wealth Fund (the Excess Crude Account).

The collapse of oil prices in 2014 doomed the Naira because all the money saved in the excess crude account was depleted. Saudi Arabia saved $900 billion, and Russia saved $300 billion, but Nigeria only saved $500 million.

The only reason the Naira did not fall in 2014 was that the government borrowed money to support the Naira's value.

The military men who were fortunate to be in power in the 70's and early 80's stole so much money, they remained politically relevant until the 2010's.
The politicians who were fortunate to be in power between 2010 and 2014 will remain relevant until they die.

People will start using lanterns and candles again.
A country in motion without movement.

aribisala0:
I am not impressed with the Minister of trade

I do not understand why we don't trade majorly with our neighbours
That should be our focus

You are right. Trade across Africa is critical to our development.

A lot of issues have made trade difficult but are being gradually resolved. Issues such as poor modes of transportation(no navigable rivers so we need low cost locomotive trains), expensive payment systems(I believe this has recently been fixed), multiple tax policies (this is being fixed), etc.

some things which appear to be easy are very complicated.

emkz:
It is not obvious to me. My expenses are in naira. I don't think in dollar.

Are you implying that oil and natural gas used for energy production within Nigeria have a dollar component? This is not obvious to me at all.

Commodities are priced the same globally. This is the biggest issue with currencies. Oil is about the same price everywhere so if a country’s currency loses value, it becomes more expensive for its citizens to buy oil.

You can google commodities to get a better understanding.

emkz:
Explain your understanding of the dollar exchange rate. Please don't tell me about crude oil. Why does exchange rate matter to you?

It matters because commodities such as oil and Natural gas are priced internationally. When the Naira loses value, the unit cost of energy goes up. It is like a tax on the system that limits growth and causes poverty. This should be obvious to you.

professorPABX:
This is off point. GDP per Capita has nothing to do with value of currencies. Nigeria remains the second economy in Africa. When China devalued her Currency against Dollar it was strictly for an intentional economic blueprint to boost export and increase FOREX earnings.

GDP is calculated in USD. When a country's currency loses value, the value of the country's GDP reduces. Even if the country's population remains the same, its GDP per capita shrinks. GDP per capita is the easiest way to calculate the standard of living between countries. GDP per capita uses the Mean Average in its calculation. If it used the Median average, it would be more accurate.

China and Nigeria are different countries. In statistics, the normal curve shows the distribution of data. Data on the tails are outliers and data in the middle represent the highest occurence of an incident. comparing a country with a diversified economy with another without electricity and struggling to educate its citizens is illogical. China devalueing the Yuan gives it a competitive edge. Nigeria Devaluing the Naira makes electricity production more difficult stunting productivity and growth.

Do not compare apples with oranges.

JuanDeDios:
What's your point?

Even though their currencies are weak, the people in such nations are rich.

The only time in Nigeria’s history that the Naira gained value was when Obasanjo saved money in the ECA. No savings equals depreciation of the Naira once economic shocks occur.

JuanDeDios:
Ever wondered why this isn't a problem for Asian economic giants (e.g. Japan and China) whose currencies are also "weak" compared to Western currencies?

Compare the GDP per capita in those countries to Nigeria’s. Nigeria is the 12th poorest nation on earth.

LegendHero:
You need to understand the definition of excess crude account.

Crude oil price is currently below the amount used in the budget, so how will you have excess crude proceeds?

Infact that is the case for the past 7-8 years or so.

So how you wan take get excess crude accruals?

You reduce the size of the budget. The ECA is essential to manage the value of the Naira

Alphagan:
Find Below Naira to Dollar Exchange Rate History

1972 $1 = N0.658
1973 $1 = N0.658
1974 $1 = N0.63
1975 $1 = N0.616
1976 $1 = N0.62
1977 $1 = N0.647
1978 $1 = N0.606
1979 $1 = N0.596
1980 $1 = N0.550 (0.900 Black Market Rate)
1981 $1 = N0.61
1982 $1 = N0.673
1983 $1 = N0.724
1984 $1 = N0.765
1985 $1 = N0.894 (N1.70 Black Market Rate)
1986 $1 = N2.02 (N3.90 Black Market Rate)
1987 $1 = N4.02 (N5.90 Black Market Rate)
1988 $1 = N4.54 (N6.70 Black Market Rate)
1989 $1 = N7.39 (N10.70 Black Market Rate)
1990 $1 = N7.39 (N10.70 Black Market Rate)
1991 $1 = N8.04 (N9.30 Black Market Rate)
1992 $1 = N9.91
1993 $1 = N17.30 (N21.90 Black Market Rate)
1994 $1 = N22.33 (N56.80 Black Market Rate)
1995 $1 = N21.89 (N71.70 Black Market Rate)
1996 $1 = N21.89 (N84.58 Black Market Rate)
1997 $1 = N21.89 (N84.58 Black Market Rate)
1998 $1 = N21.89 (N84.70 Black Market Rate)
1999 $1 = N21.89 (N88-N90 Black Market Rate)
2000 $1 = N85.98 (N105.00 Black Market Rate)
2001 $1 = N99-N106 (N104-N122 Black Market Rate)
2002 $1 = N109-N113 (N122-N140 Black Market Rate)
2003 $1 = N114-N127 (N135-N137 Black Market Rate)
2004 $1 = N127-N130 (N137-N144 Black Market Rate)
2005 $1 = N132-N136
2006 $1 = N128.50-N131.80
2007 $1 = N120-N125
2008 $1 = N115.50-N120
2009 $1 = N145-N171
2010 $1 = N148.21-N154.8
2011 $1 = N151.05-N165.1
2012 $1 = N155.09-N161.5
2013 $1 = N153.21-N162.9
2014 $1 = N170-N199
2015 $1 = N199-N300
2016 $1 = N300-N320 (N310-N370 Black Market Rate)
2017 $1 = N360
2022. Now. = Official = N419. Oops.
Unofficial = N610

What happened between 1999 and 2000?

There was no economic crisis to the best of my knowledge.

SOURCE: FACEBOOK POST

What I find interesting about this data is that the naira gained value between 2004 (N144) and 2008 (N115.5).
What was different about this period?
Was it the growing Excess Crude Account?
Was it the reduced government spending due to privatization?
Was it the gradual increase in fuel prices to reduce the burden of subsidies on the government purse?
Was it the consolidation of banks and the telecom industry growth?
Was it the growth of private sector players such as Nollywood and Afrobeats?
Was it the fact that no governor or state had a private jet?

Oil prices were not the highest during this period. In fact the highest oil price was between 2011 and 2014.


What was so special about this period?

Cc
Mrvitalis
Grandstar
Nairalanda1
Aribisala0
Kukutente23

Nigerians have not yet woken up. Things may still get radically worse in the coming years.
Nigerians need to start focusing on the policy promises of politicians rather than their tribe or their religion.

Nigeria is relatively rich in resources but its people are amongst the poorest in the world. Even poor landlocked countries in Africa have citizens living better than Nigeria.

IQ maps of the world show that west Africans have the lowest IQ on earth. This isn’t indicative of our individual educational abilities but our inability to solve collective problems. The irony is clear seeing that the highest rate of educated immigrants in America are Nigerians, yet in Nigeria, rather than have power stations, everyone has a generator set, rather than have water treatment plants, everyone has a well or a borehole.

The solutions to Nigeria’s problems include raising taxes on properties, imported cars, clothes and phone and spending the generated money on public education. Taxes need to be raised to reduce the pressure on the naira. This is the solution in my view.

aribisala0:
It is frustrating to see Nigerians think that Tinubu or any president can or will change their story

It is easier to blame than look in the mirror and take responsibility for your life

Why are we behind compared to other countries

It is not all government

Our people are stagnant take something as basic as making garri
We have failed to industrialise that process
When Nigerians get money they aspire to own homes in Dubai or London

Burna Boy and all the Musicians the sportsmen and all the other rich Nigerians
Where are their companies apart from cars and trinkets?

Business worldwide thrives through companies

How many universities teach people anything about setting up a company
How many Nigerians under the age of 30 have companies
How many rich Nigerians can point to a company

In America people doing the equivalent of Suya business set up companies and understand going into legal business with partners
With us everything is personal one man business 99.99% of the time and so there hardly any 50 year old companies

So Indians can come in see our weakness and even set up Garri factories

How come nobody has found money to set up food processing factories in Benue?


We need to look in the mirror. No president can fix that

If you look at those people who trade in Nigeria whether they are Hausa Yoruba or Ibo they do okay but fail to get to the next level of growing after the founder dies

The world is global we are competing against economic principalities and powers and we are sleeping

Dangote is a light but we need more like him and other at the $1 million dollar level
We are still importing shoes and Okrika what is the way out of that particular shame?



Our problem is knowledge deficit and superstition =religion

We have EVERYTHING we need in Nigeria

The governments’ of other countries tax the houses and cars of their rich citizens. This is to dissuade them from wasteful spending. Governments also provide tax breaks as an incentive for rich citizens to invest in businesses.
Both the citizens and the government of Nigeria lack focus.

The countries on the list have either had currency devaluations or civil wars, so the list is somewhat accurate. Turkey, Lebanon, Argentina, Nigeria, Egypt, Venezuela, and Zimbabwe have experienced currency issues in the last 20 years.


The main problem with Nigeria is Nigerians. We are too sentimental to diagnose issues; everything is viewed through an emotional lens.

Resource (Oil) rich countries need to save money from the revenue they get from the sales of their resources. Global prices of resources are never stable, so the savings are meant to even out the government's revenue. When revenues are high, savings should be increased, and government spending should remain relatively constant. When revenues are low, savings should be depleted, and government spending should remain relatively constant. During the good times, the government should reduce debt, and during the bad times, debt should rise at a steady rate while devaluing the currency gradually to minimise pressure on imports.


GEJ wasted all the money Obasanjo and Yar'Adua saved. Buhari met an empty purse. Buhari borrowed money and gradually devalued the Naira. Tinubu crashed the Naira, pushing Nigerians into poverty. Crashing the Naira gave the government extra dollars and reduced the pressure on imports. Rather than saving the excess dollars, Tinubu increased the security vote and constituency allowances of public servants, increasing inequality and also pressuring the Naira.

grandstar:
Did Buhari really end then fuel subsidy?

This is not an emotional question but a serious one.

The price of petrol is not fixed nationally. It is fixed on the international market. For instance, the price of crude oil is based on dollars per barrel. Since the NSecondly, the price of petrol is never fixed. It can go up and down.

First, let's assumer the price of petrol has been $1 per litre for the past 10 years.

In 2015 may, the exchange rate was $1-N199. Let us assume the government fixes the price of petrol that year at N200/litre. The government announces that the subsidy is gone. That is true because $1 is N199 while petrol is N200/litre.

Today, that same $1 is N1,500. If the price of petrol is still fixed at N200/litre, that means the subsidy has returned. The government will be subsidizing it by N1,300 per litre.

Then the price of petrol is never stable. Today, is may be $1 per litre, tomorrow 50 cents, next month, $2 per litre.

For instance, on 1st January 2012, GEJ increased the price of petrol to 147/litre. The government said that was the price petrol must cost for there to be no subsidy. Then, the price of crude oil was about $110/barrel. Due to protest, the government was forced to backtrack and reduce the price to N97/litre.

By 2015, the price of crude oil had dropped to $50/barrel. The government reduced the price to N87 per litre. At that price, there was no subsidy. Why? Because the price of crude oil had dropped by 50%.

So, the only way you can end petrol subsidy in Nigeria because the exchange rate is never stable, and also because the price of crude oil keeps changing, is for the government to stop fixing the price, and let it rise and fall. That is the only way you can end the subsidy and that is what Tinubu did. As you can see that the price of petrol keeps going up and down. It is never stable.

Great explanation.
However, Obasanjo managed Nigeria’s economy in a very simple way. The naira went from about 150 to a dollar in 2003, to 116 to a dollar in 2008 (Yaradua’s tenure). He gradually increased petrol prices to 75 naira removing subsidies as the international price of crude oil increased and saving extra revenues in the excess crude account.
The collapse of the naira and Nigeria’s economy is directly attributable to destruction of property economic management by the GEJ administration.

I wonder why this is so difficult for people to realize. Even now, the naira still remains under threat. So far Nigeria doesn’t re-establish an ECA.

nairalanda1:
More like we have to go to being an industrial nation so that we can have reserve in the trillions of dollars .

Master tinubu is still a bad leader though. You won't get an argument from me there. But so also were most of our past leaders, including your beloved gej

Again it boils down to our country being a resource dependent country. That's why we can't sustain strong currencies for a long time.

Tinubu is not doing anything about changing us to manufactured goods and services economy because he wants to get reelected, not to leave good legacies

Please, what specific things can Tinubu do to make Nigeria to manufacture goods and services?

Buhari was a patriot, a leader and a father. He inherited an expensive government at a time when crude oil prices were low. He borrowed money and printed money, but he paid contractors and civil servants. He left a debt-to-GDP ratio of 23% which is amongst the lowest on earth.

Nigeria faced revenue issues that Buhari failed to address, and it also spent its revenues inefficiently.

All in all, Buhari tried his best as a leader.

A few successes include the second Niger Bridge, the train stations, and the assistance he provided to Dangote's refinery.


I have never read a Sam Omatseye piece, but I must admit that he is gifted. He can write rap lyrics and is a good poet. I didn't find his article offensive, but humorous and creative. My favourite line in the article is
"Criticising Buhari's time as both military and civilian leader, he said: “As military leader, he squeezed the economy in the name of enshrining a moral tone. In his time as civilian leader, he choked the economy and failed as a moral compass.”


Condolences to the president's family.

Everything happening to Nigeria's economy could have been predicted as far back as 2008. In 2012, it became obvious we were heading to hell, and some of us started shouting and screaming that change was necessary to avoid catastrophe. Unfortunately, we only moved from crony capitalism to feudalistic socialism.

Summary. In 2008, low-income Americans were unable to pay their mortgages. These mortgages were backed by banks from several countries. A crisis of confidence occurred causing a global credit crunch.

Two things are responsible for the growth of GDP. Productivity and credit. With lenders refusing to lend to new businesses, the global economy started to slow down. Interest rates dropped almost to zero per cent, but Lenders gave money to market speculators only, so Stock and commodity prices rose to ridiculous levels.

Around June 2014, interest rates started rising, and commodity prices started falling as speculators shifted their funds from riskier commodities to treasury notes. Countries with commodity-driven economies, like Nigeria, South Africa, Venezuela and Russia, were exposed to the shocks the rest of the world had been facing since 2008. This is why there are so many anti-immigration sentiments and also why people like Trump are world leaders today. The global economy is messed up and maybe this way for an extended period.

As earlier stated, two things lead to the growth of GDP: productivity and credit. Nigeria has never really been a credit-driven economy, nor has it been a highly productive one. We rely on productive countries to buy our raw materials to increase their productivity. Things have to change, or poverty will consume us.

As Grandstar stated, the federal government must carry out painful restructuring. Any hope that oil will rise to over 100 dollars again is wishful thinking, and even if this were to occur, it probably would not be for an extended period. A focus on primary and secondary education and healthcare to improve productivity is necessary.

Good luck to Nigeria.

grandstar:
The strength of an economy is not based solely on the quality of its infrastructure; otherwise, Taiwan and Italy would never have become rich countries.

Companies in developing countries can still thrive with poor infrastructure. Two examples today are India and Pakistan.

I have always argued that structural reforms are necessary for the country to hit 7% growth rates.

Buhari's exchange controls, using the words of Charles Soludo, made a "bad matter worse.". That's my anger with Buhari.

I wrote off this government within a month of taking over. He arbitrarily fixed the exchange rate at 197 to $ without regard to market forces. He thought wicked economists were the ones who determined exchange without regard to the masses. It's like thinking that mathematicians determined that 1+1=2. They are simply interpreting what nature says. The same goes for economists.

Diversifying exports is very important, but commercial lending rates of 25% do the most damage to businesses in the real sector, not even infrastructure. Dangote said, "How can the country have a thriving agricultural sector with leading rates at 20%?"

Low lending will enable manufacturers to import world-beating machinery, for instance, making them competitive. Productivity is very low because of the high cost of credit. If Nigeria were a mine, it would be artisanal, with corresponding low levels of productivity. Low credit would enable them to keep expanding until the local market is too small and exports are the only option.

Non-oil exports can only boom until lending rates are brought down through foreigners setting up factories and mines. FDI tends to target areas in the country that have a comparative advantage.

Angola was badly governed by Dos Santos, so it's not surprising. This country has about 20 million people and produces about 2 million barrels of crude oil daily, but it can't balance its budget.

Venezuela has been a basket case to me since 2003, but it wasn't discernible . It is not until you marry your fiance that you realise she's not wife material. The signs were already there from the word go.

FG can bring down lending rates to single-digit levels by ending the "Naira substitution" policy.
Google " Ending Naira substitution policy by Henry Boyo".

Slashing corporate taxes to 15% or less can lure foreign investors. FG must also end multiple exchanges, as they scream economic incompetence to foreign investors.

Comments like this one seem so enlightening and educative, yet unfortunately, are wrong.

Nigeria does not need to increase exports or consider reducing interest rates. As you rightly stated, economists do not control exchange rates and interest rates. The rates proposed by the CBN only act as a guide to the market, but in reality, the rates would naturally rise to that level.

What is the Reason for high interest rates in Nigeria? The high importation of foreign goods. High interest rates make treasury bills/bonds attractive to foreigners, bringing in a high amount of foreign exchange. This foreign exchange is then substituted for the naira to allow for importation. If Nigeria imports less, it would not need as much foreign exchange, so it would not need such high interest rates.

Obviously, to reduce imports, Nigeria has to increase its people's productivity. The best way is to increase investments in education and healthcare.


Steve Babaeko, founder of X3M Records, said the Nigerian government did not invest in music or Nollywood, yet both industries are highly productive, increasing Nigeria's earnings and projecting a good image of Nigeria to the world.

How much money did the US government spend on Google, Facebook, or Amazon? Zilch.

With education, people will naturally find productive endeavours to pursue. The government does not need to focus on agriculture, science, and technology. Even electricity was not discovered through government intervention but by educated and creative people whose focus was on increasing their productivity. Even in infrastructure, there may be more efficient ways to solve our deficit, but without mass education, such solutions will never occur.

Another way the Nigerian government can increase its GDP is by becoming more efficient in spending its earnings on crude oil sales. Just as a business can improve its profitability by reducing its costs, a country can also increase its GDP similarly.

Ways to increase efficiency include:

-further devaluation of the naira would reduce local demand for dollars, naturally bringing down interest rates.

- Sack government workers. Most of them are unproductive, including myself, TBH. Interest rates will fall without having any adverse effect on the economy. It is actually brainless to continue paying people for no services. It is a moral hazard to cater to only 1 per cent of your population. Funds need to be spent on education and healthcare as earlier stated.

- Increase taxation, specifically on the rich. Increased taxation reduces disposable income, lowering demand for foreign exchange and lowering exchange rates.


I just reread Boyo's view. He will invariably float the naira, thus allowing market forces to determine its value. His view is better than what is currently being carried out, but monetary policies are not enough to turn this tide. I thought his point of view was not valid.

Ovamboland:
The USA has been running Social Security since the 1930s. Despite the country's $17 trillion debt, there are no serious discussions about ending it.

Many Western countries started their even earlier; they know the importance. The Nigerian government has begun within what it can sustain, yet the privileged cry the most. Why has the IMF not advised European countries having economic crises over the past 100 years to cancel their welfare programs? Why should no poor person in Africa have support or help while more affluent whites have? Why should the few rich access so much via contracts and connections while nothing is offered to the poor?

No sensible country puts social spending/welfare over investments in primary education. If you read the article, you would have seen that attainment of a percentage of a population being educated is a metric used to measure the development prospects. In Nigeria, the government focuses on helping people experiencing poverty. In these countries, the governments seek to invest in people with low incomes to be able to tax them in the future.

I like Buhari, so do not take this comment personally. Buhari invests in his cattle because he sees them as his wealth. Our leaders need to see us as their wealth, not problems.

Living conditions in Nigeria have always been worse than in Venezuela. Nigerians are used to suffering and can adapt to any condition.

I can no longer find a fishhead in the market to buy for my cat as people have started purchasing it to eat.

Economics is a social science and not a science that is based solely on numbers. Venezuelans expect more from their government, so they protest, and their rulers make hasty decisions, which are bad for their economy to maintain peace and orderliness. If you push a Nigerian to a wall, they pass through it.

The people buying the fish head will still dress well, wear polished shoes, and smile, thanking God that their situation is better than that of their neighbours.

This is Nigeria!!!

SocialFinance:
Before you shout Buhari and APC,


PDP CREATED POVERTY.....

This analysis below is vital to the commoner.... who is the majority of Voters in this 2019 election.....

1. They said when Buhari took over from them, a bag of rice was N11,500, but they took over when it was N2,500

2. They said when Buhari took over from them, the ltr of petrol was N87, but they took over when it was N11.

3. They said when Buhari took over from them, $1 was N235, but they took over when it was N20.

4. They said that when Buhari took over from them, a bag of cement was N2,000, but they took over when it was N400.

PDP met the minimum wage at 1500 and took it to 18500.
Buhari has failed to increase the minimum wage even though the price of everyday items has gone up. This has pushed many into extreme poverty.

To cushion the effect of property tax on homeowners. That you own a home doesn't mean you're rich. You're not planning to sell your home, of course. Most homes were built on mortgages and years of savings. There's no property tax in Dubai.

People pay municipal taxes equal to 5% of the rental value of similar houses in their neighbourhood.

Property tax has been argued over and over again to be wrong because owning a house doesn't mean you're as rich as the value of your home (except you're making money from the house, which usually isn't the case).

Please name any prosperous nation that doesn't tax properties and state where these arguments have been carried out.

People go out of money and go broke. They rely on the house they built when they have something going for them.
They still have to pay their taxes. They can sell the house. This would improve Nigeria's estate management industry as many houses will be up for sale as in the US housing market. 90's star, MC Hammer, had to sell his house.

Pensioners/retirees (people above 60 years) don't pay property tax because they're exempted. The question is, what happens to people who are out of jobs or without a regular income?

Not all countries exempt senior citizens. Once they pass away, the new owner starts paying property taxes. People without regular income should cut their coats according to their size. You know you cannot afford to pay the property tax on a mansion, yet you can build one. They can SELL IT on OLX.



Money is not Nigeria's problem. A clueless nation is clueless. Nigeria has no bearing, just disoriented. What we make is enough if we know what we're doing.

We have one of the lowest tax-to-GDP ratios on earth. What are you talking about, Willis?
Do you know how many unoccupied buildings there are in Abuja and Kaduna? More houses would be on the market if people had to pay property taxes.

dadark:
Nigerians don't like paying taxes...if people who don't pay taxes are thrown into prison like in Western nations, many Nigerians will land in prison...

No one likes paying taxes. I have never met or heard of anyone who genuinely likes paying taxes.

So why do other nations pay taxes? The same reason you brush your teeth or bathe in the morning. Without taxation, civilizations can never develop. It is a necessary evil.

When the government collects taxes, the people are more willing to fight for their rights. The government uses taxes to invest in its people in their youth and then recoup the investments through taxation when their citizens start working.

No one is naturally good. Without structures and institutions, humans are not much better than animals.

Newboss:
Nigeria has property tax.

The Lagos tax rate (the craziest in Nigeria, apart from Abuja's) is 0.076% for property the owner lives in. There's also a 40% relief (discount) for all properties.

So, a house valued at 2 billion will pay about 912k in property tax yearly. That's nothing much. My maths may be wrong tho

Why is there a 40 per cent discount?
Nigeria has one of the lowest tax-to-GDP ratios on earth. Our government always complains about diversification, but governments primarily earn revenue through taxation.

Our public healthcare system and education system are broken. Shouldn't taxes be used to develop Nigeria?

Is the property tax even enforced? What is the penalty for defaulting?

Newboss:
Go and check the meaning of estate tax before you say what you don't know

Sorry, Mr Lecturer. Property tax*

The same thing used to happen in England in the past.

Every wealthy family built a castle to show their wealth.

What made them change their ways? Estate taxes.

Omooba77:
Thanks, sir. If there is a subsidy, some dishonest people may profit from it. Let it be a free-flowing economy determined by demand and supply

My post supports the removal of subsidies. It is how subsidies are to be removed that my view differs from the popular view. The price of petrol in Nigeria is affected by the demand and supply of crude oil in the international market and the demand and supply of dollars within Nigeria. Petrol should be 210 Naira because of the fall in the value of the naira. My point is that through taxation, Nigeria can lower the price of petrol by reducing the demand for dollars. This invariably will eliminate subsidies without further impoverishing the masses.

Omooba77
This is a great article with a lot of important information and an absolutely accurate conclusion. However, there are a few recommendations I do not agree with.

Fuel subsidies should not be removed; we do not need to seek foreign investments. I know my view is unpopular, but please pay attention to me momentarily.

Your article focuses on the fall of federal revenue and the hardship it has brought. It also focuses on the unsustainable path the federal government is taking.

Is Nigeria's issue the fall of revenue or the resulting hardship? Must these two events go side-by-side?

Nigeria's issues are the crazy levels of inequality between the rich and the poor. I think our lack of productivity is tied directly to the high rate of extreme poverty in this country. The government's biggest failure is not equitably using our oil revenues in ways that benefit all Nigerians.

Nigeria runs a trickle-down economy where government workers and contractors take all the oil money. The rest of us earn our living by providing goods and services to these government workers. So basically, we get the crumbs that fall off their tables. What makes the matter worse is that Nigeria, like most nations, operates an open economy, so once an iPhone, Samsung, or any individual in Nigeria buys a Mercedes, we have invariably exchanged our crude oil for the purchased item, thus reducing the number of crumbs that can get to the ordinary person.

In the past, our leaders exchanged our people (resources) for mirrors cause they found their images amusing. Today, they exchange our resources (oil) to satisfy their vanity.

My issue with oil subsidy removal


In general, two things affect the local fuel price: The price of crude oil and the value of the naira against the US dollar. Between 2006 and 2007, crude oil prices were 70 dollars, yet petrol was 75 naira per litre. The dollar was 130 something then as opposed to 360 now. Why has the naira fallen so severely? I guess more demand for iPhones, Samsungs and Benzs.

Should a Barber, a Tailor, a Carpenter, a Plumber, a Farmer and an Electrician pay more for fuel because Nigerians want to use iPhones?

SOLUTION
As your article stated, increasing our VAT to the continent's average will help. Yearly progressive taxation on houses and cars will also go a long way. This is how to eliminate subsidies by raising the value of the naira through decreased demand for dollars rather than increasing the price of petrol. We already have the highest number of people living in extreme poverty, yet we have the wealthiest black woman in the world and the richest black man in Africa.

Foreign investors do not have to be marketed to. Investors look for profitability with the smallest amount of risk. Rather than focusing on attracting them, we should make our country more productive by investing in our public education system. Investors will naturally troop in when we produce our iPhones and live in peace and harmony. We need to look inward. Our people are more critical than mirrors and Benzs.

Jpphilips
My guy, no informed person is saying Buhari caused this mess. Even if Jonathan had saved money, that money would have served as a shock absorber and not a solution to this economic crisis. Challenging policy changes need to be made to improve this country, and for 4 years, Buhari has done nothing to move this nation forward.

From your write-up, you seem to deceptively imply that this crisis is over when, in reality, Nigeria is profoundly indebted and may start selling national assets to stay afloat.

What exactly do you want? Progress for your country or APC winning this election?

Buhari's relaxed attitude towards his re-election is the same attitude he has shown towards managing our economy.
(One week to elections, and you start YouTube ads. You aren't serious about winning.)

You are an intelligent man. You should only do this if you benefit from Buhari and are loyal. You should take a non-partisan stand in the election and let the chips fall wherever possible. Goodluck