David O. Kuranga, Ph.D.
The author is the Managing Director and Principal of Kuranga and Associates, a full-service investment, political and economic risk consultancy, and asset management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.
Crony capitalist and corrupt vultures have begun to circle around the Elitist-serving Nigerian Federal Government under President Buhari. Their goal is to convince the administration that the only way for Nigeria to emerge from its current recession is to sell-off its oil assets to them and their foreign business partners and financiers. They argue that since the government does not have enough to fund its current budget and stabilize its currency, that it should permanently sell all its oil assets to “investors”, and use the proceeds and foreign exchange to finance its budget shortfall and stabilize the national currency. The vultures involved in the plot include top business leaders and lawmakers in Nigeria. The idea that these predatory politicians and crony capitalists are promoting is reminiscent of how Jacob convinced his brother Esau to sell his birthright for a bowl of soup by taking advantage of him at a vulnerable moment when he was starving.
Currently, global oil prices are at an all-time low. Thus, oil assets on the open market are not nearly as valuable as they would be if oil prices were to rebound from where they bottom-outed about a year ago. Thus, common sense shows that it is not advisable for any oil operation to engage in sales of oil assets in this current market. Further, the Nigerian economy is in recession, assets in Nigeria, due to the currency collapse have drastically declined in value. Those who are holding them, would do themselves a favor to wait for the market to rebound before they go about marketing them for sale. Even if one were to structure a mutually beneficial sale of Nigeria’s oil assets, where the state could continue to collect its share of payments, the firms involved could be trusted to pay their due to government, report accurate figures, and submit their taxes to the relevant bodies, right now would be the absolute worst moment to negotiate a sale!
Further, the Nigerian federal government is currently in a legal battle with practically every single private-sector oil firm in Nigeria because from their review all of them have stolen from the country. They have either failed to report the full amount of oil they took from Nigeria, failed to remit the taxes they owe the the country, or outright lied about the times in which they took crude oil so as to take advantage of lower prices. Not a single private sector oil firm has a clean record in this regard, so it is the height of treachery for anyone to suggest that the federal government and more importantly the Nigerian people should trust private-sector oil firms by selling-off their assets to them! The fact that law-makers have the audacity to even breath a suggestion of this given the ongoing legal battles the administration is now having with oil-firms is borderline treason to the Nigerian nation.
Since the crony capitalists and elite lawmakers are so concerned about the plight of the Nigerian economy, to the point that they are suggesting the nation sell their birthright for the bowl of soup that they are offering to feed us for a night, there is something that they and their elites across Nigeria can all do that would go a long way to bring the nation from the brink of economic collapse. Specifically at the very minimum:
A) Every Nigerian household that owns more than one (1) car should pay luxury taxes to the federal government for each additional vehicle (excluding those made in Nigeria).
B) Every Nigerian household that owns more than one home (including abroad) should pay luxury taxes to the federal government on a sliding scale upward depending on the number of homes owned.
C) Every Nigerian (including companies) that owns a vehicle valued over 2.5 million naira should pay luxury taxes to the federal government on a sliding scale upward depending on vehicles value (excluding those made in Nigeria).
D) Every Nigerian household (including companies) that owns a home valued at over 50 million naira should pay luxury taxes to federal government on a sliding scale upward depending on value and the number of homes they own.
E) Every Nigerian that owns a luxury motor boat, yacht, plane, helicopter, jet, and luxury motorcycle, should pay luxury taxes to the federal government on a sliding scale upward depending on value and number of auxiliary vehicles owned.
F) Luxury taxes should be collected at screening of foreign films, and for those purchasing satellite broadcasts of foreign programmes and broadcasts.
G) Foreign brewed wines, champagnes, beers, cigarettes, and other non-essential items and luxuries should be reviewed for luxury taxes.
H) Finally, to all the elite that are hoarding dollars in their domiciliary accounts, any person or company holding more than 1 million dollars of foreign exchange who is not a manufacturer with at least 100 verified employees for every 1 million dollars they are hording, should be required to pay a one-time luxury tax of 1% of the amount of their account or whatever is not linked to manufacturing activity with verifiable employees. As former CBN chief Sanusi said in his open letter, likely many of them received the foreign exchange from the CBN illicitly.
These reforms are long overdue, and are what the administration should have implemented by now. The fact that they have not is the reason why the country is in recession in the first place. There is plenty of money within Nigeria for the nation to pay its bills, fund its budget and stabilize the naira. The money, however is in the hands of Nigerian elite in the private sector and the public sector who over the years have never been required to pay taxes the Nigerian nation like elite in other countries throughout the world. Many Nigerian elite who own properties abroad pay more taxes to foreign countries than they do in Nigeria where they do business and where they make the majority of their wealth. The administration and the lawmakers should not allow the sun to set on 2016 before they implement these reforms and the Federal Government of Nigeria collects what it is owed from the individuals to whom these measures pertain. With the current crisis they have allowed Nigeria to slip into, these reforms are long overdue!
Kuranga and Associates Limited is an investment management advisory firm and an asset manager with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2016 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
David O. Kuranga; Ph.D.
Kuranga & Associates Limited