Nigerians Must Boycott MTN

31 Jul

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.

Recently the Nigerian Senate began a probe showing that MTN Nigeria repatriated some $14 Billion US Dollars out of Nigeria over a period of 10 years. This staggering amount taken out of Nigeria’s foreign reserves for 1 company is in part responsible for the collapse of the Nigerian national currency and massive inflation that has occurred since. It is the collapse of the Nigerian currency that has caused Nigeria to slip into a recession for some time. Accordingly, addressing matters of foreign exchange hemorrhaging out of Nigeria is the most paramount issue facing Nigeria today. One would think that a competent legislative body would forcefully deal with the matter. Instead, a report released by a committee of the senate did nothing. Further, the rest of the body, while they rejected the report, have done nothing to address this matter. Instead they are seemingly more preoccupied with their ongoing feud with the presidency, that appears to be functioning, than they are with addressing this paramount matter involving MTN.

As I always say, in public policy, you have to speak with one voice. Needless to say, this worthless, time-consuming “probe” and report, is not worth the paper that its written on. Neither are the people responsible for it, or the entire legislative body that is wasting time revising it, acting as a professional government body worthy of being taken seriously. As even this worthless report shows, it is known fact that MTN Nigeria willfully removed $14 billion US Dollars out of Nigeria over a period of ten years. Nobody is disputing this. The real question now is, what is Nigeria collectively going to do about this? What is this Senate going to do about it? What about the House of Reps? The rest of the Federal government? All the state governments? All the local governments? Shockingly so far, the answer is nothing.

As any good parent knows, when a child misbehaves, and you watch them, and do nothing, you are in fact endorsing and encouraging their misbehavior. Further, when other well-behaved children witness this, you in fact encourage them to commence misbehaving also. So when a child misbehaves, their must be consequences, and they must be disciplined. In the same manner, for willfully moving $14 billion US Dollars outside of Nigeria, (regardless of the corrupt CBN governors that no doubt aided and abetted them) on principle MTN themselves must face swift consequences, and they must be disciplined severely. Otherwise, others will follow their lead. Contrary to the nauseating approach of the Nigerian Senate, it is not really that complicated to figure out what Nigeria’s “leaders” should be doing in response to MTNs misbehavior.

Since clearly none of them have the sense and/or patriotic mindset required to be “leaders” of a Great Nigeria, as a patriotic citizen, I must do my duty and spell it out for them:

*******No self-respecting Nigerian government official, their subordinates, or even immediate family, at the national, state, and local level should be an active user, or be in procession of a mobile phone, or mobile data service, provided by or linked with the MTN network. Accordingly, as a matter of principle, every singly Nigerian government official, from the national-level to the local-level, without exception, should by boycotting MTN, its network, and all its ancillary services.*******

The mere fact that this has not happened to date and there have been literally no calls whatsoever for it within any level of government, speaks volumes about the sheer stupidity, obscene levels of incompetence, and total absence of patriotism that exist today among government officials and political “leaders” at all levels in Nigeria. Even with the xenophobic killings Nigerians in South Africa, expelling of Nigerian nationals from South Africa, Nigerians are more preoccupied with lashing-out at each other than addressing a serious offense committed by this company. Do you think a Nigerian company could go to South Africa or any country, withdraw $14 billion US Dollars while they are in a currency crisis and recession, while Nigerians kill their nationals at home, and expel them, and the leaders of those countries would treat it with same level of indifference we see among Nigeria’s “leaders”?

The problem with Nigeria is not its structuring and the solution is not its disintegration. Equally to blame are all Nigerian elite from every region! Who had condemned MTN for what they have done to undermine Nigeria’s economy and the well being of ALL OF US? The Biafra leaders? They have all been silent and said nothing, because they too at just as worthless and incompetent. The Northern leaders or Youths? They too have been silent and said nothing, because they too are just as worthless and incompetent. The Yoruba Oodua leaders? They too have said nothing because, they too are just as worthless and incompetent. The fact is, all our elite have sat silent (both government and otherwise) because they do not care, yet they have distracted the masses with regionalism to mask that plain and ugly truth. No amount of restructuring or disintegration will change this. The Nigerian masses need to realize that nobody among the regional elite is worthy of trust. They do not feel your suffering and they will never fight for you. If they cared about the plight of Nigeria’s people, there is no way any of them could sit silent and watch South Africa’s MTN exploit Nigerians with impunity. If Biafran leaders cared 1 iota about Biafran Nigerians, they would be vigorously fighting MTN on their behalf. If the Northern Youths and leaders cared 1 iota about plight of Northern Nigerians, they too would be vigorously fighting MTN on their behalf. If the Yoruba Oodua leaders cared 1 iota about Yoruba Nigerians, they would be in total war with MTN on their behalf. Yet, they are not. Their total apathy is one thing they all have in common! Let their collective inaction serve as a reminder to all Nigerians, who these people truly are, and who they truly represent.

It is time for a Nationwide boycott of MTN, and I call on all true Nigerian patriots who actually care about common Nigerian people no matter where they are from, to join me.

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 2017 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Dr.Kuranga

David O. Kuranga; Ph.D.
Managing Director
Kuranga & Associates Limited
Phone: 646.481.6263
david.kuranga@gmail.com
https://kurangaandassociates.wordpress.com
http://us.macmillan.com/thepowerofinterdependence/DavidOl

Buhari Falters as Tax Revenue Down in 2016

17 Jan

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.

At the beginning of the year, the Nigerian federal government positioned 2016 as the year that they would have a bonanza in new non-oil tax revenue setting their target at 5 trillion naira! They tapped the former head of Lagos tax agency, the Nigerian state with the highest internal revenue, who promised that vigorous compliance and enforcement would do the trick. Despite all the promises made by the Minister of Finance and budgeting and planning;(http://www.premiumtimesng.com/business/197957-must-deliver-n4-96-trillion-year-nigeria-tells-countrys-tax-agency.html), and all the claims touted by the new head of Nigeria’s Tax Agency (http://allafrica.com/stories/201602031047.html), Nigeria’s tax revenue for 2016 was merely a dismal 1.2 trillion; (http://guardian.ng/news/2016-tax-collection-slumps-to-n1-2trillion/). If Nigeria were a meritocracy, where people who occupied positions in government were actually qualified to hold those positions, and once they did hold a position they were required to perform at an acceptable level, undoubtedly somebody would be sacked. Unfortunately Nigeria is not a meritocracy so it is not likely that any of the office holders responsible for this colossal failure that even the IMF noted was the real cause of Nigeria’s deep recession will face any consequences; (http://punchng.com/imf-links-nigerias-economic-woes-poor-management/).

There are three people who are critically responsible for the failure to raise Nigeria’s tax receipts. 1) The minister of finance, 2) the head of Nigeria’s tax agency, 3) the minister for budgeting and national planning. While the former two take a good portion of the blame, the most at fault is the latter. The key reason why Nigeria’s tax receipts are down in 2016 despite claims to the contrary is because the elitist APC administration led by President Buhari, has refused to require Nigeria’s elite to pay their fair share of taxes to the Nigerian treasury despite the disproportionate amount of national resources that Nigeria’s elite have consumed over the previous decade. As I discussed on a show “Deji 360” a few months ago; (https://youtu.be/mhn5RXEaNOA), and as I have been saying for years now even before the administration took office; (https://venturesafrica.com/if-nigeria-wants-to-avoid-economic-collapse-it-should-tax-its-wealthy/), the only way for Nigeria to effectively navigate its way out of its revenue crisis, is to diversify its sources of income by finally requiring Nigerian elite to pay what they owe to the country. To date, the Buhari administration and his minister of budgeting and national planning have sat on their hands watching the downward spiral of the economy and collapse of the naira that I predicted would happen years ago.

The IMF has blamed the administration for its poor management and announced that they only expect the Nigerian economy to improve just slightly next year. While some are taking this as good news, it is actually not. Nigeria has the potential to return to 5% growth, if the APC and the Buhari-led administration were not elitist and did the right thing. The tax reform badly needed in Nigeria, long overdue from the day the president entered office is the primary pathway to change the fortunes for the masses in Nigeria. The dismal performance of the Nigerian tax agency to increase tax receipts through enforcement and compliance measures alone have shown that this is a futile and totally unacceptable strategy. The majority of Nigeria’s taxes are in the hands of Nigeria’s elite who own a disproportionate amount of Nigeria’s wealth and thus consume a disproportionate amount of state resources. Requiring them to finally pay what they owe for this is not only sensible, it is the only morally correct course of action. The fact that it has not happened and the Nigerian nation continues to suffer as a result is a testament to how morally bankrupt the APC and the Buhari administration truly are at their core.

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.
Dr.Kuranga

David O. Kuranga; Ph.D.
Managing Director
Kuranga & Associates Limited
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com
http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

Managing Director, David Kuranga, Appears on Deji 360 to Discuss Nigeria’s Economic Policy

28 Oct

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.

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.
Dr.Kuranga

David O. Kuranga; Ph.D.
Managing Director
Kuranga & Associates Limited
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com
http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

#WestAfricasRefugeesMatter

26 Sep

DONATE HERE
imageAre West Africa’s refugees as important as Syrian refugees? Judging from the ongoing discussions at the UN General Assembly and the response from member nations, major donors, the global media establishment, and activists, the answer to this question is a resounding no! As result of Boko Haram Islamic extremist, propped up with heavy weapons flowing from Libya (after the NATO campaign collapsed the country sending its weapons and heavily NATO-armed militants across the Sahel region in Africa), Mali, Nigeria, along with Niger, Chad, and Cameroon have been devastated with a massive refugee crisis of people fleeing violent conflict all over the region.

Today over 50,000 refugee children in the region are in immediate danger of starving to death in the coming weeks and months. There are over 2 million refugees spread out across Nigeria alone, and hundreds of thousands more in neighboring Chad, Cameroon, and Niger. The number of affected persons rivals the over 4 million Syrian refugees that are reported to have fled into Turkey. The response of the international community however has been comparatively muted. No Pope has come to pick up West Africa’s refugees and bring them to the Vatican, the U.S. President has not made plans to lift 10 of West Africa’s refugees to the United States, yet alone a fraction of the 110,000 Syrian refugees he has promised to help relocate the U.S. on top of thousands already brought to the country.

Interestingly enough the campaign for refugees in the region is not asking or seeking to relocate them to another region, which has been highly controversial in the Syrian case. The calls that have fallen on deaf ears, has just been first for food aid, shelter, and basic medical supplies to alleviate the ongoing health crisis. Moving forward there is also a distant hope for some shanty schools where young displaced children can still learn and get a basic education. Yet in the case of West Africas refugees, all this appears to be too much for the international community to pay attention to.

Over the past several months, while aid dollars have continued to flow in support of the ongoing crisis in Syria, very little has trickled to the forgotten refugees of West Africa. Further many countries in Europe have also supported relocating refugees from that crisis in their country at a high cost, something that refugees in West Africa would not even dream of. Many major donors, nation-states have been almost apathetic and/or incredibly slow to act to the crisis in West Africa. The global media establishment have completely burried the story of West Africas refugees. Not a single major magazine or newspaper has lead with a story and a photo of one of the over 50,000 children set to die among the refugees in the coming weeks and months if something is not done. The only images that keep appearing are those of Syrian children.

In the case of the United States, the administration has been openly hostile to the ongoing suffering and insecurity. When the Nigerian government sought to purchase weapons and attack helicopters to route out the Islamic Boko Haram terrorists, heavily armed by the Libyan collapse, the Obama administration actively blocked the sale! Later the administration prevented Israel from selling to Nigeria and finally helped block a private dealer in South Africa from selling arms and helicopters to the Nigerian government reportedly in a coordinated operation with South African intelligence. At the same time, the very same Obama administration actively gifted advanced weapons for FREE to unrecognized militants and rebels in Syria and Libya, and in the case of Libya some of those same gifts of FREE weapons to militants fell into the hands of Boko Haram! All the while the same US government was refusing to SELL arms to the recognized democratic government in Nigeria! The hypocracy shown by the US Government in the crisis was unbelieveable. Needless to say, the heavily armed Boko Haram militants flushed with a cache of heavy weapons coming from Libya (thanks to NATO) caused tremendous bloodshed in Mali, Northern Nigeria, Cameroon, Niger, and Chad until the Nigerian government was finally able to secure new helicopter gunships and advanced weapons from Asia and Eastern Europe to put them down. The very weapons denied them by the US government for over a year.

Fast forward to today, the refugee crisis in the West African region is unimaginable. Tens of thousands of refugees sit with little to no food supplies and a health crisis seldom seen anywhere in the world. Within a few months tens of thousands of children will die from preventable causes of death such as malnutrition, disease, and lack of clean water. Thousands have already succumbed to the same fate and will continue to on a daily basis, as long as their plight continues to be ignored. By all accounts, the condition of a West African refugee in terms of severity rivals the situation facing a refugee in Syria. The number of people facing these conditions in both circumstances are staggering.

It would be one thing if this was happening and the international community was ignoring the plight of all the refugees in general. Yet, this is happening while the crisis of refugees are a major topic of concern to the global community, just not the ones in West Africa. The question is why? With the preponderance of evidence to the contrary, it is clear that the international community and the global media establishment needs to be reminded that indeed #WestAfricasRefugeesMatter. Their plight should not be ignored. Every effort should be made to aid these people in their time of need. They too are the victims of geopolitical power struggles beyond their control. For our part, we are reaching out to the African community in diaspora and all those who are interested to support our GoFundMe campaign and to reach out to other major donors and remind them that a West African refugee is not worth less than a refugee from anywhere else in the world.

To Donate Please Go To:
gofund.me/2qapt5qz

warmPlease share this with everyone in your network! #WestAfricasRefugeesMatter

David O. Kuranga, Ph.D

SHAM! Vultures Promote Asset Sale Plot

21 Sep

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.
Dr.Kuranga

David O. Kuranga; Ph.D.
Managing Director
Kuranga & Associates Limited
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com
http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

Nigeria Fails to Meet Q1 Revenue Mark Under Elitist APC

18 Jul

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.

The federal government acknowledged that in the first quarter of 2016 they failed to reach their revenue target by over 45%! The Nigerian economy has been in a free fall since the collapse of the price of oil to under $50 a barrel. The bulk of government revenue historically has come from oil. Since the collapse in oil, the Nigerian government has sought to shore-up its revenue generating agencies, and enhance tax compliance. In addition, they have sought to level electricity tariffs, stamp taxes on bank deposits, and potentially telecommunications taxes. Noticeably missing from all of this is a single measure to require Nigeria’s wealthy elite to pay any extra to help the nation in its time of need. During the years of high oil prices, Nigeria’s elite made the country one of the top destinations for private jets and luxury products from all over the world. The number of multimillionaires shot up dramatically, and the country became host to Africa’s largest set of private-sector billionaires.

The elitist APC, since taking office, has sought to increase the tax burden on average Nigerians considerably, most notably with the electricity. However, despite the nation’s economy in complete free fall, the elitist Buhari administration has set up a wall of protection around Nigeria’s elite, requiring them to pay nothing extra. Many of these elite are currently hoarding foreign currency in domiciliary accounts in Nigeria, further, many of them moved large amounts of money out of money out of the country before the current government took power. Many of them, like President Buhari himself and his Vice President, own residences in London and in other high-brow communities in Dubai, New York, and elsewhere in the world, with properties under their names or under the names of close relatives. It is a known fact that many of these Nigerian elites, that live and due the overwhelming majority of their business in Nigeria, pay more taxes to the British Crown, than they do to the Nigerian nation. Despite this, the elitist Buhari APC regime, continues to provide excellent security with military, navy, and police to protect the Nigerian elite in their communities without requiring these same people to contribute anything extra to the nation that has made them wealthy and is providing them security and safety in their communities.

NIGERIA’S ECONOMY WILL COLLAPSE

Nigeria has reached a critical stage, since it floated its currency, the economy has shed value and has reduced in size drastically. The floating currency has done absolutely nothing to encourage international investment, and the currency has continued to plummet. Within one year, on this current trajectory, the Nigerian economy will collapse. The country cannot afford to allow the sun to set on 2016 without requiring Nigeria’s wealthy and elite to pay higher tax receipts in-line with what they would be required to pay anywhere else in the world. They receive massive protection from the state and other benefits from the state to live securely in their communities and compounds, fly their jets, and cruise around in their luxury cars and yachts. Over the years, this protection has been provided free of cost, subsidized by the Nigerian people who do not receive anywhere near the level of protection that Nigerian economic and political elite receive in their communities. Needless to say, with the country on the verge of collapse, this dynamic is completely unfair. If Nigeria were a democracy and the APC a legitimate party, they would have moved swiftly to rectify this imbalance by now. However, after being in power for over a year, they have done nothing. Instead they have been robbing the poor seeking to increase their tax burden and force them to pay more to subsidize Nigeria’s elite class even more than they already have.

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.
Dr.Kuranga

David O. Kuranga; Ph.D.
Managing Director
Kuranga & Associates Limited
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com
http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

Its Time for Forensic Audits of all Nigeria’s States

24 Jun

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.

In the past several months both Fitch and Moodys downgraded Nigeria’s credit worthiness a significant notch, citing increased investor concern about the ability for the Federal Government to service its debt obligations. High on the list of concerns are cash-strapped Nigerian states who across the federation have issued large amounts of external debt and engaged in rampant borrowing with the backing of the Nigerian Federal Government. By virtue of the constitution each state receives a portion of the national oil revenues, that is paid out periodically to state governments and shared with the local governments in each respective state. Once the money leaves the federal treasury and is handed over to the state governments there is no accountability to the federal government whatsoever in what each states’ officials’ do with its share of the oil revenue. Further, when these same states make applications to issue bonds backed by the federal government, or borrow directly with federal government backing, they also provide little to no accountability to the federal government as to how those funds are used and spent.

Over the past year, under the leadership of President Buhari and his Finance Minister, Kemi Adeosun, the federal government has cleaned up mismanagement and waste in the federal bureaucracy by establishing a single account for the treasury (TSA) to track revenue generating agencies and the usage of funds by all ministries and agencies of the federal government. They also removed ghost workers and identified areas for consolidation of tasks to reduce the number of federal employees and other overhead expenses deemed wasteful. They have also phased-out cash allowances, forcing federal officials to use bank cards to track how money is spent. Despite this, given that much of the national treasury is handed over to states and local governments, and a large portion of Nigeria’s external debt is actually held by Nigerian state governments including several states holding hundreds of millions in debt, and Lagos State holding over 1 billion in external debt; it is not enough for the finance ministry to track the usage of funds for the federal government only. The time is long overdue for the Federal government and the Ministry of Finance to put in place compulsory world-class standards for all states holding external debt backed by the federal government.

Not a day goes by in Nigeria where there is not a major revelation in the press that a state or local government official diverted money it received from the federal government into their private account to use for non-state expenditures. To make matters worse, many of the states in Nigeria are so heavily indebted that they have not been able to pay salaries to state employees for months. Some require bailouts from the federal government just to continue functioning. For the administration of President Buhari, the self-styled “corruption eradicator and chief”, to continue to allow state and local governments to mismanage the handouts given to them by the federal government or debt received backed by the federal government is a gross dereliction of duty on the part of the administration and the Ministry of Finance. All revenue handed over to states and local governments, either their share of oil revenue, bailout funds, or proceeds of loans or bonds backed by the federal government, should be accounted for in order for them to continue receiving support and cooperation from the federal government. The Ministry of Finance should require each state with external debt to undergo third-party forensic audits of the usage of all funds received from the federal government or from debt backed by the federal government. Given that they are in debt to the federal government, they are legally no longer entitled to receive their allotment of federation oil revenue sharing, because their external debts backed by the federal government means they have already received that money in advance. If any indebted state refuses to comply with the requirement of forensic audits of their usage of federal government funds, their share of the oil revenue should be withheld by the federal government and eventually diverted to service their external debt.

Each state that holds external debt, places their debts against the entire nation, not just their particular state. If any state defaults on that debt, it becomes the responsibility of the entire nation to carry and repay the debt on behalf of that state. Therefore it is the responsibility and the duty of the federal government to monitor any and every state that holds external debts that it backs. Receiving external debt backed by the federal government is not a right of any state in Nigeria, it is a privilege. Once they accent to receiving the proceeds of those debts, they must adhere to federal government standards of accountability and reporting until those debts are repaid. They also forfeit their right to receive oil revenue payments should they refuse to adhere federal government standards. The federal government in Nigeria is far too lax in monitoring heavily indebted state and local governments, and credit rating agencies and investors in fixed-income debt around the world are fully aware of this pathetic juvenile deficiency in governance at the level of the federal government in Nigeria. Before oil revenue sharing proceeds are handed out or more bailouts given, each state in the federation that holds external debt should undergo a forensic third-party audit detailing what they did with the money it received from the federal government up to that point. If Nigeria were to default as a result of the debts of its states and local governments, the structural adjustment policies of the IMF and creditors would implement these very measures that the federal government in Nigeria has failed to do up till now.

States in Nigeria raise their own money through internally generated revenue (IGR). With the collapse of oil revenue, many states and local governments in Nigeria have finally started doing their jobs and providing services and collecting taxes through which they can generate revenue to fund the affairs of the state. There are limits on the federal government tracking how much revenue states generate from these schemes and what they do with revenue they raise locally. Despite this, there is no legal rational that prevents the federal government from requiring all states holding external debt backed by the federal government from reporting to it how it used the money given to it by the same federal government through the means of annual forensic audits of all states and local governments on their usage of those funds. Failure enact stricter standards for heavily indebted states by now is casting serious doubt and questions as to how serious the administration of President Buhari is about stopping gross mismanagement and corruption in the public sector in Nigeria. International observers have every reason to laugh at Nigeria and the administration of President Buhari’s so-called “fight on corruption”, which more or less resembles a partisan selective campaign to undermine political opponents. Some of the most corrupt officials in Nigeria are members of the President’s cabinet, including former Rivers State governor, Rotimi Amaechi. Further the administration seems hesitant to enact simple sweeping measures, like require all states who hold external debt backed by the federal government, whether they are run by APC or PDP, to submit annual forensic audits of their usage of federal money.

In short, Nigerians should understand, that the reason their state and local government officials are allowed to this day to divert money given to them by the federal government into their private accounts is because the administration of President Buhari and his Finance Minister is continuing to allowing it. If they did not, they would require all states with external debt to submit forensic audits for the usage of those funds annually. Any state that refuses to comply could see delays in receiving their allotment of federal oil revenue, and eventually compulsory repayment of their external debt deducted directly from their allotment of federal government oil revenue. Corrupt state governors and local government chiefs in Nigeria of all political stripes cannot continue to run mafia-style fiefdoms, diverting federal government allocations and receipts of debt, backed by the federal government into their pockets. Any state that refuses to certify their use of federal government funds with an annual forensic audit by an accredited third-party auditor, should have their share of oil revenue withheld and eventually diverted to service their external debts if they refuse to comply. By global standards, the administration of President Buhari and Ministry of Finance under Kemi Adeosun are not that tough on corruption because they continue to sit on their hands and allow state and local governments to undermine the entire nation and make a mockery of their corruption crusade.
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.
Dr.Kuranga

David O. Kuranga; Ph.D.
Managing Director
Kuranga & Associates Limited
Phone: 212.363.0936
david.kuranga@kaglobal.net
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