Archive | February, 2016

Hypocracy of the APC-led Electric Tax

9 Feb

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.

Understandably, the new All “Progressive” Congress (APC) administration has been diligently focused on raising internally generated revenue across Nigeria, independent of the petroleum industry. Loss of oil revenue has sent the country’s economy on a downward spiral given the the previous administration did not save and failed to establish alternative sources of revenue. While the APC pretends to be a “progressive” party that supports progressive principles like wealth redistribution, especially when there is vast wealth inequality as is the case with Nigeria, their true disposition could not be further from this. As with many things in life, actions speak louder than words.

The APC-led government under President Buhari, through the power ministry led by former Lagos Governor, Babatunde Fashola, has chosen to implement a nation-wide tariff or tax on electricity of 45%. Implementing taxes such as this indiscriminately nationwide, raises the cost of living on everyone, including those who can afford to pay and those who–most certainly–cannot. It is a prime example of a regressive taxation policy that has a greater impact on the poor and laboring classes than it does on the wealthy. Such massive hikes in basic power costs like this, is so damaging and regressive that it is even a violation of agreed UN global standards, to which Nigeria is party and a signatory. In a rare move, UN observers have publicly voiced concerns over these developments in Nigeria making clear that they are inconsistent with agreed global standards of governance. Needless to say, labour unions across Nigeria have been out in force protesting the developments and calling for the Minister of Power to repeal the power tax increases.

Regressive tax measures like this is certainly not the only means for the government to increase internally generated revenue to finance development. There are many progressive schemes that could have been implemented by now, even when they approved the revised budget measures to rescue cash-strapped states in 2015. I have repeatedly argued for regressive tax measures to target the elite in Nigeria with (Mansion Taxes, Luxury Car/Vehicle Taxes, VAT taxes, Luxury foreign Goods taxes, among other measures). However the administration has not so much as lifted a finger to implement any of these measures despite the fact that Nigeria is among the most unequal nations in the world in terms of wealth inequality. In fact the administration’s budget and planning minister indicated that there would be no major increase in taxes this year in Nigeria, at least not on the elite.

With all things being considered, why is the (APC) All “Progressive” Congress pushing such a regressive policy while shunning progressive measures? The answer is simple, the APC is not a progressive party at all. In fact just like the PDP they are equally as elitist, class insensitive, and completely aloof to the hardship that the masses in Nigeria face from the top down. Using the word progressive in their name is a charade. As unfortunate as it may be, the enemy of your enemy, is not necessarily your friend. Today, Nigerians are learning this lesson the hard way.

Nigeria does need to increase tariffs and raise money, but not on basic electricity for everyone, but on foreign wine and champagne that the elite across Nigeria consume. On the foreign films and satellite that the elite across Nigeria watch. On the business-class flights and private jets that the elite across Nigeria hire. Taxes need also to be collected on the fleets of luxury cars that elite in Nigeria currently own, and on their aquatic yachts also. Luxury property taxes should also be collected on the multiple mansions and luxury flats that elite across Nigeria own, especially if they also own property abroad. This is not radical or revolutionary, it is simple common sense in a society plagued with massive wealth inequality like Nigeria. These same policies exist in the US and the UK. The only hope now left for Nigerians to see these changes implemented is through massive nationwide protests led by organized labour. The elite-servicing hypocrites of the APC that were swept to power almost a year ago have no intention whatsoever of doing the right thing by making progressive changes in Nigeria, if they did, they would have done it by now. Instead after sweeping to power with a charade of mischaracterizations, they continue the policy of robbing poor masses of Nigeria blind, the same people they swore to serve.

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 2015 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

New Approach to Corruption

3 Feb

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 singular focus on combatting corruption of the current administration of Nigerian President Buhari has been viewed by many as a breath of fresh air that for once a leader is taking the issue of corruption in Nigeria head on. It is viewed by most Nigerians as the single most important issue impacting the growth and development of the country. From observing core members of his inner-circle as well as his ruling APC coalition, others have cautioned that the Buhari-led war on corruption is politically motivated focusing on launching probes against the opposition while bypassing serious allegations against members of his own cabinet and within the APC ruling party itself. They point to people like former Rivers Governor who continues to fly private jets despite the presidential directive that his cabinet members would not do so. In addition he infamously is reported to have spent 500 million dollars on a monorail for his state that is still not operational, when Russian officials in Moscow built a similar monorail made by the same manufacturer, Intamin, for 240 million dollars. Despite these irregularities, and stiff opposition, this is who President Buhari selected as his transportation minister of all positions.

Even if one were to accept that the president and his administration had the purest of intentions and that there was no selectivity, favoritism, or glaring irregularities in executing the war on corruption, there are serious practical and logistical obstacles that remain. As we know, it has been decades, and the Abacha loot from the 90’s is still not fully returned. The financial institutions that have been harboring the money have had decades to invest the capital, interest free, and return the principal, which is now worth fractions of what it was worth in the 90s when it was taken. While some may be happy with the decades long process of recovering these looted funds, nobody can deny that it would be better if repatriation and/or return of mismanaged funds would be done faster and more efficiently. It would seem that the best way to do this, would be with the cooperation of the very targets of the corruption probes and investigations. They themselves know better than anyone what they have done and how best to recover what they have taken or received illicitly. With the politically charged corruption prosecutions underway in Nigeria, one can be almost certain that almost none of the subjects of the investigation will cooperate or willingly choose to incriminate themselves.

President Buhari himself has to make a decision. Is it more important to score political points by engaging in largely fruitless drawn-out corruption probes and prosecutions, or would he rather recover funds as expeditiously as possible? Given the dire financial situation the country is now in, one would hope he would chose the latter, but that may not be given the dispensation of the president’s APC party. To solidify their support-base APC party members are continually projecting the idea that they are all less corrupt than the PDP they deposed despite the fact that many of them were prominent members of the PDP a fortnight ago.

Corruption and mismanagement is the greatest sin that has been committed in Nigeria. All across the country, political and economic elite have hand their hands bathed in the loot and mismanagement of public resources. For the masses trapped in poverty, robbed of their time, and of opportunities, this sin committed by the political and economic elite is almost unforgivable. The hatred for the corrupt and their progeny runs deep among the masses in Nigeria. Thus it is the perfect tool to use politically to solidify support and gain tactical advantages over opponents. Repeatedly, Nigerian leaders hurl corruption accusations at political opponents, not for the purpose of systematically tackling the issue, but rather for political gain. What president Buhari is doing and the manner he has chosen to address past corruption and mismanagement, is not much different than what those before him have done. To his credit, and to be fair, his administration appears to be having more success than others in curbing existing elements of mismanagement and corruption, but his record in also recovering what has already been taken will tell the full story on whether his approach will be successful.

Just as the crimes of corruption and mismanagement are the cardinal unforgivable sin in Nigeria, the many unspeakable crimes of apartheid in South Africa were also seen as unforgivable. Yet, at the presidential level, a leadership decision was made that it was better to move the country forward than to settle scores with political opponents. In a very politically unpopular and costly decision, President Mandela, made it possible for the unforgivable in South Africa to be forgiven and by so doing, he secured the cooperation of many, both friend and foe. While some argue that the full truth of the crimes that were committed in South Africa may not have been told, including biological weapons, economic theft, and the activities of the secret societies of which political elite were members; much of the truth came out and the nation was able to begin the long process of healing using government as an instrument to redress economic and social injustices. Does President Buhari possess this same courage to do what is politically unpopular to move Nigeria forward?

“Truth, Repayment, & Reconciliation Commission”
Should President Buhari chose this path in a similar measure to what occurred in South Africa, any Nigerian official who chooses to confess and tell the truth of what they did, make arrangements to repay what was taken, and/or surrender assets that they illicitly attained anywhere in the world, would be granted a full presidential pardon and allowed to resume life in Nigeria or abroad as if they never committed any wrongdoing. This would require an extra-judicial commission that will exonerate all those who chose to cooperate. The commission would only be temporary and I do not think it should last longer than a year, so as to give perpetrators ample time to come forward and make amends. The president, would also however need to police his own party in particular, to not politically use any confession against any individual who has chosen to cooperate as that would defeat the purpose adding a form of extrajudicial punishment for those who cooperate. By so doing, the president may anger certain elements in the general public who want to see the heads of past officials served on a platter, but it will go a long way to making the path of confessing, repaying and reconciling debts to the public the path of least resistance for all those targeted by corruption probes. Those who are currently serving in public office should also be allowed to continue their role and to keep and/or receive awards for their public service if they chose to cooperate with the commission. Even if the commission failed to recover everything, the time it will save in recovery will be far superior to the decades long interest-free loans the Abacha loot has been giving to major Swiss financial institutions.

Undoubtedly this will be among the most politically unpopular things for the president to do. His minister of information and many of his other officials will have to find something else to talk about with the media and devise another way to campaign against political opponents than instrumentally and selectively using the corruption issue to prop themselves up. In difficult times however, real leadership sometimes requires making difficult sacrifices for the greater gain. To fully win the corruption battle, President Buhari may have to stop fighting and start forgiving. There is a proven example of this working already, and indeed Nigeria may be another remarkable story of the power of forgiveness over that of retribution and revenge.

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 2015 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