Chapter 5 (4): Some Areas Requiring Redressing

Uneven Taxation From One Region To The Other

Uneven taxation between regions is a significant issue that can lead to bad governance and societal discord. When one region is disproportionately taxed at the expense of another, it creates deep-seated resentment and animosity among the regions and tribes of a nation. The principle of fairness—what is good for the goose should also be good for the gander—must be at the forefront of any taxation policy.

The country, Nigeria has long struggled with regional disparities in taxation and resource allocation. The southern regions, particularly the Niger Delta, are rich in oil and contribute significantly to the nation’s wealth. However, these regions often feel overtaxed and underappreciated compared to the northern regions, which are less economically productive but benefit more from the nation’s revenue allocation. This imbalance has led to grievances, fuelling ethnic tensions and undermining national unity.

Globally, we can see similar patterns. In Spain, the Catalonia region has historically been more industrialised and economically productive than other parts of the country. The perception that Catalonia’s wealth was being unfairly redistributed to less productive regions contributed to the rise of the Catalan independence movement. In the United States, states like California and New York, which are economic powerhouses, often complain about federal taxation policies that seem to favour less productive states in terms of federal spending.

To foster robust national development, governments must find a middle ground that ensures even taxation in proportion to resource utilisation, contribution, and capacity. Taxation should be structured fairly, following production, ensuring that those who contribute more to the nation’s wealth are not penalised, but rather incentivised to continue their productivity.

Until we reach a stage where states or regions that produce more can enjoy a greater share of the benefits, we will continue to grapple with mediocrity. The belief that one can survive without hard work or productivity, simply by relying on the wealth generated by others, is a beggarly existence that stifles innovation and growth.

This issue also underpins the concept of resource control. Allowing each region to utilise its resources and subsequently pay taxes to the central government could be a more equitable approach. Such a system encourages decentralisation, which is particularly crucial for developing countries seeking to balance regional disparities and foster national cohesion.

Fair and even taxation is not just a fiscal policy—it is a cornerstone of good governance. Without it, nations risk fostering division and stagnation instead of unity and progress.

Inconsistent Trade Policies

Inconsistent trade policies from one government to another have been a significant issue in Nigeria, leading to bad governance and economic instability. There is a pressing need for stable national trade policies that are consistent across administrations. Currently, Nigeria lacks a coherent and recognised trade policy that is understood by the average citizen.

For instance, if the average Nigerian were aware of the rationale behind certain trade decisions—such as the closure of borders to specific goods to encourage local production for long-term benefits—they would be more likely to support these policies rather than oppose them. Unfortunately, ignorance and a lack of transparency have undermined many government initiatives in recent years.

This inconsistency is particularly evident in Nigeria’s importation and exportation policies. As a nation, we require a long-term vision that is embedded in sustainable policies aimed at fostering growth and development for the national interest. It is crucial that these policies are stable and focus on enhancing local productivity and production.

Globally, countries that have succeeded in creating robust economies, such as China and Germany, have done so by maintaining consistent trade policies that support local industries. China, for example, has implemented a series of long-term trade strategies that have gradually transformed it from a consumer-oriented economy to a global production powerhouse. These policies have been upheld across successive governments, ensuring continuity and fostering trust among local producers and international partners alike.

In contrast, Nigeria’s trade policies have often been short-sighted, shifting with each new administration. This lack of continuity not only disrupts local industries but also discourages foreign investment. Moreover, our current trade policies are heavily skewed towards importation, which benefits a small elite with the resources to engage in international trade, often to the detriment of local production. This creates a monopoly-like environment where a few wealthy government officials and their associates profit from importing goods, rather than supporting the development of local industries.

To address these challenges, Nigeria must adopt a trade policy that prioritises local content development and encourages exportation. Such a policy would not only improve our trade balance but also drive economic growth and reduce our dependence on imported goods. However, this can only be achieved if our leaders have the political will to implement policies that serve the national interest, rather than personal or vested interests.

The case of Japan offers a valuable lesson here. After World War II, Japan adopted a consistent and long-term industrial policy that focused on rebuilding its economy through local production and export-led growth. This approach, supported by stable government policies, enabled Japan to become one of the world’s leading economies.

For Nigeria to move from being a consumer-oriented nation to a producing one, our trade policies must be stable, transparent, and focused on long-term national development. Only then can we break free from the cycle of bad governance that has hindered our progress and unlock the full potential of our economy.

The Nigerian Content Development Act and its Impact on Governance

The Nigerian Content Development Act, while well-intentioned in its aim to promote local content for the Nigerian market, has unfortunately not always achieved its objectives in a manner that supports quality, equity, or sustainable growth. The Act, which seeks to prioritise Nigerian participation in various sectors, particularly oil and gas, has inadvertently contributed to some of the governance challenges facing the country.

Quality Standards and the Quest for Excellence

One of the key criticisms of the Nigerian Content Development Act is that it often prioritises local participation over quality standards. While it is commendable to encourage local production, it is imperative that these local products meet globally accepted standards. Unfortunately, in many instances, this has not been the case. The lack of stringent quality control has resulted in substandard products flooding the market, which not only diminishes the credibility of local industries but also drives consumers to seek foreign alternatives.

In the manufacturing sector, the Act has sometimes led to the granting of licences to individuals or companies with insufficient capacity, often due to their proximity to those in power. This practice has resulted in a proliferation of substandard goods in the Nigerian market, further eroding public trust in local products. Citizens, naturally inclined towards quality and excellence, are thus driven to smuggle or import foreign goods, exacerbating the country’s economic challenges.

The Power Sector: A Case Study in Governance Failure
The power sector in Nigeria provides a stark illustration of how governance failures can be linked to the issues within the Nigerian Content Development Act. Over the years, successive governments have made grand promises about reforming the power sector, yet meaningful progress remains elusive. There is a widespread belief that certain powerful individuals, often referred to as ‘cabals,’ benefit from the sector’s inefficiencies. These individuals, who are often politically connected, have vested interests in the importation of generators, a booming business that thrives on the instability of Nigeria’s power supply.

Despite repeated campaign promises from various political parties, including pledges to resolve the power crisis within six months of taking office, the situation has remained dire. This failure can be partially attributed to the same issues that plague the implementation of the Nigerian Content Development Act: the prioritisation of local content or vested interests over actual competence and capacity.

In many cases, power generation contracts have been awarded to local companies that lack the technical expertise or resources to deliver. This approach, while aligned with the goals of the Nigerian Content Development Act, has not led to the desired outcomes of increased power generation or improved service delivery. Instead, it has perpetuated a cycle of poor performance and inefficiency, leaving the power sector moribund and Nigerians reliant on costly and polluting alternatives like diesel generators.

Nigeria’s approach has often been more focused on immediate local participation without adequate planning for long-term capacity building and quality assurance. This has led to a situation where, instead of empowering local industries, the Nigerian Content Development Act has sometimes facilitated the entrenchment of mediocrity and corruption.

Moving Forward: A Call for Standards and Accountability
If Nigeria is to truly benefit from the Nigerian Content Development Act, there must be a concerted effort to raise the standards of local production to match those on the international stage. This will require the establishment of clear, measurable indices for progress and improvement, as well as a commitment to enforcing these standards across all sectors.

Moreover, the government must be vigilant in ensuring that licences and contracts are awarded based on merit and capacity, rather than political connections. This approach will not only improve the quality of local goods and services but will also help to restore public trust in local industries and governance.

While the Nigerian Content Development Act has the potential to drive significant economic growth and development, its current implementation has highlighted serious flaws that must be addressed. By learning from global examples and focusing on quality, capacity building, and accountability, Nigeria can harness the true power of local content to achieve sustainable development and good governance.