Cases of fiscal mismanagement leading to high levels of trust deficit and lack of confidence in public institutions have been identified as factors limiting Nigeria’s potential and aggravating its economic woes.
Economists believe that the inability of most Nigerians to identify an economic growth policy is hinged on the trust deficit and lack of confidence in policymakers over the years.
For instance, a critical look at the campaign promises since the 1979 elections reveals that the themes and promises are the same from achieving food sufficiency, constant electricity, and building of roads, coupled with the provision of quality education and healthcare to tackling insecurity. Fighting corruption has not been truly addressed and eliminated from the list of developmental challenges.
According to stakeholders, Nigerians seem to have run out of patience in trusting their politicians and those who hold public office on their behalf. Many international organisations have blamed the spate of insecurity, banditry, kidnapping, and farmers-herders clashes ravaging Nigeria on a lack of synergy and trust deficit among the citizens.
Despite its abundant resources, Nigeria has maintained its infamous position as the poverty capital of the world, with the disclosure that 133 million citizens currently live below the poverty line owing to lingering challenges of fiscal governance.
This figure represents 63 per cent of its population living in poverty, according to a survey conducted by the National Bureau of Statistics (NBS), National Social Safety-Nets Coordinating Office (NASSCO), United Nations Development Programme (UNDP), United Nations Children’s Fund (UNICEF) and the Oxford Poverty and Human Development Initiative (OPHI).
A new World Bank report on Nigeria’s Public Finance Management and Fiscal Issues unveiled on Tuesday, stated categorically that the way forward for the nation’s lingering economic misfortune is to win the trust and confidence of the people by creating a governance structure that is all-inclusive and people-oriented.
At the presentation ceremony held in Abuja, the Country Director, of World Bank for Nigeria, Shubham Chaudhuri said: “Nigeria is currently facing huge developmental challenges, Nigeria has not been able to afford what the government needs to spend and meet those basic developmental needs. But really, Nigeria can not continue to spend more by just borrowing, with this, it becomes imperative that the financial resources that Nigeria has should be spent in a much better way.
“For instance, if you want to persuade various constituencies to contribute more to the financial resources by paying more tax and foregoing PMS subsidy, there must be some level of confidence that those funds could be used for the benefit of the public but the trust is not there now,” he said.
Chaudhuri also stated that unless Nigeria backs up its good-intentioned policy processes with good implementation commitments, the efforts of all policymakers would always remain futile.
“Nigeria right now is in a position that it can not afford to do things sequentially, we have been saying this since last year but you keep saying Nigeria can muddle through but it has really come to a point where all hands must be on deck to ensure that government programmes deliver and that public funds deliver the most cost-effective kind of value and this has become critical and imperative.”
Also speaking, World Bank Lead Economist, Alex Sienaert said there is a need for the government to increase its spending from its current very low levels, to promote economic development.
According to him, Nigeria, taking an average of six years, has just spent about 12 per cent of its GDP, which is under the global average of 10 per cent compared to peer countries.
He said: “Nigeria is not spending very much relative to its total resource space. Nigeria is spending less even in the recent past. Earlier in the last decade, with so much portion being spent, it was close to 16 per cent of the GDP in 2011. The spending in social sectors is particularly low.
“For instance, in education, the federal government spent $8 per person per year while state governments spent $14 dollars per person per year which amounted to a total of $22 dollars per person per year, even lower, when compared to countries that are poorer than Nigeria.
“The key to raising public spending lies in urgently raising more revenue. At 7% of GDP in 2021, Nigeria’s revenue-to-GDP ratio is among the five lowest in the world. Putting Nigeria on a sustainable fiscal path with improved service delivery requires a multi-pronged approach anchored around three interlinked and mutually reinforcing pillars.’
On petroleum subsidy, Sienaert said the price of subsidising petroleum in Nigeria is much lower than other countries in the region, thereby constituting a strong incentive for smuggling and beneficial to other countries in the region.
Furthermore, he suggested that the government should provide a very considerable allocation at the local, state and national levels and give priority to only programmes capable of stimulating economic growth.
The economist also urged the government to strengthen and improve existing fiscal rules, make governance more transparent and ensure that projects are followed through to implementation to boost productivity.
Also speaking on fuel subsidy, Chief Economist to the Presidency, Dr Doyin Salami said the government has been looking at various ways to reduce the cost of subsidies, stating that subsidies are not the best way of spending resources.
“I do not expect that by the end of next year, there will still be subsidies, I will be surprised that by the end of next year, we will still be talking about subsidies.
Government has been looking at a number of things to do so as to reduce the cost of subsidies even now. For you to remove the subsidy at this time, given other challenges, we will need to think through because the implications are one of the things we have to think about”.