OPINION: Waivers for the rich, hard labour for the poor – Henry Boyo

Published:10 Dec, 2012

OPINION: Waivers for the rich, hard labour for the poor – Henry Boyo

The primary underlying principle of a social contract in a modern democratic dispensation is that of equality of all persons.

Instructively, the wider the social inequity, the greater also will be the level of national instability, and the more restrained will be that nation’s economic growth trajectory.  Consequently, it becomes inexplicable that some government policies and initiatives should facilitate the prosperity of a favoured sub-group at the expense of the vast majority.

Curiously, government projects and policies overtly intended to improve mass social welfare have often transformed to a bonanza for a select few, while the majority remain victims of such exploitation.  Presidential import waivers are a good example of such misguided government interventions.  However, in spite of the gross abuse associated with import waivers, no beneficiary of waivers has ever been formally reprimanded for improper conduct!

The damning revelation from partial waiver on fuel prices is another example of how a handful of Nigerians can collaborate with government officials to rip-off the treasury!

Regrettably, those who facilitated or approved the fraudulent applications for subsidy payments have not suffered any overt sanction, and probably never will; after all the former Governor of the Central Bank of Nigeria and the auditors who gave the banks clean bills of health prior to the banking meltdown have also presumably enjoyed waivers, as none of them apparently suffered any sanctions.  Indeed, the same officials, who presided over the mess, were retained to also ‘sanitise’ the system!

Plea bargain is another dimension of the waiver system, which protects the rich and powerful at the expense of the masses; several political office holders, who recklessly abuse their offices, ultimately go scot-free after refunding peanuts, to avoid prosecution or the need to repay billions of looted funds!

The interventions of the CBN and Assets Management Corporation of Nigeria in the banking sector also serve the same purpose as waivers; the promise that the injection of trillions of naira public funds would reposition the banks to actively support and energise the real sector has remained largely unfulfilled.  Whether or not all the banks are now truly sound remains controversial, but the positive trading reports currently posted may be evidence that the banks have prospered in spite of their inability to support the real sector, and instigate increasing employment opportunities.

Curiously, the greater part of banks’ profits are still derived from the huge interest payments on government’s borrowings to the same banks bailed out with public funds.

The waiver ‘racket’ has now found fertile grounds in the capital market; the unfettered opportunities for investors to borrow at over 20 per cent in order to acquire the price-manipulated shares of lending banks was primarily responsible for the stock market  crisis in 2008.  Worse still, it has become evident that most of these margin loans were grossly under-collateralised, in contravention of the provisions of the Investments and Securities Act.

Inexplicably, none of the 84 stockbrokers identified by both AMCON and SEC as guilty of this infraction will be prosecuted.  Curiously, these offenders are now adjudged worthy of debt waivers by none other than the Minister of Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, who appears eager to consolidate her image of wilfully giving away public funds.

Although AMCON purchased the stockbrokers’ toxic assets at a discounted price of about N42bn, in reality, the current value of the underlying assets or collaterals is only about N19.6bn, according to the minister.  Consequently, AMCON’s over N2tn incursion in the money market may, in reality also, be worth less than N1tn at current valuation; thus, AMCON may ultimately have flushed another N1tn public funds down the drains.

Since the public did not partake in the profits of these stockbrokers when the going was good, one wonders why AMCON should forego N22.6bn of its asset base as debt forgiveness to speculators, who wilfully engaged in the stock market casino, with the full knowledge that the equity they purchased lacked the fundamentals to justify their inordinately high prices.  There is undoubtedly the moral hazard that this type of waiver will send the wrong signal to stock market operators, that government would underwrite future reckless or unethical market behaviour.

According to Okonjo-Iweala, the cancellation of the stockbrokers’ debt of N22.6bn is primarily aimed “at giving life to our capital market, as it would ‘remove’ the heavy burden (of debt) to allow stockbrokers to fully operate and reenter into the market with more investments and make the market more vibrant”.  It is not yet clear how the reentry of the 84 stockbrokers will reenergize the market as, they certainly cannot bring fresh capital into the market with their current zero liquidity base.

Nonetheless, in view of the constitutional provisions on appropriations, the National Assembly may still have to consider whether or not the minister has the powers to waive this magnitude of debt without legislative approval!

In addition to the debt waiver, the minister also announced the elimination of stamp duties and VAT on stock market transaction fees.  Curiously, while operators in the real sector have ceaselessly decried the multiple taxes on their depleting incomes without any sympathetic response from government, the minister has, with this measure, exempted commissions earned on traded value of shares (stock market gambling) and stamp duties on transaction fees from VAT payments.  How this will positively impact the life of the poor is left to be seen.

Paradoxically, while the ‘gambling’ proceeds in the stock market are now exempted from VAT, the government remains determined to increase VAT rate above five per cent in spite of its adverse impact on inflation and competitiveness of made-in-Nigeria products.

However, the attractiveness of equities in the Nigerian stock market will continue to slip, if the industrial landscape continues to contract, and ultimately, there may be more stockbrokers than stocks, for sale in the market!

In contrast, it is more plausible that reduction in multiple taxation and a reprieve of N22bn for Small and Micro Businesses, which inevitably failed under the yoke of over 70 per cent annual interest rates charged by Micro-finance banks, would certainly have induced a more positive knock-on effect on employment and the economy.

However,  reduction in rate of inflation and a stronger naira remain the most potent waivers for sustaining enduring economic growth and social welfare; instructively, however, such waivers cannot materialise with our permanent burden of a cash surfeit economy instigated by CBN’s substitution of naira allocations for dollar denominated revenue.

 

– Henry Boyo

Related Posts

Recent Posts

Brazil inmates dug three tunnels out of Alcacuz jail

Police searching a prison in the Brazilian state of Rio Grande do Norte say they have found three unfinished escape tunnels. The discovery comes just days after at least 26 inmates were killed in a riot at the jail in the city of Natal. Officials said inmates at Alcacuz jail had taken advantage of heavy rains to dig the tunnels in the softened ground. But they insisted that none of them had been finished and that no prisoner had managed to...

I’m ready to help Gerrard become the best manager he can be – Klopp

Jurgen Klopp has labelled Steven Gerrard’s decision to join Liverpool’s Academy staff as “wonderful news for football” as he builds a base to enter management. The 36-year-old called time on a stellar playing career last November and will help shape his boyhood club’s next generation as a coach at the same youth system that developed his talents. The former Reds skipper will begin his duties at Kirkby in February, initially in a floating role, and Klopp commended Gerrard’s willingness to swerve...

Why Buratai Sued Premium Times – Army

The Nigerian Army on Monday said the Chief of Army Staff, Lieutenant General Tukur Yusufu Buratai, sued the Nigerian online newspaper, Premium Times, for libel after it failed to retract a story published on its medium. In a statement on Monday by the Director Army Public Relations, Brigadier General Sani Usman, the Army explained that the suit “is between the person of Lieutenant General TY Buratai and the Premium Times and not the Nigerian Army” adding that the case had...

JUST IN: LAUTECH receives N500 million to pay salaries – Vice Chancellor

The Vice-Chancellor of Ladoke Akintola University of Technology, LAUTECH, Ogbomoso, Suleiman Gbadegesin, on Monday said the institution had received N500 million from Osun and Oyo State governments to pay the salary arrears owed workers.   Mr. Gbadegesin disclosed this in Osogbo when he appeared before the State House of Assembly to defend the university’s N9.9 billion budget for 2017.   He said the institution received alert of N250 million each from the two owner states.   While thanking Governor Rauf Aregbesola of Osun and his...

BREAKING: Donald Trump withdraws US from Trans-Pacific Partnership deal that covers 40 percent of world’s economy

US President Donald Trump has signed an executive order formally withdrawing the US from the Trans-Pacific Partnership (TPP) trade deal, following through on a promise from his presidential campaign. "We've been talking about this for a long time," Trump said as he signed the executive order in an Oval Office ceremony on Monday. He also called the order a "great thing for the American worker". In the same ceremony, Trump also signed an order imposing a federal hiring freeze and a directive...

Moses Doing Great Job For Chelsea – Alonso

Chelsea wing-back Marcos Alonso has paid tribute to Super Eagles forward Victor Moses for his impact for the English Premier League leaders so far this term. Moses has been a regular in the Chelsea team this term and has been one of the key performers in Antonio Conte's 3-4-3 formation. The Nigeria international had previously struggled to make much of an impact at Stamford Bridge but seems to have blossomed under the former Juventus manager, scoring three goals in 21...

Zambian police married to foreigners warned: Your spouse could be a spy.

Police in Zambia have been banned from marrying foreigners, according to a memo by police inspector general Kakoma Kanganja circulating on social media. The memo, dated 11 January, said those who were already married to foreigners should declare this within a week. It said failure to do so would "attract disciplinary action". Police spokeswoman Esther Katongo said: "Issues of security are delicate. If not careful, spouses can be spies and can sell the security of the country." Ms Katongo told the BBC...

Okorocha Urges Igbos To Join APC.

The Imo state Governor, Rochas Okorocha, has urged his fellow citizens and Igbos in the south-east to register in large numbers with the All Progressives Congress (APC) during its ongoing nationwide registration of members. The Governor made the call at a meeting with APC members and state development council members at the Sam Mbakwe executive chambers in the government house in Owerri, the state capital.   He said that the All Progressives Congress in Imo state was hoping to register not less...

Nigerian Manufacturers Demand Review Of Government Polices.

The President of the Manufacturers Association of Nigeria, Mr Frank Udemba, has expressed concerns about some government policies which he says may hinder the development of the economy.   He said this at the Presidential Villa where government officials, manufacturers and members of the private sector met to discuss issues on how best to make the economy work in the interest of ordinary Nigerians.   Speaking the mind of most businessmen and women in the hall, Mr Udemba listed the Central Bank’s...

Ogun Police Arrest Suspected Serial Burglar.

The Ogun State Police Command has paraded a 40-year-old man suspected to be a serial burgler responsible for many robbery operations in Abeokuta, the Ogun state capital. Items found in his care include many television sets, generators, mobile phones and other items suspected to have been stolen. Parading the suspect, the Police Public Relations Officer, Mr Abimbola Oyeyemi said that the suspect was arrested after a tip off from members of the community. While assuring members of the general public of the...

Lawyers Protest Arrest, Detention Of Members By DSS

A group of lawyers under the aegis of Lawyers in Defense Of Democracy are protesting the continued detention of their members by the Department Of State Services (DSS).   They have called for the intervention of the National Human Rights Commission (NHRC).   Apart from asking for the release of their members, the group also called on the commission to ensure the disbandment of the Police probe panel into the Rivers State re-run elections killings.   According to the coordinator of the group, Agu...

26 Pupils Get Rewards For Excellence In Oyo State.

The Oyo State Government has rewarded 26 pupils from various schools who have represented the state in various National competitions for being good ambassadors. The State Commissioner for Education, Science and Technology, Professor Adeniyi, presented the gifts to the 26 pupils for their excellent performances in Mathematical Association of Nigeria (MAN), Science Teachers Association of Nigeria (STAN) and Nigeria National Petroleum Corporation (NNPC) competitions. He said that there as no amount of time, energy and money that could be regarded as...

Ogun State Declares 396, Others Free Of Lassa Fever.

The Ogun Commissioner for Health Dr. Babtunde Ipaye, has said that 396 people have been declared free of Lassa Fever according to the World Health Organisation (WHO) standard, after being placed under surveillance. The persons were said to have had primary and secondary contacts with the Assistant Chief Nursing Officer of Federal Medical Centre (FMC) Idi- Aba in Abeokuta, who died of Lassa fever in December 2016. Ipaye also revealed that 19 close contacts to another new suspected Lassa fever case, came...

Wenger Charged for Misconduct by FA

The Football Association has charged Arsene Wenger for misconduct for allegedly using abusive language towards the fourth official in Sunday's encounter against Burnley. More to follow...

Committee Commends ECOWAS For Restoring Democracy In Gambia

The Committee For The Protection Of Peoples Mandate (CPPM), has commended the Economic Community Of West African States (ECOWAS) for what they say is a restoration of Democracy in The Gambia.   The committee revealed this in a statement signed by the Executive Chairman, Nelson Ekujumi, titled: “Kudos To Ecowas For The Restoration Of Democracy In Gambia”.   It reads:   “The Committee for the Protection of Peoples Mandate (CPPM) whole heartedly congratulates and commends the Economic Community of West African States (ECOWAS) for...

Australian Open: Serena Williams Defeats Strycova To Reach Quarter-Finals.

World number two, Serena Williams, has advanced to the quarter-finals of the Australian Open following a 7-5 6-4 win over Czech Barbora Strycova at Rod Laver Arena.   Williams was broken three times in the opening set and again when coasting to the finish line in the second.   However, she shifted up a gear when it counted to close out the match in one hour, forty six minutes.   Williams, bidding to win a record 23rd grand slam title in the professional era, has...

Gunmen kill man, injure another in Plateau.

Gunmen have shot and killed a man and injured another at a drinking pool in Alheri, Jos North Local Government Area of Plateau State.   The spokesperson of the police in the state, Terna Tyopev, confirmed the incident in a telephone interview with PREMIUM TIMES on Monday.   Mr. Tyopev said the victim who survived the attack with bullet wounds revealed the identities of the attackers to the police.   “Information was received on the night of Saturday 21st January 2017 that Ifeanyi Ozue and...

Did Minister Babatunde Fashola Get It Wrong? – By Simbo Olorunfemi

We cannot, for the sake of some agreement and a rigid reading of the law, continue to short-change ourselves by not removing the hurdles in the way of off-grid solutions that will enable independent power plants set up, based on potential demand, to generate and distribute directly to customers without any go-between in form of a distribution company and an overbearing regulator. Starting out, Mr. Fashola seems to have gotten it wrong. From the outside, one would think his quick...

FG to launch free healthcare programme in Niger Delta – Minister

The Minister of Niger Delta Affairs, Usani Usani, says the Federal Government will soon embark on a free healthcare intervention scheme in the nine oil producing states as from next month. The minister made this known in an interview with the News Agency of Nigeria, NAN, on Monday in Abuja. He said that the programme would be executed by his ministry in collaboration with the National Association of Urologists. Mr. Usani said the essence of the health programme was for the people...

N136 million fraud: Court reserves judgment in trial of NIMASA boss

A Federal High Court in Lagos, on Monday, reserved February 21 for judgment in a no case submission filed by ex-acting Director General of NIMASA, Calistus Obi, charged with N136 million fraud. The trial judge, Mojisola Olatoregun, fixed the date for judgment after hearing arguments from both defence and prosecuting counsels on an application for a no case submission. The Economic and Financial Crimes Commission, EFCC, had preferred an eight count charge against Mr. Obi Mr. Obi, who was also an Executive...

President Buhari re-nominates Magu as EFCC chairman

President Muhammadu Buhari has re-nominated Ibrahim Magu for confirmation as chairman of Nigeria’s anti-graft agency, EFCC. Multiple sources knowledgeable about the development, including presidency officials, have spoken with PREMIUM TIMES on the re-nomination. The Senate had in December last year declined to confirm Mr. Magu as the substantive chairman of EFCC, ending months of delay and rancorous power-play involving influential senators, the State Security Service, SSS, and officials of the presidency opposed to Mr. Magu’s headship of the agency. The spokesperson for...