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

Ebonyi Wins 2016 Democracy School Debate

It defeated Taraba and Police teams at the finals of the championship organised by the President’s School Debate Nigeria (PSDN) a non-governmental organisation from May 24 to May 28 in Abuja.   PSDN comprised private and public sector stakeholders. Dr Adaeze Nwauzor, Ebonyi Centenary Debate team leader, told NAN on Monday that Ebonyi would represent Nigeria in an international school debate competition in Indonesia. “By this feat, we have qualified to represent Nigeria in the forthcoming international school debate competition in...

Fayose Dares Buhari To Bar Him From Travelling Abroad

Governor Ayodele Fayose of Ekiti State, on Monday, dared the President Muhammadu Buhari-led Federal Government to carry out the alleged plot of preventing him from travelling out of the country , saying, “under the federal system of government, State governors are not appendages of the President and as a leading opposition figure in Nigeria, I can’t be cowed by President Muhammadu Buhari and his agents.” The governor, who reacted to reports that two governors, one from the Southwest and another from...

Dogara Introduces Electronic Voting, E-Parliament

The Speaker of the House of Representatives, Yakubu Dogara, has introduced electronic voting system in the conduct of legislative business of the House. Dogara, who last Thursday announced the adoption of the e-voting system, said it was in compliance of the 8th Assembly Legislative Agenda. Consequently, forms have been distributed to individual members to collate their data ahead of production of e-voting cards to all the 360 MPs. The implication of the new system is that records of each member’s punctuality...

I Will Defend Democracy For Life – Tinubu

The National Leader of the All Progressives Congress, Asiwaju Bola Tinubu, has said he will devote the rest of his life to the defence of democracy in Nigeria. He said Nigeria must keep perfecting its democracy despite the daunting challenges. The former governor of Lagos State said this in a statement, titled, “We must not take our democracy for granted,” on Sunday. According to him, the country needed an unrivalled fiscal policy to weather the economic storm. Tinubu said those that looted the...

Kebbi To Revive Argungu Fishing Festival

kebbi government on Sunday promised to revive the popular Argungu International Fishing and Cultural Festival, last held seven years ago. Gov Atiku Bagudu made the pledge in Birnin Kebbi when he addressed a town hall meeting as part of activities marking his first year in office. He said a committee had been established to works out modalities for the organisation of the festival in 2017. The News Agency of Nigeria (NAN) reports that apart from fishing, the three-day festival also features cultural...

Gov. Ambode Launches N500m Disability Fund

Gov. Akinwunmi Ambode of Lagos State on Sunday set up the state's Persons Living with Disabilities (PLWD) Fund with N500 million. Ambode spoke at a programme for the physically challenged with theme: "Celebrating Ability in Disability" at the Lagos House, to commemorate his first year in office. Ambode said that the aim of the Fund was to ensure level playing field for the physically challenged who were usually presumed not able to live normal lives. "This Fund is for the advancement of...

President Buhari To Launch Ogoni Clean-Up June 2

President Muhammadu Buhari will launch the Ogoni land clean-up on June 2, a statement has said. This is contained in a statement issued by Mr Chijioke Amu-Nnadi, Head of Corporate Affairs unit, Niger Delta Development Commission (NDDC) in Port Harcourt on Monday. It stated that the Minister of Environment, Mrs Amina Mohammed, confirmed the date when she visited Bodo in Gokana Local Government Area of the state to inspect an oil spill clean-up demonstration. The statement quoted Mohammed as saying that...

Police Nab 13 Suspected IPOB Members In Enugu

No fewer than 13 suspected members of the Indigenous People of Biafra (IPOB) were on Monday arrested by the Police for alleged unlawful protest in Enugu. The Enugu Police spokesman, Mr Ebere Amaraizu told the News Agency of Nigeria (NAN) that the suspects were arrested on Obiagu Road in the Coal City, while commemorating `Biafran fallen heroes and heroines of the 1967 -1970 civil war’. He said they were apprehended with flags of Biafra. Amaraizu said the command had embarked on a...

We’ll Make Nigerians Buy Made-In-Nigeria Products – FG

The Federal Government says it intends to make Nigerians look inwards by buying products, especially vehicles made in the country. The Minister of Science and Technology, Dr Ogbonnaya Onu, said this when he featured on the News Agency of Nigeria (NAN) Forum in Abuja. Onu explained that it was the only way to make Nigeria a producer country and to encourage local manufacturers to produce and grow the economy.   ``We already have made in Nigeria car. ``We want to champion the idea...

Man Kills Friend For Refusing To Help Him Charge His Phone In Lagos

A bricklayer, Demola Wasiu, has been arrested by the Lagos State Police Command for allegedly killing his friend, Lekan Omotosho, 27. Punch Metro learnt that Wasiu, an indigene of Ede, Osun State, stabbed the Ogun State indigene in the armpit after he refused to charge his phone for him. The victim was said to have lost a lot of blood before he was rushed to the Lagos Island General

Shocking! Egypt’s Minister Refers to Other African Representatives at UN Conference as “Dogs and Slaves” | Read Memo

It was at the United Nations Environmental Assembly according to an informed source. The bone of contention appeared to be an issue with a resolution on Gaza. We have now accessed a document going within diplomatic circles on what really transpired. You can also see the tweet from one James Smart who appears to have been at the session or is in on what really transpired. Below is the text of the memo sent by Yvonne Khamati, the Chair...

Civil Defence Uncovers 2 Bomb-Making Factories In Maiduguri

The Borno State Command of the Nigerian Security and Civil Defense Corps (NSCDC) on Sunday discovered two bomb-making factories in Dikwa. The NSCDC Commandant in the state, Mr Ibrahim Abdullahi, made the disclosure in an interview in Maiduguri. Abdullahi said that the factories were discovered during a patrol by men of the command in collaboration with the troops of the 22 Armoured Brigade of the Nigerian Army. “In an effort to comply with the directives of...

One Year In Office: NOI Poll Rates Buhari

Nigerians have given President Muhammadu Buhari 64 per cent average in its overall job performance rating after one year in office. The latest polls results by NOIPolls Limited released on Monday revealed that President Buhari’s approval rating between June 2015 and May 2016 ranged from his highest of 80 per cent in October 2015 to the lowest of 42 per cent in April 2016. NOIPolls regularly conducts periodic opinion polls and studies on various socio-economic...

Navy Anniversary: Sailing Club Holds Diamond Jubilee Boat Race

The Chief of Naval Staff, Vice Adm. Ibok Ette-Ibas has said that the Navy Sailing Club had performed up to expectation by producing athletes that have represented the country in international events. Etta-Ibas who was represented by Rear Adm. Joe Okojie said this at a championship organized by the club to celebrate the diamond jubilee of the Nigeria Navy on Sunday in Lagos. He noted the Club had contributed immensely to the development of water...

Men In Pakistan Encouraged To “Lightly Beat” Their Wives If They…

A constitutional body in Pakistan put forth legislation that would allow men to "lightly beat" their wives if they refuse sex or decline to wear outfits preferred by their husbands. The Council of Islamic Ideology, also known as CII, proposed the legislation last week and it's already sparked anger in Pakistan. The 160-page draft has to be...

Britain Is Most Corrupt Country On Earth, Says Mafia Expert, Roberto Saviano

He has spent more than a decade exposing the murderous criminal underworld of the Italian Mafia, but journalist Roberto Saviano believes that Britain is the most corrupt country in the world. The author of international bestsellers Gomorra and ZeroZeroZero,  has lived under police protection since publically denouncing members of the Camorra, a powerful Neopolitan  organised crime syndicate, in 2006. On Saturday he made a rare historic appearance at the Hay Literary Festival flanked by several security...

Sunday Osanyintuyi: Buhari’s Presidency; One Year After and Wailing Wailers Achievements

  Setting out to address a subject of this nature appears a huge task for me with reasons.  I am neither in government nor any party’s card carrying member. But as one of those who campaigned seriously for the current president just before March 28th, 2015 elections, the onus lies on me to access its successes, criticized its failures while setting clearer agenda for its progress. Needleless to mention that inability of sycophants of disposed GEJ administration to...

Soldiers Invade Tompolo’s Town Kurutie (Little London)

Soldiers swooped on Kurutie (Little London), another community in Gbaramatu kingdom, Warri South-West Local Government Area, Delta State, ?in six gunboats at about 4.30 am, today (Monday) , hunting for members of the Niger Delta Avengers. The residents were asleep when they came, but many scampered into the bush when heard the sound of the gunboats. The soldiers, who quickly cordoned the community, embarked on a house to house search. “I am looking at the soldiers...

Lawmaker Demands Release Of Detained Legislative Aides

A member of Kogi State House of Assembly, Idris Ndako, has expressed concern over the continued detention of some legislative aides and called for their immediate and unconditional release from police detention. Ndako condemned what he said was the illegal arrest and detention of four legislative aides on account of disrupting the sitting of the House members last week, adding that they were their legislative aides and were arrested at Crusher Village while waiting for their...

Gunmen Kill 8 In Rivers

Gunmen suspected to be cultists Saturday night killed eight persons including the oldest man in Ozochi, Ahoada East LGA of Rivers State in an attack believed to be a reprisal. A source from the community said the cult members invaded the community, shooting sporadically, but could not confirm which group carried out the act or the motive. They also set shops and other property ablaze. The Caretaker Committee Chairman of Ahoada East LGA,...

Why Buhari Did Not Release Details Of Stolen Asset Recovered From Corrupt Officials– Lai Mohammed

President Muhammadu Buhari did not release details of looted asset, recovered from corrupt persons, due to “legal reasons”, an official has said. The Minister of Information, Lai Mohammed, disclosed this on Sunday evening, hours after Mr. Buhari’s Democracy Day broadcast. “Yes, he initially said so (that he’ll give specific details about recovered loot), but he was advised against doing so for legal reasons,” the Cable Newspapers quoted Mr. Mohammed as saying during an interview...