Once again, Bill Gates, the world’s, hitherto, richest man who has spent millions of dollars on Nigeria’s failing healthcare delivery system has taken the rulers of Africa’s largest economy to the cleaners. The American philanthropist said in a report last week that Nigeria’s healthcare delivery system is a colossal failure.
He was so worried that he promised to switch attention of the Bill/Melinda Gates Foundation to Nigeria’s decrepit Primary Health Centres (PHCs) now that the country has lumbered out of the menace of polio. He lamented that some countries, poorer than Nigeria, had better healthcare delivery systems. Gates has complained about Nigeria’s health sector before. In March 2018, he castigated the bizarre sense of priority of Nigeria’s economic planners, stressing that they were building roads and bridges and ignoring health and education. The co-founder of the Bill/Melinda Gates Foundation listed Nigeria as one of the most dangerous places in the world to give birth and that soon Nigeria would not have the manpower to manage the infrastructure being developed. He stressed that one in every three children in Nigeria is chronically malnourished.
For more than one year, the stunning message elicited deafening silence from the rulers of Nigeria. Six months ago the federal government belatedly responded to Nigeria’s gruesome health statistics by declaring a state of emergency in the country’s primary healthcare system. Nothing has happened since then. The PHCs still lack the facilities essential for the delivery of critical primary healthcare services that would reduce the work load on the few ill-equipped secondary and tertiary health institutions.
Last week, Gates blamed the deplorable state of Nigeria’s healthcare delivery system on two key factors: Low revenue and wrong application of the limited revenue. He argued that Nigeria’s annual revenue to gross domestic product (GDP) ratio of six per cent was abysmally low, and that some countries that are poorer than Nigeria muster well over 15 per cent of GDP as annual revenue.
Nigeria runs a one-handed economy that depends on oil income for 80 per cent of its annual revenue. With the persistent shocks in the international oil market emanating from excess supply, Nigeria’s revenue has plummeted precipitously in the last four years.
But the problem is more about wrong application of the lean revenue than low income generation. Corruption gulps down well over 30 per cent of government income and makes government contracts unacceptably expensive. One source contends that Nigeria spends $10 million on a contract executed at $1 million in Germany.
The federal civil service is massively over-bloated. The federal government borrows N60 billion monthly to pay the salaries of its idle workers. Experts believe that the federal civil service needs less than 40 per cent of its staff strength to function effectively.
Nigerian lawmakers are one of the best paid in the world even as the country has become the world’s headquarters of poverty. The lawmakers fraudulently allocate to themselves huge allowances that are not captured legally on their remunerations. Each senator collects N13 million monthly as over-head cost. No one knows who allocated that to them.
The 109 units of Toyota Land Cruiser sport utility vehicles (SUVs) acquired for senators in 2015 at the cost of N24 million per unit are being replaced this year at the cost of N50 million per unit. A total of N5.5 billion is earmarked for that. Members of the 8th senate went away with the four-year old vehicles at a token of N1 million per unit.
The vehicles were acquired in 2015 when the naira was trading at N199 to the dollar. Now the price has doubled as the naira depreciates to N305 to the dollar. By 2023 the current senators would leave with the ones to be acquired now and they would be replaced probably at N70 million per unit as the Central bank of Nigeria (CBN) is poised to devalue the naira at the official window to N320 to the dollar.
The ministers are even more indecently ostentatious in the use of public funds. Each minister has a limousine and a back-up car which is almost always of the same brand of SUV. In the minister’s convoy are two pilot cars and other vehicles for security officials. Each minister has a minimum of seven cars in his convoy. The 43 ministers enter the dilapidated roads daily with 301 cars purchased, fueled and maintained with the nation’s lean income.
The lean revenue of the federal government is subjected to just too many leakages. That explains why Nigeria can no longer provide healthcare services. It is equally responsible for the situation where 13.5 million children of school age cannot find seats in the few over-crowded public schools. Nigeria has done very little about beefing up its tottering revenue. Attempts to diversify the economy have seen more propaganda than concrete action in the last 30 years.
The federal government of Nigeria is a very lazy tax collector. With a working population of about 88 million, Nigeria has only managed to capture just 20 million in its porous tax net.
Nigeria’s tax to GDP ratio is appallingly low at 4.5 per cent. The Federal Inland Revenue Service (FIRS) recently discovered more than 6, 000 billionaires who are outside its tax net. The billionaires in question have anything from N1 billion to N5 billion in their bank accounts but are not paying a dime as tax. Even corporate bodies are clearly cheating in tax payment. Some companies have two sets of annual reports basically to cover up their tax avoidance plots. One of the reports which capture the true picture of the company’s annual income is strictly for the directors. The second report which is usually doctored to reduce the profit from which tax would be paid is meant for the public.
Though there are still a measure of leakages in the system, the value added tax (VAT) remains the most efficient form of tax in Nigeria in terms of reliable collection process. Ironically Nigeria’s VAT is one of the lowest in the Dark Continent. Nigeria collects five per cent of the cost of the goods and services captured under VAT. VAT in Ghana is 12.5 per cent. The VAT rate of South Africa stands at 15 per cent. Outside the continent, Britain, the world’s fifth largest economy maintains a VAT rate of 20 per cent.
The federal government attempt to inch up VAT rate from five per cent to 7.2 per cent has met with a stiff resistance from the Nigeria Labour Congress (NLC) and the Nigeria employers Consultative Association (NECA). NECA is the umbrella body of employers in the nation’s organised private sector.
The NLC sees the federal government move to hike VAT rate as a way of giving the country’s embattled employees a minimum wage hike with the right and collecting it back with the left. The NLC argues vehemently that the proposed VAT increase would fuel inflation and reduce the purchasing power of the new minimum wage which workers are yet to earn.
NECA’s position is that the 2.2 per cent hike in VAT would engender commensurate increase in the prices of manufactured goods and services and possibly price some of them out of the reach of many consumers thus worsening manufacturers’ unplanned inventories.
The truth however is that Nigeria needs more tax revenue in the face of unpredictable shocks in the international oil market. Company tax is relatively illusive. Since VAT has been collected with considerable efficiency, government should stand its ground on the proposed increase. However, it must justify the increase.
The indecent opulence of government officials is a huge disincentive for tax payment. Nigerians do not see what government does with tax revenue. The roads are in deplorable state. Health and education systems are in decay. Government must plug the leakages and use tax payers’ money to improve the standard of living. That is the only way to convince people to pay more tax.
Independent (NG)
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