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Bracing-up for the challenges of dwindling oil revenue

By Obike Ukoh 

Economists have, on many occasions, warned that there are dangers for a country such as Nigeria with more than 170 million people to rely on oil as the mainstay of its economy.

They insist that no nation has ever become great by exporting raw materials and importing finished goods.

According to them, the dependence of states on statutory allocations for the running of the states, while there are numerous unexploited revenue sources, is even discouraging.

They, therefore, advise the relevant stakeholders to exploit the country’s agricultural potential and invest in Information Communication Technology (ICT).

Considering the advice, government agencies saddled with the responsibilities of increasing the nation’s revenue have been making efforts to exploit viable revenue sources.

For instance, the Revenue Mobililisation, Allocation and Fiscal Commission (RMAFC) in 2013, organised workshops in the six geo-political zones in the country for the purpose of sensitising the public to that effect.

At the inauguration of the workshop entitled: ``Economic Diversification for Sustainable Development’’ in Asaba, Chief Elias Mbam, the Chairman of the commission, said there was danger in running mono economy.

He urged the states and local governments in the country to improve their revenue generation and ensure fiscal efficiency with a view to reducing over-dependence on monthly allocation.

 

According to him, development programmes such as the Vision 20:2020 and the Transformation Agenda of the Federal Government could only be achieved through effective economic diversification strategies.

The chairman tasked critical stakeholders such as the three tiers of government and the organised private sector to make concrete efforts aimed at tapping the vast natural resources that abound across the country.

Speaking during a similar workshop in Abakaliki, Mbam restated the need to diversify the economy.

``Currently, oil and gas resources drive the nation’s economy; these hydrocarbon resources are exhaustible, non-renewable and vulnerable to international price volatility and politics.

``Therefore, we must diversify in order to ensure sustainable means of funding our national development and reduce the over-dependence on oil and gas revenue,’’ he said.

He noted that the workshop would give the governments and stakeholders in each zone the opportunity to share experiences and explore strategies of exploiting and developing the various peculiar resources their respective states.

Sharing similar sentiments, Gov. Adams Oshiomhole of Edo, said that falling oil prices would pose a financial challenge for the development of the country.

He observed that there was a huge gap between the state’s revenue projections and actual receipts from the federation account.

Speaking at an executive meeting recently in Benin, he noted that the state government would sustain the progress made in infrastructural development.

``We are going to renew our commitment to cut costs and block leakages as much as possible and ensure that all taxes that are collected are actually reflected in the revenue of government,’’ he said.

Expressing optimism that Nigeria economy could be diversified, Mr Timothy Odah, the Commissioner for Finance and Economic Development in Ebonyi, said the state’s Internally Generated Revenue had risen to N1 billion  monthly from the projected N150 million.

He said the improvement was as a result of economic measures adopted in order to reduce dependence on the monthly revenue from the Federation Account.

``Ebonyi has three rice mills and the milled rice is in high demand; we never thought that something made in Nigeria will attract such high demand.

``We also have an international market which has 7, 070 stores; and we generate a lot of revenue by renting them out to international and local businesses.

``We have been calling on the need for diversification; that we should go towards alternative forms of revenue generation instead of depending on the dwindling oil revenue.

``It is time for oil to stop being a key determinant of our budget from local to federal levels,’’ he said.

Odah also said that apart from government, every individual had a role to play in boosting the country’s economy.

In her view, Mrs Kofo Akinkugbe, the Managing Director, Secure ID, advised that various authorities should encourage more investments in the ICT sector.

Acording to her, the company’s manufacturing plants will compete with card manufacturers in South Africa, Thailand, United Arab Emirate and Europe, if the import duty on raw materials is adjusted.

Akinkugbe said that the company started with offering security and management system services, such as Closed Circuit Television, using biometric and card assessment.

``Today we have clients in 15 countries across Africa and we intend to expand; we are currently responsible for the supply of 13 million high-end, residents’ identity cards from the Lagos State Government,’’ Akinkugbe said.

By and large, economic analysts blame Nigeria’s system of government for being responsible for over-dependence on oil revenue.

They opine that Nigeria’s system is neither a true federalism nor unitary system of government.

According to them, Nigeria as oil producing state has no option than to review its revenue sharing formula and invest in the real sectors of the economy, especially agriculture and manufacturing.

They hold out strong belief that using the oil revenue to develop the productive sector could be a good platform for a virile economic transformation.NAN

 

 

 

 

 

 

 

 

 

 

 

 

 

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