Private Sector, Government and Taxation
I remember hearing something once that went like this - at some point you have to give less weight to the sources of a problem, and start to concentrate on the solutions to the problem. For example we should stop worrying about how Nigeria got where she is today, and focus more on how to get her to where she needs to be. Most times I know this is true, but sometimes I get smacked in the face by the sheer magnitude of the issues we have with our government. Our Government problems are like the heads of a hydra, cut off one and two grow back in its place.
Take the relationship with the private sector for instance. Nigeria is a nation of underserved markets. People are not consuming to their capacity because there is not enough product to consume. The government cannot possibly provide all the necessary products and so it allows the private sector to exploit opportunites. When the private sector manages to succeed at a specific opportunity - as only the successes get remembered - there tends to be someone in government who thinks that the private sector is making too much money from the opportunity. Here is where it pays to be the regulator, after all you get to see all the returns that the business is making.
In the old days, the government simply used to expropriate the business. Like the case of the man who managed the Lagos State trash collection. Some ministry guy apparently looked at the monthly figures and decided that the government should go into the business. Of course the business failed and trash collection in Lagos was set back decades.
These days, the government doesn't take over businesses, it simply jacks them. The private sector generally agrees to be jacked because it is better to lose some profit than to incur the wrath of a government like ours. I mean go ask the small business owners whether it is worth it to tangle with the local governments over some of the taxes that get thrown at them.
The Lagos State government has perfected the jacking strategy in their quest for internally generated revenue (IGR). Sometimes they are able to swing it - with the environmental impact tax they levy on the telecom operators for the masts they have all over the state (well at least for a while, the telcos sued and won). Sometimes they are unable to swing it - with the environmental impact assesment that they wanted to levy on private generators (I've read rumblings in the paper that they are going to try and bring this one back).
Sometimes the victim tries to fight back, as is the case with the 1004 redevelopment in Victoria Island. The developers got cash upfront for the project to the tune of N25 million per flat (some flats went for N27 million). I think the developers spent N7 billion acquiring the property from the Federal Government (about N7 million per flat). They will probably spend another N7 to N10 billion refurbishing each flat. The state government can do the math as well as anyone else and has decided that N8 billion is too much for the developers to book as profit. The state government as determined that planning permission was not granted for reconstruction of the estates, and has slapped the developers with N3.4 billion in fees and levies. The developers have taken the matter to court, and from what I have heard will probably win.
However most businesses do not have the deep pockets of the 1004 guys, or the telcos and have to bear the cost. For a lot of businesses, when you throw in the 30% company tax, the 2% education tax, and the attendant levies, there are businesses facing an effective tax rate of 50 to 60%. Now you can argue that a lot of businesses do not pay taxes, but would you in this situation?
The solution to the problem of haphazard taxation of the Lagos State variety in theory should a harmonization of the nations tax system. There will be certain taxes that the various federating units can charge, and these will be clear and transparent. The Federal Inland Revenue Service (FIRS) has largely succeeded in getting this harmonization thing passed into law. However the states are fighting the Chairman on implementation every step of the way, there is even talk that she will not be confirmed a second time around.
So once again we come back to the states. You my reader, I'm guessing is not surprised. Now that's a problem we need a solution to. How to get the state leadership to act against their own self interest?
Wednesday, November 28, 2007
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snazzy
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On Capital Projects, Excess Crude & Sneaky Governments
While the nation was congratulating itself for successfully concluding the Etteh Affair, a critical bit of information dribbled into the newscycle; The Federal Government had reneged on its funding commitment for the grand railway project that Obasanjo commissioned during the last days of his reign.
The decision of the Yar ‘Adua administration to reverse the commitment to the railways did not necessarily arise from a desire to “dabaroo” what the previous government had done. The decision was informed by his desire to adhere to the “rule of law” in budgeting for capital projects. Yar ‘Adua rightly decided that the Federal Government can no longer treat the excess crude account like an ATM.
During Obasanjo’s tenure, when the Federal Government wanted money to do something it simply took it from the excess crude account. The excess crude account is a fiction that works like this: if the government sets an oil benchmark at $60 a barrel and oil sells for $80 a barrel, the $20 dollars a barrel is saved in the excess crude account. Hence “excess crude” account (it’s slightly more complicated by the derivation formula but this is basically the koko). Now the constitution says something like all oil revenue should be shared amongst the three tiers. This means that technically there is no such thing as an excess crude account. The money being saved belongs to all tiers and so the Federal Government cannot legally spend the money on capital projects without the consent of the states.
Since development is very much on my mind, I immediately thought of the other projects that were to be funded by the excess crude account – the main one being the power plants that would get us to the 10,000 MW of generated power that had been promised severally. Flash forward a few weeks and my fears were realized: Business day announced that the project manager for the power project was pulling out due to the government not meeting its funding requirements.
It seemed that the Federal Government had managed to “rule of law” itself into a quandary. If the funding required state government sanction, which meant every state passing the fiscal responsibility bill then we might as well not bother. After all, from what we have seen of the state governors, they clearly would rather cut their own throats than pass the fiscal responsibility bill.
However I read something in the paper today that made me think that this government is sneakier than we’ve given them credit for. The Minister of State for Finance just announced that the government will be setting up a stabilization fund. What is a stabilization fund you ask? Well if the government sets an oil benchmark of $60 a barrel and oil sells for $80 a barrel, the $20 dollars a barrel is saved in the stabilization fund. Now as all my readers are quick witted, you are asking what the difference is. Well according to the Honorable Minister of State, the stabilization fund does not suffer from the same “constitutional limitations” as did the excess crude account.
So once the announcement is made that the capital projects will continue to be funded (he just alluded to this), I will continue to wear my cautiously optimistic badge. Now if only we could do something about the state and local governments I will be able to drop the cautiously. Oh well, as they say one thing at a time.
Tuesday, November 20, 2007
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snazzy
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Young Snaz On Rap
This is one of the better ones in my opinion, and it pretty much summed up the state of rap in 2003. Enjoy
"Who says St. Louis a'int hip hop, we hop to what's hip" - Arguably the worst lyrics ever in hip hop history. What makes an artist feel comfortable with disseminating such tripe to the public. There is nothing worse in my opinion. Rap is in a sorry state these days with very few MC's left in the game. Oh there are a lot around but most of those doing well have the skill of the budweiser frog. It takes a lot of creativity to be a rapper, the ability to rhyme works in a way that sounds good and makes sense. It's like the poets of old, and though we haven't produced a Joyce or a Tennysone, we've at least got a Pound or an Eliot. Who's going to be that? The rapper that is so rich that you are in tune with him, he moves you and connects in such a way that you are more alive for having heard him. Big & Pac certainly may have done this, Pac especially, he was hip hop's poet. He was like Nikki Giovanni to Biggie's Rita Dove. Both were excellent lyricists but totally different styles. Biggie had more structured rhymes while Pac's took him anywhere he wanted to go. However Big L could have been our Joyce, our lamp to light the way into a true hip hop renaissance. Nas was supposed to do it but he fell by the wayside. He's still great but he can never capture the fire of Illmatic. Big L rest in peace, we're less for you elaving and while we're being forced to endure the Nelly's, the Field Mobs and the Puffy's we hope the next best is scribbling away ready to restructure the game. Rhyme on muthaf***er rhyme on.
So to those of you that are into hip hop, do you think that 5 years on Young Snazz's hopes were fulfilled or are we still waiting on a hop hop renaissance? There was a lot of name dropping with respect to poets of renown, but hey he was young.
Friday, November 16, 2007
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snazzy
8 Comments
On Random Phone Toasters
This post is about a phenomenon that puzzled me for a long time. I used to think that all women I had met in Nigeria were crazy to find this normal, but the more I thought about it the more it fit into a standard category that we all know and well. So it’s safe to say no re-culture shock here.
Women in Nigeria generally have no problem with being toasted by a guy they don’t know – well as long he got the number from a friend. When I ask the whole “how did you meet” thing and I start hearing things like “Well he saw me sha, and asked my friend for my number” I shake my head. I mean it will never occur to me to ask someone else for the number of a girl that I am interested in. However it seems to be one of the standard tools for blocking girls in naij.
Even though I wouldn’t do it, I tend to understand why a guy might; after all you get the babes number without the whole “possibility of a koko in public” thing. There is also the whole mutual friend going before you to clear your path thing. After all that’s how my co-worker met her husband. A friend called her and was like “I’ve given your number to a guy, be nice to him when he calls.”
For a while that sentence never read like logic to me, I mean why would a girl accept the call of a toaster that she doesn’t know pretty much from Adamu? Then it finally clicked, it’s basically a blind date but with an extra step before the actual date takes place. That extra step also puts the ball firmly in the guy's court. Think about it, the babe knows the guy is already hooked and so there is no fronting possible. After all who begged the guy to chase after number?
That power allows girls to be harder than usual on the guy. I mean the boy better bring his A game. There is no laughing as random dry arse jokes that we guys like to crack. There is no pretended interest in whatever boring job the guy is currently employed in. There is no "you father must be a thief" nonsense allowed. There is no saying anything like "I thought you were fine and so I asked for your number". More often than not it will be interpreted as "I want to see you naked as soon as possible." From what I gather all standard acceptable answers revolve around personality, and probably fashion sense.
Still even for those guys that fail, they should be congratulated. After all it does take a special kind of balls for a guy to call a babe and when asked “um how did you get my number?” he nonchalantly says, “I got it from a mutual friend.”
Friday, November 09, 2007
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by
snazzy
5 Comments
Double Standard? Naah
About a week or two ago I came across reports of a study that if true may not bode well for pure gender equality in the near future. The researcher ran the following experiment; during a job interview a candidate recounted an event in which the other member of the team came late to a presentation and ended up costing the team the job. The candidate had two possible reactions to the event – be angry at the co-worker, or be sad at the state of events. The researcher ran the two possible scenarios for a man and a woman, and asked the viewers for their impressions of the canditates. It was discovered that the scenario viewers found most impressive was the angry man, followed by the sad woman, then the sad man, and lastly the angry woman.
The study got me thinking about the many double standards that women currently labor, and so I decided to come up with my top three double standards that apply to women in Nigeria.
Number 3
“What Benefit Of The Doubt?”
This is best illustrated by the “Billion Naira Corper” So the story goes that one of the current ED’s in Zenith brought in N1 billion as a corper. This was followed by several years of prime deposit generation. When the story is told someone always says that she collected a lot of those deposits on her back, or if they want to intimate it they will say something like “How else could she have gotten those deposits?” I don’t know or care if she was sleeping with her clients, however if a man had brought in those deposits it would be highly unlikely that people would say he was sleeping with folk.
Number 2
“Guys Settle Girls Toast”
This is a familiar rule to any girl who has been unfortunate enough to be entrapped by an unscrupulous professor in the Nigerian University system. If you have a professor that requests favors to do the job that he is being paid (badly) to do, the favors are mostly sexual from the girls and monetary for the guys. Can you imagine what would happen if a guy goes to a professor’s office for help with a project and the professor takes the guy’s hand and puts it down his pants? My personal favorite of all the “toasting” stories I’ve heard is the professor that asked a girl if she would like to taste his carrot.
Number 1
“1 Woman = All Women”
One has to look no further than the unlamented former Speaker of the House to see this phenomenon in action. Reading defenses of her that argued that men have done worse, was almost as bad as reading statements that Etteh had set back the good work done by Ngozi, Dora and co. You don’t hear people saying that Jolly & co have set back the good work done by Charles and co.
Aiight I’m done, but before I go I will encourage you to come up with a few of your own double standards.
Wednesday, November 07, 2007
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snazzy
4 Comments
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