National Impunity ...Killing Business Growth

Many Nigerians who witnessed the nation’s independence would have projected that, by now, their hope for a country that stood out in Africa as an example of development; where businesses and families thrived, and epitomised peace and respect for its citizens, would have become a reality.

It is embarrassing to compare global development to the state of some of the key sectors in the country. The widespread of poverty in the midst of plenty and the neglect and ruins amidst abundance of ideas, opportunities, natural resources and manpower, have aggravated all manners of vices.

The citizens tolerate irresponsible leadership and eulogise folks that have nothing to offer. Perhaps, Nigerians are too strong for their own good; a strength to endure and adapt to situations that would have crushed other nations. Has our tameness gotten to the brink of absurdity?

The Pains of Entrepreneurs
Businesses, today, have to meander around everything, from prejudice to unhindered suppression. Checks and quality control have been crucified at the altar of national impunity. Government agencies and the agents working under them have continued to constitute a nuisance to the free flow of business activities in the country.

An entrepreneur in Lagos, Nigeria, who listed all the government badgering and bills he had to put up with in running his media outfit and provide employment for his fellow countrymen said, “It is almost like a crime to start a business in this country.”

Nonetheless, he is thriving more and more because he is dogged at what he believes in and remains resilient, like several other entrepreneurs in the State. But in reality, the agony caused is truly needless and absolutely uncalled-for.

A Sorry State of the Nation
One of the many sorry state incidents occurred on September 4, 2013. The Nigeria Customs Services (NCS), at the Murtala Muhammed International Airport (MMIA) command, ordered the closure of two cargo warehouses at the airport over improper documentation. The affected warehouses were Skyway Aviation Handling Company Limited (SAHCOL) and the Nigeria Aviation Handling Company (NAHCO). Clearing and forwarding agents, who had planned to clear cargoes at the warehouses, were stunned by the development.

Despite the closure of the cargo warehouses by the Customs, cargoes were still being imported into the country by agents, but the clearance of these cargoes were not possible. The congestion of the apron, eventually, led to the loss of some of the cargoes at the apron.

Meanwhile, these two warehouses account for over 90% of cargoes flying into the country via the MMIA command. Many of these goods are time-bound.

Customs Defends Closure
The Comptroller General of the NCS, Dikko Abdullahi, said he approved the closure based on the:

  • Inability of the warehouses to explain the exit of goods without proper documentation
  • Inability to produce Customs release documents and evidence of payment of import duties and other statutory charges by the companies
  • Non-compliance with Customs procedure and the attendant loss of revenue accruable to the Federal Government of Nigeria
  • National security implications of these lapses
  • The resultant negative effect on the officers and men of the command in discharging their statutory duties effectively
  • The refusal of the companies to comply in spite of previous overtures by customs
  • The unfavourable working environment in these warehouses

According to the NCS, the closure was to enable a sanitisation exercise that would ultimately improve service delivery and block all revenue leakages. The action is, therefore, a follow up to series of meetings between the Customs Area Comptroller with all stakeholders, including cargo agents and freight forwarders association. Obviously, the Command acted in line with the statutory powers conferred on the NCS, as provided under  sections 145(1) (b) and 5 of the Customs and Excise Management Act (CEMA) CAP C45 LFN 2004, (as amended) and other extant regulations.

This comes with the assurance that, by the time the warehouses are reopened, there will be seamless service delivery, adequate security, less crowd and full compliance with payment of duties by licensed customs agents. However, time shall tell how well these promises are kept. In the mean time, we unreservedly applaud the Nigeria Customs Service in its efforts to put in facilities that will enable officers and men of the command inspect goods and cargoes imported into the country.

Abuse of the Process –National Impunity
The closure lasted for nine days. Knowing well that a day delay has the capacity to ruin businesses, one flinches to ascertain the damage those nine days unleashed on businessmen, whose cargoes were held captive for so long.  Fancy what happens to medical supplies for a private hospital with a patient being prepared for an urgent life-saving surgery, or copies of weekly magazines gone stale and practically worthless?

Chances are that NAHCO saw this coming and failed to sound the warning alarm to importers. The warehouses were, eventually, opened after consultations and an agreement was reached on the execution of a Memorandum of Understanding (MoU) to guide the operation of all stakeholders in the cargo business. The reopening was a relief because the airport had become over congested.

The decent thing to do was, obviously, to clear out the warehouses as fast as possible with an apology to the businesspeople who had suffered. Instead, importers’ goods were delayed for longer, and these hapless businesspersons were ordered to pay a demurrage (penalty) for the extended stay of their cargoes at the warehouse. They were ordered to pay ₦8 per kilo, for every extra day their cargoes spent in the warehouse. Assuming those medical supplies weighed 980 kg, the hospital will have to cough out ₦94,080 (factoring in 3 extra days after the 9 days), even after the patient would have waited and, probably, died. If the cargo for the weekly magazine weighed 800 kg, the publisher would have to pay ₦76,800 for the worthless publication.

A Show of National Stupidity
In protest, the National Association of Importers and Registered Clearing Agents insisted on no payment of the acclaimed demurrage, since the delays were not a consequence of their members’ actions. This situation lingered for an additional five days as investors continued to count losses. It was such a show of national stupidity! Little wonder businesses are fast relocating to neighbouring West African countries.

A Business Confidence Index (BCI) report, for the 3rd quarter, 2013, shows that the Small and Medium Enterprises (SMEs) are the worse hit as they are mostly, at the receiving end of arbitrary hike of public power price, sticky credit market and intimidation/extortion by government monitoring and regulatory agencies. Most SMEs lose a significant amount of their profit through provision of alternative electricity supply, payment for public power that is almost never supplied and payments to agents working directly and indirectly for the government.

Government’s Insensitivity
Of all the challenges facing the survival of SMEs in Nigeria, the inability to access funds, as banks unwillingly fail to support entrepreneurship and small business, is the major barrier to entrepreneurship growth in Nigeria.

Another major issue of concern is government’s insensitivity to the plight of entrepreneurs and small business owners. The outcome of these insensitivity surfaces in the form of double taxation, unnecessary levies and duties, and high cost of obtaining business licenses.

The factors that promote business are not very positive, generally, in Nigeria. The environment is not promoting SMEs. There is so much pressure on them, from local government tax collectors, rent collectors and all other spurious charges. The Nigerian loan-able funds are generally short-term funds, and the banks are interested in lending short-term. But the SMEs and companies need long-term funds to survive. The banks are lending on short-term basis, probably, because they get the money, from the owners, on short-term basis too. The loan shacks use stolen money and lend only to politicians at 120%, their fellow thieves.

Impunity Slows Nigeria’s Development
Impunity is especially common in countries that lack a tradition of the rule of law, suffer from corruption, have an entrenched system of patronage, have a weak judiciary, and protect its security force officials with special jurisdictions and immunities when they err; while claiming there is justice in the land.

Impunity does men no good. It enslaves, impoverishes, and kills the cells and fibre of business. Nigeria is in a period of endemic impunity, entrenched by long years of malpractice. The economy and the poor masses are bearing the brunt. From government agencies, the civil society organisations and to professional groups, a high level of impunity is being perpetrated in the country and it’s continually on display. All these vices deal deadly blows on the nation’s economic development drive.

Everyone is involved. It cuts across all sectors, ages and races. It must be stopped if our nation must achieve its full potentials. The Civil Society Legislative Advocacy Centre, in its Legislative Digest, said that impunity has clearly become Nigeria’s biggest problem, as it provides cover for most of the ills that plague the country and renders interventions by government, civil society groups and other stakeholders ineffective.

Other acts of impunity include:

  • A wrong attitude of the judiciary towards the fight against corruption
  • Absence of reward for good deeds
  • Lack of adequate sanction mechanism
  • Weak and ineffective positions of some civil society organisations

Case studies –Revelations of impunity as exemplified in:

  • The petroleum subsidy saga
  • The privatisation process
  • The pension investigations, and most recently,
  • The mandatory remittances of internally generated revenue of Independent Revenue Generating Agencies

Impunity in Nigeria’s Fiscal Governance
Right from Nigeria’s independence in 1960, the issue of fiscal prudence, in the nation’s expenditure profile, has remained a herculean task to overcome. The lack of adequate policies and actions to tackle the hydra-headed nature of impunity within the ranks of the country’s socio-political and economic strata, gave rise to the very high corruption level that Nigeria finds itself today.

According to the Director General of Budget Office, Dr. Bright Okogu, the country’s budget has been under the influence of corruption, which is sustained by impunity, with huge consequence on the planning, implementation and the realisation of the essence of budgeting. According to him, the avenues by which these impunities are presently thriving are:

  • Non-remittance or outright diversion of internally generated revenues and taxes collected on behalf of government
  • A high level of oil theft
  • The introduction of new projects numbering in thousands by government agencies, when the ongoing ones are yet to be completed
  • Deliberately ill-prioritised  projects
  • Introduction of poorly planned projects, with attendant waste prospects
  • Poor/late procurement planning
  • No clear Key Performance Indicators on projects
  • Poor project implementation

The effects of these impunities have manifested in:

  • The limited fiscal space for budget preparation
  • Longer budget preparation time
  • Delayed and series of amendments of budget implementation and ultimately
  • Poor project execution

Every line of expenditure in an appropriation has a purpose, amount and expense time, which may not have been strictly followed, thereby, creating more avenues for impunity. Several measures, including laws introduced to improve transparency and accountability seem to be weakly pursued and sometimes, compromised.

Impunity in the Extractive Sector
The extractive sector of the economy has contributed a fair share of the impunity ravaging the country’s development. Beside the current revelations of embezzlement and scam in the sector, impunity has been long entrenched in the neglect of the development of local capacity, which has given the international oil companies an unfair advantage over the country. These companies have built a system around themselves ensuring that Nigeria, perpetually, depends on them. Many suspect that the officials who should have put checks in place were ‘settled’ to look the other way. So much that nobody can give the exact figure of how much crude oil is produced in the country. Today, even the government gives us conflicting figures in their data.

Indicators of Impunity in the area of public finance management include the contravention of the provisions of the Fiscal Responsibility Act (FRA), 2007, without punishment. In particular, official actors and agencies refuse to fix consolidated debt limits for the Federal, State and Local Governments, while they collect revenue, retain it in the agency’s bank accounts and refuse to pay such revenue, for selfish interest, into the Government Consolidated Revenue Fund.

They also pay fuel subsidy far in excess of the amount authorised in the Appropriation Act, embezzle and steal pension funds. They issue bogus invoice of public procurement and refuse to follow the fiscal rules and procedures laid down in the FRA, with impunity. Nepotism, ethnicity, appointment of incompetent, unqualified persons and cronies into public office and flagrant disregard of the laid down rules, particularly the Federal Character Commission Act, are indicators of impunity which goes unpunished.

Probing Impunity for Public Officials
The Constitution of the Federal Republic of Nigeria, 1999 (as amended), granted room for impunity to certain public officials, while in office. In effect, no matter what crimes these public officers commit while in office, their immunity to prosecution and punishment remains intact.

Closely related to the constitutional impunity is the conventional practice which exempts the security vote from being audited, while public office holders exceed the security vote contained in the Appropriation Act or Law, without carrying out reasonable security jobs. This amounts to lack of accountability and fiscal transparency, which in reality constitutes impunity per excellence.

In the Petroleum Law, provisions for the payment of subsidy, compensation to oil bearing communities, social and corporate responsibility of the oil companies contain loopholes for exploitation. Similarly, the Income Tax Laws and Customs and Excise Laws are also full of loopholes which are exploited with impunity.

The Bureaucracy of Stupidity
The ‘bureaucracy problem’ is as old as the country itself. The bottle necks are usually created or worsened for the purpose of exploitation. Businesses in the country are always on the receiving end as business owners, merchants, manufacturers and consumers are forced to part with their hard earned money and property to avoid horrendous delays and losses. The fact that this form of corruption is institutionalised ensures that perpetrators get away with it all the time. It also ensures that the situation continually worsens and new innovations for exploitation are developed, from the surprising to the scandalous.

Just last year, Nigerians were hit in the face with astonishing reports on how most of the contracts awarded by the Federal Executive on the bureaucracy rail tracks headed for failure. These capital projects were ruled out as never having a chance of meeting completion deadlines. When projects, with implementation duration of between 90 days and 24 months, are yet to commence, four months after ‘take off’ date, projecting its success-failure chances is not rocket science.

Most of the delays here come by way of ‘delay in the release of funds.’ Many contractors would testify that these funds are usually withheld on the demand by certain officials for a ‘cut’ of the money. Once the ‘cut’ is given, the funds are released. These demand for ‘cuts’ are said to be institutionalised. As more officials seek to partake in the ‘cut,’ the size of the cut increases so much that it eats deep into the contractor’s balance, meant to be used for the construction work. Today, the country is littered with uncompleted projects.

There is a long list of awarded contracts. Billions and millions of naira are inked for these contracts, durations are pegged down for them and many times, lives and businesses are disrupted by the ‘preparations’ for the work.

A Change in Attitude
Impunity thrives because it is condoned and somewhat accepted as the norm. This means that corruption and impunity is not a legal or economic problem, it is a social problem. A change in the attitude of Nigerians towards this ‘stinky culture’ would nip it in the bud.

This nation can be great again if we call to mind the days when being a thief was the biggest shame an individual could bring upon his/her entire clan; the days when our values did not revolve around materialism.

A good start would be to acknowledge, respect and reward those who have stayed true to their conscience; those who run honest businesses honestly and built empires with their sweat.

Wealth without recognition is worth much less. So, if shady business individuals and public office-holders are scorned and ostracised, the youths will not emulate them.

myfinancialintelligence.com