Driving economic growth through legal innovations – Part 3
The country has benefited from companies like Andela which brought world-class training and job opportunities to budding Nigerian programmers. Gebeya is promoting a similar model of training the next generation of African developers. Nigeria’s growing supply of programmers will likely be met with rising demand from the country’s constantly expanding tech hubs. The potential of the business-to-business (B2B) or enterprise software sector is also good news for the country’s ITC sector. The Federal government recently said the current e-commerce spending in Nigeria has grown to $13billion per annum and is expected to hit $75billion in revenue per annum by 2025. It also said e-commerce grew in Nigeria from 14% in 2019 to 17% in 2020. Nigeria is well-positioned to benefit from this growth in terms of revenue if legal bottlenecks related to Incorporation, Trademark Security, Copyright Protection, Transaction Issues. Privacy is adequately addressed.
Nigeria’s entertainment industry already plays an important role in the Nigerian economy but its full potential remains untapped. PwC predicts that total industry revenue will rise steadily from $7.7bn in 2021 to $9bn in 2022, $10.7bn in 2023, $12.6bn in 2024 and then $14.8bn in 2025. This steady growth will be largely fuelled by internet access, which is in turn powered by the country’s broadband infrastructure and mobile connectivity. Like digital economy and e-commerce, Nigeria will benefit in terms of revenue if legal bottlenecks related to Incorporation, Trademark Security, Copyright Protection, Transaction Issues. Privacy is adequately addressed.
Although oil receipts are down, our huge gas reserves present opportunities for alternative revenue sources. The success of Nigeria’s LNG has demonstrated that gas revenue is massive but only if exploited. Nigeria can also derive revenue from petrochemicals like methanol which Nigeria currently imports. But the legal framework must be right. The legal framework relating to hydrocarbons is skewed in favour of foreign companies in the entire value chain. In at least four cases, banking, insurance, shipping, legal service, capital flight is massive. In relation to shipping alone, it has been suggested that Nigeria loses over 10 Billion Dollars annually. Revenue loss will continue unless the legal framework is amended to domesticate the value chain in hydrocarbons. It is important to review the legal framework for local content with a view to strengthen implementation and enforcement. It is also very important to address the issue of corruption in the extractive industry. The continuing lapses and loss to the nation in oil and gas revenue as revealed in the Report by Nigerian Extractive Industries Transparency Initiative, NEITI, which indicate lack of implementation of previous Reports, supports this. Our hydrocarbon resources especially gas could generate $ 30 Billion export earnings and spawn other local industries.
Solid mineral is another sector that has not been adequately harnessed. Nigeria is estimated to have about 34 solid minerals, with every Nigerian state boasting of at least one of these minerals. Still mining constitutes only 0.2% of GDP. Mining can generate $ 10 Billion and 5 million Jobs. The Democratic Republic of Congo in 2017 alone saw the sector generate $ 1.68 billion, accounting for 55.16% of the total government revenue and 17.40% of the GDP. Solid minerals is undoubtedly capable of making a more pronounced impact on the country’s employment rate and generating more revenue for the government however, to derive the highest possible benefit from this sector, a local content policy and legal framework needs to be put in place.
Agriculture is one of the largest contributors to Nigeria’s GDP. It is 25% of GDP and has the potential to create massive numbers of new jobs, especially in Northern Nigeria that has very fertile agricultural land. The Central Bank of Nigeria’s Anchor Borrowers programme that made Nigeria self-sufficient in rice production has shown the potential of the Agriculture Sector. The Central Bank has identified 10 crops to support namely rice, wheat, milk, tomato, fish, cotton etc. This is a great leap forward for the sector. But our policy on agriculture must move away from subsistence to mechanized agriculture. The legal framework for land use administration also needs adjustment. Mechanized Agriculture could generate $10 Billion, create Jobs but also improve National Security by offering employment to our teeming youths exploited for banditry and terrorism.
Land Administration/ Housing
A recent study shows that the housing inventory of Nigerian property exceeds six trillion dollars. Nigeria has fallow assets estimated at $900 billion in and outside Nigeria (according to PWC), Most of this is dead capital as it cannot be used as collateral. Creating the proper legal framework to make dead capital fungible (easily transferable) will create an instant credit market and enable Nigerians to borrow on their property. Digitalization of land registries including introducing a Land Use Administration Act will make the consent process more efficient and give confidence to banks to accept title documents as collateral. This process will release into the economy 6 trillion dollars’ worth of assets currently dead capital.
Inefficient Revenue Collection
Nigeria’s tax collection mechanisms are extremely weak and inefficient. According to the Federal Inland Revenue Services, Nigeria lost over $ 178 Billion to tax evasion by multinationals in 10 years. This can be saved if enforcement institutional and regulatory frameworks are strengthened.
Monies trapped in Ministries, Department, and Agencies
The 2021 Auditor General’s report showed N323.5 Billion is trapped in MDAs as unretired advances, payment for services not executed and payment without a voucher. The Judiciary has trapped over N3 Billion. This can be reversed with strong accounting regulations and enforcement.
Looking at all these areas and without any serious study, it shows that we are almost at N100 trillion. But with concerted deep study, it is possible to even exceed the N100 trillion mark. Government should explore new sources of revenue to close the budget deficit and grow the economy. We strongly feel that a special case can be made for laws that can generate revenue and create jobs.
Agbakoba, Senior Advocate of Nigeria SAN, was a former president of the Nigerian Bar Association (NBA).