The Punch Damning Editorial On Goodluck's Corrupt Regime Economic Policies

Okonjo-Iweala’s gaffe on abuse of waivers

OUR editorial of Monday, November 18, entitled, Jonathan, Okonjo-Iweala and waivers, has triggered a ferocious response from the Federal Ministry of Finance. Though the rejoinder was dripping with invectives, it dodged the kernel of the issues raised in the said editorial; namely, the continued abuse and misuse of waivers, concessions and exemptions.

  Public concern about the serial misapplication of waivers has been voiced for several years. It has been a subject of National Assembly enquiry and indeed, it was at some of its hearings that revelations emerged of how successive Nigerian governments have been abusing the use of these economic incentives. It was at the parliament that the Comptroller-General of Customs, represented by one of his deputies, stunned the nation with a fresh revelation that a staggering N603 billion was lost to waivers, exemptions and concessions in the first nine months of this year.

As the Customs Deputy Comptroller, Garba Makarfi, stated on behalf of the CG at the Senate: “We lost 7 per cent to Export Expansion Grant, which is non-negotiable; this amounted to about N37.2 billion. The grant was given to export-oriented companies and local manufacturers to export raw materials, but instead, these local manufacturers sell their certificates to dealers who then use them to import cars into the country.”

Nigerians were shocked because they had assumed that the odious days of brazen abuse of such incentives were gone, especially after the House of Representatives had in January 2012, passed a resolution calling for an end to such waivers. But according to some figures cited at the House by the NCS, the Federal Government lost N276.9 billion to import duty waivers between 2000 and 2008, which was nothing near the N603 billion the country lost in only nine months under the questionable policy. The then Finance Minister, Shamsudeen Usman, had confirmed the flagrant abuse of the system and said the government was resolved to ending it.  The NCS figures cited show that in 2003, N12.4 billion was lost to waivers; N55 billion in 2004; N71.24 billion in 2005; N54.59 billion in 2007; and N9.51 billion in the first three months of 2008. It is estimated that over N380 billion was lost to these dubious waivers.

But what was clearly wrong in the past became an epidemic under Jonathan. Just as dubious fuel subsidy payments ballooned from an approved N245 billion in 2011 to about N2 trillion, Nigeria similarly lost N603 billion to waivers in only the first nine months of this year! Yet, the ministry’s rebuttal spoke of waivers and reduced rates for specific sectors “to provide specific incentives for strategic job-creating sectors.” This is a worn-out mantra. It is curious that Okonjo-Iweala who had howled loudest in opposition to the abuse of the import waiver policy has suddenly discovered a magic bullet to slay the dragon.  The NCS, organised private sector and other stakeholders have always insisted that waivers have ended up in the hands of the undeserving and the NCS said this much before the lawmakers, stressing that they were sometimes used to import consumables instead of equipment.

The Coalition of Oil Palm Value Chain Associations that includes palm producers, growers, and local vegetable refiners, had complained to the Agriculture Minister, Akinwunmi Adesina, earlier this year how waivers for the import of palm oil were crippling the domestic industry. Muda Yusuf, Director General of the Lagos Chamber of Commerce and Industry, had also highlighted the harmful effects of waivers to local industries, citing the arbitrariness and impunity that reigned in their implementation. “LCCI is of the view that waivers are detrimental to the economy in a number of ways. It creates unfair competition, giving one economic player an edge over others. It leads to huge revenue loss to the government…It results in the perpetuation of a rent economy and it weakens the moral authority of the political leadership to curb corruption since waivers are a variant of corruption. It is incredible that this is happening, as only about a year ago, the minister assured the nation that the government had put a stop to waivers; and that if it becomes inevitable, it would be sector-wide.” Yusuf had expressed this view months before the scandalous loss of N603 billion. Also, the Business Day had reported on March 6, how Nigeria lost N40 billion to duty waivers in the steel sector.

Sunny Okoro, National Chairman of the Vegetable/Edible Oil Producers Association, agreed that waivers were “destroying” the sector. He alleged that some companies had obtained waivers since 2011, adding that “companies are closing, while some are retrenching staff. This has also resulted in disinvestment on plantations, which were expected to boost the total (domestic) output of palm oil.” The President of the National Union of Food, Beverage and Tobacco Employees, Lateef Oyelekan, declared: “…these import waivers, we have discovered, are mostly given to political associates and cronies to make quick money for political activities to the detriment of the economy. They…do not create jobs.” A former governor was recently interrogated by the Economic and Financial Crimes Commission over an allegation that he converted to his personal use, import waivers obtained from the Federal Government.

We gave a qualified endorsement to the use of waivers, but we cannot agree with the Finance Ministry’s argument that the fraud-riven policy in place now is of lasting benefit to the economy. Our grouse is the stench oozing from the waivers’ regime. Contrary to the rejoinder’s pretence, our editorial did emphatically highlight and acknowledge the value of waivers and how other countries had used them to deliver development. We said, “Waivers and other incentives are innovative tools adopted by countries to boost the local economy and specific sectors, create jobs and stimulate exports; or to meet a national objective such as when duties are lowered or removed on certain equipment to boost health care delivery.” We went on to cite Malaysia’s adoption of waivers and how it has used the incentives to boost its domestic steel industry, as well as Indonesia, whose waivers are for specific industries “that serve public interest, protect consumers, improve competitiveness, create jobs and raise state revenues.” One-time Minister of Education, and Solid Minerals and later World Bank Vice-President for the African Region, Oby Ezekwesili, also once faulted the abuse of waivers allowed by the Olusegun Obasanjo government for the National Integrated Power Projects.   “I did not expect waivers and that was why I was considered ‘uncompromisable’ and called names,” she had told the National Assembly in 2008. If assailing the waivers regime makes us not “up-to-date on Nigeria’s industrial policies,” as the minister’s petulant response put it, but we don’t think Ezekwesili is also in this matrix.

This country has never had it so bad! Stealing in government has never been this audacious. Government officials are now so impudent in their corrupt practices that they do not give a damn about who is watching. The National Assembly report in 2011 said mismanagement and theft by top Nigerian officials involved in the fuel subsidy cost the country $6.8 billion in three years. The country continues to sink under the suffocating weight of mediocrity and unbridled greed. With unemployment galloping beyond the 23 per cent mark, the youth of the country that make up the majority of the populace, clearly feel powerless and many are pushed to take to crime. Okonjo-Iweala must admit that she has not demonstrated the capacity to handle the economic crisis and its redoubtable ramifications.

Inferences were made in the rejoinder suggesting that this newspaper is against the minister and is “deliberately hounding” her. How ridiculous! For more than four decades, we have been here as a critical voice for the people. We are not, and have never been cheerleaders for any one side of the political divide. We have consistently railed against corruption, abuse of power and incompetence wherever and whenever we spot them. As our Mission Statement states, we will continue “to promote and defend the values of democracy and free speech,” and “foster principle of equal opportunities for all.” This is a promise we have kept for more than four decades.

So what is to be done? The National Assembly must stop this mess. We cannot continue with this lackadaisical approach. Nigeria needs decisive and compassionate leaders. This is not about politics. It is about bad government. And this is a ghastly one. The issuance of waivers, we insist, is enmeshed in corruption and there is no evidence of the reforms that Okonjo-Iweala rhapsodises about. The rejoinder’s grandstanding on the uses of waivers is therefore, a self-indictment. The government should make the identities of the waiver beneficiaries known to the public and convince Nigerians how the waivers will “contribute to the country’s long-term industrial development.”

The policy should be drastically reviewed or stopped altogether. Even special incentives like the Export Expansion Grant have been serially abused and the NCS said so and was quoted in our editorial explaining how beneficiaries diverted them into importing cars. Rather than inveigh against The PUNCH and other critics, the Economic Management Team should thoroughly review all incentive schemes, monitor the beneficiaries and ensure that the waivers are actually used for the specified purposes. Do the governments of South Korea, Malaysia and China, fold their arms when a beneficiary sells waiver to a third party or uses it to import cars?  Only a system driven by corruption allows that; and it cannot deliver the much needed development.

The weakness of many top public officials in standing up against vested private interests and duty waiver scandals has even featured in books. We urge Okonjo-Iweala to reflect on the early part of page 177 of The Accidental Public Servant, a book written by Nasir el-Rufai, who was part of the Economic Management Team she chaired during the Obasanjo administration. And how about the baleful influence of mid-level bureaucrats in the ministry, top ministry officials, well-heeled business people and their political patrons who got payoffs because of the approved waivers, which the Minister referred to in Reforming the Unreformable, her own book?  Have they suddenly turned saints? Between her first outing as minister and now, how many of these crooked officials have been exposed, investigated and brought to justice?