By Yusuf An-Nuphawi
The radical resolve by the federal government to revamp the agriculture and mineral revenue segments of the economy suggest that the government is in touch with current economic realities that bites ferociously. Analysts have observed that though the new administration is still to find its bearing appropriately, it appears to be right on track, giving hope for a cut-away from the frustrating past and heralding a promising future for the economy. This was acknowledged by the Vice President, Prof. Yemi Osinbajo when he disclosed that the federal government is planning to use a zero-based budgeting format for its 2016 budget planning. Zero-based budgeting entails careful planning anchored on the needs and costs. It is different from the current Envelope Budgeting or traditionally incremental budgeting whereby the planning is based on existing income and expenditure as the deciding factor in national financial planning levels, which often incurs waste and assumes previous costs as constant.
Many Nigerians have also renewed their hopes as the policy makers reassured that the country is safer under President Buhari who is determined to open windows of economic opportunities, not mere job creation, to the citizens beginning with the 2016 budget which planned to reflect the government’s seriousness to diversify the economy.
Reassuring Nigerians on economic diversification through agriculture, the Federal government is already working closely with seven rice producing states and hoped that focusing attention on those states by providing infrastructure, providing whatever components that are required down that value chain– silos, milling facilities will contribute tremendously to the current efforts at resuscitating the economy.
In a quest for all-inclusive budget, the federal government had sought the citizen’s opinions and suggestions on how to rescue the moribund economy starting with the 2016 national budget as instrument for opening the door to better years ahead. With a shared national vision, Nigerian economy observers have recommended the need for proper monitoring of activities in the construction sector and the need to properly recapture contractors into the nation’s tax net.
Nigerians find agreement in doing legitimate contract; there is nothing bad in doing government contracts if due process, transparency, accountability and laws that govern such transactions are not compromised, however, government contracts are perceived as a veritable means of rewarding loyalists and political party faithful(s), helping loved ones and getting – rich – quick among others. And these form the bedrock for rascality in awarding government contracts.
Construction industry plays fundamental role in economic growth especially if the government regularly awards capital cost contracts for building public infrastructures. In Nigeria, it has contributed significantly to the nation’s economic development raging from creating direct and indirect employment to attraction of foreign investments. Factors such as rapid urbanization, growing population and rising demand for social amenities such as housing and infrastructure are some of the contributing factors to the growth of construction industry in the recent time. It is quite impressive that despite fiscal and economic headwind that Nigeria has been contending with, the construction sector grew and significantly contributed to the nation’s Gross Domestic Product (GDP) by 3.2 percent in the third quarter of 2015, according official statistics.
However, analysts observed that there is still much to be done to correct inconsistencies in the nation’s taxation system which has not been defined appropriately to meet economic dynamics; some of the laws are archaic and there is little zeal by the policy makers to checkmate such constitutional lacuna.
Analyst have identified the improper capturing of construction companies and multinational players in the construction industry into the nation’s tax net as one of the silent ways the government is losing revenue. For instance, several mineral substances such as mountainous rocks are broken into smaller granites- a vital raw material for constructions- by the contractors using their sophisticated machines. There is no tax going to the government’s coffer for this activity simply because the archaic contract law recognized the mineral materials excavated from the land as waste.
Speaking to Economic Confidential, a civil engineer, Mr. Lorkar Alphonsus, argued that in the technical biding for road or bridge construction contract, contractors give cost-estimate and price quotation of each and every stage of work. Such stages may include survey, excavation and evacuation of earth surface, and land refill among others. Though these activities could amount to billions of naira depending on the scope of work involved, the contract provision in Nigeria described excavated material as rubbish, therefore, breaking the rocks and carting away from site without paying government is in order.
Public affairs analysts have also argued that apart from environmental and climatic consequences of degrading mountainous rocks, the government also lose untold amount of revenue. And in the face of current difficult economic situation, it makes no sense that government pay for excavation and evacuation of mineral resources that end up being used by individuals or corporate organisations for their own benefits.
A public affairs commentator and Director of International Institute of Journalism, Abuja, Dr. Emma Shehu opined that “there must be implementation of environmental impact assessment and there must be a proper monitoring of how these things are done especially the utilisation of local materials in these constructions.”
Shehu argued that “because the environmental impact assessment will give an insight into the materials they are going to use, especially, for instance, if they are going to harvest rocks in the construction of roads and other things for beautifying our environment.
“But following up to that, there is also need for monitoring construction mechanism to ensure that not only is the environmental impact assessment recommendation of health adhere to but that in utilizing these materials (rocks), they are not doing other things outside of the agreement and manipulating the process and therefore, at the end, maximizing their profit at the expense of our environment and at the expense of our own economy,” he explained.
Observers also suggested the need for the government to, as matter of urgency, set up committee of experts in the Federal Ministries of Environment and Solid Minerals to come up with a comprehensive white-paper for the legislature to enact law against exploitative contractors.
The bill, they said, should detail measurement and value of the mineral resources evacuated in the process of road and general construction. It should clearly distinguish and classify rubbish earth materials from valuable rocks and mineral resources. And if large quantity of any excavated mineral must be used by the contractors for their work or other private purposes, tax should be paid for that.
Nigerians also observed that one of the ways to revamp the economy through solid mineral is a review of the Nigerian Minerals and Mining Act 2007, which was passed into law on March 16, 2007 to repeal the Minerals and Mining Act, No. 34 of 1999. The Act vests control of all properties and minerals in Nigeria in the state and prohibits unauthorized exploration or exploitation of minerals.
While suggesting all these, they said, the government should avoid negative effect of multiple taxation on private businesses. It is time for the government to work with the private sector especially construction industry to develop and encourage local content for constructions. The Nigerian Building and Road Research Institute (NBRRI) should start bridging the gap between research findings and commercialization or field applications. This will go a long way to reduce construction cost.
Experts in the construction industry have also argued that importation of some construction materials is a wrong choice of economics in Nigeria because there is abundant deposit of most of the vital raw materials in the country that could be used in road construction. If the country has coal tar deposits in Ondo State, which are said to be the second largest in the world after Trinidad & Tobago (in the West Indies/Caribbean Region), then there is no point wasting money on the importation of road surfacing materials like asphalt and bitumen.
It is observed that the high cost of construction in Nigeria is result from not only cost of materials used but also manipulations by some irredeemably greedy capitalists in the industry-their activities should not be left unchecked. The government should optimize production capacity and capability of committed cement and other materials producing companies through acquisition and development of appropriate technology that would ensure adequate availability of construction material
