Nigeria: Time to Cure the Addictive Aid Fix


Abimbola Akosile writes on the need for Nigeria, which is classified as a lower-middle income nation, to ramp up local resource mobilisation to ensure continued socio-economic development as the aid tap from donor countries slowly runs dry; which was the focus of a retreat organised by the House of Representatives Committee on Appropriation in conjunction with the Civil Society Legislative Advocacy Centre (CISLAC) in Abuja recently

Nigeria is hooked on aid, especially foreign aid. And like a junkie who is hooked on both cheap and expensive dangerous drugs, the country is not willing to let go of the delicious thrill obtained from continuous free external support for her development process.

Right from the sixties till the present day, the country’s socio-economic progress in critical social sectors like health, education, poverty alleviation, and infrastructural development has largely been bolstered by billions of dollars from grants, soft loans and donor funding from abroad.

However, experts have also noted that Nigeria’s development indicators have not improved significantly despite four decades of continuous aid with nearly two-thirds of the population living on less than a dollar a day.

Foreign Assistance
According to experts and research findings, although, Nigeria has continued to benefit from all sorts of foreign assistance and aid, yet socio-economic development has remained gloomy.

According to a joint research article by Tolulope Adetayo, Olatujoye Olawale and Adebusuyi AI of the Department of Sociology and Anthropology, Obafemi Awolowo University, Ile-Ife, Nigeria, the total net aid flows from all donors that Nigeria received was $152 million in 1999; $185 million in 2000, which climbed to $573 million by 2004.

The report also noted that aid flows to Nigeria sharply increased following its return to civilian rule, which was manifested in the volume of foreign aid influx into the country covering the period 1999-2007. Also, according to the publication, Nigeria recorded $6.799 billion aid in 2005; $11.781 billion in 2006; $1.385 billion in 2007; $1.401 billion and $1.638 billion in 2008 and 2009.

Concerned Forum
The House of Representatives Committees on Appropriation in conjunction with Civil Society Legislative Advocacy Centre (CISLAC) organised a one-day retreat for National Assembly Members recently in Abuja, with a theme ‘Understanding Nigeria’s Lower Middle Income Status and Unlocking Potential for Local Resource Mobilisation for Social Sector Financing’.

The retreat was aimed at providing an enabling platform for the Members to interact in proffering holistic solutions to the current trend and challenges confronting adequate and sustainable social sector financing coupled with the need to harness and strengthen domestic resources for social sector financing in the face of dwindling donors’ funding.

The forum drew about 60 participants from the House of Representatives, Ministry of Budget and National Planning, civil society, and development partners. It featured presentations from experts and representative of Minister of Budget and National Planning.

Clarion Call
While welcoming the participants at the retreat, the Executive Director of CISLAC, Mr. Auwal Musa Rafsanjani urged the Federal Government to seek and adopt new measures and strategies to ensure continuous funding for the country’s vital social sector; to provide a viable alternative to the dwindling funding from donor countries and international organisations.

Rafsanjani also enjoined members of the National Assembly and civil society organisations to partner the government in proffering holistic solutions to the current trend and challenges facing adequate and sustainable social sector financing, coupled with the need to harness and strengthen domestic resources for social sector financing in the face of dwindling donors’ funding.

The CISLAC boss noted that although donor resources play an integral role in complementing Nigerian governments’ efforts in social sector financing, however, “we must as well not lose sight to acknowledge the present reality and proffer holistic measures to avert the detrimental impacts dwindling donors’ resources may pose to our nation’s social sector investment and development.”

Rafsanjani reiterated that while the fundamental purpose of humanitarian aid by any government is to support the efforts of a receiving nation at revitalising her social sector as well as uplifting the poor from extreme poverty, which renders them unable to attain self-reliance and effectively fight diseases, the present dwindling donors’ resources, if not matched with concrete legislative and policy measures will reverse existing achievements and backpedal development of the nation’s social sector.

“The rebasing of Nigeria’s GDP has firmed up the nation’s position as an emerging market economy. However, Nigeria is fast witnessing a downward trend in donors’ resources, practically buttressed by the recent international decisions to withdraw funding for social sector like the European Union (EU) which specifically withdraws financial support for Nigeria, “saying the country has enough resources to meet her developmental needs.

“There is also Global Alliance for Vaccine Initiative (GAVI) which runs out by 2020 with potentially 7.5 million children losing access to live-saving vaccines annually; United Nations Children’s Fund (UNICEF) warning governments to take full responsibility of their respective nutrition financing while their refusal may lead to another 2.5 million severely acute malnourished children and child mortality in the country.

“Against this backdrop the House of Representatives’ Committee on Appropriation in partnership with CISLAC finds it essential to open critical deliberation on the developmental challenge at hand. It is hoped that a result oriented deliberation will be applied in developing holistic strategies and supporting legislative and policy processes towards domestic resource mobilisation for adequate and sustainable social sector financing in Nigeria”, he added.

Notable Observations
After exhaustive deliberations on various thematic issues, participants at the retreat made some crucial observations and recommendations.

They observed that adequate and sustainable financing for the social sectors of health, agriculture and education sectors, remains paramount to achieve a healthy, secured and developed society; and that delay and inadequate release of funds remain a systemic challenge to resource mobilisation, allocation and utilisation for the social sector development.

To them, the rebasing of Nigeria’s GDP has projected the nation as a middle income economy resulting in dwindling donors’ resources; and the effect is that by 2022 there would no reduced availability of grants and more external funds that can be accessed would be higher interest loans.

The forum, in a communiqué issued after the retreat, also noted that a Technical Committee constituted by the Budget and Planning Office would critically observe, analyse, and address the impacts of Nigeria’s transition from lower to middle income status.

The communiqué was jointly signed by the House Committee Chairman on Appropriation, Hon. Mustapha Bala Dawaki; House Committee Chairman on Finance, Hon. Babangida Ibrahim; House Committee Chairman on Sustainable Development Goals, Tijjani Abdulkadir Jobe; and the Executive Director, CISLAC, Auwal Musa Rafsanjani.

To the participants, the existing income measure in addition to social inequality does not commensurate with individual’s income level and has not adequately justified Nigeria’s transition from lower to middle income nation and the need for GDP rebasing. They added that with revenue to GDP which stands at approximately 6 per cent in 2016, Nigeria records the lowest revenue to GDP ratios in world.

“Continued mono-economic practice and lack of innovation for resource mobilisation with particular focus on oil revenue discourages the internal capacity and efforts at effectively harnessing domestic resources for financing social sector. Also, high level inefficiency in tax legislation, collection and administration paves way for illegal/multiple taxation and grossly widens loopholes in governments’ revenue generation capacity”, the retreat attendees observed.

Vital Recommendations
The participants at the retreat recommended prompt design of a holistic exit strategy for the domestication of social sector financing by embracing technically-know-how of various donors’ supported activities for significant reduction in major costs and strengthen social sector.

To them leveraging appropriate domestication and full-fledged implementation of various internationally ratified pro-poor policies on agriculture, health, education would help to enhance and harness local potential adequate and sustainable resource mobilisation for social sector.

They called for enhanced cooperation among Ministries of Budget and National Planning, Finance and other benefitting Ministries and Agencies to promote joint ownership of the intervention projects and minimise the sectoral impact of declines in ODA flows in Nigeria.
The participants also stressed the need to start looking inward towards the production of vaccines, since it constitutes a huge chunk of the grants given by the donor agencies. They also advocated proactive multi-tier budgeting to promote greater coordination, efficient budgeting and improved outcomes in place of the focus on federal budgetary allocations.

The retreat also recommended a holistic National Population Policy to appropriately document and address pending issues like social inequality and GDP rebasing to justify Nigeria’s status as middle income nation for effective social sector planning and financing.
They called for the prioritising of key sectors of the economy to mitigate wastage and shortfall in resource mobilisation and allocation for adequate and sustainable social sector financing in Nigeria.

Participants also sought adequate training and re-training programmes for tax collectors at all levels to promote innovation, expansion of the revenue base and coordination in tax collection and administration process for enhanced domestic resource mobilisation for social sector financing.

They called for institutionalising revenue and expenditure tracking; and judicious utilisation of the nation’s revenue to effectively finance social sector and encourage citizens’ contribution towards revenue generation process; immediate review and amendment of the nation’s obsolete tax legislation to enhance efficiency and innovation in the tax collection and administration, and sustainable revenue generation in Nigeria.

They also canvassed for the adoption of international best practices in tax legislation and administration such as voluntary Assets and Income Declaration Scheme with proactive effort to track compliance for lack of comprehensive data.

Looking Inwards
Although Nigeria has continuously benefitted from largely free aid from donor countries and agencies over the years, there is danger in getting hooked on such life support systems.

Now that the aid taps are drying up, with the donors’ focus shifting to less-fortunate and less-endowed countries, it is time for Nigeria to look inward for local funding for the vital social sectors. The earlier this is done, the better for governance and development.