Debts, VAT and States’ Gold Mines

(Published in the Nigerian Tribune on Monday, 20 September, 2021)

The National Assembly last Tuesday received a presidential request for yet fresh foreign loans. This time, it is $4billion and €710million (N2 Trillion) to finance ‘critical projects’ in the 2021 budget. Our lawmakers will approve the loan request without asking any question. It is not the first loan request this year and it won’t be the last. The more the loans, the bigger their fortune. But, if we borrow so much to finance this year’s budget, how much more are we going to borrow to finance next year’s budget, and the next and the next? The borrowing binge holds us out as either suicidal or dizzy-minded fraudsters. I said suicidal because the debts will certainly kill us. We already spend over 90 percent of our revenue to service debts. I said fraudulent, because maybe we have no intention of paying back. Either way, our country is on a road that won’t end in praise. There is a linear link between unguided borrowing and sorrowing.

If we borrow so much to finance this year's budget, how much more are we going to borrow to finance next year's budget, and the next and the next? Click To Tweet

For over two hours last Wednesday, I was with Dr Omololu Olunloyo, first class mathematician and former governor of the old Oyo State. I go to him whenever I look into space and I am tired of everything I see. As usual, I found him sitting among old books, new books, newspapers and journals and monographs. At almost 90, he remained sharp and alert – but has refused to write his autobiography. We discussed people, places and politics. At a point, I asked him what he thought about Nigeria and its poverty. He asked if I thought Nigeria was truly poor. He said a foremost geologist once told him that every bit and part of Nigeria sat on one precious mineral or the other. Which means every square foot of the Nigerian soil is rich and wealthy. But what have we done with ourselves? “You know how Jos became one of the very first places where electricity was generated and used in Nigeria?” He asked me but provided the answer himself: the presence of Tin on the Plateau was exploited by the British to bring unprecedented development to the place. He reminded me of how the Nigerian Electricity Supply Company in 1929 near Jos built an hydro-electric plant at Kura to power the mining industry. Then I remembered B.W. Hodder, a lecturer in the Department of Geography, University College, Ibadan, in the 1950s. In an April 1959 article, he gave a picture of what that Jos’ beginning was: “At the beginning of the present century, the plateau was one of the most backward parts of Nigeria. Today, it is one of the most developed with roads, railways, towns, dams, and hydroelectricity power installations…” That was the picture of Jos in 1959, a year before independence. And what have we done with that leap since the white man left?

Instead of attacking his colleagues for asserting their rights over VAT collection, the Ebonyi State governor and his government may visit Osun State and replicate the solid minerals policy there. Click To Tweet

I told Olunloyo that we have regressed; he disagreed and stressed that what has happened to Nigeria is bad drivers who have put it firmly in the reverse gear. We have everything to make a rich, successful nation of happy people but what we lack is the sense to do what normal people do. The VAT war is intense because it is part of a scramble for the flesh of a fallen elephant. We agreed that Nigeria is resource-rich but has very ragged, bad-behaving leaders. The sub-national states are very poor and struggling -and will continue to suffer and sweat unless they question why they are miserable amidst plenty. The Federal Government can toy and trade with our sovereignty by borrowing every poisonous dollar everywhere it lurks. If the states are better run while the center runs amok, dismantling the country, the people may still survive the holocaust.

Debts, VAT and States' Gold Mines

I watched Ebonyi State governor, Dave Omahi on Channels TV on Friday morning practically repudiating everything the southern governors agreed on the previous day in Enugu, especially on VAT as tax to be collected by states for the benefit of their people. Omahi, chairman of South East Governors Forum, said he is opposed to it because his state would be poorer for it.

We are as endowed as America. The difference is in the kind of leaders we choose to run our lives. Click To Tweet

Umahi said his state and some others would collapse should VAT collection move from the federal to the states. Then he fired on: “When they (Southern governors) say that this VAT collection is part of true restructuring, I say I never believe in total restructuring; I believe in administrative restructuring.” What a man! Warri people say “Awoof dey run belle.” People who rejoice in reaping where they did not sow or who sow little and beg for plenty are negative minds. I am from Osun State and I know that my state’s monthly collection from VAT is more than what it contributes to it. Same with Ekiti, Ondo and Bayelsa. But the governor of Osun State was at that meeting and I have not heard him say his state would collapse if the rational, fair and legal thing was done. Ironically, I heard Omahi on that Channels Television interview admitting that his state had so much natural resources, including solid minerals, which had remained untapped. But Omahi is the governor and I felt like asking him who would do that tapping job for him.

Sometime last year, I wrote about a part of Osun State where at dawn every day, hundreds of Hausa/Fulani young men file out of their village shelters, shovels in their hands, pickaxes on their shoulders, daggers hidden somewhere in their bodies. They snake into the cool thickets of farms and are not seen again until dusk. They are illegal gold miners devastating lives and lands; the same people blamed for the unending deaths and banditry in Zamfara, Sokoto and Katsina states. There was a gold rush in that area in the 1940s which attracted what the colonial government described as “footpads, rogues, and an assortment of vagabonds” … “crowds of Hausa labourers” whose illegal mining activities did extensive damage “both to subsistence and cash crops…” (See ‘An Ounce is Enough’ by Toyin Falola, 1992, at page 42). The year 1940 was some eighty-one years ago. That part of Nigeria has remained resource rich and existentially poor. Why?

In 2006, fifteen years ago, former Governor Olagunsoye Oyinlola got very poor Osun State to register a solid minerals exploration and mining company with the name Livingspring Minerals Promotion Company Limited. With that company, the state bidded for, won, paid and got ten solid minerals exploration licences and seven mining licences from the Federal Government. Seven of the exploration licences are for Gold fields in Osun and in two far northern states; two of the licences are for Lead and Zinc exploration in identified fields in Eastern Nigeria and in a north central state. The tenth exploration licence is for Feldspar and Quartz, Marble and Granite Gneiss exploration in a north central state covering an area of 200 square kilometers. Three of the mining licences are for Gold mining in Osun State while the remaining four are for Feldspar and Quartz in the north – all covering 233 square kilometers.

But it is not enough to get the exploration and mining licences. They are a means to an end. You need to get the fields worked on. But you cannot do that without the needed expertise and partnership of people of means. And, again, no investor will listen to the licence owner without exploration reports that would show that the minerals truly exist and validate what the licences claim. For the assets to work, the licensee must produce what experts call Geological Exploration Reports (GER) and Geochemical Reports in addition to core drilling of the licence areas. These processes were followed in Osun State and carried out between 2006 and 2010 across all the fields in the five states covered by the licences. Hopes were very high that the state would, at last, shed its shameful hand-to-mouth toga of unviability. Then the Oyinlola government had to leave office suddenly in November 2010 and the great expectations from those fields appeared dead. It has taken the Gboyega Oyetola government, which came eight years after, to rebirth the process and sweat the assets for the good of the state. The state-owned company, in partnership with an investor, has established what has been described as Nigeria’s first gold refinery. A lot of sane activities are going on in that area now which give informed people and the stakeholders in Nigeria’s solid minerals sector reasons to cheer. Those of us who were part of the original dream in 2006 through 2010 are proud of what is happening and may still happen to the assets. If things are allowed to continue to work well, the poverty of Osun State may soon be shaken off. I asked some officials of the state last week what the next plans were. They said the value chain was being worked on, that they had got investors for two of the licences while also working on the other exploration and mining licences across the country. So, instead of attacking his colleagues for asserting their rights over VAT collection, the Ebonyi State governor and his government may visit Osun State and replicate the solid minerals policy there. After all, he confirmed that his state is very rich in minerals.

No man, institution or state progresses without a push. My people say no one gets rich without a helper. There is a state called California in the United States. Some two hundred years ago, it was as back-water and poor as my state. Today’s net worth of that State is recorded as over $6 trillion (about $160,000 per resident). Records say “the state holds 17 percent of the United State’s national net worth while making up only 12 percent of the U.S. population.” But California did not climb that tree from the top. Like we are seeing in Zamfara and Osun States, it started with a gold rush there in January 1848, the frenzy calming down sometime in 1855. California’s reputation then gradually started moving up beyond the fortune-hunting for gold to very big farming, to movie making (Hollywood), to airplane building and to dot-com and micro-chip revolution. For that state, gold provided just the initial push; today, the boom there is about big tech and about all the best in its past.

There is another US state called Nevada. Its capital is the popular Las Vegas. In the first quarter of this year, 2021, the United States’ Bureau of Economic Analysis said Nevada led the nation in Gross Domestic Product (GDP) increase at 11%. But it is not on that mountain top by a sudden flight. Nevada is in a desert area with a history of toil and struggle and of sensible leaders. David Strow of Las Vegas Sun in a January 2000 piece said that at its birth in 1864, the economic fortunes of that state were firmly rooted in the mining industry. He noted that when new veins of gold, silver and copper were struck, the state’s economy soared. Then the gold veins ran dry and fewer buyers sought the precious metals and the economy of Nevada crashed. By the beginning of the 20th century, people started running away from it. Historians add that when the downturn festered and won’t heal, suggestions were made that the United States should “revoke Nevada’s statehood and return it to territorial status, or merge it with another state.” Then the leaders there woke up and looked beyond the ‘awoof’ of gold and silver and copper. They used their brains. They legalized what their state had a comparative advantage on: Gambling. Through and around that ‘sin’, they created a tourism and leisure-reliant economy and their boomtowns came back. By the turn of the 21st century in year 2000, Nevada had become the United States’ “fastest-growing state for 14 straight years.” From people running away from Nevada and having only 42,000 residents remaining in 1900, its population grew to 1.8 million in 2000 and, this year, its very proud residents are 3.2 million.

Nigeria and Nigerian states can learn from these histories. We are as endowed as America. The difference is in the kind of leaders we choose to run our lives. We’ve had our own boomtowns which we lost to mismanagement. We had the oil boom and the billions that came with it and we lost everything. If we remain stuck in that past, our own states could have all the VAT money; they could mine all the gold and silver in their soils, but if they have leaders who mismanage the proceeds, the giant of Africa will remain right in the sink hole of poverty. That is why I say leadership matters. If we recruit good leaders, we will live well.

Lasisi Olagunju Photo

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