Friction is the silent but chronic cancer killing Nigeria

Normally I’m not the type to get into political matters and I don’t look forward to serving in the government; it’s a difficult task. Nevertheless, we own this country, so we have a responsibility to find ways to solve our never ending problems.

When we look at Nigeria today, we see that there are so many challenges but corruption and mediocrity are the poster children. Our people also complain about the government spending money unreasonably—on new planes and fancy stuff—and it’s true. But if we take a step back and look at the dollar value of these expenses, the money the government is spending isn’t so much. Nonetheless, the perception that resources are being wasted remains valid.

However, the real problem we have in Nigeria is a revenue problem. We’re just not making enough money. This country should probably be generating around half a trillion dollars in government revenue every year. So, why isn’t that happening?

I’ve already mentioned the issue of mediocrity, and that’s a big part of it. I don’t focus as much on corruption, because corruption, to me, feels more like a symptom. It exists in most countries. But the lack of consequences sets our corruption apart as a special breed. Corruption in Nigeria is fueled by mediocrity and allowed to thrive because no one is held accountable.

There’s a symbiotic relationship between friction and mediocrity in Nigeria

Some of this mediocrity I’m talking about comes from friction. Maybe mediocrity causes the friction, or maybe the friction causes the mediocrity; it’s hard to tell. But one thing that is clear is that the friction in Nigeria is intense. Remove friction, and the country will grow.

So, what exactly is friction? It’s the lack of ease in doing what needs to be done; the barriers you face, the hurdles you have to scale before you can get anything done.

Where does this come from? Let’s look at everything. In Nigeria today, if you’re a good person trying to do the right thing, it’s hard to stay good. Take paying taxes, for example, it’s difficult to do so. If you wake up one morning and set out on a mission to pay your taxes, you might not even know all the taxes or dues you’re supposed to pay. Where do you go? There’s no single place that tells you everything. And because of this, bad agents can just hustle you from all sides.

Imagine you want to start a business and wish to export your goods, you have no clue about all the steps involved. You might apply to a government agency and still be lost because you have to do 10 things just to complete one task. So, if you want to start exporting today, is there a place where you  can get a simple list of the 1, 2, 3, 4, 5 things you need to do and you just start? The answer is no.

Let’s also look at it in reverse. If you’re a Local Government Chairman, you probably don’t even know who you’re supposed to tax. And if government agencies don’t communicate with each other, as simple as this thing is, it creates a massive barrier for Nigerians who genuinely want to do right and create value.

Even the Nigerian government is getting robbed by friction

Let’s set aside Nigerians who want to do right for a moment. The government itself is struggling. When you look at the state of the economy today, and the huge debt figures, it further frames the scale of the problem. There’s so much infrastructure that needs to be built, schools that need funding, and better quality education that needs to be delivered, but there’s no money to do any of it. Why? Because the government doesn’t even know how to collect revenue effectively and that’s another layer of friction.

Here’s the thing; while friction remains a challenge, we can learn from past examples. In the early 2000s, when Lagos State was having problems with the Federal Government and its money was seized, this same President created Alpha-Beta to help the state collect  its internally generated revenue. This move significantly reduced the friction Lagos faced in collecting revenue back then; it didn’t eliminate it entirely, but things were much worse before. The state’s revenue surged and they were able to fund their activities while they were still fighting with the Federal Government.

That template is what others replicated. The Federal Government later introduced the Treasury Single Account (TSA), which made it easier to collect and track revenue. Unfortunately, their bad spending negates the gains, but the concept works.

I believe that if the government systematically addresses this friction—something I’ll talk more about in future posts—Nigeria’s revenue would increase 10X. For example, imagine if the government made it easier for everyone to know the taxes they’re supposed to pay, and every government agency that should receive taxes, knew exactly who they should be collecting from; with automated, systematic data to track it all. Revenue would skyrocket. But right now, most people don’t pay their taxes, NSITF contributions, or other dues meant to go to the government. So, the government doesn’t even need to think of increasing taxes immediately; they just need to remove the friction first.

Today,if the government understood that reducing friction is key to improving the ease of doing business in Nigeria (which is perhaps currently among the worst in the world), everything would change. If setting up a company, paying taxes, applying for permits, and filing returns became easy, this country’s growth would be explosive.

The private sector can drive Nigeria’s growth; just remove the friction

We need government spending, but the private sector, even without government funding, is more than happy to spend money and create value. 

Take Dangote for instance; because of their relationship with the government, they approached the government for them to take on the reconstruction of the Apapa Wharf with their own money in exchange for a tax credit in the future. And Dangote went ahead, spending ₦72 billion to redo the Apapa Wharf road, including a toll gate and that was it. Magic happened in that place. The road got fixed, and nobody’s complaining anymore. If the government made such processes easy and straightforward, this kind of progress would be common.

Now, let’s look at Nigeria more broadly. We talk about encouraging people to come in and out of the country, and we know Nigeria has its issues, but tourism could generate so much more revenue if we reduced the friction. It’s not even about Visa-On-Arrival. Imagine if we made visas free, or allowed people to apply and pay online, then they’d simply scan a QR code upon arrival and move on. That alone would drive tourism and business. We can take a cue from what the new minister did with automating the passport application process to work end-to-end online. After this, we literally saw the entire backlog of applications disappear, and with it, the chance for corruption. 

To sum it all up, friction is like a cancer in the Nigerian system. If the government puts in the effort to remove it, this country could grow tenfold without even needing to raise taxes. Even corruption would decrease, though it may not disappear completely. The best part? The government doesn’t even need to spend money to eliminate friction; they just need to be open-minded and willing to collaborate with the private sector to make this work.