PEOPLE AND POLITICS BY MOHAMMED HARUNA

Let the ETF Be

ndajika@yahoo.com

Of all the goods and services governments provide – national defence, security, education, health, water, fire brigade, etc – none, I believe, deserves as much support as education. The reason is obvious; without knowledge no one can produce anything at all, never mind efficiently and effectively.

Much of what we need to know to make society work comes through formal education starting from primary school through secondary to tertiary.

Nothing underscores the importance of investment in formal education like the wide gap in economic development that has emerged in the last 50 odd years between Nigeria and the so-called Asian Tigers, notably Malaysia, Singapore and South Korea.

Take Singapore, for example. With an area of little over 710 square kilometres and a population of only 4.9 million, this city-state, in the words of its first prime minister, Lee Kuan Yew, catapulted itself from the status of a Third World country to the First in just one generation.

When Malaysia gained its independence in 1963, i.e. three years after Nigeria’s, Singapore was a poor tiny island in the country. Irreconcilable differences between its mainly Chinese population and the majority Malays led to its expulsion in 1965.

That expulsion turned out a blessing in disguise. Today, even though at over 103.7 billion U.S. dollars, according to The Economist Pocket World in Figures (2006),  Malaysia, with an area of 330,000 square kilometres and a population of 28 million, has a bigger Gross Domestic Product against Singapore’s 91.3 billion, the city-state is richer per capita and much more stable than its neighbour.

Compare these figures with Nigeria’s GDP of 58.4 billion U.S. dollars, especially against the backdrop of its size (924,768 square kilometres) and population (roughly one hundred and fifty million). It makes you sad. It even makes you want to cry especially given the natural resources, especially oil and gas and other key industrial minerals, not talk of arable land, the country is endowed with.

It makes you want to cry the more when you realize that our inferior GDP does not even begin to tell half the story of the nasty, short and brutish life that is the lot of the vast majority of Nigerians. The United Nations’ Human Development Index which tells the story better lists Singapore, with 90.2 on a scale of 0 to100, among the top 25 highest in the world. Nigeria, with an index below 50, ranks among the poorest in the world.

At least two things account for the wide gap between us and these Asian Tigers we started out with as independent countries about 50 years ago; leadership and education.

 Admittedly their leaders were long reigning dictators. But so also were Africa’s Mobutus and Bokasas and Bongos of this world. The difference was that the leaders of the Asian Tigers were not venal and self-serving dictators. On the contrary, they had integrity and vision and a commitment to develop their countries.

Because they had integrity, vision and commitment they invested massively in the education of their people. Today Malaysia spends 7.9% of its GDP on education even though its literacy rate is above 80%. Nigeria, with around 60% spends only 2.5% lower than even Singapore’s (3.7%) which has a literacy rate of 96.3%. Worse, that relatively paltry sum has been subject to much pilferage and leakages.

Which is why it should surprise the reader – certainly it has surprised me - that there are moves afoot to scrap the Education Trust Fund (ETF), possibly the only idea for funding education at any level in or out of budgetary allocations which has not yet been tainted with scandal.

 Recently the Federal Inland Revenue Service (FIRS) suggested that all so-called earmark taxes, i.e. levies on profit after tax for specific public goods and services, should be scrapped because of complaints by companies that their margins are being taxed to zero by an increasing number of such levies.

The latest levy under consideration is for funding the police rehabilitation a police reform committee under former inspector general of police, Alhaji M.D.Yusuf, has recommended. The Yusuf committee suggested that government spend 4.2 billion Naira every year for the next four years to make the police effective.

This would not be the first time the policing levy has been suggested. Possibly the first was under President Olusegun Obasanjo and he almost accepted it. However, he dropped it when the FIRS, under Alhaji Ibrahim Zhukogi, advised against it because it believed not so much that we have too many levies, which we probably do, but because the country’s approach to their imposition has been arbitrary. This approach, the FRIS said, made it impossible for companies to plan and even discouraged foreign investment.

Now, it seems, the Federal Government has decided to revisit the levy. And the FIRS has apparently decided to hide behind it and recommend scrapping all ear-mark taxes in the name, no doubt laudable, of harmonizing the country’s tax regime.

Both the federal authorities and FIRS should reconsider their positions, at least in respect of ETF for at least three reasons, two of which I have alluded to. First, education as a public good needs much more funding than it has received all these 50 odd years of our independence. Of course all other sectors do too. But none, not even security, needs as much investment as education. ETF’s 2% levy on after tax profit is a significant addition to the budgetary allocation to education but God knows the sector needs a lot more if we are to catch up with the Asian Tigers that have left us far behind.

Second, at least in the last three years since Professor Mahmoud Yakubu became its Executive Secretary, ETF has demonstrated a level of initiative, transparency and accountability rare in these climes but absolutely necessary if Nigerians are to get value for their taxes.

When it was first established in 1993, it was like a blunderbuss that targeted all levels of education, from primary to tertiary. The result was that it was too thinly spread out for effect.  One of Yakubu’s first initiatives was to persuade the federal authorities to zero in on tertiary education – the universities, polytechnics and monotechnics, and colleges of education. An executive bill to amend the original law to that effect has since been on the floor of the National Assembly. However, ahead of the amendment ETF’s focus on the tertiary level of education is already beginning to have an impact on the quality of teaching and research in our tertiary institutions. Ask the management and staff unions in these institutions.

The more important side of this second reason for letting ETF be, however, is the level of transparency and accountability it has demonstrated, at least in the last three years. The most telling evidence of this, albeit in a negative form, is that there are over 20 billion Naira un-accessed by the beneficiary institutions since 2007 because they have not met ETF’s stringent requirement that they must account for every penny of previous allocations before they get new ones. ETF has since named, and hopefully shamed, those institutions in paid newspaper adverts.

To underscore its concern for transparency and accountability ETF has, in the last three years, created a forum for annual dialogue on how best to disburse its funds and achieve results.  This dialogue among heads of all ministries of education, chairmen of the councils and heads of all the beneficiary institutions, representatives of Nigeria’s Transparency International and of a coalition of civil society organizations including the mass media called Independent Service Delivery Monitoring Organization, and representatives of the two anti-corruption agencies, EFCC and ICPC, usually runs for a working week taking the universities, the polytechnics and monotechnics and the colleges of education one day each.

With the current management’s determination to entrench in the organization the philosophy that sunshine is the best disinfectant, it would be difficult, if not impossible, in future for the ETF to go the way of previous public intervention funds like the very much unlamented National Primary Education Commission.

The third reason to let the ETF be is that with staff strength of all of only 133 from the executive secretary to the messengers and with no branches outside Abuja it may arguably be the leanest and most cost effective bureaucracy in the country.

There is good reason for the federal authorities and FIRS to rethink the tendency to fund all manner of public goods and services through levies. The education of the people of this country is too important not to exempt it from this revisit. We should let the ETF be.