@PinkEngr, I think you’re missing my point by miles. You need to re-read my posts carefully.
I didn’t mention oil subsidy, and I never said you mentioned anything about an agricultural subsidy. Show me where I did.
Why I am against your suggestion that government subsidize salaries (or anything else for that matter) is that Nigeria does not have a good track record when it comes to subsidy, and they have historically caused more problems than they were meant to solve.
You’re free to provide counter-examples, if you have any (from Nigeria, not Canada o ).
In summary, @dataGuru has an interesting point of view, which is neither new nor revolutionary as it has been implemented in various parts of the world throughout history. In fact, it’s not today we just started realizing that we as a country have amortized our future [by selfish and corrupt dealings with foreign investors] in exchange for short term wealth that’s shared among a few people in the ruling class/politicians.
We can go on and on discussing macro-economics and philosophy but at some point we have to come down to earth and ask the important question:
Given the fact that the Nigerian environment appears to be extremely hostile towards the budding tech entrepreneur/SME, what practical steps can we take to overcome the difficulties, harsh environment, messed up government policies, etc as budding entrepreneurs on Radar?
A few answers have been brought forth, most pointing towards the same conclusion: create a great product that people actually want to use. Which is definitely easier said than done given the difficulties enumerated in the question above. However we have witnessed a few startups succeed in this endeavor. Maybe we as a community can learn from each other through more Radar AMA’s where the likes of PayStack, Paga, iRoko et al open up about how they have “conquered” in this harsh environment and give us practical steps to take as we try to emulate their success.
lol, that’s where you mentioned agric subsidies. I think I should rename it “initiative” rather than subsidies, since subsidies have a bad connotation.
Here is a sample proposal/case study for salaried subsidies for youths only:
In NYSC, let’s assume gov pays Let’s say there are approximately 200,000 corpers that gets paid 10K naira per month.
That’s 2 billion naira spent per month on corpers only.
My proposal is to erase NYSC and provide incentives for businesses, who already provide jobs, to hire youths. Let’s now say gov has an initiative to subsidize youth salary up to 50%. The gov will make the following criteria:
Minimum wage should be 80K, therefore the max subsidy that can be paid to anyone is 40K naira
1 company cannot have more than 20 subsidized employees
The gov subsidized salary is paid to the employee, rather than the employer
Company must be in the be tech, trades, manufacturing, and agric sector (diversification of economy)
By placing the above restrictions, fraud and ghost employees can be reduced.
Notice how this creates an incentive to hire 50,000 youths who earn a minimum wage of 80K without the gov spending extra money than it did during NYSC.
Your profile says you’re an Agripreneur. @ukay simply wanted to know how agricultural subsidies are faring since that is your forte; a question you have still refused to answer.
In agriculture, there are CBN subsidized loans given through banks. Most of these loans are still not accessible to the everyday farmer who needs it the most. Examples of other agric subsidies include the procurement of farming equipment, but these are only provided in certain states in Nigeria.
A subsidized salary varies from the above bc the subsidy is paid directly to the employee, and not the employer, a company, or a third party. It’s like the employee is indirectlying working for the gov while working with a private company at the same time.
A tax credit equal to x% of the salary will be infinitely better than x% subsidised salary paid directly to the employee.
The former is easier to administer, doesn’t distort market wage levels, and doesn’t create a culture of entitlement in the labour force.
Subsidised salaries also raises the question of who actually pays for it. The government will have to increase taxes to pay for it so effectively the entrepreneurs are still paying for it. All you are doing is taking capital allocation decisions from entrepreneurs and passing it to the government, something which they have a poor record in managing.
TLDR - Tax credits are better because they subsidise production rather than consumption.
Please note that what I’m pushing only applies to new graduates, and is not a solution to curb unemployment for every Nigerian. That’s why I believe they should get rid of NYSC and use those expenses that are dedicated to NYSC to subsidize salaries for a small amount of graduates. They can work it in such a way that the old budget will remain unchanged, hence no need to increase taxes for anybody. The wage structure can also be adjusted to fit the budget. This subsidy is just a short term solution that eases youth unemployment.
Nope. The gov will be taking capital in which they already spend anyways and pumping it back in. However, like you said, our government has poor record. But I prefer this to empty promises of job creation for youths.
Sounds like a microeconomic strategy when we need macro level policies. If NYSC is disbanded, I sure hope the money they save is used to fund tax credits for companies who choose to hire and train graduates, rather than being used to fund another entitlement program for a select few.
Where is the capital that they are going to “pump back in” going to come from? The government’s budget is funded from
Rent i.e. receipts from selling oil and other natural resources
Taxes
Debt
Most of (1) and (2) is already spent on recurrent expenditure, which you can’t decrease without job losses and crippling labour strikes. As shown in the 2016 budget, new spending i.e. a larger fiscal deficit, can currently only be funded from (3). I assume you are not advocating for the government to borrow money to subsidise salaries. Since rental receipts are falling due to low commodity prices, all that remains is taxes, which are provided by the private sector so we are back to square 1 - the government isn’t subsidizng anything because businesses will have to pay more tax in order to fund the “salary subsidy”.
If that’s the case, instead of “cutting more pounds of flesh” i.e. taxes, and risk killing business growth, why not just “dangle a carrot” and say I’ll waive, refund, or offset your tax liabilities if you hire or train more local residents? I’ll actually like to see that sort of fiscal policy play out at the state level because it’ll help them increase their PAYE tax revenues, and simultaneously reduce unemployment and crime, both of which affect states inordinately more.
It looks like I’m not communicating my points across. So I will rest my case after this.
Earlier, I stated that the salary subsidy will have restrictions and should only be targeted at this industries: tech, manufacturing, trades, and agric. Oil & gas, banking, and other industries are not included.
Most of targeted industries pay low salaries, so I don’t see it as an “entitlement program to a select few”. Note that the subsidy will have a maximum cap of let’s say 40K. From the sample I made earlier, that actually provides an initiative for Nigerian companies to hire 25% of the amount of grads that will attend NYSC for that year.
In addition the subsidy will be payed monthly to the employee, and not the company, to prevent businesses from exploiting the initiative, which has been a problem for failed subsidies.
All I’m proposing is that we get rid of NYSC and use the NYSC budget, which already exist, to invest in something else more practicable.
I read this whole thing again and got pissed. So I’ve come to shout.
THIS IS 2016. NOT THE 20S NOT THE 30S
Globailsation is real and it’s not going anywhere
THERE IS NO COUNTRY IN THIS ENTIRE WORLD THAT IS 100% SELF SUFFICIENT. All this Redcab buying spaghetti is BULLSHIT
YOU EARN INCOME BY CREATING THINGS PEOPLE WANT TO USE. THEN YOU SELL IT TO THEM
THESE PROTECTIONISTS THINKING ARE NOT PROGRSSIVE. THEY LEAD NOWHERE. YOU’RE NOT 90 FOR FUCK SAKE
ECONOMIES ALWAYS CHANGE. THEY DRIFT IN TERMS OF NEEDS, PROBLEMS AND SOLUTIONS. DEAL WITH IT
DANGOTE CEMENT FACTORIES ARE REPLACING PEOPLE WITH ROBOTS. MANUAL LABOUR WILL BE REPLACED BY ROBOTS EVERYWHERE. GET CREATIVE. DEAL WITH IT. THIS IS A REALITY. NO STUPID LAW IS GOING TO COME AND SAVE JOBS
Globalization is a threat and its killing economies.
All countries work towards been self sufficient… Africa was self sufficient before it was invaded, robbed e.t.c. the robbing continues bcos of people like you.
You earn income by providing a service to the community, the community in turn provides the environment for you to do business smoothly. If the community is in chaos your business won’t thrive.
Protectionists thinking is very important… They lead to a safe environment which is needed for businesses to thrive… South South Nigeria is a very good example of why protectionists thinking is vital.
Economies always change… that’s why the community has to change and develop with it… If it doesn’t develop with it then a foreigner would come and fill in the gap and the community stays the same and only very few members of the community would benefit.
That’s the same thing they said about computers… Robots, computers e.t.c have to be controlled and monitored by humans…
In Summary:
If a community does not improve, control and protect its wealth, foreigners will take advantage and send a huge chunk of the revenue meant to develop the community back to their countries making the community indebted and at the mercy of the foreigners…
Now tell me which is better… building an indebted community or building an independent community…
my dear, what is important is that the skill set that the people in a community posses reflect the needs of the community. If dangote wants robots den we start learning to program robots. Robots r afterall programmed at the end of the day in some programming language and coated with AI, ML and all d complicated stuff. So if dangote dosent need factory workers i recommend the factory workers begin to learn to make robots.
Now i don’t see what point you have made. All u av done is scream. The redcab and dangote example are not literal but just to make tins a bit clearer. Dangote represents “well-established” capitalist indigenous empires and redCab represents “SMEs” or upcoming businesses in this context. That example was meant to buttress how a suitable economic environment help businesses survive and grow.
No country is entirely self-sufficient agreed, but nigeria is entirely non-self-sufficient.
These companies being here wont be a problem if they did business properly and our policies actually favoured us. When their mode of operation has even the slightest chance of killing any indigenous firm [simply bcoz the environment is unfavourable] it should not happen. Local businesses must be given priority over anything else. Coz that is how economies ensure sustainability.
So nigerians are currently paying fuel money to Shell and Total, house rents to China,US, Transport fares to China, buying cars from America, digital rent to America and clothing to the UK with the aid given to us IMF to pay salaries.
Just see what happened when the new govt decided to ban imports. Pple r already starving to death. so if China, US and UK dosent give us food, we wont eat. How is this any different from 1901?
Openness works; allowing the market to determine the allocation of capital works; trying to “save jobs”, pick winners, engage in favouritism or buck reality doesn’t work. Officials cannot know in advance if one or other company will make a better steward for corporate assets; and even so-called “asset strippers” actually create economic value by reallocating resources and making sure that hidden value is extracted.
Britain’s car industry, which is thriving, is largely controlled by India’s Tata, Germany’s BMW and Japanese players such as Nissan; our investment banking industry is dominated by US and European institutions. It’s great for a country to grow world-beating, domestically-based companies; but it can thrive equally well if it serves as the host for factories, offices and R&D plants for global giants.
Ideally, one does both – but the only way to succeed is to trust the free market while unleashing a pro-entrepreneurship supply-side revolution to ensure that we get far more start-ups, and in time far more world-beating giants.
Misplaced the link to this article. But the message is clear. Globalization works when combined with a pro-entrepreneurship. E.g Singapore (pumped billions and incentives to make startups globally competitive)
To be honest I don’t know where you people are coming from but Protectionism has a history that shows it never work when broadly applied to an economy. It breeds inefficiency, which never survives. If it works, embargoes placed on Russia, Cuba, North Korea or (Iran) would make them super efficient markets but instead opposite.
Another example is ban on imported Rice, to protect and grow our own rice industry. What happened? Price shot up to the same as imported rice. Who won? Select few. Who lost? Consumers paying higher prices.
@dataGuru You got the problems facing us right but your analogies and proposed solutions show how narrow your understanding of said problems are and how economies and society works in aggregate.
"What protection teaches us is to do to ourselves in time of peace what enemies seek to do to us in time of war.”
@StolenHandle, I see you’re trying to prove a school is bad by parading its worst students.
Most, if not all, vibrant & successful economies of the world implement one or more protectionist policies. In order to (be seen to) comply with regulations & agreements, most protectionist policies are covert rather than overt. India and the US are currently the most protectionist countries. That alone blows your argument out of the water.
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