Re-The NASENI Levy-Why Is It Being Pursued at This Time?
Wole Obayomi of KPMG NEEDS TO BE EDUCATED ON THE ROLES OF NASENI IN PRESERVING NIGERIA NATIONAL INTEREST
“In Economics, it is widely accepted that technology is the key driver of economic growth of countries, regions and cities. Technological progress allows for the more efficient production of more and better goods and services, which is what prosperity depends on” – Prof. Ricardo Hausmann (Director, Center for International Development and Professor of the Practice of Economic Development, Harvard Kennedy School of Government)
“No one can ignore the vital role of science, technology and innovation for Sustainable Development” – Marie Chatardova, President of the United Nations Economic and Social Council.
These two quotations are from two of the world’s renowned economists. However a supposedly professional advice to Nigeria by Mr. Wole Obayomi, Partner and Head, Tax, Regulatory and People Services to an international financial & business advisory firm, Klynveld Peat Marwick Goerdeler (KPMG Nigeria & Africa), who also was quoted extensively in an article credited to Price Waterhouse Coopers (PWC) by the National Economy Newspaper titled: “Activating NASENI Levy Bad for Business, says PWC” came as a shock to us at the National Agency for Science and Engineering Infrastructure(NASENI) in the Presidency. We were stunned by the misleading information dished out to the public by such articles authored by a man who should know better.
We had expected KPMG and PWC’s Wole Obayomi to know the critical role technology plays in the upward curve of economic development for any nation. But unfortunately his articles which have gained prominence currently in online media and conventional newspapers seek to mislead Nigerians otherwise with comments and publications on their websites and the daily newspapers.
In one of such articles titled “The NASENI Levy-Why is it Being Pursued at This Time”, Obayomi, who is also a consultant to the Federal Inland Revenue Service (FIRS), questioned the decision of President Muhammadu Buhari, GCFR, who doubles as the Chairman NASENI Governing Board, on why a misdeed and injustice of 29 years is being corrected. NASENI’s establishment Act of 1992, which was reconfirmed as the NASENI Establishment Act 2004 CAP N3, Laws of the Federation of Nigeria, provides for the NASENI Statutory Fund in Part VI, Section 20, Sub-sections (1), (2a), & (2b) of the Act and it states as follows:
(1) The Agency shall establish a fund from which shall be defrayed all expenditure incurred by the Agency for the purpose of this Act.
(2) There shall be paid and credited to the fund –
(a) 1 percent of the Federation Account in the first instance, to be increased to 2 percent by the year 2000.
(b) Levy on income or turn-over of commercial companies and firms with turn-over of N 4 million and above, which shall be –
(i) At the rate of ¼ percent in the first instance;
(ii) Collected by the Federal Board of Inland Revenue or by any other suitable means as may be specified by the Agency; and
(iii) Credited to the account of the Agency.
This provision of the Laws of the Federation of Nigeria has been flouted for 29 years. It is yet to be implemented after 29 years of the establishment of NASENI. This maladministration, which Mr. President seeks to correct, through his directive, on 26th January, 2021, to the Ministry of Finance, Budget and National Planning, and other relevant Agencies of Government, including FIRS, for the immediate implementation of NASENI Statutory Fund, is currently being questioned by KPMG and PWC.
This directive by Mr. President curiously was preceded by a similar directive of the National Assembly in the year 2020 which also directed the Agencies of Government concerned to commence the implementation of NASENI Statutory fund. We ask Obayomi how could two most powerful arms of the Federal Government (executive and legislature) be wrong in their independent perceptions of same issue and its importance at two different breaths without formal communication between them, which is the case in this matter. Obayomi apparently was not seeing the hands of providence upon Nigeria.
These two international corporations, KPMG and PWC both operating in Nigeria, for a while now have engaged in unwarranted meddling with the critical policy directions of the Federal Government concerning funding of NASENI. The actions of these two corporations may be summarised as deliberate campaigns of calumny and sabotage of Nigeria’s national interest as the nation today is making concerted efforts to come out of its present economic woods occasioned by long-years absence of such critical productive economic catalysts like the Science, Technology and Innovation factor which every developed economies had deployed to get themselves ahead of others in the comity of nations.
The engineering, research, science and technology innovations and the positive impacts of such investments on modern economies cannot be overemphasised except those who want our dear nation Nigeria to remain perpetual consumer of foreign products, goods and services, making the economy of our country to depend on other nations forever.
KPMG and PWC surreptitiously are querying the rationale of the Federal Government, under the guise of offering professional counsel, on the implementation of NASENI Levy as stipulated in its Act, saying it is not the right time to pursue it considering the impacts of COVID-19 on the economy of Nigeria.
We ask KPMG and PWC to tell Nigerians when it is most appropriate than now when all measures and solutions to rescue the nation point at the need to look inward to salvage the country’s political economy. We ask KPMG to tell Nigerians how it is advising the Anglo-Dutch nation, Germany, its own home Government how not to spend on research and development at this time because of COVID-19. If KPMG is not doing the same thing to its home government then the professional firm, to say the least, is hypocritical. We will give example below to show that KPMG is not advising its own government not to spend on research and development.
Growth in research and development (R&D) intensity was widespread across most Organisation for Economic Cooperation and Development (OECD) countries in 2019 during the peak of the COVID-19 and even till date, with the United States, Germany and Korea accounting for much of the increase. Israel and Korea continued to display the highest levels of R&D intensity among OECD countries, at 4.9% and 4.6% of GDP, respectively. In the United States, R&D intensity surpassed the 3% milestone for the first time, while the R&D intensity of China grew from 2.1% to 2.2%. In contrast, the EU27 area experienced a more modest increase to 2.1%.
The United States of America and China account for a greater share of total R&D investment in 2019. The United States, Japan, Germany, Korea and France were the largest R&D performers in the OECD area. In comparative purchasing power terms, China is the world’s second largest R&D player, with total R&D expenditure reaching 80% of that of the United States in 2019, up from 26% in 2005. Growth in R&D investments in the EU 27 area has been on a faster trajectory since 2016, mostly driven by Germany, though it remains lower than growth in China and the United States over the same period.
If Wole Obayomi of KPMG and his cohorts must be educated, Nigeria at this time needs not only NASENI to be funded but all other government research and development related Agencies for the development of Science, Technology and Innovation (STI) and if Obayomi of KPMG who was quoted by PWC (both International firms) will be adding their voices negatively in the matter that has to do with the future of a nation with the level of unemployment, under-industrialization, then he is carrying out an espionage assignment and also a saboteur of Nigeria’s national interest.
The National Agency for Science and Engineering Infrastructure (NASENI) by its mandate is the sole agency of the Federal Government with its mandate to conduct developmental work in manufacturing of capital goods, equipment and machines thereby preventing the influx of foreign goods into Nigeria which causes capital flights. That way the Agency is capable of coordinating the proliferation of technologies developed either within or outside of its Development Institutes for the much needed industrialization of the nation.
KPMG and PWC in their publications which are being syndicated in online and national dailies nationwide are asking, “Why is NASENI pursuing the implementation of its Levy now?” And we respond, why not now? Why must NASENI take permission from Mr. Obayomi of KPMG and PWC to implement the Laws of the Federal Republic of Nigeria and the Acts of the Nigeria’s National Assembly?
If President Buhari, in his wisdom, decided that the time was ripe to take Nigeria out of poverty and unemployment, through investment in engineering, science and technology, knowing that NASENI has all it takes to ensure that its agenda and promise to provide 10 million jobs to the Nigerian youths succeed, why would international organizations like KPMG and PWC that do not understand the pains and suffering of Nigerians query the directives of Mr. President that FIRS and the Federal Ministry of Finance should implement the Agency’s Act in terms of funding to enable it function optimally? Why should the directives of Mr. President be a problem to Mr. Obayomi of KPMG and PWC? Many questions needing curious answers.
NASENI has over the years achieved much in the Science and Technology Development of the country through its local production of industrial tools and equipment which has 100% local contents that meet international standards. The Agency has successfully intervened in key sectors of the economy. The Agency established and operates a 7.5 Megawatts Solar Panel Manufacturing Company, it developed the First Made-in-Nigeria Motorcycle and KEKE NASENI, First made-in Nigeria Helicopter, Unmanned Aerial Vehicles (UAVs) and for agricultural purposes: Agricultural processing tools such as integrated cassava plant, oil expeller, coconut oil expeller, Rice Thresher, power transformers, primary and secondary schools science equipment and tertiary laboratory equipment, Made-in-Nigeria Cargo tricycle, Small Hydropower turbines, to mention a few.
Facts abound globally, that economies founded on knowledge and driven by innovation are the frontline economies, who invest substantially and sustainably in technology and innovation. The NASENI Act, since its establishment in 1992 stipulated that “The Agency shall establish a Fund from which shall be defrayed all expenditure incurred by the Agency for the purpose of this Act. This provision for funding of the agency is in addition to the one currently being contested by KPMG and PWC’s Obayomi. Regrettably however, despite the provisions of the Act, the Agency had never received such remittance from the Federation Account as provided for by the Act since its inception. But President Buhari would have none of such disconnects or disregard for the provision of the law anymore hence his directives to Finance Ministry and FIRS to release the allocations and necessary dues to the Agency to enable it function optimally, so that the country could benefit from its research innovations for improvement on the nation’s economy, job and wealth creation including industrialisation.
The trend of non-release of NASENI’s statutory fund and dues, to a great extent, had hindered the Agency from optimally fulfilling its mandate of establishing science and engineering infrastructure and development institutes in various fields and sectors of the economy aimed at empowering small and medium scale industries through reverse engineering, appropriate technologies and advanced manufacturing techniques to keep the nation abreast and at par with other technologically advanced nations of the world.
President Buhari said the promise by his administration to create over 10 million jobs for Nigerians was not a mere statement of intention but an order that must be carried out by NASENI and all other concerned agencies of the government. Any visionary leader would put resources and funds where his words and thoughts are. This was the case with the President during the NASENI Governing Board meeting held on the 26th January, 2021 at the Federal Executive Council (FEC) chaired by Mr. President himself. Apart from the directives given to the Executive Vice Chairman/Chief Executive of NASENI, Engr. Professor Mohammed Sani Haruna and the entire management of NASENI, the President further directed the Ministry of Finance, Budget and National Planning and FIRS to release all statutory funds due to NASENI.
It was Ben Gurion, the First Prime Minister of Israel who said that “scientific research and its achievements are no longer a mere abstract intellectual pursuit, but a central factor in the life of every civilized society”. It is no longer news that no nation of the world can develop economically without investing in science and technology. It has also been established that powerful countries like Japan, U.S, China, Germany, Indonesia etc. have gained their titles as “Economic Giants” because of the importance they attached to research and development, earmarking 5-6% of their GDP in the development of their science, technology and innovation sector. As a matter of fact, Nigeria needs to commit more than what it is doing now to NASENI especially to develop its science and technology sector which holds the key to solving the problems of unemployment and general socio-economic underdevelopment. The option of investments in R&D, Science, Technology and Innovation sector remains the only sector yet to be explored since Nigeria’s independence in 1960 to turn her economy around. The sector has the greatest potential to give the nation and its citizens a more sustainable and economically prosperous Nigeria.
Foreign companies like KPMG and PWC ought to be seen supporting measures that could help the nation overcome its developmental challenges, but rather they had left their pursuit of own legitimate business as corporate citizens of Nigeria and decided to embark on tearing down sincere and genuine initiatives by the President of the Federal Republic of Nigeria to revamp the economy via a strategy that had not been used before in Nigeria. The vision and mission of Mr. President, as the father of the nation, is to bequeath a new knowledge-driven Nigerian economy to the next generation, a new economy thriving on innovation, research and technology development.
According to its publication, Issue 8.1/ August 2021 Newsletter of KPMG of Monday, August 16, 2021, KPMG listed what it termed “compounding of the multiple taxation burden on businesses by NASENI Levy in addition to the extant tertiary education tax (2% of assessable tax), Nigerian Police Trust Fund levy (0.005% of net profit) and NITDA levy (1% of profit before tax payable by designated companies) in addition to 20% and 30% corporate income tax rates payable by medium and large companies, respectively” but Obayomi failed to notice that the NASENI levy is tax deductible, that is, it is not a new tax burden, it is rather a levy which is a euphemism to companies by way of lessening their tax burden. Also, NASENI, if properly funded, will foster on Nigeria a 100% local content capacity for the emergence of a new Nigeria economy, the research and development of capital goods production and reverse engineering to enhance local mass production of standard parts, goods and services required for the nation’s technological advancement.
Therefore, Obayomi, KPMG and PWC erred on the side of posterity as the individual, with two foreign corporations that waged war and sponsored public contempt on a genuine cause by the Federal Government to shift the paradigms of Nigeria’s dependence on commodity economy to knowledge based economy rooted in research, science and technology innovation, artificial intelligence, high power computation and massive deployment of advanced manufacturing technologies, the practice which had become a household names in NASENI. All that the agency is asking for is to derive its funding mechanism as contained in its establishment Act in order to popularize the aforementioned technologies in Nigeria to affect positively lives and the Nigerian economy, making it become more productive.
Investment in science and technology is the secret that had caused economic growth and development of all developed countries globally, but this secret KPMG, PWC and Obayomi will never reveal this to their host (Nigeria) so that the economic dependence on foreign goods and services by our country will continue sixty years post-independence. At this critical time in the life of our nation, we cannot imagine any better time that the research, engineering, science and technology sector should come to the fore to help Nigeria revamp its economy.
All hands either corporate or individual ought to be on deck today to support President Muhammadu Buhari’s good intentions as he finds the best way to pull Nigeria out of its economic difficulties through the on-going resolve to invest and fund the development of science, technology and innovation via provision of special funding for R&Ds. In this particular case, KPMG, PWC and their collaborators have presented to the public half-truth because when a nation invests in science and technology it is investing in its people. KPMG in its publication noted that “As businesses are yet to recover from the adverse effect of the COVID-19 pandemic, the activation of NASENI Levy is untimely and should be reconsidered” forgetting that it was at the same period that most developed countries including its home country, Germany, has continued to invest in Research and Development, knowing well that a country based on science and technology for its development is more profitable or sustainable.
Mr. President in his wisdom realized that science and technology is the only weapon that should be used to address the challenges of unemployment, poverty and industrial revolution, thereby giving the directive to the appropriate authorities to release the funds including the levy which KPMG and PWC are now kicking against. Let it be told that no amount of campaigns of calumny will hinder the promise of Mr. President and the on-going paradigms shift by the administration towards use of science and technology innovation to change the political and economic landscapes of the country. KPMG, PWC and Obayomi should note that a new Nigeria is emerging and NASENI, the research, technology and innovation paradigms are the keys to achieving it.
Deputy Director, Information
National Agency for Science and Engineering Infrastructure (NASENI)