2. Current Price = $113/barrel
3. Daily Sales = 2.5M x 113 = $282.5million
4. Monthly Sales = 282.5M x 30days = $8.475billion
5. Yearly Sales = $8.475billion x 12 = $101.7billion
6. Naira Equivalent = 101.7billion x #160 = 16.272trillion Naira per year.
7. Nigeria's budget for 2012 = 4.5trillion Naira.
According to Professor Toyo, the contribution of oil to the national revenue is less than 50% with the rest coming from taxes (paye taxes and sales taxes mostly) and other sources of revenue from sectors like agriculture, customs and excise, and culture. Surprised? Well do not be surprised. The explanation is that the Nigerian state, like most oil-producing states, is not an oil-producer but a rentier state that collects rents or royalties from the oil companies. The National Bureau of Statistics confirms this by reporting that the contribution of oil and gas to the GDP in the second quarter of 2012 is less than 14% while the contribution from agriculture is 40% http://www.nigerianstat.gov.ng/
This is why oil which contributes over 70% of internal revenues from taxes also contributes a small part of the GDP and the GNP compared to agriculture which employs 70% of the working population: An oil company receives the license to explore for oil in a field; the company invests billions of dollars and sometimes strikes it lucky or fails; when it fails it bears the loss, perhaps written off as tax deductions; when it succeeds, it pays royalties of 10% to the government on the profits (after deducting operating costs, research and development, etc.).
Surprisingly, 10% is considered a generous royalty considering that authors get 8% or less from book publishers as royalties (I think that they are so miserly that they should be called peasantries), with questions emanating about the accurate declaration of sales figures, wastage, theft, subsidy scams and fraud. The recent dispute in Ecuador over agreements with gas companies exposed the exploitative arrangements internationally. The new left-wing government insisted on getting more than 10% in royalties and the gas companies refused.
I conclude with my tireless call for the revenue allocation formula to be changed constitutionally to guarantee that 10% of the annual budgets at the federal, state and local governments will be allocated directly to Nigerians to invest as they see fit, similar to the farm subsidies and business or research grants that all industrialized countries disburse constantly to their privileged citizens. In ten years, we will count the miles after the race.
Governor Kayode Fayemi got the memo and I am impressed to hear that he just distributed half a billion naira to 140 unemployed youth who were retrained and funded to start their own farms in Ekiti state. Governor Peter Obi did get the memo too and distributed 100 million naira to unemployed youth to start their own businesses in Anambra. Comrade President Yaradua surely got the memo when he allocated 200 billion naira to be distributed to unemployed youth for start-ups before he died (and I agree with Baba Soyinka that his death should be investigated thoroughly).
I commend these tentative steps and urge policy makers not to make them a one off but an annual commitment and not to regard them as loans but treat them as grants. If this is done consistently at the federal, state and local government levels, we will no longer be trying to calculate the square root of minus one or zero with cargo cult mentalities. Obviously, we cannot do this systematically without democratically contesting for power on a progressive platform at the global, continental, regional, national, state and local levels and thereby use our abundant resources to empower the tremendous talents of our people.
Biko Agozino is a Professor of Sociology and Africana Studies, Virginia Tech.