- Nigerian billionaires choose to stay in the country due to significant disparities in tax rates compared to developed economies like the UK and the US, where higher-income earners face higher tax burdens.
- Some billionaires benefit from monopolistic business ventures supported by the Nigerian government, while developed economies have antitrust laws that promote fair competition and limit market power.
- While the allure of developed economies may be enticing, these billionaires weigh the benefits against the unique opportunities and circumstances presented in Nigeria.
In 2022, the National Immigration Service reported that a staggering 1,899,683 passports were issued, indicating a significant outflow of Nigerians seeking better opportunities abroad.
This phenomenon, often referred to as the “brain drain,” has caught the attention of experts and policymakers. Surprisingly, amidst this mass exodus, Nigeria’s billionaires remain resolute in their decision to stay.
Figures like Aliko Dangote have openly declared their commitment to the country, prompting an investigation into the reasons why these billionaires choose not to relocate.
Tax Rates: A Favorable Comparison
One crucial factor that may contribute to Nigerian billionaires’ decision to remain in the country is the significant disparity in tax rates between Nigeria and countries like Canada, the United Kingdom, and the United States.
- The Nigerian Federal Inland Revenue Service reports that only a small fraction of the labour force is captured in the tax net. In contrast, countries such as the United Kingdom have stringent measures in place to prevent tax evasion, especially for high-net-worth individuals like Femi Otedola and Aliko Dangote.
- For instance, if Aliko Dangote, with a net worth of $9.7 billion, were a resident of the United Kingdom, his tax liability would amount to up to 40% of his income. The UK’s progressive income tax system has different tax bands based on income levels, with the highest bracket being 45% for income above £150,000.
This stark contrast in tax rates presents a compelling financial incentive for Nigerian billionaires to stay put.
Economic Monopoly: A Distinct Advantage
In Nigeria, there are speculations that certain billionaires have been able to establish monopolistic business ventures with the support of the government.
One prominent example is the Dangote Group, which operates at the top of the manufacturing chain for staple food and building items.
Reports suggest that Dangote’s business empire owes much of its success to governmental support, including waivers and subsidies in foreign exchange.
However, in developed economies like the United States and the United Kingdom, antitrust laws are in place to promote fair competition and prevent the concentration of market power.
These laws ensure that mergers and acquisitions do not create monopolies, and if necessary, they break up firms that have become monopolistic.
Consequently, billionaires running businesses in these countries face stiffer competition, which may discourage them from relocating to more developed economies.
Income Inequality: A Disparity Challenge
In Nigeria, the business environment is characterized by significant wealth inequality, with a large gap between the rich and the poor
- Although Nigeria scored 35.1% on the 2022 Gini coefficient, indicating wealth inequality, the country still faces challenges in reducing unemployment rates, improving job income, and lowering housing prices.
- The minimum wage in Nigeria is among the lowest in the world, according to reports. Bloomberg highlights that nearly two-thirds of Nigeria’s population lives on less than $2 a day, with approximately 133 million Nigerians classified as “multi-dimensionally poor.”
However, in Nigeria, these basic necessities are often accessible only to the elites and middle class. This means that the elite class in Nigeria enjoys a higher standard of living. As a result, billionaires in Nigeria feel a sense of security in their wealth, unlike in the United States where these amenities are more widely available to the average person.
Economic Competition: A Landscape Comparison
Nigeria’s economy is still in its early stages of growth, grappling with challenges such as inflation, insecurity, and corruption.
These issues, combined with certain policies and macroeconomic shocks, have hindered the progress of many promising companies.
- Some businesses, like Opay, faced regulatory challenges that led to their demise as a logistics company.
- Without sufficient access to business funding, many companies have been forced to shut down, allowing established players to dominate the market. In contrast, developed countries like the United States and the United Kingdom boast thriving business environments with better access to funding.
- If Nigerian billionaires were to operate in these highly competitive landscapes, they would face formidable competitors capable of challenging their market position.
While the allure of developed economies may be enticing, these billionaires weigh the benefits against the unique opportunities and circumstances presented in Nigeria.
As the country strives to address these challenges and create a more conducive business environment, it may foster an atmosphere that encourages both billionaires and talented individuals to contribute to Nigeria’s growth and development.
With all due respect, the author of this piece is clearly ignorant of the complaints in places like the US and the UK that many billionaires do not pay taxes or pay ridiculous amounts of taxes.
Again, with all due respect, that ignorance (in the literal sense of the word) is amplified when he essentially attributes Dangote’s success to monopoly, when Dangote competes against the world’s largest cement producer HolcimLaFarge which has been in Nigeria (both as LaFarge and as Blue Circle) since the 1950s/60s (probably before Dangote’s birth).
Meanwhile, there are at least 28 or more licenses issued for private refineries in Nigeria since the advent of civilian rule, most of such licenses years BEFORE Dangote received a refining license. Despite this, and the fact that Dangote will be competing against the FG’s 4 (inefficient) refineries and the likes of Waltersmith, Orient, Edo, and the proposed BUA refinery, many Nigerians will ignorantly accuse him of monopoly when/if he makes a success of his refinery project.
Seems so many Nigerians detest the success of others in Nigeria, and are more comfortable with failure which often serves to justify their own failure, japa and/or refugee status abroad.
Further, personal taxes are NOT paid on net worth, but on INCOME!
The author clearly stated that “For instance, if Aliko Dangote, with a net worth of $9.7 billion, were a resident of the United Kingdom, his tax liability would amount to up to 40% of his INCOME” She never mentioned that personal taxes are paid on net worth.
Secondly, tax evasion is a big deal in the West, billionaire status or not. Moreso the seemingly ridiculous amount is a big deal for Nigerian billionaires who do not pay a fraction of the seemingly ridiculous amount paid by billionaires in those climes.
I agree with the author, on the fact that while the allure of developed economies may be enticing, these billionaires weigh the benefits against the unique opportunities and circumstances presented in Nigeria.
For example, the control of the white goods markets by Indians and Lebanese, who choose to stay in Nigeria despite all the unique Nigerian issues show that there are profitable and unique opportunities in Nigeria.
Moreover, their status gives them access to these countries whenever they want.
Lastly, the way you allude to the ignorance of the author and hammer (in the literal sense of the word) the word ignorance in the light of clear and verifiable facts depicts your biased position.