Former Deputy Governor of the Central Bank of Nigeria (CBN), Prof. Kingsley Moghalu, has said that taxation in Nigeria and across Africa must be tied to visible public benefits rather than what he described as 'elite consumption'.
Besides, the President, Institute for Governance and Economic Transformation (GET) warned that countries that pursue economic growth without building strong institutions often end up with fragile economies marked by inequality and instability.
Speaking at the 2026 International Civil Service Conference organised by the Office of the Head of Service of the Federation in Abuja, Moghalu argued that governance reform remains the foundation for economic transformation and regional stability, stressing that no nation can achieve sustainable prosperity without competent state institutions.
In his keynote address titled: "Governance Reform, Economic Transformation, and Regional Stability," the former presidential candidate maintained that effective governance was not optional, but the bedrock upon which prosperity and peace are built.
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According to him, governance goes beyond political rhetoric and must reflect the actual ability of the state to deliver public goods, enforce the rule of law, administer taxation effectively, provide security and create an enabling environment for businesses and innovation.
Moghalu lamented that many African governments often speak about governance without demonstrating the core elements of state capacity, including transparency, accountability, responsiveness, efficiency and citizen participation.
He noted that economic transformation required a structural shift from low-productivity activities to manufacturing, technology and modern services, insisting that such a transition could not occur without investments in human development and strong institutions.
The former deputy governor of the apex bank criticised what he described as the tendency of political leaders in developing countries to separate economic management from governance, saying technocrats alone could not revive economies where political systems undermine institutions through patronage, ethnic balancing and short-term electoral calculations.
He identified four major pillars of state capacity as protective capacity, extractive capacity, administrative capacity and the ability to create a healthy business environment.
On taxation, Moghalu argued that governments should focus on fair and transparent taxation systems that allow citizens to see clear developmental outcomes from public revenues.
He further warned that attempts to pursue rapid growth through oil revenues, mega projects or foreign aid without institutional development would ultimately fail.
"First, invest in human development anchored on governance competence. This enables structural transformation (shifting labour and capital to higher-value activities). Only then does inclusive economic growth accelerate sustainably.
"Skipping steps-chasing growth via oil rents or megaprojects without building institutions-leads to fragility, inequality, and reversal. Citizens must trust the state; taxation must fund visible public goods, not elite consumption. Without this, the social contract frays," he emphasised.
Using Nigeria as an example, Moghalu said the country presents a paradox in which banks and large corporations declare trillions of naira in profits while the broader population remains poor.
He observed that despite Nigeria's huge economy, nominal Gross Domestic Product (GDP) per capita remains low at about $1,556 in 2026 according to International Monetary Fund (IMF) projections, placing the country among the lower income brackets globally.
He attributed this partly to uncontrolled population growth and the persistent depreciation of the naira, contrasting Nigeria's trajectory with countries such as Malaysia, Indonesia, Botswana, Singapore and South Korea, which he said achieved structural transformation through policy stability, investment in human capital and effective governance.
Drawing lessons from Asia and the West, Moghalu said countries that succeeded economically first built competent institutions and professional bureaucracies before experiencing industrial and technological growth.
He cited the example of Lee Kuan Yew, under whose leadership Singapore transformed itself from a poor, corruption-ridden state into a developed economy through meritocracy, anti-corruption reforms and investment in education and infrastructure.
Moghalu also stressed the importance of a capable civil service, describing it as the engine room of governance and the machinery that translates policy into concrete outcomes.
While acknowledging that Nigeria's civil service has contributed to national unity and policy continuity, he said it has also suffered from politicisation, corruption, red tape and weak implementation capacity.
He urged Nigeria to adopt aspects of the New Public Management (NPM) model, including performance measurement, digital governance and results-based administration, while also strengthening foundational governance institutions.
Moghalu additionally advocated the application of private-sector corporate governance principles in public institutions, saying ministries, agencies and state-owned enterprises should embrace transparency, accountability, risk management and measurable performance indicators.
He said public institutions should treat citizens as stakeholders entitled to returns on public resources, warning that without such reforms government agencies would remain inefficient and vulnerable to corruption.
Linking governance failures to insecurity, Moghalu argued that challenges such as terrorism, banditry, separatist agitations and militancy are worsened by weak state institutions, poor service delivery and economic exclusion.
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He maintained that improving governance, investing in education and healthcare, and creating economic opportunities would help reduce tensions and strengthen national stability.
"In Nigeria, governance deficits link directly to challenges. Insecurity in the Northeast (Boko Haram), Northwest (banditry), Southeast (separatist agitations), and clashes in the Middle Belt stem partly from weak state presence, corruption and vested interests in the security sector that rise above the communal and broader societal interests, and failure to deliver basics-exacerbating poverty and ethnic/regional fractures.
"Resource mismanagement in the Niger Delta has bred militancy. Political interference in the civil service undermines consistent policy, eroding investor confidence and amplifying economic volatility that spills into social unrest," he argued.
Among his recommendations were merit-based recruitment into the civil service, continuous training, competitive compensation, stronger anti-corruption enforcement, improved coordination among levels of government and greater investment in human capital development.
He charged civil servants to embrace integrity, professionalism and results-oriented leadership, saying the future of Nigeria and Africa depended largely on rebuilding state capacity and restoring public trust in institutions.
