Emmanuel Nwachukwu
For the first time, in many a year, Nigeria may have a budget ready for implementation from the beginning of the fiscal year, following the Senate’s early approval of the 2020 Budget. This is welcome progress. Unfortunately,this annual ritual has made very little impact on the lives of Nigerians. We go through this farcical exercise every year, repeating the same mistakes and expecting a different outcome. We agree a budget the government knows from day one cannot be delivered in full because of unrealistic assumptions of income and expenditure and then expect to have good roads.
About a quarter (N2.4tn) of the aggregate expenditure proposed for 2020 will go towards debt servicing, leaving a paltry N7.0tn for capital (N2.1tn) and recurrent (N4.8tn) expenditure. The government is proposing to finance the entire capital budget and some element of recurrent expenditure from borrowing because the Nigerian economy is not generating enough revenue to adequately fund the country’s budgetary needs. Apart from perhaps Lagos State, economic activity across the rest of the country is stagnant or at best sluggish.
With a begging bowl, the government is looking for help wherever it can find it. Interestingly, Aliko Dangote has become Nigeria’s donor of last resort, stepping in to bail out a government in dire need of money. Dangote is building public roads and transport infrastructure; Dangote is building arefinery; Dangote is renovating the National Stadium; Dangote is building a rice mill to feed the nation; plus many other Dangote interventions. Nigerians are quite rightly asking if we should not just hand the country over to Dangote as the de facto government!
Addressing Nigeria’s funding challenges would require making difficult policy choices that may not be popular, but nonetheless in the best interest of the country. Fuel subsidy, or ‘cost under-recovery’, as it is now referred to, remains the biggest albatross to Nigeria’s economic development, depriving it of the much-needed funds for job creation and infrastructural development. A Lagos-based financial derivatives firm estimates that fuel subsidy or loss of revenue from cost under-recovery in 2019 could be as much as $5bn (N1.8tn) – more than the combined capital and re-current budgetsfor Education, Health, Policing, Transportation, and Works and Housing. This is money that could have gone into addressing the country’s power challenges, fixing our roads, investing in the railway infrastructure, funding education and health services, and creating millions of direct and indirect jobs for the masses of unemployed Nigerians.
The President, Major General Muhammadu Buhari (retd.), at his inaugural June 12 address this year, promised Nigerians a reduction in poverty by 100 million in 10 years, but proposing a measly N48bn capital for education is more likely to increase, not reduce poverty. You reduce poverty by investing the enormous sums currently used to subsidise petrol in quality education, skills training, and job-creating infrastructure.
The N2.1tn proposed for capital in the 2020 budget falls far short of what is needed to spur any meaningful economic growth. However, the regime must first put its house in order, before seeking further loans. Poor productivity and waste continue to be the hallmark of the public sector. Nigeria is believed to have over 600 agencies and parastatals.Many of these parastatals have allegedly become conduits for corruption and money laundering, serving primarily the interest of the board and their CEOs, with zero ‘value-add’ to the country.
There is something fundamentally wrong in a budget that allocates N125bn to the National Assembly and N46bn capital to health for a population of 200 million. If you have any serious medical condition like cancer in Nigeria today, the prognosis for over 90 per cent of the population who cannot travel abroad for treatment is dire. Thousands of our fellow citizens are dying every single day from treatable conditions because of the lack of drugs and basic medical equipment, whilst the ruling elite are on the plane to the US and Europe at the first hint of a headache; unashamedly enjoying health facilities abroad they have denied their fellow citizens, at great cost to the treasury.
The USA, the world’s richest economy, with a GDP of about $20tn, can afford a presidential jet; but not Nigeria, the poverty capital of the world. Even Britain, the world’s fifth richest economy, does not have an aircraft dedicated solely for the exclusive use of the prime minister. A much poorer country like Nigeria has no business maintaining a presidential fleet at a whopping cost of N8.5bn to the taxpayer.
Corruption continues to plague Nigeria’s budget at both the federal and state tiers of government. The N10m monthly upkeep allowance legislated for ex-governors of Zamfara State, thankfully now repealed, epitomises the callousness of corruption in Nigeria. A poor state like Zamfara was paying its ex-governors more than twice the salary of the British Prime Minister, a country that gave £320m in aid to Nigeria in 2017. How ironic! The ruling elite have simply legitimised kleptocracy in Nigeria, appropriating more and more of the little resources Nigeria has to themselves in salaries and obscene allowances through the budget process. Corruption in Nigeria is ubiquitous, and pervades the whole budgetary process, from the formulation of the MDA budgets to the approval and oversight of the budget by the National Assembly – all the budget stages are riddled with corruption, stifling the much needed development.
As a country, Nigeria could be doing much better. The Nigerian entrepreneurial spirit is thriving wherever Nigerians are based, whether in the USA, the UK, South Africa and nearer home in Ghana. Nigerian businesses are creating jobs and making a huge impact on the GDPs of their host countries. The problem in Nigeria is simply government and its agencies. We have a commercial banking sector, for instance, that has been given a free hand by the Central Bank to fleece Nigerians, under the guise of recovering cost; charging customers for every transaction; making huge profits from non-interest income. In other climes, banks survive primarily from interest income and from investing in the real economy, through loans to businesses and individuals.
Notwithstanding the challenges facing the country, the star performer in Buhari’s regime, these five years, has been the Nigerian Customs Service. Under the leadership of Hameed Ali, income from Customs has trebled, from N59bn in 2015 to N182bn in 2018, providing the country with the much needed revenue.
To address the enormous social and economic challenges facing the country, the economy needs to grow by double digits for many years. The projected real GDP growth of 2.9% for 2020 falls far short. Moving the country forward would require a radical change in the way budgets are currently determined and performance monitored. It would require sacrifice and commitment on the part of the executive and the leadership of the National Assembly to put Nigeria first before self-interest. The rich must be made to pay their fair share of taxes.With debt taking up as much as 50% of projected revenue, our finances as a country are worrisome, unless this regime can significantly increase income from non-oil sources or find innovative ways of leveraging private sector finance.
Nwachukwu, a London-based business specialist, wrote in via [email protected]
Twitter: @emmanwach17
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