Since the return to democracy in 1999, several national budgets have not been able to deliver on the much needed rapid socio-economic transformation. The yearly financial plans have been bedeviled by lack of Long Term Perspective and Sectoral Plans, lack of or non-adherence to a Budget Planning and Implementation Calendar, long delays in passing the budget, inadequate or improper scrutiny of projects and programmes admitted into the budget, revenue projection shortfalls, non-funding of approved critical projects, dominance of recurrent over capital expenditure, weak linkage of the approved budget to Sectoral Plans and ineffective Monitoring and Evaluation Mechanism.
The perennial late passage of budgets, effectively subdued national growth and development, because it inadvertently skews expenditure in favour of recurrent, and starves capital spending, which is the major plank for investment in infrastructure and social wellbeing of the citizenry. This explains the outright lack of investment in infrastructure between 1999 and 2014, even though the country was awash with the petrodollar, with an average oil price above one hundred USD per barrel.
The 2019 deficit budget of N8.3 trillion, was passed and signed into law in May, 2019 with the expectation that a substantial part of Capex was to be financed by the deficit, meanwhile, arrangements to obtain the loans to finance the budget would involve the Executive going back to Parliament afresh for approval of the Borrowing Plan, thereby further delaying implementation. According to the Centre for the Study of Economies of Africa (CSEA), the Country suffers a depression of 2.5 per cent, whenever the budget is delayed. The twin evil of delay in passing the budget is the issue of Constituency Projects, through which funds are moved by Parliament, from ongoing and well established major projects to nebulous projects that have not passed through the rigorous test of admissibility into the budget but are also mostly within the remit of Local Governments. About 6,400 such projects were injected into the 2018 budget, with funds diverted from major ongoing projects like the Lagos-Ibadan Expressway and the Second Niger Bridge, among others.
Since 2016, the Federal Government intends to reflate an economy devastated by a drastic fall in oil prices has progressively increased the size of the budget from around N4 Trillion in 2015 to 2020 proposed Budget of N10.33 Trillion. This budget size is still considered to be abysmally low, by analysts, and will only be scratching the surface of our massive poverty and unemployment levels. In comparison with peers, Nigeria’s budget as a percentage of GDP, as of 2018, is a miserly 6% compared to South Africa at 31%, Egypt 16%, and Ghana 20%. The scenario is even worse when budget spending per capita is considered in view of the country’s high population. The 2019 budget, as a percentage of the population, is 12% compared to 201% for South Africa, 175% for Brazil and 190% for Malaysia
$’bn Million $’bn % %
Nigeria 23 195.87 354.35 6% 12%
South Africa 116 57.73 371.29 31% 201%
Egypt 40 97.04 249.56 16% 41%
Ghana 14 29.77 69.56 20% 47%
Brazil 368.42 210.87 1868 20% 175%
Malaysia 61.46 32.4 354.35 17% 190%
In order to break our vicious cycle of poverty, engender rapid economic transformation and grow the economy in double digits, we need to at least, double our current budget size, improve the efficiency of spending and give priority to Capex to deliver investment in infrastructure. With a budget of N20 Trillion and 60% allocated to Capex, Nigeria would be on the right track to realizing her immense potentials, which will impact positively on the socio-economic welfare of the burgeoning population, through critical investment in infrastructure, healthcare, education, and poverty eradication.
This bold and radical step needs serious political will and taking actions that may appear politically unpopular but without which, Nigeria’s fiscal crisis would become further entrenched and intractable. The Buhari Administration has demonstrated seriousness in tackling poverty, by an unprecedented investment in infrastructure and social safety net, even in a period of extremely lean resources, occasioned by drastic fall in oil revenues. Indeed, a lot needs to be done, and the second term in office offers an opportunity to be more of a statesman, than a politician.
To raise the massive fund needed for rapid economic transformation, there is the need for a paradigm shift, from public debt because debt repayment is already taking a disproportionate chunk of the yearly budget. Alternative funding sources include selling of equity in dollar-denominated JV assets estimated to be about $60bn, disposing dead capital trapped in FG real estate properties reputed to worth about N180tn, rolling out a debt restructuring and embarking on a sovereign-type rights issue, removing oil subsidy to unlock about N2tn trapped therein, tapping Nigeria’s proven gas reserves of over $460bn, encouraging Public-Private Partnership to finance infrastructure projects and concession of State-Owned Enterprises in key Sectors, like Airports, Rail, Seaports and Transmission and reducing cost of governance by rationalizing the more than 700 Government Agencies as recommended by the Stephen Oronsaye Committee.
Sodade, a retired permanent secretary, wrote from Lagos.Hits : 159