TheCable

In spite of apparent challenges around the funding of the 2021 budget, with Nigeria already cap-in-hand begging for loans from everywhere, I still believe the document should be thoroughly scrutinized for purpose, and if we do, we just may junk it altogether. Our budget, just like our nation, needs fundamental rethinking and rejigging. Some call it restructuring. I say it is a case of reimagining so that we may make progress.

A national budget is the most important document in any nation on earth in any given year. This goes beyond the fact that many companies and organisations key into government plans yearly, as suppliers, contractors, consultants, and strategic partners of every hue. It is a fact that the government remains the biggest spender in every country. No private sector entity can come up yet, with the kind of budgets that governments are able to put together. I did a small research of the budgets and revenue expectations of some of the world’s largest organisations as I worked on this article. They are nowhere near the budgets of nations. Why is this so? It is because governments plan sustainably for the survival and progress of every resident in their domain, and even people from other countries or all over the world. The USA for example, being the top country in the world, has to plan not only for Americans but for billions of other people either on an economic, health, environmental or security front. Nigeria also has to plan not only for Nigerians but for people in Niger Republic, Ghana, Benin Republic, Chad and others, either for their power needs or for the security issues which unite the peoples of these countries. However, I can see that despite the acute awareness of Nigeria’s strategic role in the subcontinent, our budgets have always been a joke and the 2021 proposal is in the same basket. A joke.

HOW MUCH IS N13 TRILLION?

So, I have always advocated for a larger budget for Nigerians. I proposed N15Trillion 3 years ago. Nigeria’s Federal Government has today proposed N13.58Trillion which looks like a large figure and may be evidence that the government is caving in to some of our agitations. But the amount is also nothing, given the fact that Nigeria has devalued the Naira, and that most of the budget is not skewed towards benefiting the people. There seems to be little or nothing in this budget for anyone apart from politicians. The president merely happily went to the National Assembly not long ago, to announce another period of jollification to the ever-money-hungry politicians because the budget can only cover their excesses. A few days back, he signed the budget into law.

There are so many problems with this budget and it seems like year-in, year-out our fiscal situation only gets worse. President Buhari has to also question his luck, especially why in the 5 recessions that Nigeria has ever entered, 3 of them have happened when he was/is the president. He announced the onset of the next recession in the budget speech with so much confidence, perhaps based on top-level information that he may have been availed backend. Today we are in that recession. I would wager that it is an economic depression. Story for another day.

The many problems of the 2021 budget include:

1. Out of a budget of N13.58Trillion, a total of N5tr will be borrowed afresh

2. Our deficits keep increasing. This time we budget to have a deficit of N5.02Trillion or 40% of the entire spending we intend to do. There is the usual trickery of comparing our deficit and debts with an almost meaningless GDP (Gross Domestic Product), but real financial management requires that we compare with the budget itself. In the military days, we used to have reasonable deficits like 3% or 5% of the budget. Deficits are good when a country hopes to instigate and accelerate growth, such that the Federal Government spends a little more than it can raise. But for some years now, we have been maxing at out 35% – 40% deficit. I don’t know anywhere in the world where a federal government goes so berserk as to be borrowing way beyond reasonability. It doesn’t make sense. In 2003, Nigeria’s budget deficit was 16.4% while in 2005 under the Obasanjo administration the deficit was 10% of the N1.6Trillion budget. In 2008, under Yar’Adua, Nigeria’s deficit was 20% of the budget. It is under this government that this apparent huge deficit recklessness began and it has serious implication for the future of our children as we are not seeing much salutary transformations that justifies the deficits. I understand that we are in a crisis though. Governments must however at some point think of BALANCING the budget. That’s right, we must very soon think of spending only what we generate. That is how governments are run.

3. Still on the future, I recall Lee Kuan Yew used to say if democracy is the primacy of the wishes of the majority then the wishes of unborn children should always carry the day. The 2021 budget of N13.58Trillion is to be financed with N5Trillion of new borrowings (N4.3Trillion of new borrowings and N700Billion of new drawdowns on pre-approved borrowings). This means that Nigeria can only generate just over N7Trillion from grants/aids as well as internally generated revenue. Again, with a situation where debt servicing is already so high, we are having to borrow 40% or N5Trillion, of the proposed budget. Not sustainable. Indeed, there is no difference between the management of a household’s finance and a country’s finance. Any father of a household that has to consistently borrow 40% of the money required to sustain his family every year is beyond reckless.

4. The personnel cost of the Federal Government as estimated by the budget, is over N5Trillion or 40% of the budget. This means that the entire budget deficit will be used to pay public and civil servants. This could also mean that from the N7Trillion of internal and external revenue the government wishes to generate, over N5Trillion, or about three quarters of all revenue will be used to pay salaries. In short, the Buhari government has totally lost its way and is dragging the whole of Nigeria with it to a bitter end.

5. There was a brief mention of revenue in the 2021 budget speech. The Federal Government hopes to finance the budget using over N7trilion of revenue that it may generate. The president decided to lump up all the MDAs or government agencies, without breaking things down. The only assumption in the budget was as usual about how much crude oil we hope to sell, and at how many dollars per barrel. I will come to that shortly. One would have expected the president to dwell on some of the units where the N7trillion revenue will be made up. In fact, aside from the assumptions on crude oil, the expected revenue from all key MDAs should set the tone for the budget. Except of course the intention is to hoodwink and befuddle the people, there is no reason why the president cannot state exactly what the expectations are from key agencies like the Customs, FIRS, NIMASA, NPA, FAAN, Immigrations, NCC, CAC, NNPC, CBN and others. This will help the leaders of those government agencies to sit up. The current situation where they make money and remit nothing to the consolidated revenue fund, leading to all the hoopla in the Senate and House of Reps recently, need not come up. The Reps needn’t command these MDAs to remit 60% of all takings as they did recently. I see that the 2020 Finance Act now enables the excess revenues of these agencies to be moved to the Consolidated Revenue Fund quarterly by the Accountant General of the Federation without recourse but with presidential connivance, it is unlikely that the MDAs will pay heed, until another legislative review. Some of the MDAs have simply grown too powerful that they see Nigerians as a bother… some hapless people trying to parasite on the money they make. For them, it is the comfort of their executives and staff first, and always.

6. I have always wondered why the technical people behind our budget cannot do better than to state how many barrels of crude oil the country intends to manufacture and how much she wishes to sell. The OPEC (Organisation of Petroleum Exporting Countries) is it that determines how much our daily production cap should be anyway. The issue of average expected price (benchmark) is usually open to conjecture and contention because that is a largely arbitrary, random digit. Why? The Economist, in an editorial two years ago, stated that the prediction of crude oil prices is a fool’s game. The magazine said it should know because it had been caught playing the fool a number of times in the past. Today, Bonny Light, our flagship product, sells for circa $52. But who could have predicted that in April of this year, we couldn’t find any buyers and crude prices went into negative territory? Who can tell precisely when renewables will totally dislodge fossil energy as has been predicted for a while now? Again, a better idea is that that crude oil should not be the only revenue assumption in the budget. In fact, it is a redundant figure as the amount to be derived is not shown… only assumptions. Why not include assumptions about other revenues we expect? That will be the real precursor to the diversification we have always mouthed.

7. If the amount of crude oil ‘revenue’ we expect was shown in the budget it would have been totally deceptive. Why? When Nigeria states that we intend to extract or produce 1.8million barrels per day of crude oil, and sell at $40 per barrel, a common man is deceived to think that Nigeria will make a total of $72Million, or N28.5Billion EVERYDAY (This is if we multiply the daily proceeds at N396 official rate). I hope this is not the impression our budget drafters are trying to create or whether they are under same illusion. It is all wrong and makes absolutely no sense at all. Why? According to NEITI (Nigerian Extractive Industry Transparency Initiative), in its review of petroleum sector activities between 2015 and 2017, only about 36% of the production is for Nigeria. The rest goes to foreign companies that assist in the production, as well as local companies that are joining in. Therefore, it would have made better sense if only 36% of that calculation entered the budget in any way or form. This is N10.3Billion per day. It is however from this figure (asides from taxes, royalties, signature bonuses etc), that expenses incurred by NNPC and all other subsidiaries are deducted and those expenses can be very substantial. That is why I say Nigeria is not particularly a rich country and we should stop living so large.

8. The budget remains a pork barrel. Someone asked me in an interview if the N13Trillion budget was ‘sustainable’. Of course, people are usually fazed by the seemingly large amount. I replied that the budget was not sustainable, not because of its ‘size’, but because sustainability has to do with one’s ability to repeat a certain process into the future without stress. The debt levels, the yearly deficits, are unsustainable and will catch up with us in a short while. It is as if the country has been finally auctioned. What is even less sustainable is that the budget is basically a pork barrel budget. Someone sits in the Budget Office and calls for all MDAs to send in what they wish to buy next year. The focus of course is on the expenses. When the procurement items are sent to Budget Office, they often slash and burn, and send an ‘envelop’ stating the maximum allocation to each MDA. Inefficiency. What Olusegun Adeniyi described about his experience in government in 2011 still obtains. Heads of Agencies and their directors sit in their offices imagining what needs to be changed or bought. Usually, if these were private sector entities, resources will be stretched more into the future, and there may be no need to spend anything substantial. But this is government and monies need to be spent. I take that back please. This is Nigerian government. Our leaders have not thought about a radical way of cutting out this pork barrel approach where MDAs send expense proposals to the centre. There’s got to be an organic way of ensuring that especially in a time such as this, our MDAs cannot continue to be burden on the country.

9. Per capita budget. So, I did an analysis of the budget on per capita basis. I tried to find exactly what the budget has for each Nigerian. I realized it wasn’t much. At N13.58Trillion, the budget is barely $34billion this year, for over 200million people if we believe the figures coming out of our National Population Commission. This is barely $170 per person per year, to be spent on education, defense, policing, housing, roads, and every other thing we desire. If we back out the N5Trillion to be spend on less than 2 million government personnel and the N134Billion to be spent on about 500 National Assembly members and their admin staff, we are left with potentially N8trillion for the entire country, which is barely $80 per Nigerian in this year. Countries spend as much as $30,000 per person in other jurisdictions, where their yearly budgets come to around 40% of their GDPs. This budget is barely 7.5% of our shrunken GDP. We should also note that usually, a mere 30-40% of capital expenditure is released every year for the past 15 years, for the purpose of capital budgeting. Tragedy.

10. MINIATURISED DREAMS – I had a foreboding feeling, as the president reeled out the roads they had done or intended to do during his speech couple of months back, that the leadership of this country had miniaturized the dreams of the people. I read the South Africa government’s 2020 budget speech and saw commitments on number of jobs to be created, social services, mega infrastructure projects of R200Billion (about $13Billion or N5Trillion), industrial strategies, a sovereign wealth fund with offtake of R30billion ($2Billion or N760Billion), plans for the upcoming AfCFTA (African Free Trade Agreement), and a spend of R396Billion ($26.4Billion or N10Trillion) on Education, R230Billion ($15Billion or N5.8trillion) on health and R310Billion ($21Billion or N7.9Trillion) on Social Development. Christ! The budget even announced that coding and robotics will be introduced to young students between Grades R to 3! For Nigeria all we heard from our president was how they were building a road to Itakpe, another to Kutigi and yet another to Jalingo. Tiny roads that should not make it into a national budget. Our budget is lacking in imagination. When shall we wake up, ladies and gentlemen? Our budget should be concerned more with strategic and macro issues. Our dreams and our coasts as a people must be enlarged. At this rate and with the tunnelization of our vision and the miniaturization of our imagination and ambition, I am afraid we will lose the little that is left of our national prestige and continental influence. At the run rate for South Africa, year on year, it is not rocket science to see that that economy will envelop and subsume ours if it hasn’t already.

NO FOCUS ON THE NIGERIAN PEOPLE

Overall, our budget does not focus on the Nigerian people. That is the problem. Like our police, our budget is focused on our elites and their usual enjoyments. It is something to be shared amongst them, in the hope that perhaps some crumbs will drop off their table for the poor masses. The budget is a tragedy. To compound our woes, the budget is deliberately darkened in different important areas, papered over and made opaque where it should be transparent. There is no departure from the past whatsoever. I know these things are difficult to operate and achieve, but I believe the people of Nigeria have given especially this government enough time to get its act together. In fact, the issue now is, as our people say “oosha boo ba le gbemi, se mi bi mo se wa”. If our government cannot improve the lots of our people, the least it can do is not to shrink their dreams and reduce us all to hewers of wood and fetchers of water… the wretched of the earth. Apart from deceiving themselves and maintaining a damaging conspiratorial silence, one wonders if there is anything else they do at government meetings. These budgets are a cancer to Nigeria. We are developing new diseases from these nightmares. We are not recovering from anything. The 2021 budget is certainly NOT a budget of recovery or any resilience. It is a budget of mental and physical laziness instead.

OTHER RIDICULOSITIES

Just to add that there are other dramas around the budget. The Vanguard newspaper of January 8, 2021 reported on ‘strange’ items in the budget, including construction of classrooms in Kaduna and supply of motorcycles to empower Nembe youths by Ministry of Transport, construction of township roads in Katsina by Ministry of Science and Technology under its subsidiary, the Science Equipment Development Institute, Minna. Many budget items were also noted by the newspaper as having no location (just monies provided for by clever lawmakers), such as a N200milliom for supply of materials for Fashion and Design Trainees, a provision of N150million for solar-powered borehole somewhere in the ‘South East’ and such like. Premium Times, reporting on the 30th of December, 2020, had complained that the President again refused to question the budgets of comfort that legislators made for themselves.

What is more? Daily Trust newspapers reporting on the 15th of November, 2020 wrote on paddings, omissions and walkouts in the budget defence process. It was a collage of ridiculosities which formed the foundation for this very budget. In what read like some high drama scriptwriting, the newspaper reported that many agencies failed to articulate their budgets, many finance directors fumbled and wombled to explain items in the documents they forwarded and so on. Also, there was an N11billion inserted into the budget for the Federal Emergency Road Management Agency (FERMA), with only Imo State alleged to be getting the lion share of their projects. The FERMA DG, Nurudeen Rafindadi, said the insertion was done without his knowledge. Yet the House Committee Chairman, Femi Bamisile, confirmed that all was well with the document, despite the DG’s befuddlement. The Rep Member knew more than the Agency than the DG! Anyone interested in the sorry details should please search for the news report on Google.

The legislators and their friends in the MDAs have done the usual. Apparently, not even the reality of our friends dropping dead left and right as a result of the pandemic is enough to make us contrite and sober as a people. The chase is still very much on for monies that we will never spend, and power that we know nothing about using to benefit humanity. That is the story of the 2021 budget. Of course, I know it will not be junked. This is just an article for memorandum purposes… for those who will be alive still when the dark hand of the pandemic leaves and we return to normal. Nigeria can surely do much better.