The 2020 budget provisions are a cautionary tale in other ways, too. Given the distance from its assumptions to every sane estimate of what the reality will be over its tenor, it is hard to escape the sense of successive national budgets as fairytales. Yet, fairytales have their uses.
Up against daily experiences that increase their burden of risks and having to reach much deeper into their pockets in order that they may soften increasingly fewer of these existential challenges, it’s no surprise that your average Nigerians look to the clouds searching desultorily for silver linings. And in the other instances when already adrift, they end up clutching desperately at all manners of straws. Alive to the importance of dynamic of this safety-valve for relieving pressure on the system, governments at the different tiers regularly throw red meat the people’s way.
Last week, it was the federal government’s turn. President Buhari’s “Budget of Sustaining Growth and Job Creation” did at least nod in the direction of how difficult it is for Nigerians, especially young ones, to find jobs. It did not admit, however, to culpability for the country’s increasingly dire straits. On offer, instead, was clear evidence of the results of the administration’s heavy-lifting: the fact that the domestic economy has endured nine back-to-back quarters of output growth! That’s 2¼ years of non-stop GDP growth – following the 2014-2017 recession.
One way to look at this data is to endorse the president’s spiel: irrefutable evidence of the rectitude of current macroeconomic policy. But between annual growth of 0.82 per cent two years ago and 2.02 per cent in the first six months of this year, on one hand, and an annual population growth rate of 3 per cent on the other hand, is a lot of detail. The story told by these other numbers is that, in per capita terms, output growth is moving in the wrong direction. In a sense, this deterioration lies at the heart of the other crisis facing the country. Large numbers of unemployed youth providing fodder for all manners of non-state interventions in the domestic space, and for the resulting violence.
Desirable, though, enhanced law enforcement abilities are, some will argue that it is far better for the economy to build new capacity to absorb the extra labour that comes on stream annually. Rather than police the resulting anti-social behaviour from idle hands not finding useful work.
Understandably, one could take comfort in the fact that the 2020 budget proposal’s planned increase in personnel outlay this year will, in addition to providing for the new national minimum wage, go towards increasing general security. At least that should be an intended outcome of the decision by the federal government to “improve remuneration and welfare of our police and armed forces”.
Desirable, though, enhanced law enforcement abilities are, some will argue that it is far better for the economy to build new capacity to absorb the extra labour that comes on stream annually. Rather than police the resulting anti-social behaviour from idle hands not finding useful work. Better, therefore, to improve the economy’s resilience by keeping existing infrastructure in good repair and building new ones ― especially broadband connectivity. Alas, the provisions of budget 2020 appear to disappoint in this regard.
At N2.46 trillion (inclusive of N318.06 billion statutory transfers), what the incumbent government hopes to spend this year on infrastructure-type activity, is by the president’s own admission, far less than the 30 per cent minimum aggregate projected expenditure anticipated by the Economic Recovery and Growth Plan (ERGP) 2017-2020. The plan, of course, imagines this level of expenditure necessary if the economy is to grow at levels consistent with its ambitions of rescuing vast swathes of the economy from poverty. So, why is the government at the centre hoping to spend on expenditure this year, 23 per cent less than it did last year?
Not minded to add fagot to an already combustible mix, the burden of fiscal adjustment over the next 12 months will understandably be borne by capital spending and not by the recurrent bit, which is set to rise as government implements the new minimum wage this year.
One possibility is that, as suggested by the calibre of persons appointed into its recently constituted economic advisory council, we are at the threshold of a pivot in the Buhari administration’s policy trajectory. Accordingly, we should soon begin to see movement away from the old dirigisme to policies that improve the economy’s private sector response function. De-risk the economy, and get private providers to build roads, bridges, ports, etc. while recovering their costs through users paying at the point of consumption, and government may spend less on capital items, while boosting its spend on the development of domestic human capital. A win-win situation?
Far likelier, though, is that the exchequer is straitened. Government’s new-found bulimia for new ways of taxing the economy, and the shortfalls in the revenue estimates every year over the last few years (in 2019 aggregate government revenue was 58 per cent of target) are strong pointers to this possibility. Not minded to add fagot to an already combustible mix, the burden of fiscal adjustment over the next 12 months will understandably be borne by capital spending and not by the recurrent bit, which is set to rise as government implements the new minimum wage this year.
The 2020 budget provisions are a cautionary tale in other ways, too. Given the distance from its assumptions to every sane estimate of what the reality will be over its tenor, it is hard to escape the sense of successive national budgets as fairytales. Yet, fairytales have their uses. How may you better narcotise a potentially restive people?
Uddin Ifeanyi, journalist manqué and retired civil servant, can be reached @IfeanyiUddin.
