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 to 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.
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 scrutinised 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 U.S.A, 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?
I have always advocated for a larger budget for Nigerians. I proposed N15 trillion three years ago. Nigeria’s Federal Government has today proposed N13.58 trillion, 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 covers 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 five recessions that Nigeria has ever entered, three 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 on the basis of top-level information that he may have been availed from the backend. Today we are in that recession. I would wager that it is an economic depression. Thats a story for another day.
The many problems of the 2021 budget include:
First. Out of a budget of N13.58 trillion, a total of N5 trillion will be borrowed afresh.
Second. Our deficits keep increasing. This time we have budgetted for a deficit of N5.02 trillion or 40 per cent of the entire spending we intend to carry out. There is the usual trickery of comparing our deficit and debts with an almost meaningless gross domestic product (GDP), but real financial management requires that we compare these with the budget itself. In the military days, we used to have reasonable deficits that were like 3 per cent or 5 per cent 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 out 35 per cent to 40 per cent deficits. 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 per cent, while in 2005 under the Obasanjo administration, the deficit was 10 per cent of the N1.6 trillion budget. In 2008, under President Yar’Adua, Nigeria’s deficit was 20 per cent of the budget. It is under the present Buhari government that this huge deficit recklessness began and it has serious implications for the future of our children, as we are not seeing much salutary transformations that justify the massive deficit. 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.
Third. Still on the future, I recall Lee Kuan Yew used to say that 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 N13.58 trillion is to be financed with N5 trillion of new borrowings (N4.3 trillion of new borrowings and N700 billion of new drawdowns on pre-approved borrowings). This means that Nigeria can only generate just over N7 trillion from grants/aids, as well as internally generated revenue. Again, with a situation in which debt servicing is already so high, we are having to borrow 40 per cent or N5 trillion of the proposed budget. This is not sustainable. Indeed, there is no difference between the management of a household’s finances and those of a country. Any head of a household who has to consistently borrow 40 per cent of the money required to sustain their family every year is beyond reckless.
I did an analysis of the budget on per capita basis, and tried to find exactly what the budget has for each Nigerian. I realised this wasn’t much. At N13.58 trillion, the budget is barely $34 billion this year, for over 200 million people… This is barely $170 per person per year, to be spent on education, defence, policing, housing, roads, and every other thing we desire.
Fourth. The personnel costs of the Federal Government, as estimated by the budget, is over N5 trillion or 40 per cent 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 N7 trillion of internal and external revenues the government hopes to generate, over N5 trillion, or about three-quarters of all the revenues 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.
Fifth. There was a brief mention of revenue in the 2021 budget speech. The Federal Government hopes to finance the budget through over N7 trilion of revenue that it may generate. The president decided to lump up all the ministries, departments and agencies (MDAs) of government without breaking things down. The only assumption in the budget is, 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 N7 trillion 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 Nigeria Customs Service, Federal Inland Revenue Service, Nigerian Maritime Administration and Safety Agency, Nigerian Ports Authority, Federal Airports Authority of Nigeria, Immigrations, Nigerian Communications Commission, Corporate Affairs Commission, Nigerian National Petroleum Corporation, Central Bank of Nigeria 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 Representatives recently, need not come up. The Reps needn’t command the MDAs to remit 60 per cent of all their 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 to but with presidential connivance; yet, it is unlikely that the MDAs will pay heed, until another legislative review is done. 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.
Sixth. 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 extract and how much she wishes to sell them. It is the Organisation of Petroleum Exporting Countries (OPEC) that determines how much our daily production cap should be anyway. The issue of an average expected price (benchmark) is usually open to conjecture and contention because this 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 per barrel. But who could have predicted that in April of 2020, we couldn’t find any buyer and crude prices went into negative territory? Who can tell precisely when renewables will totally dislodge fossil energy as it has been predicted for a while now? Again, a better idea is 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.
Seventh. 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 1.8 million barrels per day of crude oil, and sell these at $40 per barrel, a common man is deceived to think that Nigeria will make a total of $72 million, or N28.5 billion, EVERY DAY (this is if we multiply the daily proceeds at the N396/$1 official rate). I hope this is not the impression our budget drafters are trying to create or whether they are under the same illusion. It is all wrong and makes absolutely no sense at all. Why? According to the Nigerian Extractive Industry Transparency Initiative (NEITI), in its review of petroleum sector activities between 2015 and 2017, only about 36 per cent 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 per cent of that calculation entered the budget in any way or form. This is N10.3 billion per day. It is, however, from this figure (asides taxes, royalties, signature bonuses, etc.) that expenses incurred by NNPC and all its subsidiaries are deducted and these expenses can be very substantial. That is why I say Nigeria is not particularly a rich country and we should stop living so large.
Eighth. The budget remains a pork barrel. Someone asked me in an interview if the N13 trillion budget is ‘sustainable’. Of course, people are usually fazed by the seemingly large amount. I replied that the budget is 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 the following year. The focus, of course, is on the expenses. When the procurement items are sent to the Budget Office, they often slash and burn these, 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 burdens on the country.
Ninth. Per capita budget. I did an analysis of the budget on per capita basis, and tried to find exactly what the budget has for each Nigerian. I realised this wasn’t much. At N13.58 trillion, the budget is barely $34 billion this year, for over 200 million 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, defence, policing, housing, roads, and every other thing we desire. If we back out the N5 trillion to be spent on less than two million government personnel and the N134 billion to be spent on about 500 National Assembly members and their administrative staff, we are left with potentially N8 trillion 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 per cent of their GDPs. This budget is barely 7.5 per cent of our shrunken GDP. We should also note that, usually, a mere 30 to 40 per cent of capital expenditure is released every year for the past 15 years, for the purpose of capital budgeting. Tragedy.
Our budget is lacking in imagination… 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 tunnelisation of our vision and the miniaturisation of our imagination and ambition, I am afraid we will lose the little that is left of our national prestige and continental influence.
Tenth. Miniaturised dreams. I had a foreboding, as the president reeled out the roads his government has done or intends to do during his speech a couple of months back, that the leadership of this country has miniaturised the dreams of the people. I read the South Africa government’s 2020 budget speech and saw commitments on the number of jobs to be created, social services, mega infrastructure projects of R200 billion (about $13 billion or N5 trillion), industrial strategies, a sovereign wealth fund with offtake of R30 billion ($2 billion or N760 billion), plans for the upcoming AfCFTA (African Free Trade Agreement), and a spending of R396 billion ($26.4 billion or N10 trillion) on education, R230 billion ($15 billion or N5.8 trillion) on health and R310 billion ($21 billion or N7.9 trillion) 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 tunnelisation of our vision and the miniaturisation 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 to 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 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.
Just to add that there are other dramas around the budget. The Vanguard newspaper of January 8 reported on ‘strange’ items in the budget, including the construction of classrooms in Kaduna and supply of motorcycles to empower Nembe youths by Ministry of Transport; and the construction of township roads in Katsina by the 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 N200 milliom for the supply of materials for Fashion and Design Trainees, a provision of N150 million for a solar-powered borehole somewhere in the ‘South East’ and such like. PREMIUM TIMES, reporting on December 30, 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 November 15, 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 bumbled in explaining items in the documents they forwarded and so on. Also, there was an N11 billion insertion 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 about the agency than its 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 the purposes of memorandum, 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.