Can Buharinomics pull Nigeria back from the brink? (2)

Based on my understanding of Zero Base Budgeting, its implementation in this new era means that government officials would no longer regale Nigerians with the volume of money to be invested in a project as is currently the case; rather the expected impact of the project would be the focus of the announcements after federal executive council meetings and at the end of the budget circle, Nigerians would have the opportunity to know how well or how badly the project budgeted helped the society. This is because with ZBB’s template, emphasis is on measuring, comparing and weighing of benefits of projects against other competing initiatives before scarce government funds are appropriated for priority projects only, hence it is also known as performance budgeting.

For instance, under the current regime, if a ministry or agency of government budgeted N100m this year as expenditure for travels, it just increases the margin by about 20 percent in the next year’s budget. More often than not, such unjustified budgets get approved hence each succeeding year’s FGN budget surpasses the previous one and, worse still, most MDAs stash away (carry over) unexpended allocations in doggy bank accounts which TSA is aimed at eliminating. It is important to note that ZBB is only applicable to capital budgets and not the recurrent which covers employees’ emoluments and other overhead costs that are by nature variable. Therefore, salaries and other entitlements won’t be entangled in ZZB complexities.

Of course, ZBB is not a magic bullet expected to create a eureka feeling in public accounting, so its implementation is expected to be fraught with challenges, such as the tedious process of starting budgeting from ground zero as opposed to building on the previous year’s and the resultant delay. Just like the International Financial Reporting Standard, which organizations in Nigeria were compelled to adopt as global best practice, was pursued with determination, with equal zeal, ZBB can equally be adapted to very quickly by civil servants over a short period.

Such sacrifice will be worth it if at the end of the day, it facilitates the change which the ruling APC promised and which Nigerians have been patiently waiting for.

Amongst other intentions, the funds saved from the unfolding prudent financial management measures would be applied in providing some of the social services promised by President Buhari, such as offering at least one free meal a day to students and payment of N5,000 monthly stipends to the unemployed, a cause which Vice President Yemi Osinbajo seems to be so passionate about.

At this juncture, it is pertinent to point out that Quantitative Easing, also known as economic stimulus package, has been in existence since the Great Depression, when Lord Maynard Keynes first recommended it as a policy measure aimed at lifting the USA out of the recession quagmire, and the concept was most recently applied by President Barack Obama in pulling the US economy from the brinks of recession when he took the reins of office in 2008. It entails government buying public assets, like bonds and sometimes ailing companies, with a view to keeping them as going concerns to provide jobs, etc. Assets Management Company of Nigeria is a typical example of a QE vehicle. The risk of descending into recession of the world’s largest economy was a consequence of George W. Bush Jnr, Obama’s predecessor, dragging the US into two wars simultaneously – in Iraq and Afghanistan – resulting in budget deficit of nearly $19 trillion against a GDP slightly in excess of $17 trillion which the country is now groaning under. Notice that while US budget deficits more or less square up with her GDP ($17-$19) and her economy has been recording modest GDP growth of 2 percent, Japan’s $4.62 trillion GDP is less than half of her domestic debt of about $8.62 trillion, which is very risky and therefore reason for remaining stuck in stagnation mode. With such huge public debt, a new dawn in the land of the rising sun may be long in coming.

Compared to Japan’s negative GDP-to-public debt ratio, which is in excess of 100 percent, Nigeria’s 2.7 percent (pre rebasement) and 13 percent (post rebasement) GDP/debt ratio is quite healthy. With such good economic fundamentals, re-injecting about N1 trillion into Nigerian economy as payment to contractors would yield positively and not lead to inflation as feared by some pundits. According to Bloomberg Business News Africa, Nigeria’s GDP/debt ratio is one of the lowest in the world and certainly the lowest when ranked amongst 30 largest sub-Saharan Africa’s economies.

So President Buhari’s adoption of Obama’s QE concept which the USA franchised to Japan as Abenomics is remarkable because there are other options like austerity measures usually recommended by the International Monetary Fund IMF as best path to economic recovery. As a matter of fact, Buhari inherited such austerity measures from former President Shehu Shagari in 1984 during his first stint as head of state, and he even introduced stricter control measures through trade restrictions and ban on imports of some items which resulted in Nigerians queuing up for the infamous essential commodities in that era.

Buhari’s successor, Ibrahim Babangida, eased it by modifying the austerity measure into Structural Adjustment Programme when government failed to reach an agreement with the IMF to accept a loan considered obnoxious by Nigerians.

So, apart from refining his political beliefs from autocracy to democracy after the collapse of the former Soviet Union, President Buhari has also upgraded his economic policy proclivity from welfarism to market-driven capitalism. Well, maybe not totally so as Mr President’s reluctance to remove the resource-guzzling fuel subsidy is hinged on his concern about the negative effect the policy could have on the masses in terms of increased cost of transportation, housing and food. So Buhari is still a sort of dyed-in-the-wool socialist.

Whatever the case may be, President Buhari’s economic policy tendencies, which are leaning more towards capitalism, are commendable and welcome. If diligently and painstakingly implemented, the QE policies which are preferred, favoured and currently being implemented by Buhari’s government (now tagged Buharinomics) appears, in my view, to be capable of pulling Nigeria back from the brinks of economic collapse in the face of the prevailing 60 percent slump in oil price.

Magnus Onyibe