Paying for the APC manifesto’s spending promises

The Buhari-Osinbajo APC manifesto makes a number of social spending promises, which have been picked upon for criticism by certain public commentators as not being consistent with the austere times that are upon us as well as not having been well thought-out in terms of their affordability.

These spending promises are as follows: Cash transfers of N5,000 per month to the 25 million poorest and most vulnerable citizens; job-seekers allowance for discharged and unemployed Youth Corps members for 12 months; and one meal a day for primary school pupils.

The approximate annual costs of these programmes are estimated below:

(1)          Cash transfers to the vulnerable poor

Giving 25 million poor households the sum of N5,000 monthly will cost N1.5 trillion annually. The scale and cost of this programme will require us to make some tough choices.

But this is exactly what political economy is all about – making choices based on priorities. In 2014, the Federal Government budgeted N971.14 billion for fuel subsidy on PMS (petrol). This subsidy paralysed the whole country for almost a month in 2013,  and is the subject of continuing controversy, allegations of corruption and outright theft and dubious claims as to its real benefits to the most vulnerable poor.

The budget amount in 2014 represents 65 percent of the cost of this programme.

The sheer number of the 25 million most vulnerable poor creates the challenge of implementation. The logistics of registration, tracking and monitoring therefore means that 25 million is a target that will be achieved gradually over a number of budget cycles.

This also means that the cost of N1.5 trillion is a target to be attained at full rollout of the programme and not at inception, thereby allowing the multiplier effect of spending in the earlier budget cycles to have a beneficial impact on the economy and therefore improve its affordability.

Cash transfers to the poor strengthen private consumption and have been proven to work in alleviating poverty, improving human development, creating jobs, making economic growth more inclusive, improving social cohesion and, in fact, stimulating economic growth.

Cash transfers are being used as an important tool for economic stimulus in several countries across the world – Malaysia, Indonesia, Singapore, Germany, the most visible and most successful – Brazil with its Bolsa Familia programme, amongst several others.

Paying for this programme will require government to redirect resources away from: obtuse and badly targeted fuel subsidies, corruption and waste in government, bloated payrolls and duplicated jobs and the ostentatious lifestyles of our public officers and towards the more critical mission of looking after the most vulnerable in our midst and thereby improving overall wellbeing, social cohesion and economic growth.

(2)          Post-NYSC job-seekers training allowance

For unemployed Youth Corps members during the first 12 months after discharge, beneficiaries will receive training to either make them more attractive in the job market or ready for self-employment.

Let’s assume that 150,000 graduates enrol annually and receive the NYSC monthly allowance of N19,800. This translates to N2.97 billion per month or N35.64 billion annually.

This job-seekers training allowance represents roughly 2 percent of the amount budgeted for personnel costs of ministries, departments and agencies of the Federal Government in 2015.

Read also: Atiku Centre Lecture Series: APC manifesto in light of current economic realities – Chioke

The director-general of the Budget Office of the Federation disclosed in his 2015 budget presentation that N160 billion has been saved and 60,000 ghost workers eliminated so far from the introduction of the Integrated Personnel and Payroll Information System (IPPIS) programme.

This saving represents almost 9 percent of budgeted personnel costs for 2015 and covers the cost of the job-seekers training allowance a handy 4.5 times.

(3)          Primary school meal programme

The World Bank 2010 estimate of gross primary school enrolment was 21,558,460 with a gross enrolment ratio of 84.8 percent. Based on an estimated cost of provision of N70 per child per day and 36 school weeks per year, the annual cost of this programme nationwide is estimated at N271.6 billion.

School feeding programmes deliver the several social benefits including but not limited to the following: (a) Improved pupil enrolment attendance and retention, especially for the girl-child and urban and rural child labourers. (b) Improved child nutrition and health and the corollary, reduced child mortality. (c) Improved learning outcomes and pupil performance due to the impact of improved nutrition and school attendance on educational outcomes.

In addition, using cost and employment generation estimates based on extrapolations from the Osun State Home-Grown School Feeding and Health Programme, this programme has the potential to create over 250,000 direct jobs nationwide for cooks alone, excluding ancillary jobs for food and input suppliers and the beneficial impact on agriculture and rural economies.

This is a programme that deserves to be rolled out nationwide in a collaboration between the federal and state governments. The cost of a national school feeding programme can be readily incorporated into the Universal Basic Education Commission (UBEC) framework and the Federal Government’s share of the cost substantially funded from there. For example, on 3 July, 2014, Punch newspaper reported that N53.6 billion of unutilised UBEC funds was sitting in the Central Bank of Nigeria.

The aggregate cost of these programmes, when fully rolled out, is N1,807.24 billion. The strength of cash transfer and spending programmes such as these is the multiplier effect. Using a multiplier of 3.25 which is an average from the estimates of leading private sector economists in Nigeria, this spending will create additional output of over N5.8 trillion. The numbers speak for themselves.