IHEANYI NWACHUKWU
Past experiences have shown that Nigerian government is very good in policy formulation particularly, in budget formulation. But when it comes to implementation, there is a big question mark. For the budget 2009, the question has remained how effectively the policies that underline the 2009 budget will be followed to get results. This question is pertinent given the impact of the global financial crisis and the dependence of the budget implementation on growing non-oil revenue.
Growing non-oil revenue for instance will reflect on the government intention to tax Nigerians than in the previous years.
But, how efficiently or effectively will the non-oil revenue policy be implemented? And if the proposed target is achieved, how focused will be the utilisation from the tax receipts?
In the 2009 budget, five sectors were regarded as the priority sectors. These include investment in critical physical infrastructure- power, aviation, petroleum resources, works and road transportation sectors, human capital development- education, health and MDGs grants, projects and capacity building, land reform and food security and development of the Niger Delta Region.
All of these key targets will have to be funded and the idea is to fund them through various forms of taxations including the Value Added Tax (VAT). Though, the federal government has said that its planned non-oil revenue will not translate to increased tax rate. In other words, one way or the other tax receipt has to grow by at least 60 to 70 percent. At least for many analysts, it will be the starting point for tax to assume more relevance than oil.
If Nigeria can grow tax revenue by 70 percent, we will be able to get somewhere, according to Jame Ade-Agbo of Ernst & Young Tax Service. There is indeed, a consensus that the capacity to do that does exist, but there is constant resonating cynical question-why tax when receipt from oil revenue couldn’t finance our infrastructure needs since the discovery of the black gold?
The draw back, as has often been identified, is the way revenues have been in the past been put to use. 70 percent of the country’s earnings have often been shared and that means little or nothing is in the end left for meaningful projects. This pattern of sharing is not certain to go away soon even if bulk of the money the country gets comes from tax.
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What has been critically lacking is meeting the challenges that go with profitability and growth, revenue generation and creative application or channeling of resources for optimum result.
For Ade Kanmi, a chartered tax practitioner, the challenge lies on developing the technologies that will drive this revolution (of alternative source of funding) across agriculture and commerce. There should be a sort of development in agriculture and modern technology.
There is absolutely no evidence that the huge revenue receipts in the past from oil have been linked to record levels of project financing or project performance. Top politicians have often grabbed a portion of their share. The impact on budget and consequently, the economy remain negatively enormous. The implication is underlined by the scanty implementation of the budget every year.
Analysts suggest that the frequency of this trend is underscored by the more petty need to be corrupt rather than be service-inclined.
Tayo Fakiyesi, Head, Department of Economics University of Lagos, Akoka, Lagos says President Yar’ Adua can turn around this trend by making sure that what is put in the paper as budget is fully implemented observing however that. The major problem in the effective and efficient implementation of the budget is the issue of corruption. No Nigerian admits being corrupt but corruption persists even while we all campaign against it. Given the current global environment that poses tough time for policy makers, the full implementation of budget is in doubt even when the times were good.
There is no doubt that with improved non-oil revenue, the 2009 budget proposal could be implemented effectively but the only doubt remains implementation of such revenue (non-oil revenue).
Tayo Fakiyesi noted: Nigerians have reasons to be confident about their future. We do not have strong fiscal position like the developed countries and there is need to reposition our economy to meet both home and international challenges. We expect the Government to provide leadership at home and abroad based in its budget.
He further said: The concerted effort made by President Umaru Musa Yar’ Adua administration in this fiscal year 2009 cycle to create a budget despite the global financial crisis and the continuing decline of prices of oil from highs of about $147/barrel in July 2008 to current prices of about $47/barrel may not be seen as wasted effort. This commitment of the President has been called into questions by critics, because now under the present conditions of the global downturn many Nigerians are seeing the proposed 2009 budget as not workable.
In this budget, the programmes of the government were announced. The questions are: Is the government undertaking the right programmes? Has it selected the right programmes? Does this statement convey any hope and vision for the masses in Nigeria? Does it have any target in relation to growth of the priority segments of the economy and employment in these segments?
Speaking to participants at a workshop organised in Lagos by the Chartered Institute of Taxation of Nigeria (CITN), Fakiyesi noted that, to tackle what appears to be a problem coming up in 2009-10, President Umaru Yar’ Adua needs to focus on procedure and substance. Following the latter, it also means he must be willing to admit past mistakes in priorities and rectify them in the present budget. We expect the President’s N2.87 trillion 2009 budget to reach a balance in 2009, while continuing to invest in the Nation’s prosperity through the seven-point agenda and 2009 budget should be balanced and targeted toward the need for addressing poverty allevation and employment creation with the ambition to enhance fiscal sustainability, promotes an economic growth plan through continued deficit reduction, make tax relief permanent and proposes other policies to improve the quality of education, expand access to affordable health care and tackle the poor state of the power sector.
He is of the view that as the world economies is changing, the questions are that, will 2009 budget demonstrates leadership within the West Africa region in the face of recent economic challenges in ways that enhance our long-term prosperity?
Will 2009 budget helps Nigeria compete on the world stage with investments in people, knowledge, communities, traditional industries and infrastructure?
Will 2009 budget commit to helping those who need the care and support of their fellow Nigerians? Will 2009 budget helps modernise and strengthen Nigeria’s safety systems for food, consumer and health products and includes new measures to strengthen and implement Nigeria’s eco-action plan for clean air and water? Will 2009 budget help create new economic opportunities and encourages micro, small and medium enterprises in rural areas as well as urban areas and provide alternate means of employment and livelihood to people engaged presently in agriculture related occupations? Will 2009 budget sustains our cultural institutions and invests in sports, help educate consumers, combat foreclosures, and promote a healthier housing market? Will 2009 budget helps make Nigerians safe and secure in their homes and on the streets?, he asked.
It is expected that the Nigerian economy continue to show robust growth, notwithstanding the global downturn. These actions by the Government, along with our solid fundamentals, will support Nigeria’s economy as it faces uncertain times arising from the global financial turbulence and the continual decline of oil prices. We expect the 2009 Budget should demonstrate leadership in the face of recent economic challenges in ways that enhance our long-term prosperity.
