As President Bola Tinubu presents the proposed 2024 budget today, some experts have advised that more and better funding should be allocated to infrastructures so that the country’s business climate would recover from the negative impacts of the recent reforms.
This will be the first annual budget Tinubu will present to the National Assembly since he was inaugurated in May. The budget of N27.5 trillion is 26.1 percent higher than that of 2023 presented by his predecessor, Muhammadu Buhari, last year.
Rising inflationary pressures in recent months have weakened the purchasing power of cash-strapped consumers, even as businesses grapple with higher operating costs.
This has forced many small businesses to close up shop, worsening the unemployment situation and increasing poverty levels in Africa’s biggest economy.
“We expect that enough funding will be allocated to infrastructures such as roads, electricity etc such that the business climate can improve. We also want the government to hit the ground running immediately the budget is approved,” Femi Egbesola, national president of the Association of Small Business Owners of Nigeria (ASBON), said.
He added that effective monitoring should be in place to see how effective the budget implementation is. “Because one thing is to have a budget released now and for it not to be well implemented.”
Adeola Adenikinju, a professor of economics and president of Nigerian Economic Society, said it is important to know how the country has fared with respect to previous budgets.
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“To what extent have we been able to use the budgets to create jobs, reduce poverty and create infrastructural projects in the country? In other words, we should start putting quantitative values to the outcomes, not just how much money that is spent,” he added.
According to Adenikinju, this will help us to look at the future and the current budget in terms of what it will achieve, not how much the country is spending.
The budget on Monday was revised upwards by N1.5 trillion to N27.5 trillion after increasing the oil price benchmark and lowering the naira exchange rate assumption.
Atiku Bagudu, the country’s minister of budget and national planning, said the cabinet had revised its oil price assumption up by $4 per barrel to $77.96 and its assumed exchange rate to N750 per dollar from N700/$.
Bagudu added that the 2024 forecast revenue would now be N18.3 trillion, up from N16.9 trillion.
“We want to see better public investments in infrastructure because, over the years, the budget has been largely skewed in favour of recurrent expenditure which is why we keep having huge infrastructural deficits which is affecting productivity and production,” Muda Yusuf, chief executive officer of Centre for the Promotion of Private Enterprise, said.
He added that there should be a lot more expenditure on capital projects, not just budgeting for it. “It is also about making resources available because it is one thing to appropriate and another thing to ensure spending because the government has been talking about job creation and reducing poverty.”
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Analysts at BudgIT, a Nigerian civic organisation, noted in a recent report that the country has had a history of misallocating scarce resources through the budget and wasteful spending, resulting in the worst human development indices and creating fiscal space for state capture.
“The president must pay attention to certain things that have caused the federal government budget, despite enormous resources allocated and spent, to fail in meeting the country’s development goals, reducing poverty, creating jobs, and fostering inclusive broad-based economic growth,” they added.
For many years, Africa’s most populous nation has struggled to meet its revenue and expenditure target and the variance keeps getting wider ever since the 2014 global collapse in oil prices that sent the oil-dependent nation to its first recession in a quarter of a century.
In 2017, the federal government’s actual revenue stood at N2.7 trillion, an 81 percent decline compared to a target of N4.9 trillion. Its actual expenditure was N6.46 trillion more than its target of N7.44 trillion.
For 2018, the government could only manage to generate N3.96 trillion, compared to the N7.16 trillion target in the budget. It spent N7.51 trillion from a target of N9.12 trillion.
In 2019, the government achieved revenue of N4.1 trillion, a 40 percent decline compared to a target of N6.97 trillion. Actual expenditure stood at 8.29 trillion, down from N8.92 trillion.
For 202o, the country realised revenue of N3.4 trillion, a sharp contrast from the projected revenue of N8.15 trillion. Its expenditure was N10.1 trillion more than its target of N9.97 trillion.
For 2021, the federal government’s actual revenue stood at N4.64 trillion, a 69 percent decline compared to N7.89 trillion in the budget. Actual spending was N12.6 trillion, down from N13.1 trillion.
In 2022, projected revenue was N7.48 trillion while actual revenue was N6.49 trillion. The actual expenditure was N14.27 trillion from a total spending of N18.14 trillion.
As of July 2023, the government retained revenue was N5.19 trillion, approximately 80.5 percent of the target of N6.44 trillion, while N4.16 trillion was spent as against a target of N5.47 trillion.
Israel Odubola, a Lagos-based research economist, said the N27.5 trillion expenditure and a revenue projection of around N18 trillion leave a deficit of around N9 trillion, which is lower compared to N10 trillion for this year’s budget.
“For the revenue forecasts, N18.3 trillion is ambitious. I don’t think we have done N12 trillion in revenue since 2015. However, we hope Oyedele’s committee on tax reforms and fiscal policy matters will help the government drive revenue mobilisation,” he added.
Business activity in Nigeria contracted in October for the first time in seven months, declining near levels seen in the thick of the cash shortages that rocked the economy in the first quarter of the year, according to the latest Purchasing Managers’ Index by Stanbic IBTC Bank.
“The inflationary environment depressed consumer demand in the month of October, pausing the steady pace of new business expansion for the first time in six months,” the index said.
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Data from the National Bureau of Statistics shows that the rising cost of energy and foreign exchange pushed the country’s inflation rate to an 18-year high of 27.33 percent in October from 26.72 percent in the previous month.
Inflation pushed an estimated four million more Nigerians into poverty in the first five months of this year, the World Bank said in June.
