• Thursday, May 23, 2024
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A self-help model of development

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The federal government is replete with equally egregious examples of leadership irresponsibility and mis-governance. Study the annual federal budgets of the past decade. Each budget allocates 70%-75% to “recurrent expenses,” which is a code word for innumerable “allowances” for assorted luxuries for the upper echelons of the public service including the bloated 469-member National Assembly, the Presidency, the Judiciary, and the Civil Service. A reluctant, measly 25%-30% is left for capital projects. And what capital projects? Is it the reconstruction of the Shagamu-Benin Expressway? Or the Apapa-Oshodi Expressway? Or the Nigerian Railway system? Or the dilapidated educational system? How many capital projects were ever completed? How much of the funds were not stolen each and every year?

In countries governed with sanity and common sense, it’s the other way round: “recurrent expenses” are kept at a minimum; the bulk of revenue is devoted to railways, roads, public transportation, education, health care, agricultural and industrial production, etc. That is how those countries developed in the first place, and how they have stayed on top. 

As if Nigeria’s upside-down allocation of funds is not bad enough, every budget every year includes a loan (debt) of over N1 trillion to be borrowed to complete it. “Trillion” is a staggering figure. For those who may not realize it, N1 trillion = N1,000,000,000,000 = $6 billion = $6,000,000,000 of additional new debt added to the National Debt each and every year.  In other words, the huge budget of over N4 trillion naira includes more than N1,000,000,000,000 which the country must borrow each year so that our top government officials can live in luxury while the rest of the populace live with no light no water no road no hospital no school no job. The nation goes into debt each year to provide luxuries for those in government.

The upside-down allocation of funds and the debt incurred by the federal government each year is repeated/duplicated in the budgets of the 36 states each year.

Our economists are quick to tell us that it is quite allright to borrow money; that in fact Nigeria is “under-borrowed”; that our debt is only 19% of GDP whereas the danger point is 40%. In short, they tell us, we have nothing to worry about.

READ ALSO: Belated reforms fail to offset Nigeria’s dire economic forecast

What they don’t tell us is what the debt is for. Since “recurrent expenses” swallows 70% of the budget, most if not all of the debt is equally to service “recurrent expenses.” It certainly isn’t to service Education—whose allocation around N500 billion is LESS than the payments made each year to service the accumulating debt.

Our economists do not tell us that well governed nations go into debt usually to finance the construction or updating of their infrastructure (roads, railways, public transport systems, power, water, etc.), to update their educational institutions, or to extend manufacturing, agriculture or other essential productive establishments. Well governed nations do not incur National Debt to enable them purchase fleets of cars, mansions, furniture, entertainment, first class travel and hotel, estacode and other allowances for their public officials—which is what the badly governed nation of Nigeria does. When Spain, Greece, Italy or other industrialized countries go bankrupt or fail to meet their loan repayments, they do so for very good reasons; they have something to show for their debts. Nigeria has NOTHING to show for its debts.

Our economists are no dummies; they trained in the best schools, worked in prestigious global establishments. They know the facts very well. When therefore they tell us not to worry about our mounting debt, but fail to tell us that the loans are for consumption, not construction or production, it can only mean that they are all in the game. Our economists deliberately suppress the facts and deceive the public.

When crude oil sold for $110/barrel, many sensible, thrifty oil-rich nations set their budgets on a low benchmark of approx. $35/barrel. In other words, they spent only 32% of their oil revenue, saving 68% for economic transformation of their nation and citizen welfare.

Being a prodigal, spend-thrift, ill-governed nation, Nigeria habitually set its budget on a benchmark around $80/barrel, spending 73% of its oil revenue every year, sharing out the remaining 27% to its governors as “excess crude,” and saving zero! When in belated afterthought the federal government in 2012 saw the wisdom of setting up the Sovereign Wealth Fund like other nations, the state governors fought it furiously like spoilt brats.

For years, it’s been a globally acknowledged fact that oil prices were heading for a tumble because (a) oil had been discovered in super-abundance in every continent—in swamps, desert sands, ocean beds—and (b) Nigeria’s best customer, the USA, had begun exploiting its own domestic oil and gas reserves. Neither NASS nor the Presidency paid any heed. By end of 2014 it finally happened: oil fell to $46/barrel; notwhithstanding, the proposed 2015 budget is benchmarked at $65/barrel. Imagine that! The budget is still above N4 trillion, including 60% on “recurrent expenses,” 14% on capital expenditure, and fresh debt of nearly N1 trillion!!

Unlike other oil-rich nations which saved for a rainy day, Nigeria has no national savings, just national improvidence!

What can be expected from such leaders and their supporters and protectors? Little or nothing. . . .

Onwuchekwa Jemie