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Buhari presents N8.6trn 2019 budget as 20.93mn Nigerians now unemployed

Buhari presents N8.6trn 2019 budget as 20.93mn Nigerians now unemployed

It was a mix of jeers and cheers on the floor of the National Assembly yesterday as President Muhammadu Buhari presented a N8.8 trillion spending plan which he said is aimed at placing “the economy on the path of inclusive, diversified and sustainable growth in order to continue to lift significant numbers of our citizens out of poverty.”

Earlier yesterday, the National Bureau of Statistics (NBS) released the latest unemployment data showing that 20.93 million Nigerians are actively searching for jobs but cannot find any to do.

The NBS data shows that the country’s misery index, which is a sum of the inflation rate and the unemployment rate, is now 34.38 percent compared to 36 percent in the corresponding period of 2017.

The marginal decline in the misery index is mainly because of a drop in inflation rate which has dropped from 17.2 percent in September 2017 to a November 2018 rate of 11.28 percent. However, within the same period, the unemployment rate has consistently been on the rise, an indication that many families are losing their source of income and falling into misery.

READ ALSO: Missing 10m labour force means Nigeria’s unemployment rate at 34%

The number of unemployed Nigerian represented 23.1 percent of the country’s total labour force of 90.47 million as at September 2018, up from 18.8 percent in the corresponding quarter in 2017, the NBS said yesterday.

In absolute numbers, unemployed Nigerians rose to 20.93 million at the end of the period, from 16 million in the corresponding quarter a year earlier. This implies that the number of jobless Nigerians jumped by 30 percent or 4.9 million within one year.

But besides Nigerians actively seeking for job, who cannot find any, the NBS data also shows that there are another 25 million Nigerians who are of employment age but are not interested in working or are not actively seeking to work. In total, there are 115.49 million Nigerians within the working age population but only 69 million people are in full time employment currently, a net increase of 1.6 million when compared to the 67.95 million that were employed as at June 2015, just about a month after President Buhari was sworn as president.  Another 18.2 million Nigerians, representing 20.2 percent of the country’s workforce are classified as underemployed. Combined, unemployed and the unemployed make up 43.2 percent of the country’s workforce.

The administration of President Muhammadu Buhari came into office in May 2015 with a pledge to create jobs as part of his plans to resuscitate the Nigerian economy. Since its inauguration it has churned out figures of jobs created in different sectors, chiefly agriculture but these figures have been questioned consistently.

“There are two things that this unemployment figure has done for Yemi Kale and NBS,” Johnson Chukwu, CEO, Cowry Asset Management Limited,” said by phone to BusinessDay today. “It has saved them from embarrassment and reputation damage.”

“You don’t need to be an economist or statistician to know that the level of unemployment has increased. If someone tells you that there are 12 million jobs that have been created it means that the person does not know what he is taking about,” Chukwu added.

The rising unemployment is becoming a big source of discomfort to the Presidency which still insists that it is creating jobs despite the rising unemployment rate and sluggish economic growth.

The President stated that N2.14 trillion, which is almost 25percent of the budget, will be used to service debts.  N2.031 trillion, which is approximately 23.0percent of the budget, is earmarked for capital expenditure, and N4.04 trillion, which accounts for 45.75percent, will be incurred on recurrent expenditure.

“The big problem with the budget is there is an inability by the government to take certain reforms like subsidies, agitations, streamlining government recurrent expenditures and privatizing government enterprises,” Wale Okunrinboye, Head of research at Sigma pension said.

Okunrinboye explained that part of the reasons why the FGs recurrent expenditure is going up is because the government will be paying higher salaries next year when the implementation of the new minimum wage starts.

“And based on the shortfalls of revenues, CAPEX will be the one to suffer because the government will want to look into recurrent first before talking about CAPEX,” Okunrinboye said. “Next year, capital expenditure will be very weak because in the first quarter of the year, nothing will necessarily be done due to the elections.”

Buhari while presenting his N8.8 trillion spending plan for 2019 said that he expects the economy to grow at 3.1 percent in 2019, a growth rate analysts say is ambitious considering that the economy grew at just 1.9 percent in the third quarter of 2018.

Despite achieving only 53 percent of 2018 revenue targets three months into the year, Buhari set a revenue target of N6.97 trillion to fund the 2019 budget. While giving breakdown of the sources of revenue, Buhari disclosed that the sum of N6.97 trillion (3 percent lower than the 2018 estimate of N7.17 trillion), consisting of N3.73 trillion oil revenue while non-oil revenue is estimated at N1.39 trillion.

Gbolahan Ologunro, an equity research analyst at Lagos-based CSL Stockbrokers said next year will not be different from the past because the delay in the passage of budget in 2019 will also mean a slow start to the economy in 2019.

“Momentum in GDP growth for next year will be very slow even if oil prices are high because politicians will be concerned with retaining power even after the elections,” Ologunro explained.
President Buhari said the administration has earmarked the sum of $1 billion (N305 billion) for fuel subsidy also called Under Recovery in 2019.

The President explained that the new subsidy regime involves the Nigerian National Petroleum Corporation (NNPC) being the sole importer of fuel for local consumption against practice of the past where marketers presented fictitious claims.

“We have allowed for N305 billion ($1 billion) for under-recovery by NNPC on PMS in 2019. We will continue working to bring it downwards so that such resources are freed up to meet the developmental needs of our people,” Buhari said.

Prior to his assumption of office on May 29, 2015, President Buhari had vehemently denied the existence of fuel subsidy and described it as a scam.

The budget is based on assumptions of $60 per barrel of oil benchmark at 2.3 million barrels per day, a GDP growth rate of 3.01 percent and inflation rate of 9.98 percent while exchange rate was based on N305/$.

Allocations to sectors are as follow Ministry of Health (N315.62billion), Ministry of Education (N462.24 billion), Ministry of Defence (N435.62 billion) and Ministry of Interior (N569.07 billion).
According to the president, the budget deficit is forecast to drop to N1.86 trillion which will be about 1.3 of GDP in 2019, from N1.95 trillion forecast for the preceding year. In his words “this reduction is in line with our plans to progressively reduce deficit and borrowing over the medium term”.

KEHINDE AKINTOLA & OWEDE AGBAJILEKE, Abuja, DIPO OLADEHINDE, MICHEAL ANI, BUNMI BAILEY & ISRAEL ODUBOLA, Lagos