• Thursday, March 28, 2024
businessday logo

BusinessDay

2020 Budget : Mired in controversy

2020 Budget

For those who have the eyes to see into the future, 2020 is likely going to be more challenging for hapless Nigerians than the current year, no thanks to the proposed budget rolled out by the Federal Government for that year.

Although the total figure appears bigger than that of 2019, the budget for 2020 flies in the face of daunting needs that demand financial outlay for solutions.

Some ministries are already lamenting that allocation to them is paltry and does not reflect the size of their needs. Key sectors that should prepare Nigeria for a secure future, particularly education, were given little consideration and meagre allocation in the budget. Despite the criticisms that have trailed the budget proposal, plaudits have however, attended to the presentation by President Muhammadu Buhari. Hence, the 2020 Appropriation Bill has been mired in deep controversy.

Some Nigerian analysts have argued that the budget, which will run on deficit, is doomed to fail because of the alleged heavy taxation it will impose on the people and urged Nigerians to prepare for more suffering ahead.

President Muhammadu Buhari last Tuesday, presented the 2020 Appropriation Bill, which has aggregate expenditure proposed for the Federal Government at N10.33 trillion.

The budget also has the sum of N8.155 trillion estimated as the total Federal Government revenue in 2020 and comprises oil revenue N2.64 trillion, non-oil tax revenues of N1.81 trillion and other revenues of N3.7 trillion, which according to President Buhari, is seven percent higher than the 2019 comparative estimate of N7.594 trillion inclusive of the government-owned enterprises.

However, about a quarter of the budget, the sum of  N2.45 trillion will be used for debt servicing, while capital expenditure is expected to gulp N2.14 trillion, which excludes the capital component of statutory transfers.

The expenditure estimate includes statutory transfers of N556.7 billion, non-debt recurrent expenditure of N4.88 trillion and provision for Sinking Fund to retire maturing bonds issued to local contractors is N296 billion.

The budget was based on the assumption of $57 per barrel with crude oil production of 2.18 million barrels per day and the exchange rate assumed at N305 to $1.

Real GDP growth of 2.93 percent was another assumption of the budget while “inflation is expected to remain slightly above single digits in 2020.”

The budget is a fraud- Ononuju

A Public Affairs Analyst, Katch Ononuju (PhD Economics), told BDSUNDAY on Friday that the budget is a fraud because it is based on taxation of Nigerians.

“A budget based on taxation; have you ever heard about that before? It is a scam. For us, the budget is not acceptable. You want to jack up everything, it is just a general consumption tax; it is not going to work.

“What that means is that they have not been able to grow the economy. The people are suffering why are you taxing them? You are taxing a population that has a very low per capita income, this is not proper.  This is unsustainable,” he said.

Speaking about the communications tax for instance, Ononuju said “My mother calls me from the village you tax her, my sister calls me you tax her. Somebody is sick and tries to call the doctor you tax that call, a child calls from school to tell his daddy that he is not well, you tax him.

“So, who will gain from this? Don’t you see that something is wrong with this government? Buhari has failed and there is no need for us to pretend about it, Buhari’s government is a calamitous mistake,” he said.

He also condemned debt servicing of the budget with 2.45 trillion, saying that using about a quarter of the budget to service the loans, not repaying back the loan, shows that Buhari does not know what he is doing, wondering what government is doing with all the money it claims it has saved in the Treasury Single Account (TSA). He said that government has not been sincere.

He opined that President Buhari should have allowed the new Economic Advisory Committee (EAC) to tinker with the budget, provide advice and provide guidance instead of preparing it in a hurried form.

“Buhari has admitted for the first time that his economic policies have indeed failed. He is telling the people that he does not have plans to grow the economy, what he has is a plan to tax the people,” Ononuju added.

He called for restructuring of the country to allow the federating units to grow themselves instead of the current unitary arrangement.

Nigerians will suffer more for choosing Buhari – Buba Galadima

Buba Galadima, a prominent politician, who also spoke with BDSUNDAY on Friday on the budget, said Nigerians would pay dearly for choosing Buhari as President, warning that more suffering will be imposed on Nigerians. He stressed that Buhari is not perturbed by the people’s pain even as he chided the National Assembly for clapping instead of booing the President for “taxing everybody.”

“Look at the budget; it will be funded through sweat and blood of Nigerians through taxation. He will tax Nigerians then his boys in government will steal the money and nothing will be on ground. Buhari has taken loans more than any other government in Nigeria from Lord Lugard to Jonathan, yet there is nothing on ground and some people are clapping for him,” he said.

Galadima alleged that Buhari’s government is the most corrupt in the world. “Is there any government in the world that is half as corrupt as the Buhari government?  Who does not know that we are going to fund the budget for his people to steal? They are only converting our common wealth for their own use. Buhari is not perturbed by the suffering in the land. This is the crisis we are in. This man has no respect for human feeling,” he said.

“Nigerians should pray and stand up,” he said, even as he alleged that the president does not even know what is happening around him as an unelected cabal has hijacked power and ruling Nigeria.

Going by an army of jobless people, unemployable youths and the consequent increase in crime rate, concerned citizens thought that government should have budgeted more for education, including technical education and skills acquisition, with the hope of engaging many idle hands and impacting the economy.

Unraveling how unserious Nigeria is in developing its education sector to a level that is good enough to impart needed skills for job creation, Gabriel Eluma, an education consultant/school proprietor, called the proposed budget for education paltry and unrealistic for job creation.

For him, it is sad that South Africa is proposing to spend about N10.7 trillion (an amount larger than the 2020 Budget) on education alone for a population of about 60 million people, while Nigeria with over 200 million people, is proposing N160 billion for education.

“The result will not be the same. Despite its improved educational infrastructure, South Africa is boosting its education sector; hence, we will keep sending our children to universities in South Africa and other countries that are making sustained commitments to boost their education sector”, Eluma said.

On job creation, Bode Ake, an oil and gas business executive, said that high interest rates charged by banks do not encourage entrepreneurs to easily access credit facilities to set up businesses or expand existing ones to employ more people.

“At 25 percent interest rate, most entrepreneurs are shying away from bank loans because the economy is not vibrant enough to assure prompt repay of the loans. Even the Central Bank has recently sanctioned commercial banks for not giving out loans, but business owners are not borrowing from banks again, they rather look for equity or private lenders”, Ake said.

The oil and gas guru decried the commendations to the president on the proposed budget, asking, “What is there to rejoice about when the 2020 proposed budget is not big enough to stimulate the needed economic growth”?

For Ake, the budget does not give hope for the alleviation of the sufferings of the poor who the government should even protect more when there is no assurance that the border is going to open soon, rice is going to peak N50,000 by December, and prices of every other thing going up daily.

“The average person on the street is still waiting for the dividends of democracy.  But instead of that, the votes during the elections seem not to be yielding the promised welfare, better economy, jobs, security, among others. Instead there is increase in taxes, toll gates coming up, cuts on deposits and withdrawals, food price rising, which further impoverish the masses. Government should cut down on its expenditure, cost of running democracy and curb corruption within and use the saved money to boost the economy and not making the poor poorer”, he said.

For those who appreciate the plan by the National Assembly for hasty passage of the budget, Jerry Ikhile, an economist, noted that there is no need to hasten the passage if the country is going to be in a circle of doom with the budget.

He noted that while the president said that he adopted a conservative oil price benchmark of US$57 per barrel, daily production estimate of 2.18 million barrels of oil per day and an exchange rate of N305 per US dollar for 2020, but when oil sells beyond the benchmark nobody tells Nigeria how the excess revenue is spent.

“I rather advise the National Assembly leadership to send the budget back to the president for proper scrutiny and boosting because the masses are not finding it easy now and what they need are things that will lift them from the present predicament and not adding to it”, he said.

Ikhile insisted that the paltry N262 and N127 billion for Works and Housing and Power sectors respectively are not enough in closing the gap in infrastructure deficit in the country, which has resulted in the closure and relocation of many companies, especially to Ghana and other West African countries where electricity supply is stable and taxation policy is favourable.

He also thinks that if successive governments had given industrialisation, education and job creation the needed attention, there would have been a robust economy, good jobs and security in the country by now. But the failure of government to do these, according to Ikhile, gave rise to insecurity now requiring huge budget as evident in the N100 billion and N81billion proposed for Defence and Niger Delta respectively.

Most people think that Agriculture, which has potential of employing millions of people should have be given more than the N83 billion in the proposed budget; a pointer to the fact that government is not going to do much in boosting food production, while it is closing borders against imported food items.

They insisted that the 2020 budget does not inspire any significant hope, and are foreseeing more sufferings for the average Nigerian.

We can’t have an anemic budget of N10trn for 200m Nigerians – Agbakoba

In an open letter written to the President, titled: ‘Kudos for on time budget presentation but missing fundamentals remain’, a copy of which was sent to BDSUNDAY, Olisa Agbakoba, a former president of the Nigerian Bar Association (NBA), said: “I applaud the unusual departure of the Government of Nigeria by laying the budget estimates in good time and the reciprocity of the National Assembly to pass the estimates in 2019! This is record-breaking, but alas, this is only as good as can be said of the budget estimates.”

The senior advocate of Nigeria (SAN) however, noted that: “In a country of 200 million and 50percent living in poverty, the budget reflects many missing fundamentals. The starting point with this budget is a diagnosis of our condition. I would diagnose that Nigeria is afflicted with malignant metabolic economic syndrome complicated by high inflation, high interest rates, mass unemployment, weak infrastructure, slow growth, unclear borrowing policy, unaccountable subsidy, etc.”

According to him, “To turn things around, I like to assume that you have charged the new Economic Advisory Council to give us short and immediate solutions. Working from my diagnosis of Nigeria’s economic disease, we need to work out a macro-economic development framework that lays out a harmonised fiscal, monetary, investment, legal, institutional and regulatory agenda. Fiscal policy or rate at which government spends, must be dramatically expansionary. We cannot have an anemic budget of N10trillion for 200 million Nigerians, which is equivalent to N50,000 per person, per annum. This will keep us in poverty abysmal when we need double digit growth!

“On the basis of a GDP of 400 billion Dollars, the baseline annual budget should be 20percent which approximates 20-30 trillion annual spend rather than the miserly 10 trillion budget.  Our annual spend is anemic and we have to infuse large money. For monetary policy, we need urgent quantitative easing, which is easing of all interest rates in particular to slack the heavy burden of high interest rates on lending afflicting long suffering Nigerians. We must be very proactive to look for new funds.”

Agbakoba told Buhari that “Traditionally, public revenue has depended on tax and oil receipts but there are far too many other sources- the Maritime sector is laden with cash, agriculture and the blue ocean, trade, the real sector, and controversial as it may appear, revenue that can be derived from new legislation on immunity from criminal prosecution. Government must consider legislation on criminal immunity to those who have plundered us, and we will likely see massive inflows of our money in foreign banks back to us. At present, the money is out of our reach anyway! I estimate 100 billion Dollars will flow back if we grant immunity from criminal prosecutions but with civil sanctions.”

He is of the belief that: “Engagement of the private sector in partnerships will yield a massive stock of revenue.  We need our Dangotes, Jim Ovias, Mike Adenugas, Innosons to be involved, just like the Chaebols of South Korea. I know that the Onitsha-Nnewi-Ogidi market axis can generate up to N10trillion if the proper incentives are offered.”

He is convinced that: “Foreign and domestic investments in infrastructure is possible if the proper legal institutional and regulatory environment is established. Public revenue will be enhanced by at least N3trillion if we rebase foreign exchange rates from N305 to N360 and remove fuel subsidy at once.

“Additionally, we must review public expenditure. Far too much money is consumed by recurrent receipts. Downsizing government is a task that needs immediate attention by implementation of the Oronsaye report. Our public sector borrowing requirement needs review so that our revenue to debt ratio is less than 30percent. Banks must focus on their primary function of lending not trading as we have seen in purchase of Treasury Bills in excess of N400 billion. Tax collection efficiency and not increase should be the policy and Chairman Babatunde Fowler of FIRS and Governor Godwin Emefiele of CBN are two public servants deserving special mention for their innovation.”

Speaking from the wealth of his experience, the Maritime lawyer said: “As an expert in Shipping and hydrocarbons, I query why government only sees dollars from a barrel of crude when the value chain has at least 34 soft and hard by-products other than crude oil. In my field, there is banking, shipping, legal and insurance, but very little of the cash from this value chain from crude oil stays in our economy. We need to reset the clock. I will assume that the budget estimates is just the start of a turnaround process of economic transformation.”

Making a request from the President, Agbakoba said: “Having held their meeting with you, can the Economic Advisory Council give us a short turnaround plan to create jobs, opportunities and double digit growth? A good plan can create 10 million jobs annually, open the economy, expand local production and put the economy into double digits and pull millions out of poverty in addition to good education and healthcare.”

History will be kind to Buhari – BMO

The Buhari Media Organisation (BMO) has said that history would be kind to President Muhammadu Buhari for his bold step to re-calibrate Nigeria’s budget cycle by presenting the 2020 appropriation bill before a joint session of the National Assembly in October. The group also has harsh words for the PDP for its criticism of the budget proposal.

BMO said that re-calibration would go a long way in ensuring that the country finally begins implementing its national budget from the first day of the fiscal year.

In a statement signed by its Chairman, Niyi Akinsiju and Secretary, Cassidy Madueke, a copy of which was sent to BDSUNDAY, it said that the move was in line with the Buhari administration’s goal of leaving the country better than it met it.

“For far too long, Nigeria has had a budget cycle that runs contrary to what is obtainable in developed economies and other countries on a growth trajectory.

“And that is partly due to the fact that annual appropriation bills have almost always, since 1999, been presented to the National Assembly in December, with a May to June budget cycle the norm rather than the exception”, BMO said.

The group also faulted the People’s Democratic Party (PDP)’s criticism of the budget, saying the main opposition party lacked the understanding of basic budgeting process.

BMO said this could also be part of the reasons the PDP allegedly failed to make a real impact in spite of the billions of dollars that accrued to the country from oil receipts alone, between 1999 and 2015.

“Like many Nigerians, we were really not surprised to see the opposition party’s hasty reaction to President Muhammadu Buhari’s presentation of the 2020 Budget proposal tagged ‘Budget of Sustaining Growth and Job Creation.’

“But what came as a surprise is that the party again got its assessment wrong, not only on the general principles of the budget but also on the figures it mischievously claimed were allocated to certain sectors.

“How could a party that was at the helm of affairs at the centre for 16 years, during which the country realised $963 billion from oil alone, and left no real footprint on the infrastructural landscape, claim that the administration that has done more, with just a little over $100bn in four years, is impoverishing Nigerians?”, it said.

On PDP’s claim that the budget would further impoverish the populace, the group insisted that it is farther from the truth.

According to BMO, “Facts that can easily be gleaned from the appropriation bill show clearly that the country will continue to look like a giant construction site, with massive allocations to infrastructure development.

“We make bold to say that if PDP had done half of what the All Progressives Congress (APC)-led administration has done in four years, Nigeria would not be budgeting and spending a large chunk of its resources on power, road and rail projects in 2020. Of course, with the President’s directive that all on-going projects be concluded, there would be more money in circulation and a lot more direct and indirect jobs would be created all over the country where project sites are located. And contrary to the opposition party’s assertion, these projects, when completed, would have a direct and positive bearing on the masses.”

Recall that the PDP had pooh-poohed the 2020 Appropriation Bill, saying it was skewed to serve the rich, among other alleged shortcomings.

“The core of the budget remains hazy, showing streaks of padding, duplication, replete with false performance indices, deceptive projections and inexplicable expenditure assertions,” Kola Ologbondiyan, PDP national publicity secretary, said.

These, according to him, would create openings for diversion of public funds.

“The budget is skewed to serve the interest of the opulent, as projects that have direct bearing on the well being of the masses were not substantially accommodated in the overall expenditure profile,” he said.

Ologbondiyan also criticised what he termed allocations for “alleged vague projects,” particularly the Ministries of Works and Housing as well as Transportation, where, according to him, there were allegations of diversion of public funds in the last budget.

“Standing with millions of Nigerian youths and women, our party rejects the paltry budgets of N48bn for education and N46bn for health; and urges the National Assembly to review the allocations in the interest of Nigerians,” he said.

 

 ZEBULON AGOMUO, OBINNA EMELIKE, INNOCENT ODOH and INIOBONG IWOK