The Lagos Chamber of Commerce and Industry (LCCI) and The Manufacturers Association of Nigeria (MAN) have expressed concerns over the plan of the Federal Government (FG) to borrow more money and increase debt servicing to fund the 2020 budget as revealed by Zainab Ahmed, minister of finance, budget and national planning.
Chinyere Almona, director-general, LCCI, said in a statement that the government needs to explore alternative sources of revenue generation other than incurring debt, especially as revenue of N10.13 trillion was projected which was described as “too ambitious”
“Most of the items for which more funding was sought are recurrent expenditures, we understand the government may be under pressure regarding these recurrent expenses, but it is not best practice to borrow for consumption,” she said.
She added that since revenue fundamentals were weak, the government needs to examine other sources to generate resources to fund the budget rather than debt financing
“The Federal Government should focus more on non-interest asset-linked securities as these unlock revenue and growth in the long term, furthermore, the private sector should be allowed to invest in some infrastructure projects that are commercially viable to generate revenue” Almona said.
Read also: Nigerian manufacturers say rising cost impedes benefits of AfCFTA
To preserve more revenue in the long term while curbing wasteful spending, Almona urged that there should be a strong corporate governance framework and strict monitoring mechanisms to supervise spending by the Government Owned Enterprises (GOEs) some of which are regulators of some sectors.
“Supervising spending of GOEs and restricting them to the approved 50 percent spending limit from their generated revenues will curtail any form of wasteful spending which will retain more revenue,” she said.
Segun Ajayi-Kadir, Director-General of MAN, said in a statement that commended the FG’s efforts to improve human capacity development and address insecurity through increased allocation to crucial sectors.
The DG noted that the provisions of the budget suggest a fiscal deficit of N6.26 trillion which translates to further increase in debt servicing responsibility.
“It is therefore imperative for Government to exercise caution in borrowing and work diligently to lower recurrent expenditure,” he said.
He advised that deliberate efforts should be made to facilitate reforms that will drastically reduce the high recurrent expenditures and borrowings of government.
“The Manufacturers Association of Nigeria, therefore, expects that Government will give priority consideration to complement the current trend and performance of vital macroeconomic indicators with a deliberate effort at taming inflation to maintain price stability in order to meet the expectations of the proposed budget,” he said.
The minister of Finance during the public presentation and breakdown of the 2022 appropriation bill on Friday disclosed the FG’s plans to spend 35.60 percent of the projected revenue in the 2022 budget to service debt.
“We have had to resort to borrowing to enhance our fiscal gaps. However, we believe that the debt level of the Federal Government is still within sustainable limits, borrowings are essentially for Capital Expenditure and Human Development,” she said
According to her, the government further intends to spend N6.83 trillion on recurrent expenditure, which represents 41.7 percent of the entire N16.39 trillion budget.
