10 solid reasons why budget 2021 should be scrapped (II)

Continued from last week   I have always wondered why the technical people behind our budgets cannot do better than to state how many barrels of crude oil the country intends to manufacture and how much she wishes to sell. The OPEC (Organisation of Petroleum Exporting Countries) determines how much our daily production cap should […]

Continued from last week

 

6. I have always wondered why the technical people behind our budgets cannot do better than to state how many barrels of crude oil the country intends to manufacture and how much she wishes to sell. The OPEC (Organisation of Petroleum Exporting Countries) determines how much our daily production cap should be anyway. The issue of average expected price (benchmark) is usually open to conjecture and contention because that is a largely arbitrary, random digit. Why? The Economist, in an editorial two years ago, stated that the prediction of crude oil prices is a fool’s game. The magazine said it should know because it had been caught playing the fool a number of times. Today, Bonny Light, our flagship product, sells for circa $40. But who could have predicted that in April of this year, we couldn’t find any buyers and crude prices went into negative territory? Who can tell precisely when renewables will totally dislodge fossil energy as has been predicted for a while now? The usual thing will happen. The National Assembly will spend months as usual, debating the benchmark price to include in the final budget estimates. Again, a better idea is that crude oil should not be the only revenue assumption in the budget. In fact it is a redundant figure as the amount to be derived is not shown.
7. And if the amount was shown it would have been totally deceptive. Why? When Nigeria states that we intend to extract or produce 1.8 million barrels per day of crude oil, and sell at $40 per barrel, a common man is deceived to think that Nigeria will make a total of $72 million, or N27.432 billion EVERYDAY (This is if we multiply the daily proceeds at N381 official rate). I hope this is not the impression our budget drafters are trying to create or whether they are under same illusion. It is all wrong and makes absolutely no sense at all. Why? According to NEITI (Nigerian Extractive Industry Transparency Initiative), in its review of petroleum sector activities between 2015 and 2017, only about 36% of the production is for Nigeria. The rest goes to foreign companies that assist in the production, as well as local companies that are joining in. Therefore, it would have made better sense if only 36% of that calculation entered the budget in any way or form. This is N9.87 billion per day. It is however from this figure (asides from taxes, royalties, signature bonuses etc), that expenses incurred by NNPC and all other subsidiaries will be deducted and those expenses can be very substantial. That is why I say Nigeria is not particularly a rich country and we should stop living so large.
8. The budget remains a pork barrel. Someone asked me in an interview if the N13 trillion budget was ‘sustainable’. Of course people are usually fazed by the seemingly large amount. I replied that the budget was not sustainable, not because it had size, but because sustainability has to do with one’s ability to repeat a certain process into the future without stress. The debt levels, the yearly deficits, are unsustainable and will catch up with us in a short while. It is as if the country has been finally auctioned. What is even less sustainable is that the budget is basically a pork barrel budget. Someone sits in the Budget Office and calls for all MDAs to send in what they wish to buy next year. The focus of course is on the expenses. What Olusegun Adeniyi described about his experience in government in 2011 still obtains. Heads of Agencies and their directors sit in their offices imagining what needs to be changed. Usually, if these were private sector entities, resources will be stretched more into the future, and there may be no need to spend anything substantial. But this is government and monies need to be spent. I take that back please. This is Nigerian government. Our leaders have not thought about a radical way of cutting out this pork barrel approach where MDAs send expense proposals to the centre. There has to be an organic way of ensuring that especially in a time such as this, our MDAs cannot continue to be a burden on the country.
9. PER CAPITA BUDGET. So, I did an analysis of the budget on per capita basis (see attached). I tried to find exactly what the budget has for each Nigerian. I realized it wasn’t much. At N13 trillion, the budget is barely $34 billion this year, for over 200 million people if we believe the figures coming out of our National Population Commission. This is barely $160 per person per year, to be spent on education, defence, policing, housing, roads, and every other thing we desire. If we back out the N5 trillion to be spent on less than two million government personnel and the N128 billion to be spent on about 500 National Assembly members and their admin staff, we are left with potentially N8 trillion for the entire country, which is barely $80 per Nigerian in this year. Countries spend as much as $30,000 per person in other jurisdictions, where their yearly budgets come to around 40 per cent of their GDPs. This budget is barely 7.5 per cent of our GDP. We should also note that usually, a mere 30-40 per cent of capital expenditure is released every year for the past 15 years, for the purpose of capital budgeting.
10. MINIATURISED DREAMS – I had a foreboding feeling, as the president reeled out the roads they had done or intended to do, that the leadership of this country was miniaturizing the dreams of the people. I am reading the South Africa government’s 2020 budget speech and I can see commitments on number of jobs to be created, social services, mega infrastructure projects of R200 billion (about $13 billion or N5 trillion), industrial strategies, a sovereign wealth fund with offtake of R30 billion ($2 billion or N760 billion), plans for the upcoming AfCFTA (African Free Trade Agreement), and a spend of R396 billion ($26.4 billion or N10 trillion) on Education, R230 billion ($15 billion or N5.8 trillion) on health and R310 billion ($21 billion or N7.9 trillion) on Social Development. Christ! The budget even announced that coding and robotics will be introduced to young students between Grades R to 3! For Nigeria all we heard from our president was how they were building a road to Itakpe, another to Kutigi and yet another to Jalingo. Tiny roads that should not make it into a national budget. Our budget is lacking in imagination. When shall we wake up, ladies and gentlemen? Our budget should be concerned more with strategic and macro issues. Our dreams and our coasts as a people must be enlarged. At this rate and with the tunnelization of our vision and the miniaturisation of our imagination and ambition, I am afraid we will lose the little that is left of our national prestige and continental influence. At the run rate for South Africa, year on year, it is not rocket science to see that that economy will envelop and subsume ours if it hasn’t already.

No focus on Nigerian people

Overall, our budget does not focus on the Nigerian people. That is the problem. Like our police, our budget is focused on our elites and their usual enjoyments. It is something to be shared amongst them, in the hope that perhaps some crumbs will drop off their table for the poor masses. The budget is a tragedy. To compound our woes, the budget is deliberately darkened in different important areas, papered over and made opaque where it should be transparent. There is no departure from the past whatsoever. I know these things are difficult to operate and achieve, but I believe the people of Nigeria have given especially this government enough time to get its act together. In fact, the issue now is, as our people say “oosha boo ba le gbemi, se mi bi mo se wa”. If our government cannot improve the lots of our people, the least it can do is not to shrink their dreams and reduce us all to hewers of wood and fetchers of water… the wretched of the earth. Apart from deceiving themselves and maintaining a damaging conspiratorial silence, one wonders if there is anything else they do at government meetings. These budgets are a cancer to Nigeria. We are developing new diseases from these nightmares. We are not recovering from anything. The 2021 budget is certainly NOT a budget of recovery.