A potential turning-point budget

In the first place is the longstanding dependence of the economy on crude oil, whose international prices in recent weeks have tumbled in the market, with the attendant loss of over 30 percent of the nation’s expected revenue from the commodity.  The situation, which is expected to last for a greater part of 2015 and […]

In the first place is the longstanding dependence of the economy on crude oil, whose international prices in recent weeks have tumbled in the market, with the attendant loss of over 30 percent of the nation’s expected revenue from the commodity.  The situation, which is expected to last for a greater part of 2015 and maybe beyond, has not only rendered much of the revenue and expenditure projections of the budget unrealistic, it also calls for new ways of managing the economy in a sustainable way.
The government has responded with a series of austerity measures, including a new focus on taxation. Yet how these will drive the budget and lead to the hoped-for reinvention of the Nigerian economy to make it resilient in the face of these forces is a challenge.
Given the long-sought diversification of the economy, the reality of the moment is a wakeup call for using the 2015 budget as a turning point to tilt it towards desired and more beneficial direction. That would entail an entirely new budget making culture. The current practice indicates that the opposite is the case as the budget still manifests elements that point to business as usual. Even with much of the details not made public, the little that is known so far does not give cause to be upbeat.
Among its weaknesses is the disproportionate allocation of a paltry 10 percent to capital expenditure and 90 percent to recurrent. This is happening despite the fact that the capital component should be the growth element of the budget. The implication of this is that there will be relative stagnation, even possible retrogression, of the economy in this period of austerity, limited though the government might wish it to be. Such a situation will not serve the interest of Nigerians, whether in the short-term or in the long run.
Another area of weakness is the absence of any clear-cut strategic measure to grant indigenous productive capacity statutory advantage in the efforts to re-grow the economy. Beyond the complement of lame policy prescriptions that have been traditional with every budget exercise in this country, hardly is there any protectionist measure to define the budget as the fulcrum which at least the indigenous entrepreneur, who may be competing with better endowed foreign investors in the Nigerian market, should stand on. This is a major anomaly that needs to be addressed by the National Assembly in its consideration of the budget.
It is traditional for countries to adjust statutory considerations to ensure that their nationals gain advantage in any conceivable economic activity. Ghana recently outlawed the participation of non-Ghanaians in retail trade of any kind in the country. The United Kingdom still uses the pound sterling as its official currency in spite of its participation in the economy and politics of the European Union.
In the same vein, with the contingent situation of dire economic circumstances facing the greater majority of Nigerians in 2015, it is the government’s bounden duty to respond in the interest of all citizens. The nation is faced with the challenge of launching another structural adjustment, this time away from the prescriptions of the Bretton Woods institutions of the World Bank and the International Monetary Fund (IMF), by rebuilding the economy with wholly Nigerian enterprise through the instrumentality of the 2015 budget.
 The adoption of the World Bank and IMF model in the 1990s is partly responsible for the present dilemma.  Going down that path this time around should not be an option.