The 2018 budget is very important to Nigeria in two major
ways – 1) it is the last full year budget that will be implemented by the
Buhari administration, a government that rode to power on the back of
tremendous goodwill and popular vote, but to this day, has largely failed to
meet the expectations of the majority; 2) It is the first budget after the
country began recovering from the economic recession which hit hard into the
standard of living of the majority for the large part of 2016. So, to the
average Nigerian, this budget is the last single hope that this government may
still deliver on some of its campaign promises.
It was therefore with so much
raised hopes that the nation listened to President Buhari’s budget speech to
the National Assembly, I was particularly looking out for pointers to drastic
transformation and strategic spending to curtail government excesses and send
strong message that this last year was not going to be business as usual for
the government. But many were largely disappointed, both with the budget
itself, and the lacklustre speech that the President delivered. The speech was
largely indifferent from previous budget speeches, and had little or no
substance, enough to inspire Nigerians that 2018 will be different, or enough
to jolt the overwhelmingly corrupt public system that 2018 was the year to sit
tight and deliver on the President’s mandate. I struggled to extract a few
takeaways from the budget, and have broken them down to basic implications for
the ordinary Nigerian:
1. Our Budget was tagged ‘Budget of Consolidation’
– Though the budget, at ₦8.612 trillion (16 % higher than 2017 estimates) is
regarded as the ‘largest ever’ budget, a conversion of the budget to real
currency shows the budget is a joke in real value. There is very little to
consolidate with a budget of a meagre $24 billion in 2018; in an economy of 180
million people, when Angola, a similar oil major country, as at 2017, had a
budget of $44billion with a population of 30million.
2. It appears the major objective of the Budget,
from the President’s speech, is to ‘reinforce and build on recent
accomplishments; and sustain reflationary policies’ – there were little or no
accomplishments by this government since 2015 in the first place, so this
budget will build on little or nothing.
3. The two major claims to success by Buhari -
movement on the 2018 World Bank’s ease of doing business ranking and peace in
the Niger Delta – were achieved when he ‘stepped aside’ – so, it’s either we
pray he steps aside again in 2018, or we may achieve nothing again.
4. Increase in external reserve to US$34billion as
at 30th Oct. 2017, extra $500million in Sovereign Wealth Fund, and an increase
in our trade surplus – while all good macro-indicators, have almost zero impact
on the overwhelming majority of Nigerians who work in the informal sector. These
majority population require ONE major thing to drive their economic activity –
infrastructure, and this can only be achieved by a focused and firm government,
that is totally committed to budget implementation, devoid of corruption, so as
to ensure every naira allocated and released is spent. As it appears, we still
expect the likes of Ameachi, Ngige, Dalung, Adeosun, Ogbeh & other
political jobbers to execute the 2018 budget – so, fellow Nigerians, this is another dead end.
5. With the massive infrastructure deficit, we have
budgeted only about 30% to Capital Expenditure, that comes to $7billion. I
assume that’s cost of campaign in 2018, because that amount won’t even scratch
the surface if this govt intends to make any impact before it leaves in 2019
(and it has to, otherwise, it gambles with 2019)
6. FX rate at ₦305/1US$, when the economy
mostly runs on the parallel market of ₦363/1US$ and the I&E FX Window is ₦360.46/1US$
shows one thing – continued currency peg – this tells the world that our
political leaders are still as ignorant as ever about economic realities, and
market-determined exchange rate
7. Revenue forecast at oil production of 2.3million
barrels per day, when average crude oil production in 2017 has been less than 2million
barrels per day – we have over-estimated revenue again, then next year, we’ll
be back here with stories of low income bla bla. What’s wrong with doing a
worst-case scenario planning?
8.
Personnel and Overhead costs to increase by 12%.
This is completely unjustifiable. At this point, we should be investing heavily
in projects that will drive employment in the private sector. Any increase more
than 5% here shows we haven’t learnt jack from the past
9. Plan to set aside ₦12billion for transmission
lines and substations to address challenges with power transmission and
distribution networks – asides the fact that most of the allocated funds may be
diverted, $33million is grossly insufficient to fix the Transco and Disco end
of the power value chain. More importantly, the government failed to address
the fundamental regulatory issues that impede on the growth of the power
sector. Throwing money at the power sector has repeatedly failed to solve the
problem. So, darkness again in 2018.
10.
Agricultural sector – 6 staple-crop processing
zones to be established to support investors and boost crop production,
processing and storage – as usual, nothing will come of this. Certainly not
under Audu Ogbeh. Even the brilliant Akinwunmi Adesina, with brilliant
initiatives, couldn’t end the food crisis, how much more Ogbeh
11.
Budget deficit of ₦2trillion to be financed
through new borrowing of ₦1.7trillion, and the balance of ₦306billion to come from
privatisation of non-oil assets – we are
already spending 23% of 2018 budget on debt service, 7% less than our CAPEX, so
as it is, our borrowing is already impeding our development. And we are sinking
deeper into the debt hole. While debt in itself is inevitable for development,
we must quickly balance infrastructural growth with growth in debt profile,
otherwise, we’ll be back to 1999, begging for debt pardon, which may not come.
12. Having said all these, it is this same APC
government that has foot-dragged since 2015 that owns this budget, a large part
won’t be implemented (less than 60% in 2017), and some released funds will be
diverted, especially as elections are fast approaching. So effectively, Nigeria
is expected to survive 2018 on less than $15billion. Absolute disaster.
Ayo-Bankole Akintujoye is a Political Economist
and Strategist. He has worked with some of the world’s biggest consultancies to
advise organizations and governments in the areas of Strategy, policy
formulation, transformation, and process improvement. He holds a Master’s
degree in Political science. He tweets from @AyoBankole
