In 2016, the Nigerian budget was coined: The Budget of change. Nigerians anticipated the change but were drove into the ditch of recession. 2017 came swiftly, the budget promises to be a budget of Recovery and Growth. The economy thankfully recovered, however, with sluggish drive into maturity. In 2018, there was an overlap of 2017 budget with the former promising to be that of Economic Recovery and Growth plan. The economy outsmarted recession as a result of an increase in the international oil prices, the gradual drop in the oil prices took a toll on the economy in 2018 and once again the budget and the economy was threatened.
On December 19, 2018 the President of Nigeria, Mohammed Buhari presented the 2019 appropriation bill to the National Assembly. The 2019 budget was termed; Budget of Continuity but here I am scared at sight of the word ‘continuity’. Continuity on what? Continuity of budget padding? Continuity of failed implementation? Perhaps continuity of unsuccessful budget.
The 2018 budget was based on a benchmark oil price of $51/barrel, the oil production was assumed to be 2.3million per day and an exchange rate of 305 Naira. The projected revenue was 9.13 trillion naira and the deficit was 1.95 trillion Naira. Unfortunately, the oil production was 1.95 million barrel per day against the 2.3mbpd projected; resulting to a reduction in the projected revenue. The overall revenue performance of the budget was only 53 percent of the target for the year because of some oil revenue not actualised. The appropriation bill presented promises to fare better in the area of oil production for the sake of more revenue, else, the budget will be threatened once more. When will Nigeria be free from the misery of oil price volatility and oil production cut?
While presenting the bill, the President paraded the 2018 budget to have gained grounds in creating 500,000 jobs, school food feeding, infrastructure, trade deficit and others. The claim on job creation is quiet confusing, the latest reports from the National Bureau of Statistics revealed that unemployed Nigerians had risen from about 17 million in 2017 to over 20 million in 2018. The unemployment rate has been experiencing an upward trends over years whereas the federal government claims to create jobs yearly. So, who are those employed?
THE BUDGET OF CONTINUITY
Moving on to 2019 budget, it aimed to further place the economy in the path of inclusive, diversified and sustainable growth in order1 to continue to lift significant numbers of citizens out of poverty. The projected revenue is 8.83 trillion naira, oil price projected at $60/barrel and oil production 2.3mbpd.
As a normal ritual, 70 percent of the 2019 budget is for recurrent expenditure while only 30 percent is for capital expenditure. This happened in the 2017 and 2018 budgets, it is quiet appreciable but more allocation for capital expenditures is needed. It is high time the government stopped spending more on non-productive activities than productive activities. The overhead costs of the budgets totally outweighs the capital expenditures, which serious-minded government does that actually?
The budget’s allocation to ministries, departments and agencies of government were guided by three objectives:
1. Restoring and sustaining growth
2. Investing in people
3. Building a globally competitive economy
These objectives might not be achieved via this ‘budget of continuity’ if the change needed is not visible. To restore and sustain growth, the government must channel efforts to ensure the budget is not always at the mercy of the fluctuations of oil prices and production in the international market. Already, the 2019 budget’s promises are gradually Fading away, the oil price is dropping below the target in the proposed budget. Also, the cut in the nation’s oil production quota by the Organisation of Petroleum Exporting Countries (OPEC) airs risks to the bill.
On December 7, 2018 OPEC members at their meeting in Vienna saw the need to extend efforts to ward off oil supply glut and prop up prices. OPEC and its Russia-led allies agreed to reduce oil production by 1.2 millions barrel per day for an initial period of six months this year. Consequently, Nigeria is expected to cut its oil production by 3.04 percent – 1.685 mbpd (excluding condensates) for the first half of the year. Annually, Nigeria’s budget is hinged on this highly volatile commodity, the country generates more than half of its revenue from it. How can a government that preaches change relies on a commodity it does not control? The economy is facing a double blow of the drop in international oil price and a reduction in its production, the nation is vulnerable to any negative shock in the oil sector. Who or what will save our budget form this hovering woes about to be unleashed? Again! the national budget is about to somersault.
Although, the targeted oil production might be achieved, the first cargo of crude oil from Total’s new Egina oil field hit the international oil market for future trading – a good news for the 2019 budget. The country might lose in terms of prices but we may gain in terms of production quantity. Nigeria’s budget has always been a business of hope, so, one can only hope for the best.
The president revealed that his administration has achieved greatly in infrastructure development. He said:…in the Ministry of Water Resources, we identified 116 abandoned or uncompleted projects relating to irrigation, dams, drainage and water supply. To date, we have completed and/or commissioned these projects… In every State of Nigeria today there is a major Federal road project going on. From 2015-2018 the presidents confirmed that great improvement have been attained when it comes to infrastructure. What achievement can be boast of in the education sector? What change is evident in the health sector?
In 2018, the President of World Bank, Yong Kim confirmed the bank regrets advising the Nigerian government to invest heavily in infrastructure. The bank’s president advised the government to focus on the expenditures that improve human capital; the education and health sector. Unfortunately, the Presidency is not listening to the World Bank this time around maybe it is selective to what it listens to, since we are aware the federal government listened to World Bank on fighting corruption because the Vice President, Prof Osibanjo gave us an hint about it during the debate. How can a budget that promises to invest in people allocates such ridiculous amounts to the critical sectors?
INDEED BUDGET OF ‘CONTINUITY’ IN EDUCATION AND HEALTH SECTORS
I borrow a leaf from the words of Hanushek; No improvement with unimproved people. There can never be a developed and sustained nation without a developed human capital – no education, no nation. How can the budget drives sustained growth and build a globally competitive economy without properly educated and healthy individuals living in it? One can only wonder what is meant to be continued when the amounts proposed to the health and education sectors are smaller when compared to the previous budget. Capital expenditures ought to be improving and increasing, unfortunately, the expenditures reduced while that of recurrent increases.
The goal to introduce Science, Technology, Engineering and Art Mathematics (STEAM) into the education sector will remain a mere paper work if more properly monitored allocations are not disbursed to this sector. Priority must be laid on quality and sound education if the economy must be recovered. An economy that seeks to experience positive change in every sector must be ready to invest in its people through the provision of sound education. This will sharpen the knowledge base of the citizens which can be channeled to inventions and innovation on how to push the economy forward.
What can we say about the health sector? A healthy nation is a wealthy nation. How can there be increase in productivity level when there are no quality and sound health delivery services? Education and health sectors have a causality effect to other sectors in the economy. Improving the human capital drives development in any economy.
The concern over more budgetary allocations to education and health sectors has been expressed by numerous witty writers in the country, yet, a reduction is what we got this time. Until, the annual budget see the need to invest in people truly by improving the capital expenditures on these critical sectors, our budget lacks sanity.
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Omolola Lipede (The Talking Pen) is a contributor to The African Progressive Economist and the opinions expressed here are her own. She is currently an Economics post graduate student at the University of Ibadan.