10 solid reasons why Nigeria’s 2021 budget should be trashed

In spite of apparent challenges around the funding of the 2021 budget, with Nigeria already cap-in-hand begging for loans from everywhere, I still believe the document should be thoroughly scrutinised for purpose, and if we do, we just may junk it altogether.

The budget is the most important document in any nation on earth in any given year. This goes beyond the fact that many companies and organisations key into government plans yearly, as suppliers, contractors, consultants, and strategic partners of every hue. It is a fact that the government remains the biggest spender in every country. No private sector entity can come up yet, with the kind of budgets that governments are able to put together. Why is this so? It is because governments plan sustainably for every resident in their domain, and even people from other countries or all over the world. The USA for example, being the top country in the world, has to plan not only for Americans but for billions of other people either on an economic or security front. Nigeria also has to plan not only for Nigerians but for people in Niger Republic, Ghana, Benin Republic, Chad and others, either for their power needs or for the security issues which unite the peoples of these countries. However, I can see that despite the acute awareness of Nigeria’s strategic role in the subcontinent, our budgets have always been a joke and the 2021 proposal is in the same basket; a joke.

How much is N13trillion?

So, I have always advocated for a larger budget for Nigerians. I proposed N15 trillion three years ago. Nigeria’s Federal Government has today proposed N13 trillion which looks like a large figure and may be evidence that the government is caving in to some of our agitations. But the amount is also nothing, given the fact that Nigeria has devalued the Naira, and that most of the budget is not skewed towards benefiting the people. There seems to be little or nothing in this budget for anyone apart from politicians. The president happily went to the National Assembly to announce another period of jollification to the ever-money-hungry politicians because the budget can only cover their excesses.

There are so many problems with this budget and it seems like year-in, year-out, our fiscal situation only gets worse. President Buhari has to also question his luck, especially why in the three recessions that Nigeria has ever entered, he was the president. He announced the onset of the next recession in the budget speech with so much confidence, perhaps based on top-level information that he may have been availed back-end. The many problems of the 2021 budget include:

Out of a budget of N13 trillion, a total of N5 trillion will be borrowed afresh
Our deficits keep increasing. This time we budget to have a deficit of N5.2 trillion or 40% of the entire spending we intend to do. There is the usual trickery of comparing our deficit with an almost meaningless GDP, but real financial management requires that we compare with the budget itself. In the military days, we used to have reasonable deficits like 3% or 5% of the budget. Deficits are good when a country hopes to instigate growth, such that the federal government spends a little more than it can raise. But for some years now, we have been maxing out at 35% – 40% deficit. I don’t know anywhere in the world a federal government goes so berserk as to be borrowing way beyond reasonability. It doesn’t make sense. In 2003, Nigeria’s budget deficit was 16.4% while in 2005 under the Obasanjo administration, the deficit was 10% of the N1.6 trillion budget. In 2008, under Yar’adua, Nigeria’s deficit was 20% of the budget. It is under this government that this apparent huge deficit recklessness began and it has serious implication for the future of our children.
Still on the future, I recall Lee Kuan Yew used to say if democracy is the primacy of the wishes of the majority, then the wishes of unborn children should always carry the day. The 2021 budget of N13 trillion is to be financed with N5 trillion of new borrowings (N4.3 trillion of new borrowings and N700 billion of new drawdowns on pre-approved borrowings). This means that Nigeria can only generate just over N7 trillion from grants/aids as well as internally generated revenue. Again, with a situation where debt servicing is already so high, we have to borrow 40% or N5 trillion, of the proposed budget. Not sustainable. Indeed there is no difference between the management of a household’s finance and a country’s finance. Any father of a household that has to consistently borrow 40% of the money required to sustain his family every year is beyond reckless.
The personnel cost of the federal government, as estimated in the budget, is over N5 trillion or 40% of the budget. This means that the entire budget deficit will be used to pay public and civil servants. This could also mean that from the N7 trillion of internal and external revenue the government wishes to generate, over N5 trillion, or about three quarters of all revenue will be used to pay salaries. In short, the Buhari government has totally lost its way and is dragging the whole of Nigeria with it to a bitter end.
There was a brief mention of revenue in the 2021 budget speech. The federal government hopes to finance the budget using over N7 trillion of revenue that it may generate. The president decided to lump up all the MDAs or government agencies, without breaking things down. The only assumption in the budget was as usual about how much crude oil we hope to sell, and at how many dollars per barrel. I will come to that shortly. One would have expected the president to dwell on some of the units where the N7 trillion revenue will be made up. In fact, aside from the assumptions on crude oil, the expected revenue from all key MDAs should set the tone for the budget. Except, of course, the intention is to hoodwink and befuddle the people, there is no reason why the president cannot state exactly what the expectations are from the Customs, FIRS, NIMASA, NPA, FAAN, Immigrations, NCC, CAC, NNPC, CBN and others. This will help the leaders of those government agencies to sit up. The current situation where they make money and remit nothing to the consolidated revenue fund, leading to all the hoopla in the Senate and House of Representatives recently, need not come up. I am alleging executive connivance with these agencies because the president seems to be giving them blank cheques ab initio. The Representatives needn’t command them to remit 60% of all takings as they did recently. And with presidential connivance, it is unlikely that the MDAs will pay heed, until another legislative review.