2021 budget of continuing unrealism! - By: Eugene Enahoro | Dailytrust

2021 budget of continuing unrealism!

President Muhammadu Buhari presents 2021 Budget PHOTO; SUNDAY AGHAEZE. OCT 8 2020

There is so much talk about restructuring, zoning the next presidency, or even breaking up the nation as a solution to Nigeria’s problems that people appear to have taken their eyes off the ball. The next presidential election is three years away and the imperative problem is financial not political restructuring. In order to fund the 2021 Budget’s N5.2 trillion deficit President Buhari intends to sell off or concession government-owned properties and non-oil assets in addition to borrowing more money from the World Bank, the Islamic Development Bank and countries like China and Brazil. As usual there are no concrete plans as to how to repay this money. While most parents save money and assets to bequeath to their children, Nigerian governments consistently mortgage the nation’s future so that instead of inheriting assets future generations of Nigerians will inherit only massive debts! Spending is easy while revenue generation is difficult.

Government’s habitual over-optimism in revenue projections gives the impression that there is plenty of money to spend whereas in reality there isn’t. Bearing this in mind it’s pertinent to ask why such large amounts are required in the first place. The Budget contains ridiculous items like SUVs for chief executives, repetitive annual purchase of computers, catering equipment and new top of the range vehicles, fancy office buildings for agencies that can function effectively without them, international and local travels even in this age of internet meetings, banqueting, entertainment as well as a plethora of unnecessary “capital expenditure” items which add no productive capacity to the economy.

The Executive isn’t alone in failing to cut its coat according to Nigeria’s cloth. While the Judiciary is underfunded, a recurring feature of the Presidency and the Legislature is their extravagance at the expense of the ever increasing number of citizens living below the poverty line.  A cursory look at details of the 2021 Appropriation Bill affirms that despite the nation being in dire economic straits their profligacy knows no bounds. Quite rightly there is serious concern over federal government’s consistent borrowing to fund budgets. The 2021 budget designed to be implemented against a backdrop of a global economic crisis and domestic impact of COVID-19 is somehow expected to accelerate the pace of Nigeria’s economic recovery, promote economic diversification, enhance competitiveness,  ensure social inclusion and deliver on the goals of the Nigeria Economic Sustainability Plan (NESP).

The truth is that all these goals are unachievable without accepting the fact that government has an abysmal track-record on delivering services which the private sector can provide more efficiently, and they must cease attempting to do that which the markets are better able to accomplish. Also worthy of note is that the majority of economic and policy analysts agree that government is too big and unwieldy and there is the need to reduce the size of its bureaucracy whose recurrent expenditure consumes over 70 per cent of the budget.

Quite ridiculously the 2021 budget seeks to expand bureaucracy and shows no indication that government understands that the world is going through a fundamental change. It contains no big ideas which demonstrate comprehension of the challenges or opportunities. Instead it is business as usual where good money is thrown after bad ideas. The current worldwide “Fourth Industrial Revolution” is being driven by technologies which change the way the world operates: Artificial Intelligence, advances in telecommunications, enhanced computing power and interconnectivity of electronic devices, 3D printing, self-driving vehicles, and a shift towards carbon neutrality.

While the 2021 budget acknowledges that Nigeria is developing a new economic plan, there is no evidence that it is guided by lessons learnt from the implementation of earlier plans. There is little evidence of any Impact Assessment on any previous economic plans. Although security is one of the three promises President Buhari’s government made to Nigerians the budget is incomprehensibly silent on the cost of the war on Boko Haram. In addition to having no positive effect on the lives of citizens there is a seeming insensitivity towards continuously burdening citizens with raised taxes and tariffs without any reduction in the exorbitant cost of governance. Increasing taxes is completely unjustifiable in a situation in which Transparency International asserts that treasury looting, massive corruption, and numerous fraud cases are still commonplace.

The 2021 Appropriation Bill continues the same pattern of behaviour of ever increasing government expenditure combined with continuously under-performing revenue. This type “deficit budgeting” and “planning” will no doubt lead the nation back into a debt crisis and the need for further “creative” financing measures. The nation needs big ideas in order to change the trajectory of the economy but there are no big ideas in this budget.  Nigeria can only survive through making the economy more productive, not mere political restructuring. All hope of turning its economy around and building a country that improves the quality of lives of its people lies in sensible budgeting.

The truth is 2021 budget is simply old wine in a new bottle.  It displays no understanding that the world has changed and that the nation’s problems have intensified. Humongous sums being voted for comfort of leaders is not the way forward.  There is neither over-arching economic philosophy nor development agenda. The only conclusion which can be reached from the lack of big ideas on how to fix youth unemployment or prepare the nation for the already-commenced fourth industrial revolution, lack of emphasis on the role of the markets in addressing economic challenges, is that the 2021 budget is impractical and not implementable.

If history is anything to go by, revenue projections will be impossible to achieve. Overly optimistic revenue projections are part of a continuing pattern of false optimism which has put the nation deep in debt and in dire financial straits.  The 2021 budget is merely a continuation of a pattern of “cut and paste” budgeting and spending that can only ultimately end in a bankrupt federal government. It’s long past time when government should consider limiting its role to creating the enabling environment for private sector participation and regulating the delivery of the services rather than seek to borrow and invest unprofitably. The truth is that the solution to the nation’s problems lies in economic, not political policy. The reality on ground is that nothing will improve as long as ill-considered budgets continue to be the order of the day.

Future governments must ensure that subsequent budgets are guided by big ideas based on rigorous, evidence-informed debates, not simply “cut and paste” estimates. Cynics claim that the most difficult part in producing Nigeria’s annual “cut and paste” budget estimates is thinking up a name! The 2021 Budget, tagged “Budget of Economic Recovery and Resilience”, should have been called “Budget of Continuing Unrealism”.