As Budget 2024 continues to generate comments, it will be instructive to look at the current state of the economy.
Inflation is inching towards 30 per cent from recent figures released by the National Bureau of Statistics (NBS); fuel is expected to rise beyond the current price levels of N650; the naira exchange rate will continue its uncertain trajectory against major currencies; the trend of long-established companies folding up and leaving the country will continue as a result of the uncertain economic climate in the country.
On this, most Nigerians concur with the assessment of Economist Bismarck Rewane on the budget. He said ‘’In the end, budgetary arithmetic, budgetary mathematics in economics is of no use to anybody except when by this time, in six months we are buying rice at N40,000 per bag rather than N60,000, and a loaf of bread at N700 instead of N1,300. The people are not interested in whether the budget is balanced and what the debt is. How does the budget affect their livelihood? That is the key thing’’
Similarly, the World Bank lead economist for Nigeria Alex Siernert recently remarked that based on the current exchange and global oil prices the pump price of fuel should be N750 rather than N650 as currently obtained. In his words, ‘’It does seem like petrol prices are not fully adjusting to market conditions so that hints at the partial return of the subsidy, if we estimate what the cost reflective price would be and assuming that importation is done at the official FX rate.’’
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Essentially this means that contrary to what the government has made us believe, facts on the ground indicate that subsidies on petrol still exist. With none of the refineries in the country working at optimal levels to produce the commodity and satisfy the domestic market, the bulk of the stuff is imported by agents using official exchange rates.
That is what the World Bank is pointing out which invariably indicates that indeed some favoured agents are retained by government to import the commodity under the official exchange rate in order to keep the current price levels. And now that the World Bank has blown the cover on what it regards as a negation of the free market principles which the government had pledged to follow, it is logical to expect that in due course, fuel prices will rise.
Taken together these are clear indications that the much-hyped ‘’Renewed hope’’ promised by the Tinubu administration is actually a pie-in-the-sky exhortation to Nigerians, lulling them into a sense of dubious hope and expectation of good times ahead.
At political and economic crossroads presently, Nigeria needs to cut a fundamental economic paradigm shift away from the budgetary economic expenditure framework that we are used to doing. We need to develop a comprehensive economic framework that moves away from reliance on oil revenues and loans. We need to move away from the periodic hand-to-mouth expenditure projections which do not fully take into account the need to integrate all sectors of the economy into an integrated economic development framework.
The budgets we make annually are mostly for the finance sector, the bloated federal and state institutions and bureaucracies and the military/security institutions that are mostly service-oriented. They do not directly identify and address such critical areas as agriculture, industry and manufacturing, research and development which in real terms stand to boost the economy more, provide employment, research, innovation and value-added.
President Tinubu faces an auspicious opportunity to rejig the Nigerian economy from one that depends on rents and revenues from oil to one that produces and manufactures products for export and value-added.
There is an abiding need to initiate a bold integrative industrial master plan to be spurred by research and innovation. We must set targets for industrial development to produce most of what we currently import and add value to other countries which places us in perpetual debts and deficits.
The comprehensive economic programme should be in the form of a new economic deal for Nigeria where all sectors will be harnessed to participate and contribute to economic development and growth. We should aim to be the hub of an African emerging economic zone producing and manufacturing products for exchange.
The budgets we make annually do not bring the desired economic impact because they are superficial in nature and lack the necessary linkages to stimulate the critical areas of national development.
President Tinubu’s budget 2024 is in pretty much the same mould with previous budgets. And despite the high-sounding ideals and accompanying figures will not make the desired impact because it is principally an expenditure framework whose implementation does not fundamentally identify and address the essentials in the economic development of the country.
We cannot hope to develop our economic potential using this expenditure framework. It breeds corruption, stifles innovation and stymies economic development. A country in excess of 200 million people with vast potential deserves to project more economic output than currently obtains. Year in, year out, our budgets do not deliver the desired impact because the emphasis is tilted more towards sharing than stimulating productive endeavours.
Budget 2024 structured in much the same way will also go the way of its predecessors. But with the dire economic situation in the country, it will most likely suffocate the economy and produce a disappointing result with consequences that may not be palatable.
The Tinubu administration should pro-actively consider this and come out with a more comprehensively constructed economic plan that will address the situation going forward. (Concluded)
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