President Buhari’s farewell budget

President Muhammadu Buhari’s seventh and last budget, presented to the National Assembly on October 7, 2022, is replete with positive features that raise hope of better social service and infrastructural development. However, a close look at the details could diminish expectations due to inherent challenges that arise from systemic issues that have dogged revenue collection over the years. With a budget of N20 trillion, the highest ever in Nigeria, the country should be poised for a greater deal next year, but the amount still dwarfs the budgets of other economies that compete with Nigeria. The N20 trillion is approximately $43 billion, just slightly more than a third of Egypt’s $111 billion for 2022; South Africa’s 119.1 billion; and India’s $478.6bn. Nigeria’s projected revenue and expenditure are, therefore, grossly inadequate for the needs of a population of about 216 million.

Tagged the ‘Budget of Fiscal Sustainability and Transition’, President Buhari said, “Our principal objective in 2023 is to maintain fiscal viability and ensure smooth transition to the incoming administration.” He explained further that, “The expenditure policy of government in 2023 is designed to achieve the strategic objectives of the National Development Plan 2021-2025, including macroeconomic stability; human development; food security; improved business environment; energy sufficiency; improving transport infrastructure; and promoting industrialisation focusing on Small and Medium Scale Enterprises.”

No doubt, there are several commendable plans enunciated in the budget, among them the government’s commitment to the Basic Health Care Fund, which is to boost healthcare at primary health clinics. Under this scheme, government will employ more midwives, nurses, and other health personnel. States will implement health insurance scheme for the rural populace. If properly implemented, the majority of Nigerians in rural areas would have access to improved healthcare. Also, the president’s commitment to funding tertiary education, especially with the budget of N470 billion for revitalising universities and increased salaries for lecturers, a direct response to demands by the Academic Staff Union of Universities (ASUU), is a good measure in dealing with human capital development. So too are the funding for basic education through the Universal Basic Education Commission (UBEC). The plans to upgrade infrastructure in land, rail, and air transportation sectors are also commendable, given the acute infrastructure deficit in Nigeria.

However, the revenue divide of the budget is a source of worry. President Buhari projected that the non-oil sector would raise some N9.7 trillion to fund the budget. This is doubtful for several reasons. Over the years, the non-oil sector has not raised more than N5trillion revenue, except for 2022, when that threshold was met. It is, therefore, doubtful, that, in an election year, the non-oil sector would generate about N10 trillion for the 2023 budget. Worse still, if the revenue for next year does not double the N5 trillion mark for this year, it means that, with some N6 trillion being earmarked for debt servicing, government may need to borrow even much more than the projected deficit of N10.78 trillion in the budget, increasing Nigeria’s debt burden substantially.

The challenges with the non-oil sector revenue are plain to see. With the chaotic foreign exchange regime, industries may find it more difficult to import so much goods that would attract huge revenues for the Nigeria Customs Services – one of the major contributors to non-oil revenue. Another revenue agency, the Federal Inland Revenue Services (FIRS), may face enormous challenges in tax collection in Corporate Income Tax (CIT) from industries because of the high inflation rate that puts pressure on the profits of many commercial enterprises. Furthermore, remittances to the federation purse by Government Owned Enterprises (GOEs) have been laughable, as some mangers of the enterprises rather help themselves with revenues than make credible returns to the treasury. With the monumental oil theft going on in the Niger Delta and the legal controversies surrounding the tier of government that should collect Value Added Tax (VAT).

Above all, it is still not clear how the question of often paltry remittances from the now private company, NNPC Ltd, will be resolved, particularly in light of the public statement by the Governor of Kaduna State, Malam Nasir El-Rufai that he does not believe NNPC’s claim that nearly all revenues from sales of crude oil go into paying for the importation of subsidised petroleum products. When all of these are taken into account, then, it is easy to guess if government can generate the trillions of naira needed to fund the expenditure projects in the 2023 budget.

Now, it must be noted that this is the president’s last budget, and therefore, his administration’s last chance to finish strong. He must ensure that government officials do their jobs irrespective of the elections, which have often times diverted attention from governance, and opened up the treasury to private pockets. Government must be determined and transparent in the implementation of the budget, if expectations raised by Buhari in his speech are not to be dashed.

For instance, if Nigeria’s refineries for which billions of dollars were paid in maintenance costs last year do not come on stream next June as promised by the NNPC Ltd, then the subsidy regime due to be lifted then would cause unmanageable chaos.  Much the same applies to several infrastructure projects that are expected to be funded from tax expenditure. In a nutshell, this government must seize this last chance with both hands.