Why revised 2020 budget may not work, by don

A development Economist, Dr Chiwuike Uba, is doubtful of the workability of the revised 2020 budget of N10.8 trillion signed into law last week by President Muhammadu Buhari.

Uba told The Guardian in Enugu yesterday that the national budgets had consistently because of corruption, inflation of contracts, poor planning and supervision.

According to the economist, the 2020 budget may be difficult to achieve because of the coronavirus pandemic ravaging the globe.

He said: “The signed 2020 Federal Government budget has a budget deficit of about N4.5trillion, debt service of N2.9 trillion, a capital expenditure of N2.4 trillion, and N4.9 trillion for recurrent expenditures. This means that about 42 per cent of the 2020 budget will be funded through additional public debt.

“Currently, Nigeria’s debt service to revenue ratio is about 66 per cent, which is above the World Bank’s prescribed debt service to revenue ratio of not more than 22.5 per cent. Nigeria is borrowing to fund consumption and this is not only sustainable but unacceptable for a country struggling with high poverty rate, high misery rate, high unemployment, insecurity, and an economy facing recession, among other challenges.”

He added: “Painfully, monies that end up in personal bank accounts are included as part of the metrics for determining budget performance. A typical example is the N1.6 billion allegedly shared by the management of NDDC (Niger Delta Development Commission) as part of their COVID-19 palliatives. Budget performance should not be measured based only on the amount expended, but, more importantly, the value-added.

“The value-added should be determined by evaluating the social costs of the foregone projects and activities as well as the social and economic benefits derived by the citizens for the monies spent.
“Clearly, Nigeria needs to rethink its project and infrastructure strategy. A cost-benefit analysis should be employed in project determination and implementation.

“The 2020 budget of $28 billion is a far cry from South Africa’s budget of $122 billion and Kenya’s budget of $32 billion. Unfortunately, Nigeria has a population of over 200 million people. Nigeria’s population is 3.5 times the South African population of 57 million and over four times Kenya’s population of 48 million. Yet, only about 22 per cent of the 2020 budget is for capital expenditure.

“The current administration promised to increase the capital budget, but that has not really happened. Most of the government budget under spending is related to capital expenditure, especially, the economic sector –infrastructure projects. In most cases, more than a third of these projects are never started. Even when they are started, they are never completed.

“It is even worse when you factor in overinflated and poorly executed projects. South Africa’s budget for infrastructure is above $28 billion, which is more than Nigeria’s entire 2020 budget. In addition to poor funding for education, health, and other social sectors, the less than $2 billion budget for infrastructure is not enough to jumpstart Nigeria’s economy. I wonder how the government wants to stabilise the economy with the current policy and budget.”

The don said there was a need for the country to “increase our investment in the social sectors, manufacturing, and basic infrastructures to increase the productivity output in Nigeria”, adding that “Nigeria has the potential to become aand inclusive growth”.

He added: “Nigeria’s 2020 budget should also be re-allocated. The current allocations will not guarantee economy stabilisation and growth intended by the government. Instead of reducing the allocations for health and education capital expenditure budget by 25 per cent and 20 per cent respectively, it should be increased and some of the recurrent expenditures reduced.

“This reduction is even made worse by the hedging of the proposed allocations for health and education on the budget performance; whereas the allocations for the Presidency, National Assembly and National Judicial Commission are arbitrarily assigned irrespective of how the revenue performs.”