The 2016 budget proposal

IN what looks like a patriotic deviation from the norm, the Buhari administration recently rolled out the 2016 budget that has unique features and challenges. Typically, the budget ought to have towed a low profile considering the prevailing economic downturn. But it didn’t. Instead, it turned out to be a super budget, the biggest the country has ever had. The optimism in the budget is uncommon and befuddles doubters. It underscores a move towards a new Nigeria, borne out of ingenuity and creative thinking hitherto lacking in this sphere.

This is the first budget by the hitherto opposition party, now the ruling All Progressives Congress (APC). The past 16 years witnessed budgets prepared and implemented by the Peoples Democratic Party (PDP) that largely failed to achieve set targets, as evidenced by the woeful state of affairs in the country. The 2016 budget, therefore, ought to be a budget of hope and rejuvenation. It is a new menu prepared by a different cook. The taste would be different just like the eating style. Nigerians should give the budget a chance to unfold, given, especially, the unusual bleak times the country is facing.

Over the past 16 years, budget failure was the norm. The country raked billions but reeked in mass poverty and suffering. Nigerians need redemption in the new dispensation. The way and manner budgets are prepared by the ministries, departments and agencies (MDAs) need to change. The process of budget defence, debate and approval at the National Assembly (NASS) need to change. The culture of unending discord, rancour and acrimony over budget, especially, at the National Assembly (NASS), should also change. The idea is to adopt a different approach in the spirit of CHANGE to give Nigerians a new lease of life. By this, the so-called “budget mafia” spanning the MDAs will get into trouble. Those who have enriched themselves over the years by padding budgets should realise that a new dispensation has dawned. The die is cast. It’s no longer business as usual.

With unprecedented N6.08 trillion, the budget is aimed at infrastructure development, economic and inclusive growth. This is the biggest and most ambitious budget ever proposed in Nigeria. As such, its failure would be colossal. This must be guarded against. And that is the essence of the war against corruption.  For the first time, the poor, unemployed and vulnerable Nigerians were taken into account under a social security intervention programme.

Coming at a most inauspicious time when the country is facing severe economic and domestic challenges, both the people and government must adopt a new attitude to survive. The administration must introduce unusual creative measures to fund the budget and realize set targets.

Under the budget, in an attempt to redress the infrastructure deficiency, the Federal Ministry of Works, Power and Housing, was allocated N433.4 billion; Ministry of Transport got N202 billion;  Ministry of Solid Minerals and Steel, N18.6 billion and the novel social security intervention programme got N500 billion, among others. How to ensure that this money gets to the real beneficiaries is the crux of the matter, particularly, in the absence of a reliable database of the target group. There may be need for a fresh headcount of the vulnerable and unemployed to get a rough estimation to work with.

Nigeria’s housing deficit alone is put at 17 million housing units of which N56 trillion is needed to bridge the gap. The infrastructure gap is put at $2.5 trillion according to the Institute of Appraisers and Cost Engineers (IA&CE). This explains the huge budget allocation to that ministry. The decrepit infrastructure in Nigeria is a huge embarrassment that demands systematic and diligent action. For me, one way to deal with the problem is to target the budget to specific infrastructure projects. Take the completion of the Lagos-Ore, Lagos-Ibadan or Enugu-Port Harcourt highways as example.

The global economic downturn occasioned by the fall in crude oil price is taking toll on Nigeria. Over the weekend, the benchmark Brent crude sold for $34/barrel below the budget benchmark of $38 per barrel. That means a deficit budget from the outset. The forecasts are not glittering. There may be knee-jerk price rises. But President Buhari and his team must be smart to be able to implement a superb budget in a hard time. Some hard decisions must be taken.

The greatest challenge facing the budget is funding. Nigeria’s over-dependence on oil that fluctuates every now and then puts the country in a precarious condition. This is not the first time that government was put in tight corner. In 2008, in the wake of the global economic meltdown, the price of oil fell from over $100/barrel to as low as $30, thereby, putting the budget in jeopardy. One option that was adopted was to slash the budget by as much as 40 per cent. Committees were set up to rejig the budget by slashing the funds allocated to some sectors. There is uncommon optimism in the 2016 budgets that betrays the economic realities of the time. Rather than going lean, the budget is offering more to Nigerians.

The Federal Government intends to fund the budget from three main sources as follows: N820 billion from oil, N1.45 trillion from non-oil and N1.51trillion from independent revenues, making a total of N3.85 trillion. That will leave a deficit of N2.2 trillion, out of which government hopes to borrow N1.8 trillion from domestic and international sources. The N1.8 trillion, representing 30 per cent of the budget is strictly reserved for capital projects. With Babatunde Fashola at the helm of that ministry, positive result is expected.

That the budget was predicated least on oil revenue underscores the reduced importance attached to the commodity. Oil revenue has reportedly dropped by 50 per cent.  The Vice President, Professor Yemi Osinbajo, had stated earlier that this year’s budget will depend less on oil. That explains the zero-based budgeting (ZBB), which some top bureaucrats in the MDAs are uncomfortable with.

With zero-based budgeting as opposed to the traditional incremental budgeting, every item in the 2016 budget is justified on its merit. Those that cannot be justified were removed. That way, the 2016 budget is based purely on need rather than anticipation. This is a new paradigm, which Nigerians should give a chance to play out.