2019 budget’ll rarely bring Nigerians out of poverty
Looking at the budget benchmark, you can see the oil price coming down gradually; will this not gravely affect the benchmark?
I made a comment where I said that it was a hopeless budget that will rarely bring Nigerians out of poverty, diversification of the economy and inclusive growth. When I said that, I noticed a lot of people were a bit defensive, saying the statement was borne out of politics. I am a kind of person that is responsible enough to choose my right words and I am happy about this question.
If you followed the previous budgets under this administration, there was no budget under this administration that I have ever used any word as strong as that. Some of the budgets have given hope, some have tried to address growth but this budget particularly, I still stick to my words, it is not only hopeless, I think it is even deceptive. Is it that those that prepared the budget did not asked themselves these questions?
Looking at the issue of the oil price, they have not completed budgeting when the price of crude oil dropped to fifty something and they are now using the benchmark higher than the current crude oil price, what does that mean? If some people believe that the price might go up, then they better come back later with a supplementary budget. But to say categorically, putting the price at 60 is not realistic. And so I think there are those who know that the price is not realistic, and government itself would soon know that the price would not be realistic. Not only the price, if you look at the production level, throughout 2018 and 2017, we are producing about 1.90 million barrels and now we are now using 2.3 million barrels, how? What indices are there? Again, it is not realistic. And if you are going to base your revenues on that, you’ve already seen a big hole, that was the reason I said that it was not a budget of inclusive growth.
Would you say the preparation was wrong or was it just done simply out of ignorance?
Well, I can’t see their minds or speak on their behalf. What I am just saying is from my own experience. I was SA budget and I showed interest in everything. What I suspect is that they are just looking at the best way of financing the expenditure, based on realistic projections. What is even disturbing is the fact that when you look at the total expenditure, you’ll see that over 70 per cent is already gone on recurrent, debt servicing and others.
So, it’s clear that any shortfall of revenue is going to be very impactful because already between the crude oil price and production we have already seen that once we don’t meet those targets, we are going to have a huge deficit problem.
Budgeting generally has been a big problem for this administration. There are always issues around budgeting process, what exactly is the problem?
One is that they are all based on assumptions and I believe that the leadership needs to take charge, they need to provide leadership. You see, as a president, you can’t just be a technocrat to prove this, I can’t just imagine when somebody tells me he’s going to do 2.3 million barrels, when we have always done 1.90m barrels, it is not true, it is better if some of these assumptions are realistic. But I think there should be more consultations between the National Assembly, at the senior level, I am not talking about ministerial level. The president should be able to sit down with the Speaker, House of Representatives, and the Senate President to tell them that this is what my technical people have brought to me. By the time it comes to the National Assembly, to the public domain, it will be something that is fully known, not talking about ministers briefing leadership. If the process is followed, it will become a document owned by both, not a document owned by the executive.
What is happening now is the fact that a lot of work that should be done behind the scene, that shows consultation and ownership is not there, that’s why it takes a longer time. The executive will bring it, it’s as if the work starts all over again because we have constitutional powers to do our work, so it starts all over again. But if there is adequate consultation, by the time it comes to the National Assembly, it will be in the National Assembly for a very short time because the principles have been agreed, the framework will have been agreed, it will only remain the details. So when you see details, you might see maybe five per cent, 10 per cent adjustments here and there because you’ll see those adjustments at the lower level.
That is why you’ll see a budget that the executive will bring and by the time it leaves the National Assembly, it looks like a document that does not look presentable and the provision of the constitution, which emphasises check and balance expects that, but there is no dialogue and we may continue to see this kind of scenario. Even if you bring your budget in the second week of December, if there is adequate consultation, there shouldn’t be any problem.
If you look at some of the states, they bring their budgets and they don’t have issues because of consultation. When I was the governor, before I brought the budget, I would have consulted with the entire House of Assembly. Whatever is their concern like their priority I knew it, I would have incorporated it in the budget because they were stakeholders, you couldn’t ignore them. There is no alternative to dialogue and once you don’t do that those are the kinds of things causing friction.
It’s not the personality, change the whole 360 members of House and senators and 109 senators, even if the president likes let him write the names of the people he wants in the National Assembly, as long as the style and the approach do not change, it will be the same result.
Where do we stand on the implementation because it is very poor?
It will be poor because the funding is not there. Go to the independent revenue, it has been under-performing from day one of this administration and they keep giving the man independent revenue that is not realistic-N700b, N800b, N900b, look at implementation, N150b, N200b, and these are areas we have been telling him, independent revenue is not working because there are many leakages. In a government that claims to be fighting corruption, the level of leakages is too huge. You are giving a budget of N900b and they are coming with N200b, so that N700b does not allow the implementation of the budget because first charge will go to personnel. Like this budget now, personnel is about N2.3tr, you cannot do anything it’s gone, serving of loans-overN2tr, overheads even if you can’t take the whole over N2tr, N6tr has gone, so recurrent expenditure has carried the whole money. It is now the little money after that that can be used for capital expenditures. So, once you have got the revenue wrong, the implementation will be a problem.
What is even more frightening now is that the deficit is so huge that the majority of the borrowing in 2019 is going into the recurrent expenditure, if you are not already seeing it now, and that is against the law. Borrowing is meant for capital expenditure. So, the major issue now is the issue of revenue, you must block the leakages. As long as you don’t block the leakages, you’ll have poor implementation, you’ll break the law and there will be no investment in capital infrastructure. And when there is no investment in capital infrastructure, there cannot be growth, there cannot be the issue of addressing poverty, so where is the hope for Nigerians?
Currently, there is propaganda machinery on, instead of us looking at the message; we just attack the messenger, this is the truth, and that is why it will continue to reoccur. Go and look at the budget in the last three years, you cannot address the issue of independent revenue. I think finally now the president is going to an extent now on oil subsidy. Go and look at my speech, I have shouted about the issue, the Nigerian National Petroleum Corporation (NNPC) was blowing illegality called cost-recovery, where is it called cost-recovery, this is illegality, that is inefficiency, again that is the source of leakage, because if subsidy management is efficient, we would save money, if subsidy management is inefficient money that should be coming to the consolidated account is going away, so these are the things that we should all tackle, but unfortunately that is not the case.
So, when you talked about the implementation of the budget it will be poor because there is no money to fund the budget. The reality is that there is no money.
Government’s borrowing has been massive, without impact, why is this happening?
If you borrow well, if you borrow for infrastructure there is no problem with that. As you can be seeing now I am sure some of the borrowings are going for recurrent expenditure because of the huge deficit. Then, two, should we be borrowing? Since our expenditure is up, instead of doing N150b, we are doing N700b, servicing of the borrowings is high. If you remember when we were in recession in 2016, some of us say look we need to recoup some of your assets, again instead of looking at the message, they said ah they want to sell them to their friends. Go and write it down, a time will come when we will have no alternative than to restructure the G.D.P assets.
This year, finally, the government that is saying over a year ago that we want to sell assets has put N810b in the budget this year, which they claim will come from the restructuring of JVC, unless it’s a U-turn, I don’t believe they’ll do it, because I don’t believe in it. Even, if they do it, that money cannot come in in a year. Again, that is another gap, which might materialise in 2020. So, it’s either you have equity, revenues and investments or you borrow, but their own has been one-line strategy, which is borrowing and the borrowings have not been properly utilised.
What can you say about the general management of the economy in the last two years?
Well, these are the things that have created a lot of issues, based on the fact that we need serious investment in infrastructure. Like I said you can’t do social investment in education, invest in health, invest in security and infrastructure, the money is not there to do that. I think they should try and get more private sector investment, if the private sector is allowed to do the infrastructure deficit-roads, and they focus on education and security, things will be better.
Last year or year before, I pushed very strongly for the Lagos-Ibadan expressway. I said look, it is a viable road and people are dying there on a daily basis, instead of you putting that money on other roads that are not viable in other parts of the country, all these monies you are putting and saying it will be completed, it will not be completed. What they were just shouting then was that Saraki didn’t want them to complete the Southwest road. Today, go and find out, what are they doing now? The NSIA, the Sovereign Wealth Fund, exactly what we said that you cannot fund a road like that through regular appropriation. So, these are the wrong decisions that have been taking place. The private sector must have confidence in government; you can harass politicians but not investors’ whose money can only go to where there is safety. So as long as the private sector investor does not have confidence, things will be difficult, due to the fact that right decisions are not taken by government.
I keep on saying that ordinary Nigerians will go and vote on February 16, 2019 but the business community has voted already, that is the truth, and unless we bring that confidence in our economy it will be difficult. And that is why for those of us that found ourselves on the other side of the divide, we are saying that for Nigerians to move this country forwards, we must do the right thing and vote our candidate, Atiku Abubakar because that is what will bring confidence in the private sector to invest. We don’t have that money, there are some countries like Saudi Arabia, and those kinds of countries that can fund their projects successfully, we cannot, where is the money and who is going to bring out the money? Who will bring out that money, do they have confidence in government? Then the answer is No, then the government have to go, if the government does not go, poverty will continue.
Because oil price is at this level, it’s not going to move up, so we already know the revenues. So, the question is will this revenue bring this investment? The answer is No, No, No. Where will the money come from? It has to come from somewhere else, this is why they have been taking loans, which is not good for us, it should come from investment.
We were taken aback recently when the governor of Zamfara State came out and said the president told them that the economy was in bad shape, because he had been telling us the economy was growing and we were moving in the right direction. Again, the figure coming out from NBS has shown us that over 20 million Nigerians are unemployed, this is alarming. What does the country need to do?
The country needs to vote out the All Progressives Congress (APC). This is not just propaganda, I have said it severally that my commitment is to see a Nigeria that is not backward. In 2014, we believed Buhari would come in as a former General, former Head of State that has the capacity, and that his integrity would address the issue of corruption, which would provide an atmosphere for people to invest in the country. And I said then that if Nigeria did not perform on three issues-security, provision of jobs and eradication of poverty and corruption-they should vote us out. That’s democracy because election is a referendum. There are some in APC who know that the man has not performed but because of their own personal interest, they have left that one. They say Yoruba should look at 2023, so people should just continue this way? No, no, no.
No president knows everything, but a man should know his strength and his weaknesses. You don’t have to be an economist to do this, put people who will be able to do it. Let us look at it, when we came in 2015, there was the issue of Boko Haram insurgency, today they are not only in the Northwest, they are going as far as Zamfara. What we saw in North Central is even as bad as that; in that area he is a failure.
On the economy, the NBS has told us the number of unemployed people. If you look at poverty today, we have over 85 million people living in extreme poverty, the largest number in the whole world today. Even within us let’s ask ourselves, all these cases in court, tell me why there is none from this administration. So, everybody in Buhari’s government is a saint, they are all clean?
To me, the way forward is clear, if we continue in this direction we will not perform because the revenues cannot ensure the growth because the numbers are not there and we must change that, to do that we need investment from economists, investment from the private sectors.
What and what did you try to do, to reverse these anomalies before you eventually left the party?
Go and look at 2016 when we were in recession, I called a debate and we wrote the president, listing things that he was yet to do. I will give you an example, we said we should see how we could raise equity, he attacked us. They said we wanted to sell refineries to our friends, you can remember. If you see the 2019 budget, the president is saying he is expecting the sum of N810b from the restructuring of JVC, exactly what we said at that time, you can see what I am saying. I have been shouting about oil subsidy, when former President Goodluck Jonathan was there. That was what created problems between us. I raised the issue of oil subsidy that it was a scam that we were importing fuel and consuming 30 million litres per day and that Nigerians cannot consume that. When we did it Ngozi Okonjo Iweala and others went back and because of us, they saved half a billion dollars yearly. From the process they found more efficient ways of doing it and that is one of the major ways of curbing corruption under Jonathan’s government.
If you look at it that this subsidy must continue, then let it be efficient. Instead of doing that the NNPC wrote government saying that without putting the money in the budget, they can take the money straight from revenue, called cost recovery. This is fraudulent, it is illegal. There is nothing we did not tell Mr President that this cost recovery is wrong, but he said no.
Now, under this government we went from fuel consumption of 30 million litres a day to 50 million litres per day. Where is this consumption taking place? This is criminal. What I am saying is that if we were so hard on Jonathan for claiming to be doing 30 million litres per day, but now, they are debiting us with 50 million litres per day. Nobody will tell you that we can consume more than 25 million litres per day at the very best. Calculate the amount of money that we are losing. Two, it is not appropriated for that terminology is just a means to cover that transaction. Instead of reversing it, the president has said it should be appropriated for and now we are coming back for it to be under the budget.
You should open it up to the private sector because the private sector is more efficient, I bet you that the price that we are paying for subsidy will come down because you cannot tell me that the total cost of importing petroleum product will be higher than that of NNPC, any government agency is not efficient. I gave an example of why the private sector should be allowed to invest in infrastructure because as government you cannot. I spoke on the Lagos-Ibadan road and it came to a level that royal fathers in the Southwest were calling me: don’t you live in Lagos? Are you against the Southwest? I called Wale Babalakin and other people that were fighting on the road for the sake of Nigerians to reconcile. I begged them to drop all their court cases and settle. But government said no, the road must be financed by the budget. But today, they have seen the light and they have gone to the Sovereign Wealth Fund to bring about N100b, because I spoke to the contractors and they said there is no confidence.
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