President Muhammed Buhari, finally laid the 2019 budget before the National Assembly, on Wednesday 19th December 2018; that is, barely 2 days before Parliament vacated for the Year End holidays. Incidentally, there was no apparent regret, nor indeed explanation why this mandatory process took so long; arguably, however, tardy implementation and gross distortion of the budget plan, are the products of such casual approach to this critical national assignment.

There was obviously, no lesson learnt from the 2018 budget which did not receive Presidential assent until June 2018, and consequently left barely 6 months for executing a projected 12-month Capital budget. Ultimately, by December, just N820bn had been released out of N2.652tn, actually budgeted for infrastructural enhancement; meanwhile, the partial release of funds may not also have reduced the borrowing plan for N2.652tn in the 2018 budget. Indeed, if government has already borrowed the outstanding balance of about N1.8tn from the N2.652tn 2018 Capital budget, then there would probably be a bigger project implementation and capacity challenge if the 2019 budget also provides for another N2.031tn for capital expenses.

The serial failure of the budget process, since 1999, is clearly evident in decayed Infrastructure, low productivity and the rising rate of unemployment. 
Furthermore, the glaring failure of the current budgeting process to create jobs and improve social welfare, is clearly corroborated by the latest National Bureau of Statistics report that the number of unemployed Nigerians, had risen from about 17million in 2017 to well over 20million, a year later. Incidentally, the Brookings Institution (a Washington based Economic think-tank) Report of comparative poverty, also lately, concluded that Nigeria was presently the World’s Poverty Capital, with a capacity to stampede at least 6 people into poverty every minute! 

Nonetheless, the poor annual budget performance, since 1999, is probably sustained by the erroneous concept, that increasingly bloated fiscal plans translate into better infrastructure, improves social welfare and creates more jobs. Regrettably, this has not been so.

There is evidently, however, little difference, for example, in the positive social impact between the last Administration’s relatively modest N4.92tn 2015 budget and the implementation of the much larger N7.44tn 2017 budget.  Alarmingly, nonetheless, the sum of N8tn was initially canvassed as the proposed budget for 2016, before good sense, presumably prevailed! 

It would, therefore be useful, going forward, to examine the critical, common features which continue to challenge the implementation of Nigeria’s fiscal plans; thus, in addition to the regressive impact of extended delays and nominally bloated budgets, other factors, such as content of budget, will be examined; furthermore, the burden of an obtuse exchange rate mechanism, and crippling debt and service charges will similarly be given attention, together with the faux pas of sustaining a covert disenabling fuel subsidy scheme, even when Mr. President had contended, before assuming office, that subsidy was a calculated scam!

Finally, the financial impact of price and output, Budget benchmarks, adopted for government’s major revenue source, and the challenge of implementing the proposed minimum wage will also, be briefly considered.

Although, in contrast to earlier Administrations, the present government was expected, as an incoming, reportedly, progressive administration, to tilt fiscal allocations, considerably, in favour of Capital expenditure; regrettably, however, PMB’s Administration seems satisfied to sustain the regressive average of 30/70 ratio between Capital expenditure and consumption spending, despite the obvious reality of our grave infrastructural deficit, particularly, in such areas as power, transportation, health and education. Currently, salaries and consumables however, still, receive premium allocation, despite the reported elimination of thousands of ghosts workers and considerable savings from the adoption of a Treasury Single Account.

Worse still, by December, for example, only N821bn was so far released, out of the total of N2.87tn actually budgeted for Capital expenditure in 2018. Indeed, according to PMB, in his budget address, “we have carried over Capital Projects that were not likely to be fully funded by December 2018 to 2019 budget.”

Regrettably, however, with Mr. President also laying the 2019 budget before NASS, already, as late as December 2018, a substantial part of the 2019 capital budget, will similarly be carried forward to 2020 budget. Arguably, nonetheless, if a new administration comes into power, in May 2019, the implementation of PMB’s 2019 budget may actually suffer worse fate.

Invariably, the adhoc and tardy implementation of the Capital budget, obviously creates attractive opportunities for corruption and distortion in fund application. Consequently, it will not, apparently, be in the personal interest of government officials, involved in the budgeting and implementation process, to ever work assiduously, towards the presentation of annual budgets, to the National Assembly before 30th June each year, at the latest.

Curiously also, despite, relatively higher crude prices and output, since 1999, the Naira exchange rate still continues to depreciate. Indeed, if crude oil price spirals, once again, and even, exceeds $100/barrel, Naira rate, would still depreciate against the dollar. Indeed, as earlier witnessed, the Naira rate has continued to remain seriously challenged even when reserves fortuitously approached $60bn. Conversely, however, the Naira actually remained stable around N80=$1 between 1994-8, even when, total foreign reserves was barely $4bn!

Nonetheless, it is because of this clearly incongruent Naira exchange rate mechanism, that Nigeria’s, increasingly bloated annual budgets are ultimately reduced to very modest values when expressed in dollar rates. Consequently, for example, the 2013 budget of N4.99tn ($31.19bn), with N160=$1 is presently, probably more in real value than the proposed 2019 budget of N8.83tn (about $27bn) with N305=$.

It is clearly unusual that we should become cash strapped and heavily indebted to seek for foreign loans, when, infact, about 90 percent of our foreign reserves, belong to the CBN, from where the reserves are liberally auctioned and dispensed willfully, while the owner of the CBN, i.e. the Government and People of Nigeria, simultaneously pay upto 7 percent to borrow the same dollars externally! Don’t make me laugh!!!

It is notable, also, that Nigeria’s erstwhile celebrated GDP of about $400bn, dwindled by almost $200bn overnight, with the collapse of the Naira beyond N305=$1 in 2016; furthermore, Nigeria has also become the World’s Poverty Capital, simply because the related value index for comparative assessment, is usually denominated in US dollars, which, inexplicably, continues to rise against the Naira, even when crude price and output spiral above budget benchmarks and increase forex inflow into our Treasury.

Lately, Nigeria’s debt burden has, precariously doubled, much against public expectation, particularly when budget impact on infrastructure still remains intangible. Although, the 2019 budget accommodates a debt service charge of about N2.14tn, i.e. well over 20 percent of total budget, but, in essence, this means that we are allocating about 50 percent of actual realized revenue to service our debt.

Indeed, unless the Naira rate, significantly improves against dollar, it will remain a major challenge to eliminate fuel subsidy, and Nigeria’s debt burden will clearly continue to balloon; furthermore, if there is also significant shortfall in government revenue as a result of unexpected lower crude prices and output, the need for more borrowing to fund annual budgets will become more compelling. 

Although the arguments for urgent wage review are also compelling, the adoption of N30,000 Minimum Wage, may not only fuel inflation but will also require to be funded with more external debt, which will further deepen our debt burden.

Incidentally, PMB’s government apparently favours ‘cheaper’ external loans, with below 10 percent interest, rather than the more expensive rates (between 14-18 percent) for domestic borrowing, over which, ironically, government should expectedly have better control.

Nonetheless, foreign loans are actually, only optically cheaper, as unrestrained Naira depreciation overtime, would make external loans, even more difficult to offset, and this may ultimately kick start a new cycle of oppression and colonialism. 

Besides, unless inflation is bridled with astute discipline in the management of money supply, economic diversification, increasing job opportunities and a less oppressive debt burden will clearly remain elusive!