Tope Fasua, economist, chartered accountant, former banker, presidential candidate, and Chairman of Abundant Nigeria Renewal Party, has made some damning claims: “Nigeria (and Congo DR are) easily the most mismanaged, most looted, most unproductive, and (most) unimaginative economies in the world.”
He threw some frightening statistics: Nigeria, with the world’s seventh largest population, operates the second lowest budget per capita in the world. And he relies on the Bill and Melinda Gates Foundation to claim that 40 per cent of extremely poor people in the world will come from Nigeria and the DR Congo in the future.
Fasua draws some dismal comparisons: Whereas Nigeria’s Gross Domestic Product is the 31st biggest in the world, its budget-to-GDP ratio is a mere six per cent. Healthier economies record between 30 and 50 per cent budget-to-GDP ratios.
Fasua laments that Nigeria’s budget level hovers between 79 and 82 per cent in the world, its per capita budget is between $115 and $130, and it is doing worse than Kenya, Macau, Lithuania, Morocco, Oman, Belarus, and war-torn Libya in terms of revenue drive.
The Legatum Prosperity Index, compiled by Legatum Institute, a London-based independent charitable organisation that focuses on education, reveals that Nigeria has the world’s worst eighth healthcare system, and the 32nd worst educational system.
It adds that Nigeria has the 19th worst economic system in the world, is the fifth most dangerous country to live in, and is the 22nd overall worst state in the world. The verdict of “unsafe,” probably places Nigeria in the category of failed states.
It is worrisome that the National Bureau of Statistics did not confirm, dispute, or interrogate these depressing claims, which would make right-thinking members of the public to conclude that Fasua is not just engaged in the theatricals of a politician.
Fasua has walked his talk by staging a demonstration in Abuja, and submitting a petition to the Finance and Budget and National Planning ministries, to ask the Federal Government to review the 2019 budget upward to N15tn.
The Federal Government’s Economic Management Team, led by Vice President Yemi Osinbajo, needs to invoke the spirit of enlightened self-interest and take a look at Fasua’s jeremiad, even if he belongs to a rival political party.
In line with the Medium Term Expenditure Framework Fiscal Strategy Paper, which is designed to translate the strategic development objectives of its Economic Recovery and Growth Plan, the Federal Government is proposing N8.73tn budget for 2019; about N200bn lower than the 2018 budget.
The Federal Government expects 2019 revenue to fall by N840bn, whereas the budget deficit is expected to increase by N640bn, from N1.9tn in 2018 to N2.59tn in 2019. Well, reports that the external reserves are tapering down is evidence that “wahala wa,” there are issues, with the economy.
Fasua thinks the Federal Government should plan a more ambitious N15tn budget in 2019. He backs his call for a higher budget with the argument that because Nigeria’s population grows by three per cent, or six million people, annually, there must be incremental provision to cater for them.
To Fasua, a lower budget, with a devalued currency, and increasing inflation rate, reduces the value of the budget in real terms, and shrinks the capability of Nigerians to live decently. His thinking that this amounts to double jeopardy is compounded by Nigeria being an essentially import-oriented economy.
Fasua laments that the proposed 2019 Budget, as well as the other budgets before it, is not performance and evidence-driven. Any government accountant can confirm to you that the envelope budgeting template currently used by government works on hunch, and guesswork. You could say it is voodoo budgeting.
Fasua seems to disagree with the classical definition of budgets, which is no more than a formal estimate of future income and expenses. He must subscribe to the school that regards a budget as a planning tool used for economic development. President Muhammadu Buhari, who moved budget and national planning out of the Ministry of Finance, probably agrees with him.
Recall that the Executive Branch, led by President Buhari, earlier proposed a dovish N8.61tn budget for 2018. It took the bullish National Assembly to up it to N9.12tn. So, Fasua must give rapturous applause to the audacious legislators, even though they are notorious for delaying budgets.
The Federal Government had thought it could finance the 2018 budget with N2.99tn crude oil revenue, N31.25bn Nigeria Liquefied Natural Gas dividend, N1. 17bn revenue from minerals and mining, N658.55bn Companies Income Tax, and N207.51bn Value Added Tax.
Other sources of revenue proposed to finance the budget were N324.86bn Customs duties; N57.87bn from Federation Account levies; N847.95bn revenue from government agencies; N87.84bn tax amnesty income; N114.30bn signature bonus; N250bn unspent balance from previous years; and a N1.954tn deficit or debt.
Regrettably, of the N9.12tn 2018 budget that was signed into law by President Buhari in June 2018, only N3.64tn had been spent by the end of August, the eighth month of 2018! If you prorate the budget, it means there was a N2.44tn shortfall from N6.08tn that should have been released.
The bigger tragedy is that about 42 per cent, or N1.54tn, of the money released was spent on debt servicing. The balance of N1.83tn was spent on recurrent expenditure, like personal emoluments, pensions, and the omnibus, opaque, overheads-if you know what that means.
In any case, the N3.64tn that was released was made possible only because Section 82 of Nigeria’s constitution allows the President to withdraw money from the Consolidated Revenue Fund to carry on the service of government for a period not exceeding six months.
You would flip to know that only N2.48tn, or 52 per cent, of revenue expected in 2018 was realised. Talks of expected bumper revenue make-up from Companies Income Tax by the end of the year are just balm to lull the blow that the low VAT revenue is caused by “slow recovery in economic activities that drive consumption, and the lingering security issues.”
The dismal revenue profile of the 2018 budget presents a dilemma to Fasua’s call for an increased budget. Because Nigeria’s clueless political elite serially fail to grow the economy organically, Nigeria’s budget is funded largely through off-shore revenue-from crude oil sales, and Eurobond.
The Central Bank of Nigeria recently disclosed that proceeds from crude oil sales were 61 per cent of federally received revenue so far in 2018. Therefore, revenues from Company Tax, Customs Duty, and Government-Owned Enterprises are just complements to the budgeting process.
Fasua is optimistic that the revenue to finance his big budget is possible from an aggressive revenue drive. He thinks that about N2tn is obtainable from a review of the royalties agreed and paid by International Oil Corporations for crude oil.
While arguing that N2tn can come from plugging the tax collection system, and N500bn from driving up Capital Gains Tax receipts, Fasua suggests the harnessing of sundry revenue sources, setting rational revenue targets, introducing zero-based budget, and riding hard on expenditure.
However, Presidential Candidate Tope Fasua’s first assignment is to realistically tease out funds for his ambitious N15 trillion budget.
– Twitter @lekansote1
END
Be the first to comment