•N350bn earmarked to stimulate economy is a good elixir at this point in time
After months of palpable meltdown, the economy seems finally set to receive the much-needed shot in the arm as promised by the Buhari administration. Emerging from a two-day National Economic Council (NEC) retreat in Abuja last week, finance minister Kemi Adeosun outlined the administration’s plan to spend N350 billion – a component of the 2016 Budget – to stimulate the economy. The plan primarily seeks to get contractors that have stopped work due to paucity of funds to re-engage staff and get back to work. This, according to her, “would bring significant economic activity.”
Also on the cards is a legislative approval to change the requirement for counterpart funding for the Universal Basic Education (UBE) Programme, to reduce the burden on state governments. As against the existing plan which requires states to pay 50 percent as counterpart fund to access UBE funds, the new plan seeks to reduce that requirement to 10 per cent – a move expected to free up an estimated N58 billion currently un-accessed by state governments. NEC’s view was that the fund would go a long way to address around 1,000 of the worst classrooms in each of the 36 states, with massive spin-offs on job creation and improved economic activity.
We couldn’t agree more with the premise that the economy needs all the help it can get at the moment – and fast too. Most certainly, one of the most important steps to take is to get the contractors back to their sites. If only for the sake of the 197,000 kilometres of federal roads of which only 18 percent is barely passable; the daily agonies of motorists on the death traps that the roads have been reduced to, as well as the humongous costs of vehicle maintenance and, of course, the countless man-hours lost on the highways, the intervention could not have come at a better time.
Well channelled, the massive spend will surely help bridge the infrastructure gap, a steady path towards boosting domestic manufacturing capacity while supplying a launch pad for industrial competitiveness.
The case for the reduction of the counterpart contributions to UBE fund is just as compelling. Today, many states, pressed for cash, are barely able to meet their monthly obligation to workers not to talk of raising counterpart funds required to access UBE funds. The result is the huge pool of funds lying idle in UBEC accounts – funds that could have gone a long way to upgrade infrastructure in our public schools. It certainly makes a lot of sense to reduce the counterpart fund to such a level that would allow more states to benefit.
There are however additional reasons why the massive funds will come as a soothing balm at this time. First, is the fact that the economy in recent times has shrunk considerably. Across the states of the federation, it is a case of double jeopardy: at a time of severe cutbacks in capital spending, which makes any prospects of infrastructural renewal forlorn; the other reality is one of arrears in wages and salary sometimes running into several months. The situation, particularly the severely curtailed disposable incomes, carries the risk of further depressing the economy. The huge spending should help lift economic activities across the states.
The second factor is the multiplier effect expected to be generated right across the demand and supply value chain to the overall economy; the countless linkages and the spin-offs – oftentimes indeterminate – are what the economy badly needs at this time to lift her out of the current gloom.
As always, we recognise that there is a world of difference between intentions and outcomes. The huge vote is certainly no guarantee that the goals outlined will be met. The real challenge is for the implementing agencies to ensure that values – commensurate with the sums expended – are delivered. That being the test of budget discipline and implementation is where Nigerians expect the Buhari administration to make a difference from what obtained in the past.
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