By Henry Boyo

Over the years, both the Legislative and the Executive arms of government have consistently demonstrated their faith in the popular axiom that “he who fails to plan, plans to fail”; consequently, they have, always ensured that an Income and Expenditure plan is passed into law annually;

nonetheless, inspite of their apparent loyalty to the concept of planning, public expectation for improved infrastructure and enhanced social welfare has, ironically remained unfulfilled, such that some cynics may suggest that our economic and social welfare couldn’t be worse even if we ignored the need for a formal plan of action.

In reality, however, empirical evidence suggests that planning is intrinsic to success in every endeavour, including the business of government; so, why is our own case different; why do we fail, even when we apparently plan?

We will hereafter take the 2015 budget as a paradigm, and identify the areas of deviation from best practice in successful economies where annual plans positively impact on the welfare of citizens.

It is noteworthy that in more successful economies, budget implementation religiously commences on the first day of each year. Regrettably, in contrast, as at the first week in March, Nigerian’s 2015 budget still remains inchoate. Nonetheless, this is not unusual, infact since the return to civil rule; Nigerians may not recall any budget enactment before March.

Clearly, the salaries and allowances of civil servants are nominally immune to any delayed passage of the budget for up to 6 months; in this event, there is never any real pressure or anxiety for civil servants and political office holders to complete the budgeting process promptly.

Lately, however, there are suggestions that the 6 months latitude for expenditures on operational expenses in the absence of a budget should be reduced to 3 months; however, some critics may wonder how we can hope to become a first world country, when we cannot embrace the required fiscal discipline that will ensure that budget implementation begins on the first day of January each year!

Ultimately, the more serious impact of delayed budget passage is primarily on the capital budget, which captures expenditure on those sectors and infrastructure that would reduce hardship in the lives of increasingly more citizens. Unfortunately, delayed budget enactment, has consistently frustrated the comprehensive implementation of the most essential part of the budget for several years;

indeed implementation rates above 50% for Capital Expenditure is often regarded as success, while the unspent funds are hazily accounted for with well tested civil service procedures. In the light of the above process, the present decrepit state of public infrastructure should not come as a surprise; for example, despite over $20bn expended on power in the last fifteen years, power still remains epileptic with barely 4000MW generated from the national grid.

Ironically, we have also had to selectively provide additional soft loans to those buyers to whom we sold our power infrastructure with a loss of over N400bn! Curiously, despite the privatisation of power, government’s sustained expenditure in the subsector still exceeds the consolidated funds brought into the subsector by the new owners of our power infrastructure.

Clearly, with the present 15% paltry allocation (including 5% from SureP) to capital expenditure, the 2015 budget cannot raise any hope of any serious remediation to our critical infrastructural deficit. Indeed, with the legislators’ current demand for almost 80% reduction in the projected SureP allocation, the net capital budget may be less that 10% of total expenditure, despite the urgent requirement for at least 50% to gradually redress the general decay.

Sadly, about 90% of all federally budgeted revenue in 2015 will simply be consumed in running the civil service; surprisingly, inspite of the savings from the alleged thousands of ghost workers so far weeded out of government service, the recurrent budget still continues to increase while the capital budget contracts; surely, such an inverse strategy will never transform us into a first world country.

However, the other serious threats to the success of the 2015 budget relate to the adopted benchmark for crude oil price, the Naira exchange rate and uncaged inflation. It is not clear if the Minister of Finance and the Budget office will stick to the proposed benchmark of $65/barrel before the recent crash below $50/barrel.

Nonetheless, if the  more cautious benchmark of $52/barrel proposed by the Legislators is ultimately adopted, then, the budget as it currently stands would become worthless, and the Minister of Finance would need to revisit   the drawing board to produce fresh income and expenditure estimates for the year 2015’.

Expectedly, the protracted nature of such review may make budget enactment a challenge until after the elections in April, unless of course, unfolding opportunities for self enrichment induce the hurried passage of a clearly inchoate budget by the Legislators. Either way, the net product, will be the attendant social misery nationwide.

Certainly, the massive over 20% devaluation of the Naira was certainly not factored into the 2015 budget. Indeed, even if, inspite of low crude prices, a paltry 10% capital vote below N500bn is realisable, the sizeable import component of infrastructure expenditure, may actually further shrink because of the 20% plus devaluation and constrain any hope of infrastructural improvement.

Incidentally, if low crude prices persist through 2015, almost 50% of budget revenue will be wiped off to create severe challenges for the implementation of the already paltry recurrent and capital budgets. In this event, government would incur further debts at atrocious interest rates in order to fund the N1 trillion deficit in the Federal budget, which sadly, is predominantly consumption oriented.

It is really a sad day, if inspite of our bountiful resources, we still have to borrow irresponsibly just to fund our appetite for consumption rather than make a serious commitment to social and infrastructural remediation. Nonetheless, just because civil servants and political office holders still earn the nominal values of their incomes and allowances will not totally shield them from the austerity budget.

This is because Naira devaluation will push up prices and fuel inflation beyond 10%, and this will also have serious consequences for the purchasing power of all income earners. In other words even if your salary or usual income does not change nominally, it will inevitably begin to buy less and less.

Thus, unless, there is a commensurate annual increase in salaries and incomes in the face of inflation, the net result is that consumer demand will contract as people involuntarily cut down on their basic needs and endure poverty, with disastrous consequences for manufacturers and suppliers of consumer goods and services and ultimately for employment opportunities.