Breaking News
Translate

Interrogating the budget of Buharinomics

By Femi Aribisala

IF there is anybody I can vouch for in Buhari’s Cabinet, it is Senator Udoma Udo Udoma. I have known him, and his best friend Keem Bello Osagie, for 30 years. All three of us are graduates of Oxford University, England, although I was there before him and Keem. Udoma is as sharp as a razor; he is one of the most intelligent people I know. Better still, he is a man of unimpeachable integrity. Udoma cannot be bought. He has a very successful law practice; the last thing he would do is fiddle public funds.

Udoma was a two-term Senator of the Federal Republic, where he distinguished himself representing Akwa Ibom. His people would always remember him as the man who ensured that Akwa Ibom now receives one of the biggest, if not the biggest, share of oil money from the federal government. While many of his Senate colleagues pocketed N50 million bribes to support Obasanjo’s dastardly third-term bid, including those who nevertheless voted against it; Udoma rejected the bribe and joined the campaign against the scheme.

Thereafter, he knew even his re-nomination as PDP Senate-candidate from Akwa Ibom would be blocked. So he quietly bid the Senate and politics goodbye. But righteousness will always exalt a man. Udoma was sought after by blue-chip companies. He re-surfaced as Chairman of UAC and a Director of Unilever. He also became in 2010 chairman of the Governing Board of the Securities and Exchange Commission.

Planning in a hurry

On 11 November, 2015, President Buhari appointed Udoma as Minister of Budget and Planning. Six weeks later, the president presented the 2016 budget to the National Assembly. This makes the budget an inevitable casualty of timing. A new Nigerian president is sworn in at the end of May in an election year. He is expected to have his cabinet in place by June. That would give a Minister of Budget and Planning six months to work on a budget.

However, when Buhari became president in the middle of an economic crisis, the first thing he did was to squander the first five months. In that time, anti-corruption propaganda became a substitute for policy. The economy nose-dived; going from bad to worse. Queried about the delay in choosing his cabinet, the president bad-mouthed anticipated ministers as “noise-makers.” When he finally succumbed to the Constitution by unfolding his Cabinet, the year had virtually come to an end.

Udoma is a man well-prepared for public office. However, in the short-term, he will have to defend as, a team-player minister, a budget unlikely to be his brainchild. Udoma could not have known he would be the Minister of Budget and Planning. But now he has to defend a budget he could not have planned. Frankly, there are a number of things in this budget that are indefensible.

In the medium-term, Udoma is in the unenviable position of being an economics minister to a president who clearly has very limited understanding of economics. Worse-still, he is minister to a president who castigates ministers as noise-makers. That indicates Buhari is not likely to be open to wise counsel. It would not surprise me if schemes like the ante-diluvian counter-trading are mooted again from Aso Rock sooner or later.

Pretend Budget

The first thing that becomes noticeable in the 2016 budget is that it is a budget of pretension. Nigeria is still a monocultural economy. The oil, on which the lionshare of the nation’s income depends, has suffered a drastic decline in price in the international market. But the government has decided to pretend as if nothing has happened. No austerity whatsoever is entertained. As a matter of fact, in the name of stimulating the economy, the president has decided to present a budget that assumes Nigeria has suddenly become richer overnight, when in fact we have become poorer.

Buhari presents N6.08trn 2016 budget to NASS
Buhari presents N6.08trn 2016 budget to NASS

This is a very neat trick. In 2015, the total federal budget was N4.45 trillion naira. In 2016, in the middle of an economic downturn, this has been increased dramatically to N6.08 trillion. The new 2016 budget is based on the price of oil being $38 a barrel, ignoring the fact that the price has already fallen below that to $36. Indeed, the IMF projects the price might fall even further in 2016 by $5 to $15; bringing it down to as low as $20. But the government is not prepared to contemplate that eventuality. How can the APC enjoy the trappings of power if, after so long in the political wilderness, its turn is now to be constrained by austerity?

Therefore, observe the following contradictions. In the middle of looming economic adversity, the government has decided to be even more profligate than the previous administration. For example, in 2014, the budget for Aso Rock was N12 billion. In 2015, President Jonathan judiciously reduced this to N6.6 billion. But in 2016, Buhari has raised this by 50% to N18 billion. One of the more ludicrous aspects of this is the N3.6 billion earmarked for the purchase of an unspecified number of BMW saloon cars!

Clearly, there will be no austerity in Aso Rock in 2016. As a matter of fact, it would appear that elephants will be on the menu for lunch. A whopping N1.75 billion has been budgeted for feeding in Aso Rock in 2016. Goodluck Jonathan was pilloried for spending N1 billion in 2011. He reduced this to N717 million in 2013; N542 million in 2014; and N530 million in 2015. But now Buhari has decided to increase this by more than 100%. N115 million is budgeted for foodstuffs and catering materials for President Buhari alone, an increase of over 64% above that of President Jonathan.

If you were of the view that the president has spent too much of his honeymoon period gallivanting abroad this year, think again. N1.4 billion has been allocated for his travel expenses in 2016; N470 million more than that of Jonathan in 2015. The maintenance of the 10 aircraft presidential fleet that the president attacked as wasteful when he was asking Nigerians for our votes will cost N3.6 billion in 2016. N764 million is budgeted for the construction of recreational facilities just for Mr. President.

The same lavishness is also proposed for the vice-president. Not to be left out, the National Assembly will cost us nothing less than N115 billion.

These are the kinds of changes the APC has in store for Nigeria in fiscal 2016.

Voodoo Buharinomics

Where is the money for all the extra expenditures in 2016 supposed to come from given the sharp reduction in our income? There is a lot of talk about squeezing more money out of taxation, creating greater efficiencies in the MDAs, and generating more income from agriculture and solid minerals. But it is just talk.

Only N29 billion is devoted to the Ministry of Agriculture, while more money, N39 billion, is earmarked for Ministry of Information and Culture. But of course, Lai Mohammed has already told us he plans to have one cultural festival a day, 365 days in 2016; although he has already missed a few days.

Principally, the government has decided to go a-borrowing. It proposes to borrow N1.88 trillion in 2016; 30.9% of the total budget; N1 trillion more than was borrowed in 2015. This is where the whole thing gets even more ludicrous.

When the APC came to power, the first thing it attacked was Nigeria’s debt-profile under the previous Jonathan administration. Vice-President Osibajo complained that: “Our economy is currently in perhaps its worst moment in history. Local and international debt stands at $60 billion.”
The APC answer to this predicament is now to borrow more in 2016 than we did in 2015. Osibajo complained that our debt-servicing bill in 2015 was N953 billion. How then are we to understand the APC decision to increase that debt-servicing bill to N1.8 trillion in 2016; an increase of nearly 100%. Osibajo complained that our debt-servicing bill was 21% of the budget under Jonathan in 2015. But now under Buhari, 30.9% of the total federal budget in 2016 is going to be financed by debt.

Suddenly, the same government that complained it inherited a huge burden of debt from the PDP now argues that Nigeria is under-borrowed. That is the new truth now being dished out by government spin-doctors. Kemi Adeosun, the new Finance Minister, now says Nigeria’s debt to GDP ratio is low at 12%. She compares this conveniently to Angola (57%) and South Africa (48%).

In which case, our indebtedness is no longer an albatross. Since the APC has replaced the PDP at the centre, we can now borrow as much as we like. This is all well and good. Except that it is exactly how we got into the debt predicament of the 1980s and 1990s. It means in 2016, we will spend N4 billion every day on debt-servicing.

Productive debt

The government promises that, this time, it is only going to borrow for capital projects. But it cannot tell us precisely what these capital projects are. All we have are promissory notes that they will be for infrastructural projects like roads, rails and power supply. However, promissory notes from this APC government are no longer worth a dime.

In 2015, the federal budget was N4.5 trillion. Nevertheless, the government was able to gather as much as N1.5 billion into the TSA account. This represents money not spent from previous budgets. This should tell us that we did not even have the capacity to spend what we earned. Monies voted for recurrent expenditure gets gobbled up more or less. But capital projects are either ignored, uncompleted, or big chunks of the earmarked money are stolen.

What the government now proposes to do is to increase even that usually unspent money, without first fixing the underlying lack of capacity-utilization. Since the government actually has no structural anti-corruption policy, beyond declaring its enemies guilty without trial, all that might happen here is that we are simply making more money available for graft.

Then there is the brilliant idea of employing 500,000 graduates as teachers in the rural areas. Quite apart from the difficulty of assembling and equipping these graduates, the cost of the project is prohibitive. A modest 50,000 monthly wage bill will come to N300 billion per annum, while the total amount allocated for education is N369 billion.

My conclusion is simple. The APC won the election in the wrong country. The government should be shipped elsewhere; perhaps to France.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.