January 22, 2024

We expect citizens to challenge us over budget performance – Bagudu

We expect citizens to challenge us over budget performance – Bagudu

By Emeka Anaeto, Business Editor

The 2024 budget has a record increase in deficit.

It gives me the impression that the government will continue to borrow to the point of crowding out the private sector
It’s not going to crowd out the private sector because the first thing the president had directed is that we are no longer going to borrow money unlawfully. So the Central Bank is not going to print money for the government anymore.

If, to the extent that we would borrow from the Central Bank, it is going to be within what the law allows. Our law allows up to 5% of the previous year’s revenue. What we have been doing wrong is to go beyond that 5% limit. So now there’s that clarity.

And secondly is where we are to borrow; we will issue bonds. It’s an option. People can invest. It even provides an opportunity for some private investors who have money to buy government bonds. Some are looking forward to it. So certainly it will not crowd out the private sector.

Are you comfortable with the revenue structure that we have? For instance, having a very robust income from the maritime industry could represent the second to what you get from the oil industry.

Well, first, the institutional realignment of recognising and creating a ministry of blue and maritime economy supports the point you made that we appreciate that this is a sector that deserves attention by itself.

The second element is, and that’s why, one of the reasons we are here. Look, we should task people. We should put questions to public officials to the effect that if you don’t think you can do it, step aside and allow somebody who can do it to step in. That’s how companies are run. If you are given a sector to run and you accept that it can contribute X to our national life, and without any decent reason, you can’t, then the searchlight should be beamed on you to make the choice.

President Bola Tinubu, in signing the budget, said as much, if you cannot help us, then you may consider leaving and you all have the responsibility to put us to task.

A budget, just like the mission of a private company, demands hard work. It’s not a presumed achievement. It depends on the industry and the hard work of those who are bestowed with delivering it. And we should put everyone to task.

The budget expects that Nigeria should be producing 1.78 million barrels per day. But now we are doing just 1.3 million. What’s the solution to this? And this problem will also affect the country’s ability to raise foreign exchange and save it from high exchange rate.

Budget, whether of a company or of a household – can be both a statement of courage such as “This is what I want to achieve and I’m going to task everyone so that we achieve that’’. So, 1.78 million barrels may sound high but we have done more than that before. And I go back to my point, why can’t we task the people who accept to do particular assignments to deliver the targets?

We need this, if you can’t, can you step aside and let’s find somebody who can? I think if we begin to challenge public officers that way, then we will find that, we are able to achieve our objectives better, rather than assuming that things cannot get better, and even providing the legal cover for it by budgeting that we are not ambitious. It’s not an unusual thing. We have done that before. We have had production in excess of 2million barrels at one time in our national life.

Those who are running institutions that are charged with targets should be put under pressure to say, guide us, tell us how to do it. If you need support, tell us so that we support you and once you do that, it answers your second question, because once you have more production, for example, then more investment comes in. And investment, most of it is currency, foreign currency. The more foreign currency inflow you have into the country, the stronger your exchange rate is.

If you want a very pedestrian illustration of this, see how our containers, thousands of containers come into the country full, and they go back empty. So assuming we can fill them with something, and give the world, and that’s part of what we are challenging ourselves, that we should fill them with something, it will go a long way.

Talking about driving investment in particular, from the economic planning point of view, what are we doing, to ensure that something is done about our exchange rate policies, so that the prospective investors, who want to come have that confidence?

More than from an economic planning point of view, Mr. President has signed two executive orders, because literally we have been deceiving ourselves. We have run a system where we don’t have dollars or we don’t have foreign exchange anymore. So even if your desire is to ensure repatriation, you don’t have because you have boxed yourself into a corner. And that’s why Mr. President said, look, let us allow Central Bank to liberalize the market. Let it be a rule-based market.

Yesterday there was an announcement that they have started disbursing to airlines. There are a number of pronouncements. Mr. President, at the Nigerian International, Economic Summit Group annual meeting said, all commitments will be met. And so that is the start. But it has to be a willing buyer, willing seller. It has to be market-based. There are things you can’t control. If somebody makes legislation and says that every bag of yam will sell for N100, the people who sell it will just take them quickly back to the store and lock. So the steps taken by Mr. President and the central bank might be inconvenient now in terms of the fluctuation, but I will believe it will stabilize and get better. Countries that have chosen that route have done better on average in the long run.

Towards the end of the last year we were told that over 90% of our revenue was now going to debt service and we have not stopped adding to the debt. Why is it that we are piling up debts

Unfortunately in our national life, some things cannot wait. We have many children. We want them to have education. We have security challenge. We need more foot on the ground. So as much as you would want to cut back on borrowing, there’s a minimum that you need to do. And investment in maybe security is not building a house, certainly. So you won’t see it when you come back, maybe that invisible spending, maybe you will not get the structure that is being built. So, how did this happen? During Gowon era, he even had the famous statement that revenue is not Nigeria’s problem. We became a more populous nation thereafter. Demand for everything is growing; Infrastructure, security. So we need a minimum of spending and we don’t have the money to meet that minimum.

There are countries in the world that collect 50% of their GDP as revenue. Most European countries are over 30%. France is about 50%. Italy, I think, 38%. Nigeria used to be the second lowest in the world. So once you don’t have revenue and you have a minimum commitment you are in trouble somehow. We recognized this and that is why in the 2024 budget, despite the need for spending, we said, well, look, for the private sector to even have confidence in us in macroeconomic stability, as much as we need to spend more, let us cut back on borrowing and debt size. We have done it and I’m sure more will be done.

There are some funny items or provisions you see in the budget that you know these things are lies. You cannot be buy computers every year in the same department, or duplicate items across departments. We can find so many provisions that are humongous. How do you assess these sort of budgetary provisions as the Budget Minister? Is there any way that you try to scrutinize to interrogate these sort of budget items that they bring forward for approval?

That’s again the tough one because why is it that around the world governments are deemed to be more inefficient in budgeting than the private sector? Maybe sometimes, what can be done in the private sector with ease is difficult to accomplish in government. Mind you, because we have been having under-investment, you take a hospital that does not have many items or a school that does not even have chairs, every year you will see it in the budget, but probably they were not purchased. That’s where every citizen has to know that the budget does not belong to the government, the budget belongs to us and we have to put public officers to task.

Mind you budget is a permission to spend, not an obligation to spend. What the National Assembly is saying, we have given the government permission to spend N10 million in buying, for example, a motor vehicle. So, after that process, if the citizenry takes an interest, maybe such purchase that we deem inefficient or should not be will not be prioritized or will not be done at all.

What is your ministry doing to ensure the implementation of this budget?

We have protocols that we are enhancing now. First, we will demand ministries as directed by Mr. President, to take responsibility. It means an MDA will say this is my implementation plan, which should be public, prioritise it, and then it will be scrutinized. And then we invite citizens to take responsibility. There is an eye-mark app you can download. You can check the GIS coordinate of the capital item that is in the budget. You can take pictures, you can share them and criticize. Everyone has a role to play.

We have the monitoring and evaluation function of both the ministry and the budget function and the deliverables that have been signed by ministers with Mr President. They will all be used to assess implementation.