THE FEDERAL GOVERNMENT OF NIGERIA MUST BUDGET AT LEAST N15 TRILLION (Fifteen trillion Naira Only) FOR THE YEAR 2019
BEING A PETITION TO THE NATIONAL ASSEMBLY, MINISTRY OF BUDGET AND PLANNING, MINISTRY OF FINANCE, THE NIGERIAN PEOPLE FROM MR. TOPE FASUA – PRESIDENTIAL CANDIDATE, ABUNDANT NIGERIA RENEWAL PARTY. (ANRP) – SEPTEMBER 2018
It was to with utter shock that I received the news of Tuesday 18th of September, 2018 indicating that the Federal Government of Nigeria (in its fiscal strategy paper) plans to present a 2019 budget of N8.9Trillion for the people of Nigeria.
This proposal is problematic for several reasons;
- In gross/absolute terms the 2019 budget is smaller than the budget for 2018 by over N200Billion. This means that from get go, Nigeria’s government is decidedly and deliberately taking Nigeria backwards, or promising clearly that Nigerians are in for tougher times next year.
- Nigeria’s population grows at about 3% per annum. This means that an extra 5 to 6 million mouths are added to the responsibility of government each year. It is therefore unacceptable, and utterly wicked to provide less for these people.
- Already the plans and dreams of the Nigerian government for WE the people is suboptimal and dismal in several respects, even when compared to what other countries – even in Africa – have as plans year on year for their own people. I will elucidate on this later. To plan to do less for a people is to confront the people with that planlessness and tell them to go to blazes
- Yearly average food and other consumer inflation is about 13% in Nigeria. This means that N1million at the beginning of the year is a mere N870,000 at the end of the year. If we discount the proposed budget with the Consumer Price Inflation rate in order to find its REAL VALUE, the figure shrinks to about N7.7Trillion (at a conservative 13% average CPI per annum).
- With this small dream the FGN has for Nigerians, there is no way it can grow the economy at the required ambitious rate or begin to reduce the numbers of the 90 million odd Nigerians who live presently in extreme poverty according to the World Poverty Clock. The government is still the biggest spender in our economy (and there is nothing wrong with that because the government is empirically the biggest single spender in every economy). The ability for the government to spend appropriately not only reflates the economy but spurs growth in other sectors of the economy. As government shrinks its plans, other sectors of the economy will certainly shrink.
- This 2019 proposal is being done along the usual lines. There is little responsibility or accountability in the budget. The budget is not performance or evidence-driven. As usual we are beginning another budgeting process where each item on the budget is an insertion by powers that be. Perhaps the reason for the reduction in both the absolute and real value of the budget is that the usual suspects are getting a bit tired of budget-padding and stealing. Their thinking revolves around what they’ve been used to and they cannot therefore imagine something totally different. However, it is also clear that they have no plans whatsoever for the people of Nigeria – young or old, strong or weak.
- Already the 2018 budget is being implemented in breach. Little or No capital releases have been made. The budgeting process has become a joke, rather than the anchor of the Nigerian economy, and its hopes and dreams as it should be
Not only is the budget on the downward slide, the FGN expects revenue to fall by N840billion in 2019 – compared to the current year. Why should this happen? Are we going to be less productive, all of us? And if the government thinks so, what is it doing to avert this sad course? Equally, Nigeria hopes to increase deficit financing by N640billion. So what we have here is a plan for a multiple jeopardy. Not only is the budget smaller, and revenue projections even punier, but we intend to incurred a larger deficit of over $2billion additionally above the deficit we are running this year. In other words, Nigeria intends to move from a budget deficit of N1.9Trillion ($6Billion) in 2018, to a deficit of N2.59Trillion ($8billion) in 2019, while the total budget is even lower
The implication of this is that all revenue agencies – according to this budget proposal – intend to go to sleep. Revenues drive budget and many African countries are doing far better than we are because of our capture and imprisonment by ‘entrenched interests’ who simply enjoy that 90million Nigerians remain in extreme and food poverty, that 15million children remain out of school, and that Nigeria remains the worst country on earth in terms of child and maternal mortality. A Bill and Melinda Gates Foundation report came out a few days ago to the effect that even in the year 2050 – 32 years away, 40% of all poor people on earth with be from Nigeria and DRCongo (this same report notes that the first wave of poverty eradication in modern times happened in China and the second is happening presently in India). This is a judgment call on our collective future that we must reject in all totality and the way to do that is to weigh in at this momentous time and reject this budget of hopelessness.
It is imperative to do this because of the way things play out in Nigeria. Every budget proposal is subjected to at least 9 months of back-and-forth which has nothing to do with how the people will benefit better from such proposal but everything to do with who can insert pork-barrel items into such proposals. This year’s initial budget was N8.6Trillion before members of the National Assembly increased it by N500billion by adding loads of their own ‘projects’ into it. We are indeed in a state capture and the time to reject this whole shebang, is NOW!
Further analysis of our 2019 budget proposal shows that the absolute dollar value dropped from $25.2billion (N9.1Trillion divided by N360=$1) in 2018, to $24.7billion (N8.9Trillion divided by 360). However we need to discount this Dollar value by the US rate of inflation of 3%. Still the REAL Dollar value of the 2019 budget is $24billion. If we consider the erosion of value as described above, per capita budget – or budget per person – drops from $140.4 per annum (or $0.38 a day), to $117 per annum for 2019, or $0.32 a day. This is what the government plans to spend on salaries, pension, infrastructure, education, security, health, environment, agriculture and every other thing it budgets for, per Nigerian in the year 2019. This is unacceptable because even within Africa, Ghana budgets $492 per person for the year 2018, Cote D’Ivoire $532, Cameroun $342, Gabon $2,449, South Africa $2,672, Morocco $838, Egypt $715, Algeria $1,467 and Angola $1,880, to name a few. It needs to be emphasized that a dream precedes any great achievement, and the budget of a nation being its most important dream, year on year, tells a story of where that nation is heading. All the nations mentioned above seem to be powering on faster than Nigeria and this is reflected in everything else. Nigeria is however only not dreaming big enough, but the dreams of our leaders for the country seems to be in solid reverse.
I have heard it asked; ‘so how do we fund this big budget figure?’. First of all, a budget of N15Trillion is not big for Nigeria because it only translates into $225 per capita for each Nigeria – except if we are admitting that our population figure is overbloated. We also have to question whether truly we are the largest economy in Africa, or simply the most chaotic. Chaos and noise does not translate to substance. I want Nigerians to know that mass poverty is not a destiny and that we can do a lot better than we are right now. Figures don’t lie, and we should be giving our leaders marching orders IMMEDIATELY to produce the kind of results that other countries even in Africa are achieving or no deal. We must not look at our economy with the eyes of the present. We must forget everything we know about this economy and consider it with the eyes of a new CEO that has been headhunted from a rival, successful organisation. If that is the case, the first benchmark is to look at other countries and decide to at least match them. It is certainly not acceptable in the very least, for Nigerian leaders to be saying to the poor, suffering people of this Republic, that we have to budget LESS for next year, when population is growing and inflation is eating rapidly into the value of our money.
Figure 2: Comparisons of absolute budgets and budget per person, among African countries
HOW DO OTHER COUNTRIES GENERATE REVENUE TO DRIVE THEIR BUDGETS?
The time has come to ask this question and find answers. Nigerians are the most traveled people perhaps in the world. Some questions confront us in this country; how do other countries generate revenue? How can Angola generate from its economy, more than twice Nigeria’s revenue, and drive more than twice our budget for its 25million people? How can South Africa budget 6 times what Nigeria does for its 60million people? And how is it funding that budget? A highly-respected person once said rather than being truly the largest economy in Africa, Nigeria is actually akin to a large grapefruit with little juice. Is this our reality? Can we never do better than this? I believe we can. I believe we must. And the time is now. I would wager that our biggest problem in generating revenue is the entrenched interest factor. Emir of Kano, Muhammad Sanusi II, had mentioned this once, among others, in a TEDx Talk. The entrenched interests, otherwise known as principalities and powers of Nigeria, should be made to see the negation of their own enlightened self interest, because even within the context of Africa, they have only succeeded in keeping us all down. They can make more money than they are right now, if money was the problem. What is unacceptable is the present state of our affairs. The incredibly tiny budget is a mere symptom of a more endemic malaise.
I will proceed to explore ways in which Nigeria can generate revenue to finance the proposed, ‘ambitious’ N15Trillion budget;
- FIND THE PIB – Yes, let’s start from here. Crude Oil is Nigeria’s biggest source of revenue. However in this sector we are seriously suboptimised. Reaching a compromise with International Oil Companies on the Petroleum Industry Bill (PIB) does not have to be so onerous. We cannot also brag our ways to glory in this area. The reason why Angola is doing twice our budget is that that country somehow got its crude oil laws right. In Nigeria, we messed up dues to corruption but we are at the very turning point right now. Barrister Femi Falana is in court with Nigeria over the treatment of Production Sharing Contracts with IOCs. The clause that requires that we review such contracts be reviewed if crude oil price exceeds $20 has not been invoked. Ditto the clause that grants a 15 years concession for zero royalty on all production from wells deeper than 1km has not been vacated since 1993! The efforts of Falana has met with a brick wall. Nigeria has lost more than $60billion so far according to no less than the Minister of State for Petroleum, Ibe Kachikwu. See https://www.thisdaylive.com/index.php/2017/08/07/kachikwu-nigeria-lost-60bn-to-non-enforcement-of-pscs-with-oil-majors/. Nigeria can add over N2Trillion to its budget by the proper governance, supervision and risk management of its oil and gas sector. This can take immediate effect – if uncompromised leaders see to it.The original PIB was focused on increasing signature bonuses, royalties, and other advantages due to the Nigerian people. We must find it, mainstream it, get it signed and put into effect by every means. And urgently too.
- TRANSPARENCY IN TAX/REVENUE DRIVE – Transparency will breed trust in driving revenue. People don’t like paying taxes because they are unhappy with the way our governments use these revenues. If our leaders would show total transparency around budget management then there will be better compliance. A report says VAT compliance in Nigeria is about 29%. See http://blogs.lse.ac.uk/africaatlse/2017/03/20/enhancing-tax-collection-efficiency-and-compliance-in-nigeria-the-role-of-behavioural-economics/. Also the FIRS has claimed that many businesses not registered for VAT collect and don’t remit, among other infractions. It needs to be noted that we shouldn’t view government revenue from the prism of taxation only. Government revenue entails every collectible for the purpose of organizing society. There has been little attention, compliance and accountability in the areas of fees, levies, duties, fines, rates, rents and sundry sources. Whereas the TSA enforcement has helped but there still exists a huge gap in this area. Another N2trillion should be added to the budget from better management at this level. This is N4trillion added to the proposed N6.4Trillion projected (reduced) revenue so far.
- OPTIMIZE TAXATION – Apart from the issue of transparency and leadership-by-example in the revenue drive, there is also a need to optimize some tax and revenue lines that are lying a bit sedate in our books. Nigeria is where people don’t bother paying Capital Gains Taxes and we have also given waivers on CGT on capital market transactions just to encourage the market. This is largely needless as the market swings up and down irrespective of these waivers. These is unnecessary loss of revenue. Also despite there being a provision for inheritance taxes, our revenue chiefs have largely avoided that area as it touches on powerful families, despite this being an equitable tax that works for societies wishing to reduce corruption and reduce inequality. We can rake in at least N500billion if we were serious about sundry taxes like this. The UK makes over 5Billion Pounds on Capital Gains Taxes alone each year. This is an equivalent of N2trillion. Furthermore, the rapid standardization of other sectors of the economy, like solid minerals, will results in the mainstreaming of new categories of taxes. The Chairman of the Federal Inland Revenue Service (FIRS) mentioned recently that there were as many as 6,800 cash billionaires in Nigeria whose accounts have been frozen for total tax evasion. We commend the deployment of information technology and hereby urge the FIRS to immediately mainstream the taxes payable by these evaders. At a mere N10million per defaulter, we are talking of potentially N60Trillion. This figure sounds bizarre but indeed it mirrors the decades of merciless raping of Nigeria and its people by a tight confederacy of vultures.
- ORGANIZE SOCIETY, MONEY WILL COME. Related to 2 above, the real issue with Nigeria is our inability or refusal to organize ourselves. For example, we have a situation where ‘big men’ go around with policemen trained and equipped with taxpayers money in Nigeria. Some of these big men pay for this service but the funds go straight into the pockets of God-knows-who. These payments should be standardized and organised, and paid directly into the TSA. They should also be punitive. Anyone needing a single policeman to follow them around should be able to pay N200,000 – enough to pay the police escort N100,000 salary with extra going to the coffers of government. Senator Misau alleged that the Inspector General of Police pockets N10billion monthly (N120billion annually) in this area – right or wrong. What is evident is that this could be a money-spinner for government, enable Nigeria to employ more people into the police, and ultimately help in tackling insecurity. Another area where we could organize ourselves and also generate money is in obsessing with our environment. Our youths could be employed from secondary school to be ENVIRONMENTAL GUARDIANS, tidying up, beautifying, securing and protecting the environment with salutary effect in terms of an improved image for Nigeria, more tourism, higher home remittances, better security as these youths will not be idle, and general increase in productivity for all. Environmental enforcement could also yield revenue for government. The biggest problem we have with organizing our society for good is the do-you-know-who-i-am factor. When leaders and their friends in high places are not ready to keep the law or pay a fine, no one else will comply. I will not put a figure on this.
- REORGANIZE BUDGET MANAGEMENT – Perhaps the first thing that should be done is to reorganize and rejig our budgeting culture. The Federal Government has basically continued with the envelop system which emphasizes discretion on the part of Ministries, Departments and Agencies. What makes it into our budgets bear every resemblance with what the operatives at those institutions dream about, and little to do with the desires of the people. There is an urgent need to fuse zero-based with performance and evidence-based budgeting with the people being the full beneficiaries of our budgets at every level. As it happened last year and the years before it, and as it is this year, the 2019 budget will be full of the appurtenances of office that our leaders in the MDAs wish to acquire for themselves. It will be full of projects that tie with the protection of territory, and not the delivery of service to the people. For example, there is an item in the 2018 budget for NPA to construct a new office in Abuja, 19 years after it was forced to relinquish Ship House to the Ministry of Defense. Why does NPA need an office in Abuja? And why do government agencies prefer buying or building their own mansions rather than taking over some of the thousands of recovered properties all over town – beyond the need to strike deals for themselves in these real estate acquisitions? Very importantly, there is a need to make budgets at all levels of government – and ultimately what makes it into the revenue and expenditure side of the final federal budget – to be driven by revenue targets. If the budget is premised on a sense of responsibility on the part of CEOs of MDAs, and they first commit to a revenue target of which they must ensure an excess percentage goes to government coffers, this will release a lot of revenue for government and the people. So, for all revenue-generating agency reorganized and refocused with reasonable revenue targets remittable to TSA, I say Nigeria should target another N2trillion in revenue. This takes our additional revenue to N6.5.Trillion
- ESTABLISH SHARED SERVICES AGENCY AND COMPULSORY ANNUAL ACCOUNTING – Any budget which concentrates on waste via ego-trips, or on the conveniences of powerful demigods in office not only kills a nation, but ensures stunted growth. A budget is a spending plan that should reflate itself. So, there is a way of streamlining the budget to reduce the expenditure component in the right places, while freeing up revenue in other areas to ensure the economy is properly rebooted for productivity. My target and consistent admonition is that this economy should grow by 15-20% per annum. Only double digit growth can justify upper double digit interest rates and inflation. So, rather than the current situation where every powerful person in the MDAs throw in sundry fancy projects to fill up the budget, we should have a strictly controlled agency that does the procurement for all MDAs and also sees to proper usage and disposal after useful life of government assets (like the GSA – General Services Agency – in the USA). Also, Nigeria must immediately establish a compulsory publishing of the Comprehensive Annual Financial Report by ALL MDAs. This will ensure that we urgently and gradually begin to embrace the kind of responsibility that has made other nations great. For starters, we urge the Nigerian government to ban the purchase of any new car for any agency for the next two years at least. To emphasize this, our budgets should be for the people. It must be clearly shown that those budgets are calibrated to uplift the people.
- PRIVATE SECTOR APPROACH – An economy cannot be run any differently from a private sector enterprise… at the end of the day. When I listen to otherwise enlightened people speak about how this is the best we can achieve in Nigeria – even in the face of so much evidence as to what is happening elsewhere – I just marvel. The level of accountability that drives the private sector must ultimately and immediately begin to drive our economy. Ditto the sense of progress and urgency. In the private sector, you will have hell to pay if you tell your shareholders or bosses that you are projecting smaller figures in absolute terms for next year compared with this year. You have to explain why the company is dying. Nigeria is dying. The N8.9Trillion projection by Nigeria’s Ministry of Budgeting for next year 2019 is not only N7.7Trillion in 2018 Naira, but converted at 2015 Naira (which was N200 to the US$), the figure is a mere N4.2Trillion – smaller in real terms than the budget for 2014! What will happen in a private sector setting is that a new CEO will be hired who will not listen to any excuse about how the company (country) is peculiar and how there are different evil spirits and principalities crawling out of every hole. The new CEO will ask only one questions; “How is Angola budgeting twice, Algeria thrice and South Africa doing 6 times our budget?”. Then he will proceed to issue out marching orders and targets, and even lay off some fat cats who are sitting on the company’s neck and choking it to death with their dead weight. The fact is that this economy is still shut in. The economy hasn’t started, and most people who should know, are unfortunately suffering some sort of cognitive bias or the other. This certainly is not the best we could achieve.
MY PRAYERS / CONCLUSION
I urge the Nigerian government to have a total relook/reconsideration of the 2019 budget. I urge it to find every way to increase the budget to at least N15Trillion for the sake of the Nigerian people, and to calibrate the budget for the good of poor Nigerians, and not for fat cats and smart Alecs who roam around the ministries, departments and agencies. I urge the government, and indeed all Nigerians to throw away their Nigerian eyes and look at our present predicament with fresh eyes. It is the decades-old institution of mediocrity – which masquerades as corruption, nepotism, greed – that we cannot see that even other African countries have since overtaken us in their investment in HUMAN CAPITAL. It is the stranglehold on our mental faculties that makes us want to miss this necessary inflection point from where we could blossom into our destiny. We should never, as Nigerians, go around just beating our chests about being the largest economy in Africa when we know we have nothing to show for it.
This humble request for a considerable upward review of the 2019 budget is further premised on the need for government to for once do something reasonable for the people of Nigeria. We have seen many decades where governments merely care about their few mega billionaire friends. Our governments are quicker in arranging bank bailouts and assisting mega defaulters to stave off their bad loans. More than N6Trillion of such loans sit in AMCON while Nigerians have become beggars in their own land. Another $7billion (over N2Trillion) is allegedly stuck in some local and foreign banks since 2006! We are only demanding for a little fairness.
The 2019 budget and all budgets going forward should not be budgets of convenience and appurtenances for the 18,000 top civil servants and politicians, but should be used clearly and succinctly to reflate and reboot the economy, by focusing on critical sectors – security, basic public education, environment, health, commerce, agriculture, rural and urban housing for the poor, tourism development, incentivization of a local textile industry, etc, so as to give Nigeria a new face globally, attract more investments locally and internationally, and uplift the quality of human capital in Nigeria. This is also the irreducible minimum that we must achieve so that our country is averted from imminent implosion due to decades of systemic mediocrity and underachievement.
The FEDERAL GOVERNMENT, Budget N15Trillion or Nothing! Note that whether this administration continues or another comes is immaterial as this dream basically defines next year for Nigerians. We must learn to aim for the moon so that we can find ourselves among the stars.