A budget that says many things but may just mean only one thing
By Richard Mammah
‘On your marks, set go! 2019 Loading!’ These to me are the words that best describe the 2018 budget that was presented to the National Assembly by President Muhammadu Buhari on Tuesday.
Fundamentally, the budget, and the series of ‘rallying meetings’ that preceded it point in one direction: the Buhari administration and the ruling APC are indicating for all to see that they are back on their feet and prepared to make a solid push in the political arena that they hope would culminate in a repeat victory for their platform in the 2019 polls.
Now let us look into the details.
The total sum contained in the appropriation bill is N8.612 trillion. The statement being made here is simple: the administration is building on its already demonstrated penchant to push the limits in the area of fiscal spending notwithstanding rising concern over the associated debt burden. It is preparing to spend ten percent more in 2018 than it had projected in 2017 and chances are that going by these trends, ‘beg, borrow or steal,’ the nation is almost guaranteed to get a N10trillion budget in 2019. On which actual revenues?
The administration is not accepting the widespread criticism that it ‘has not achieved anything.’ According to the president, the budget is going to consolidate on ‘the achievements of previous budgets.’
Assumptions and projections
The assumptions upon which the entire budget has been built are generally upbeat. Putting the benchmark crude oil price at US$45 per barrel is an indication that it expects the present relative regime of stability in the sector to not only continue but that its partners in OPEC would continue to show understanding of its particular circumstances. But having itself announced that its ‘worst days are behind it now in the area of economic growth,’ just like the West has done as regards its re-classification as a middle income country, this ‘preferential shielding’ can no longer be taken as given. When children grow up, they are required to pay their bills!
Equally, the oil production estimate of 2.3 million barrels per day also suggests that the administration is also most optimistic that the Niger-Delta will be calm. To guarantee this, it may have to do more in not only the arena of ‘pay-offs to the boys,’ but also in terms of even more concerted monitoring to ensure that funds allegedly allocated to the region by the federal government do indeed get there and are consequently deployed onto solid development projects that will truly placate the greater majority of the people of the region. As for exchange rate, building on a figure of N305/US$ for 2018 equally points to the fact that the current regime of active CBN intervention in ‘managing’ the exchange rate will likely be pursued all through the new year.
There are however issues with the projected real GDP growth of 3.5 percent given that the present figures are hovering at about 0.55 per cent. Also to peg inflation rate of 12.4 percent, particularly in the build-up to another election season, where, despite the anti-corruption grandstanding of the administration, ‘cash is very likely to talk plenty,’ may be simply wide off the mark! If you doubt this, go to Anambra now and see ‘wetin dey happen!’
The proposed recurrent costs of N3.494 trillion is to be expected even as the Debt Service vote of N2.014 trillion does say a lot. It is about a quarter of the total budget! While the provision for Statutory Transfers comes to about N456 billion, the Sinking Fund vote of N220 billion (to retire maturing bonds to local contractors) should more appropriately be read alongside the N2.1trillion for debt servicing as it is really not available for expenditure purposes in that sense. Capital Expenditure is put at N2.428 trillion (excluding the capital component of statutory transfers) but to put this in perspective, we need to also read it together with the details contained on the revenue side as well as the reality of what has been released this far in the 2017 budget for that purpose. As it is said, you really cannot give what you do not have!
Notably, a substantial part of the recurrent costs proposal for 2018 is for the payment of salaries and overheads in what the president has termed ‘key ministries providing critical public services.’
These include: N510.87 billion for Interior, N435.01 billion for Education, N422.43 billion for Defence and N269.34 billion for Health.
While it is notable from a welfare point of view to continue to meet salary obligations to staff, the debate would however continue about the large volume of these releases relative to the rest of the budget as well as the fact that the administration may, on account of political exigencies, already have also given up on the critical reformist imperatives of a trimmed down workforce and ensuring greater value for money from its personnel.
Some of the advertised key capital spending allocations in the 2018 Budget include Power, Works and Housing: N555.88 billion, Transportation: N263.10 billion, Special Intervention Programmes: N150.00 billion, Defence: N145.00 billion, Agriculture and Rural Development N118.98 billion, Water Resources: N95.11 billion, Industry, Trade and Investment: N82.92 billion, Interior: N63.26 billion, Education N61.73 billion, Universal Basic Education Commission: N109.06 billion and Health: N71.11 billion.
Others are the Federal Capital Territory: N40.30 billion, Zonal Intervention Projects N100.00 billion, the new North East Intervention Fund N45.00 billion, the Niger Delta Ministry: N53.89 billion and the Niger Delta Development Commission: N71.20 billion.
Highlights of some major ‘politically-sensitive’ projects and programmes to be implemented in the year N9.8 billion for the Mambilla hydro power project, including N8.5 billion as counterpart funding, N12 billion counterpart funding for earmarked transmission lines and substations, N35.41 billion for the National Housing Programme, N10.00 billion for the 2nd Niger Bridge, and about N300 billion for the construction and rehabilitation of strategic roads
There are also whimsically tagged spending priorities for peace, security and development such as N65 billion for the Presidential Amnesty Programme that has been retained in the 2018 Budget, the capital provision for the Ministry of the Niger Delta which has presently been increased to N53.89 billion from the N34.20 billion provided in 2017, and the Completion of the East-West Road, with a provision of about N17.32 billion in the 2018 budget. The hope here is very clear: with these allocations, ‘the boys should just chill and permit the gravy continue to flow!’
And what do these and other provisions in the budget further suggest about how the government is responding to the forthcoming increase in political activities that the year promises?
One, the administration is moving to set the stage for demonstrating that it has indeed delivered on its promise of ensuring improved security and infrastructure. It is also now moving to play more ground politics through for example its highlighting projects like the Second Niger Bridge, the Niger Delta allocations and the Zonal Projects. It’s National Housing Programme and Roads and Power Projects also fall in line with having something to show for its four years on the saddle.
Three sticky points however. One, finding the money to fund the budget and at what costs? Answer: Let posterity bother about that! Two, providing fitting oversight both at the administrative and parliamentary levels for executing the second part of the 2017 budget and the 2018 budget at the same time along with the additional burden of all of these taking place in an ‘election season?’ Answer: you cannot win everything! And three, how to handle the ‘internal party affair’ of finding the money to fund the 2019 elections process and at what costs to the nation, and most notably, the ‘anti-corruption war?’
On this last question, we will leave the reader to provide the answer for him or herself. This is because, in the past, the seeming rule of thumb has been that the sectors with the highest allocations in notably the last two budgets of the administration’s life cycle were expected to ‘arrange for the bulk of the funds’ to be used in the campaigns proper even at the expense of abandoned projects and postponed commitments! So except the ruling party has found better ways to raise its campaign funds, as you read through the details of the budget, you may also want to begin to identify some of the fairly predictable ‘failure points’ that loom ahead. And recent history is our guide here as a lot of the debt obligations that continue to assail the nation today (even in the mundane area of salary payments) are traceable to monies that were diverted from the last two budgets in the 2015 elections cycle.
On the long term also, it is also noteworthy that the administration through its Budget 2018 proposal has still not demonstrated any gumption to establish the framework for helping the nation develop two of its more critical sectors, namely health care and education. And even more sadly, in the absence of a viable opposition on ground, and one with a greater degree of integrity, clout and a strong capacity to interrogate and engage the deeper developmental issues that are on ground, Budget 2018 may therefore very well come and go just like that; with some arguable motion but indeed very little movement. Just like the 2019 elections, sadly. Did someone just remind us that ‘a nation gets the leadership it deserves?’
Nigeria’s President, Muhammadu Buhari