Economic experts pick holes in 2023 budget

Wed, Oct 26, 2022
By editor


By Ejike Obeta

SOME economic experts have criticised the N20.51 trillion 2023 budget presented to the National Assembly by President Muhammad Buhari, saying its implementation will be difficult, considering the prevailing economic realities.

The experts are of the opinion that with dwindling revenue, oil market volatility, high imports occasioned by a weakened naira and high food prices, implementing the budget will be a herculean task.

The stakeholders who picked holes in the estimate said part of the solution to Nigeria’s economic problems was to reduce the cost of governance.

President Muhammad Buhari on Oct. 7 presented a N20.51 trillion 2023 budget of Fiscial Consolidation and Transition to the National Assembly with a proposed Revenue of N9.73 trillion, resulting in N10. 78 trillion fiscal deficit.

The budget which has passed second reading comprises Statutory Transfers of N744.11 billion, Non-debt Recurrent Cost of N8.27 trillion, Personnel Cost of N4.99 trillion as well as Pension, Gratituties and Retirees’ Benefits of N854.8 billion.

It also has Overhead Cost of N1.11 trillion, Capital Expenditure of N5,35 trillion, Debt Service of N6.31 trillion and Sinking Fund of N247.73 billion to retire certain maturing bonds.

The N6.31 trillion debt service which includes interest payment of N1.2 trillion for Ways and Means is 30.8 per cent of the total expenditure as well as 71.2 per cent higher than 2022 estimate.

In the proposed revenue, 20 per cent is expected to come from oil-related sources while 80 per cent is projected to come from non-oil sources.

Among other allocations to various sectors, health receives N1.58 trillion which is 8 per cent of the budget with N47.65 billion provided for the Basic Healthcare Provision Fund (BHCPF).

A total of N2.05 trillion is proposed for education with the Universal Basic Education Commission (UBEC) and Tertiary Education Revitalisation and Salary Enhancement provided with N95.30 billion and N470 billion respectively.

Infrastructure has N998.93 billion allocated to it in the budget and this provision includes Works and Housing, Power, Transport, Water Resources and Aviation.

Reacting to the provisions, some of the economists decried the borrowing plans of the Federal Government to fund the budget while others said the allocations made to some critical sectors were very poor.

According to Dr Fidelis Adaka, former Vice President, Nigerian Statistical Association (NSA), the estimate is not workable because of the parameters used for projected revenues of the federal government.

“How can we borrow almost half of the required money to fund our budget? What is the cost of servicing the loans?,” he asked.

Adaka, who is also the Secretary General of the Delta State Association of Justices of Peace, bemoaned the cost of governance, describing it as ‘’too high in the face of security challenges.’’

He said the provisions for overseas travels, feeding, overheads as well as debt servicing at N6.31 trillion (30 per cent) were unacceptable, adding that allocations to health and education were less than five per cent.

For adequate funding of education, Adaka suggested that tertiary education should be jointly funded by government and individuals

On his part, Mr Moses Chukwuka, an economist and civil servant in Asaba, said that the figures projected for internet services and travels for the Presidency were too huge.

He criticised the borrowing rate of government and said that the revenue projection of N9.73 trillion was unrealistic, especially in the face of N6.3 trillion projected for debt services.

According to him, it is difficult to reconcile the call made by Buhari at the United Nations General Assembly for debt forgiveness for developing countries with the plans to borrow over N10 trillion.

Similarly, Mrs Aina Omo-Ojeonu, President, Benin Chamber of Commerce, Industry, Mines and Agriculture, lamented that the budget seemed to be built around servicing of debts.

‘’Where are we going to get money to implement the budget? It is almost about servicing debts,’’ she said.

On education sector, while some of the respondents expressed belief that the allocation to the tertiary education was inadequate, others okayed it.

The President of Agricultural Policy Research Network based in Abuja, Dr Anthony Onoja, said the N470 billion earmarked for tertiary education out of N2.05 trillion appropriated to education was disappointing.

According to him, the figure showed that the federal government has not fully committed to advancing tertiary education in the country.

“I don’t think that the funds appropriated for the education sector, particularly tertiary education, can bring the desired effective results.

“The only way to grow the sector is by adopting the UN Educational, Scientific and Cultural Organisation’s (UNESCO) recommendation of investing between five and 10 percent of the national budget in education.

“Less investment in education means that there will be more infrastructural decay in our tertiary education centres, further lowering the quality of education in the country,” he said.

Onoja, who is an Associate Professor of Agricultural Economics in the University of Port Harcourt (UNIPORT), called on the national assembly to thoroughly review the budget.

Similarly, another lecturer in UNIPORT, Dr Williams Wodi, said that the ‘meagre’ allocation earmarked to tertiary institutions had shown that the government was merely paying a lip service to education.

He said rather than budgeting paltry sums for education, government ought to have cut the allocations for non performing Ministries, Departments and Agencies (MDAs), and redirected them to education.

According to Wodi, the consequence of having politicians establish universities is less attention being given to public universities.

On the contrary, Dr Ray Chikogu, Chairman, Academic Staff Union of Universities (ASUU), University of Benin, said for government to make such a provision amounted to being sensitive to the agitation for proper funding of public schools.

“It is okay they have made that provision, but the one for revitalisation is for the public universities to be rightly positioned. The money is for university adminstration,” he said.

Chikogu noted that ASUU had been agitating for universities to be properly funded and necessary equipment provided in order to ensure conducive working and learning environment for both staff and students.

“For the N170 billion for salary increase, I will only say, ‘we are watching.’ We don’t know how they arrived at N170 billion,” he added.

Sharing a similar sentiment, Dr Abdulkadir La’aro of the University of Ilorin, described the provisions as a welcome development.

La’aro, a lecturer at the Department of Mass Communication of the university said that the heeding to the agitation of ASUU showed that the unino did not lose the battle.

But an econometrist in Uyo, Dr Christian Nyenke, described the allocation to tertiary education as grossly inadequate, saying that it would not sustian the sector effectively.

He maintained that the N470 billion provided for tertiary education reviltalisation and salary enhancement would not be enough.

‘’This means there is no near permanent end to the unfortunate disruption of academic activities in our universities,’’ he said.

According to him, findings in the independent evaluation report shows that an increase of 20 per cent in investment is needed to ensure inclusive basic education in the country.

On health, Nyenke described the allocation to it as not befitting, saying it is below the African Union (AU) benchmark.

He said the sector’s eight per cent allocation was far below the commitment made by African leaders under the Abuja Declaration to allocate at least 15 per cent of their annual budgets to the sector.

A total of N1.58 trillion or eight per cent of the proposed budget has been allocated to health while the government plans to spend N756 billion (four per cent) on social development and poverty reduction programmes.

On Infrastructure, some economic analysts and business operators are of the opinion that the 5 per cent appropriated for the development of the sector is too poor to meet the deficit in the country.

An economic analyst in Rivers, Dr Fred Ekini, decried the N998.93 billion voted for infrastructure which included works and housing, power, transport, aviation and other critical sectors of the economy.

He said the 5 per cent allocation to infrastructure was insufficient, considering that the sector was largely in deficit across the country.

“If government had invested in infrastructural development over the years, perhaps the flooding we are experiencing now wouldn’t have happened in the first place.

“The over 2.5 million people displaced by flood; the over 500 deaths recorded so far and businesses destroyed wouldn’t have occurred if there were enough investments on infrastructure.

Similarly, the Manufacturers Association of Nigeria (MAN), Edo/Delta chapter, decried the allocation to infrastructure, describing it as inadequate.

According to the Edo/Delta branch Chairman of MAN, Dr Okwara Udensi, looking at the 2023 budget, one begins to wonder where the focus of government is.

Udensi said that infrastructure and insecurity were among the major challenges affecting the economy of the country, adding that infrastructure was critical to growing the nation’s economy.

‘’The issue of power supply is a problem; industries are collapsing because of poor power; people cannot distribute their goods to various locations because of bad roads.

“A country that is looking at growing its economy and putting 5 per cent for infrastructural development, for me, is not gettingit right,’’ he said.

Proffering solution, Mr Moses Chukwuka, an economist believe that the cost of governance at the federal level could be reduced significantly if government implements the Steven Orasonya report.

He noted that the report had recommended the merger of ministries, departments and agencies instead of creating new ones. (NAN)