Economists suggest effective implementation of national budget
Following the passage of the 2016 budget, some economic experts have called for the political will to effectively implement the budget.
The experts, who made the call in a survey conducted by the News Agency of Nigeria (NAN) in Abuja on Wednesday, also called for transparency and credibility in the implementation of the budget.
They lauded the efforts of the government to diversify the economy but stressed that national development could not depend on the production of primary products.
A development expert, Dr Emeka Okengwu, advocated a three-year cycle for capital expenditure in the national budget to enhance sustainable development.
Okengwu said while the capital framework could run for three years, the recurrent framework should be implemented yearly.
“If we can tie our budgets to three-year period, it will give us opportunity to have what we call milestones.
“With this, we can evaluate and revaluate and then break them into capital, running for three years and recurrent running annually.
He expressed optimism that the current budget would not face funding challenges considering the will and steps taken by the government to ensure efficient implementation.
“I see the will on the part of this administration to do things differently.
“From what is happening in the economic space so far, particularly, the recoveries and blockages, enough funds will be available to fund the budget.
“Things are happening and eventually we might surpass the demand of the budget,” he added.
Commenting on concerns over the reliance on oil revenue in relation to the budget, Okengwu said crude oil was not the major contributor to Nigeria’s revenue but that oil was used as benchmark for planning the budget.
`The only thing is that oil is the highest contributor to the foreign exchange but not to the revenue of the country.
“ Non-oil revenue, made up of taxes, contributes more than oil to the revenue.
“Oil is the benchmark of budget that receives the country’s foreign exchange.
“It is somehow for people to say that oil is contributing 90 per cent of the budget but I do not think it is a true assessment.
“If you look at the last budget that the Federal Government proposed, it is contributing, I think N800 billion.
“ Right now, the government is targeting more of non-oil resources to finance the budget which are taxes,’’ he said.
A former Director of African Heritage Institution, AfriHeritage, Enugu, Dr Ifediora Amobi, said that the zero-budgeting approach and process adopted by the Federal Government would check corruption and ineptitude.
Amobi said zero-budgeting would make for easy specification and monitoring of each item in the budget … thus helping to check paddling and exaggerations.
“On the Gross Domestic Product (GDP), the service sector accounts for over 40 per cent; agriculture about 30 per cent; information, communication and computer 10 per cent, entertainment (music, video, theatre etc) 10 per cent; while manufacturing and other miscellaneous is about 10 per cent.
“The manufacturing sector of the GDP is still very low due to power and credit issues as well as the need for our people to patronise our own locally-made goods,’’ he said.
Amobi said deficit budget planning and pegging the benchmark lower due to price variation was in the best interest of the country.
“It would make for more prudence and government thinking more ingenious ways to fund the deficit instead of having a surplus budget.
“So, with deficit and lower benchmark; it makes for creativity and having excess to save if the parameters used in pegging the budget improve.
“This means that if the 2016 budget is benchmarked at 32 dollars per barrel and the global oil price rises to 100 dollars per barrel, it is surplus for the country,’’ he said.
A former Head of Department of Economics, University of Nigeria, Nsukka (UNN), Prof. Cletus Agu, said the government should not depend on foreign grants and aids to fund the deficit.
“But government should invest the money borrowed to fund the deficit on profit yielding ventures so as to pay back at the appropriate time
“The problem in African countries most times is that monies borrowed to fund deficit budgets are embezzled or invested on white elephant projects.
“It is not proper for government to depend on foreign grants and aids to fund budget deficits because if the expected foreign grants and aids do not come such budget projections will fail,’’ Agu said.
He advised the executive arm of government to always prepare the budget on time to enable the National Assembly to have enough time to scrutinise it.
“If Nigeria’s fiscal year run from January to December, the budget should be ready to be presented to National Assembly latest by October so that before December ending it has been passed by National Assembly.
“Why government delays in presenting budget is because it knows that Central Bank of Nigeria (CBN) will provide what is called `ways and means’.
“This is money the apex bank provides the government to carry recurrent expenditures pending when budget is passed,’’ he said.
The economist said Nigeria’s budget would continue to depend on oil because past leaders abandoned agriculture and other resources that could earn the country forging exchange.
“The present situation where the country imports almost everything, including toothpicks, is not in the best interest of the country and it will continue to depreciate the naira,’’ he said.
Dr Richard Edeme, a senior lecturer in the Department of Economics in UNN, blamed poor implementation of budget to the lack of monitoring.
“Most times some road projects listed in the budgets in federal, states and local government have remained unconstructed and nobody asks about the money budgeted for such projects.
“Budget implementations in the country has not crossed 50 per cent in the past two decades,’’ Edeme said.
Dr Taofik Ibrahim, an economist with Nigerian Institute of Social and Economic Research, Ibadan, said the problem with the country’s budget was the lack of political will to implement it.
He criticised delays in passing the budget, saying “ we have not been able to keep to the fiscal periods as there is always overlapping because budget processing is always delayed’’.
He said that an economy that depended on primary goods would always face challenges.
“The oil sector dominating the economy in revenue profile is a major problem.
“ We need to look at issues like savings which can be turned into investment; government should tax investors and there will be revenue.
“Our current expenditure is more than income, so Sovereign Wealth Fund should be considered because they are domestic ways of mobilising resources to cover the revenue gap,” he said.
The President of Institute for Fiscal Studies, Mr Godwin Ighedosa, said: “Historically, we tend to operate the budgeting system that we would call traditional or incremental system of budgeting.
“I think that had always been the problem with our fiscal management system in Nigeria where you take individual lines of items every year and you basically just say we spent a certain amount last year and you say prices have gone up.’’
Ighedosa said such budgeting system was susceptible to corruption.
He said this was because “all you are doing is that you just take a line and increase the money because you think that the cost of doing it this year must be more than what you spent on it last year.
“What we are seeing with the current administration is the idea of performance based budgeting which most industrial countries adopt.’’
He said such strategy ensured that every item in the budget was subjected “to vigorous analysis’’ of importance and value for money.
“So you are starting afresh every year, subjecting the budget to much more rigorous analysis to say let us look at it afresh and that is the best form of budgeting system,’’ Ighedosa said.
“The key issue is our undue reliance on oil and that is what we have done in the last 45 years to 50 years.
“We have relied heavily on revenue from oil and 90 per cent of our foreign reserve is from oil revenue and about 75 per cent of government revenue is from oil and 35 per cent of GDP is from oil.
“So, the government relies heavily on oil.
“What has happened now is that the precipitous decline in oil revenue has cracked open the opacity in our fiscal architecture.
“For the first time we are beginning to realise that the reliance on oil revenue is not sustainable in the long term,’’ he said.
Ighedosa said the attempt by the government to diversify the economy was good.
“They mentioned agriculture and a number of other industries that they are trying to develop. Yes, agriculture is good.
“The issue is that you cannot actually get rich by selling primary commodities like oil.
“No country has been able to achieve a sustainable level of development by selling those commodities. Countries only get rich by making things to sell.
“If you are relying on agricultural development which is a great idea … what will make this country rich is industrial development policy and that is where the issue is. Even managing the naira, creating jobs and all depends on this.\
“So, my focus are the government efforts in terms of driving industrial policies that will move Nigeria into the industrial age,’’ he said.
Mr Eze Onyekpere, Lead Coordinator, Centre for Social Justice,
said “Nigeria, over the years, may have been running deficit budgets because of leakages and corruption in the fiscal system.’’
He called for popular participation and reflection of the people’s preferences in the budgeting process.
Onyekpere said oil had been used as the reference price for the budget because it was the major foreign exchange earner and source of budgetary revenue.
“This is a result of the fact that the economy has not been diversified and is dependent on the commodity.
“The benchmark should have been set on tax revenue if the economy had been diversified and the productive sectors fully developed.’’