By, Paul ADEYEYE
A REVIEW of the Revised 2020 Budget exclusively obtained by DATAPHYTE indicates that the Federal Government has reduced the total budget size by only ₦84.71 billion. Against the background that the government initially proposed a ₦1.5 trillion budget cut (over 14 percent reduction of the total budget size), the new cut is low.
On a close look, the revision proposes less than one percent reduction to the initial budget size. With less than one percent budget reduction, one wonders the real essence of the whole budget review attempt. In addition, the budget review dampens the hope of many the Nigerians optimistic of a reduction of the enormous cost of governance. Budget for the National Assembly only reduced by 10 percent while the budget for the Presidency reduced by only 9.75 percent.
Revised 2020 Budget across Main Expenditure Items
The composition of the revised budget implies more dilemma for Nigeria’s development aspiration. Across Nigeria’s four main expenditure items, only the budgetary provisions for statutory transfers and capital expenditure have been reduced. While statutory transfers decreased by 28.9 percent, capital expenditure reduced by close to 10 percent. Against the background that budgetary provision to development propellants continue to be low, the reduction is not satisfactory.
But the bigger dilemma bothers on Nigeria’s priority. While budgetary allocation to the National Judicial Council, National Assembly, Independent National Electoral Commission, and other agencies of government have been reduced only by about 10 percent respectively, budgetary provision for education reduced by close to 55 percent. Similarly, provision for basic health care fund reduced by over 42 percent.
With the reality of the COVID-19 pandemic, reduction in budgetary share for education and healthcare does not reflect the prioritization of the citizen’s real needs. With the growing number of COVID-19 cases in the country, an increase in budget share to the health sector is expected. To expand education access to the teeming Nigerian school children who are deprived of education during this period, additional budgetary commitment is also required. This is to cover up the cost of setting up virtual learning alternatives.
Revised Budgetary Allocation to Statutory Transfer
Increased Recurrent and Debt Servicing Expenditure
Contrarily, budget share for recurrent expenditure as well as debt servicing has increased. By implication, spending on recurrent items will continue to suppress Nigeria’s aspirations for development this year. But there are even bigger questions on the items that have increased the recurrent expenditure figure. For instance, insensitive recruitments like that of the Nigerian National Petroleum Corporation would have added to these expenditure burdens. Also, the increasing budgetary commitment to debt servicing over health and education may affirm that Nigeria indeed cares more about its debt profile than the citizens.
Conversely, Nigeria’s revenue realities continue to expose the need for stiffer revenue management measures. In fact with the realities presented by the Addendum to the 2020-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP), the proposed budget revision appears like a mere child’s play. As at Q1 2020, gross oil and gas revenue was short by over 28 percent of the anticipated revenue.
In addition, the net oil and gas revenue inflow to the Federation Account was ₦940.91 billion. This represents a shortfall of ₦425.52 billion (or 31.1 percent of the pro-rata amount). Similarly, non-oil tax revenue was only ₦269.41 billion by the end of the first quarter of 2020. This is a shortfall of about 40 percent of the predicated non-oil revenue earning for 2020.
From the revenue earnings in Q1 2020, as well as the existing realities on oil trade and the ongoing global pandemic, hopes for increased revenue earnings may be blurry. The continued lockdown is expected to impact on tax revenue from Nigeria’s business community. Thus, the revised budget may be somewhat impracticable without a corresponding increase in Nigeria’s debt.
Counting on the National Assembly To Do Better
At this point, the National Assembly must step in to show solidarity to the Nigerian people. Therefore, it must use its oversight powers to ensure the proposed budgetary revision is jettisoned and replaced with a more realistic and citizen-focused budget. Increasing commitment to capital investments will show Nigeria’s commitment to the course of development. DATAPHYTE’s recent occasional paper provides a guide for the budget revision.
Moreover, the legislative arm needs to show it is truly not patronised by the executive arm of government. Especially as the Zonal Intervention Project budget and the National Assembly Library budget tied to the two chambers were untouched in the budget revision. Above all, a budget that allows for increasing provision for basic education and healthcare should be developed.
In an interview with a health advocate, Ms. Aanu Rotimi, the Program Manager at Health Reform Foundation of Nigeria (HEFRON), she said the current COVID-19 situation has revealed proper investment in the health sector is central to economic growth and development. “Nothing can be more important now than appropriate and focused investment in human development according to the current realities and the future needs of this country”, she further stressed. The health advocate said this is the time to push aside superfluity of a few for direct and impactful investments for all that can be tracked and validated. In conclusion, she nudged the legislatures to walk the talk, translate their commitments to actions and ensure there are no wastages as usual.”
Also reacting to the budget revision, Mr. Kolawole Oluwadare, the Deputy Director Socio-Economic Rights and Accountability Project (SERAP) said these cuts are not inevitable. He said the Nigerian government had a lot of choices as to what to cut but chose to balance the budget on the backs of the most disadvantage. “In the absence of concrete social protection for over 80 million poor Nigerians, these cuts (and what was left uncut) will not only worsen the plight of the poor but also deepen the trust deficit of citizens in government.” Mr. Oluwadare submitted.
In April, SERAP gave the President and leadership of the National Assembly 14 days to reverse the proposed illegal cut of N26.51 billion in basic healthcare budget and to cut the National Assembly and Presidency budgets instead, or face legal action.
This report was originally published by DATAPHYTE