This Day
16 December 2011
Nasir El-rufai.
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... whilst the president was preaching a sermon of transformation in the National Assembly, Nigerians were simultaneously experiencing practical retrogression. Worse still, the raging debate on the removal of fuel subsidy to which the president was reported last weekend to have said he would "rather confront mass revolt than keep the subsidy" raised its ugly head by way of deaf silence with which the issue was foreclosed as not a single kobo was provided for subsidy in the so-called budget of transformation; just as not a single word on the subject was included in the 81-paragraph proposal. Is this transformation or retrogression?
In order to fully answer the question, we shall focus for now on just four elements of the budget - Recurrent Expenditure, Power Supply, Security and Job Creation. This will enable us to have a meaningful dialogue on whether the country is making progress (let alone transformation) from the advent of the Umaru Musa Yar’Adua/Jonathan administration in 2007 up to the 2012 Budget Proposal.
RECURRENT EXPENDITURE:
In the 2007 budget, spending on capital investments was dramatically increased from N567 billion in 2006 to N830 billion, representing a year-on-year increase of 46 per cent; whilst total recurrent expenditure accounted for 64 per cent of the total budget. Since then, the annual budget has made a quantum leap of 107 per cent from N2.3 trillion to N4.75 trillion. Concurrently, the capital element grew from by slightly less than 60 per cent to N1.3 trillion, whilst recurrent expenditure has ballooned by over 133 per cent from N1.47 trillion to N3.4 trillion, thereby outgrowing the pace of the total budget by over 25 per cent.
Although President Jonathan understands the critical importance of putting a cap on government spending when he states in his 2012 Budget address that "this underscores the need to intensify our efforts to curtail recurrent expenditure, which we have already embarked upon under the policy of fiscal consolidation as evident from the Medium Term Fiscal Framework. The share of recurrent expenditure in the 2012 Budget proposal is 72 per cent down from 74.4 per cent in 2011, and we intend to continue in this downward trend"; the statement is at best a half-truth if only because recurrent expenditure nonetheless went up by a staggering sum of N91 billion between 2011 and 2012.
In the circumstance, Nigerians are still saddled with a bloated administration where over 70k out of every naira of the near N5 trillion revenue is spent on running the government; consumed by about 1 million people that work for the Federal Government, whilst the same administration is imposing a punitive tax of N8.00 on every man, woman and child by unilaterally “withdrawing fuel subsidy”. The government has dared the people to put up or shut up. Would it not have been transformational for the size of the government and the waste and corruption of its officials to have been reduced as opposed to eliminating any subsidy?
POWER SUPPLY:
As alluded to previously, Egbin power plant has been shut down, meaning we now generate less than 3,000mw for a population in excess of 160 million. This means that power generation for each Nigerian is less than 20 watts of electricity whilst a Ghanaian enjoys about four times at 88 watts; a Brazilian enjoys almost 25 times at over 500 watts; a South African enjoys over 50 times at about 1,093 watts not to talk of an American at about 150 times at 3,252 watts of power generation!
In the "Road Map for Power Sector Reform" that was launched in August 2010 by President Jonathan, it was stated that "the medium-term expectation is that 14,000mw of power generation capacity would be available by December 2013". The additional 10,000mw power that must be generated for this target to be accomplished would cost about $10 billion. Even if we assume that the Independent Power Plants (IPPs) and other power plants under construction would add about 5,000mw to the existing pool, there exists nonetheless a shortfall of 5,000mw that will cost $5 billion, whilst only N161 billion - a little over $1 billion is the total earmarked for recurrent and capital spending of the power sector in the 2012 budget. Where is the transformation?
Clearly, in the unlikely event that we are able to appropriate $4 billion in the 2013 budget for power sector; we will still not be able to meet the said target if only on account of the gestation period of a couple of years that is required for power plants to be built. Here again, the concept of transformation is more of a wishful thinking rather than a realistic prospect.
SECURITY:
Security has become our primary challenge as a nation, and the budget proposal loudly earmarked N922 billion for the sector. Compared to infrastructure (N774 billion) and Human Capital (N714 billion), it looks sizeable. What is not apparent to many people is that the amount proposed is about N250 billion lower than the N1,174 billion budgeted to cater for the capital and recurrent needs of our armed forces, police, the NSA, amnesty programme and the para-military agencies that make up our security sector. Today, our civil intelligence and security system has collapsed with the administration having to deploy the Nigerian Army in active, but totally inappropriate combat duties in 34 out of 36 states and the FCT. Our Army has never been so deployed in as many states even during the civil war!
And the spending of over N1.1 trillion on "security", about 26 per cent of the 2011 budget has brought nothing but greater insecurity, needless deaths and destruction of property of Nigerians. What has happened to our internal security is certainly retrogression, not transformation, and proof of a totally inept and dysfunctional governance!
JOB CREATION:
The only tangible element of direct intervention by the Federal Government to create jobs was the N50 billion that was set aside in the 2011 Appropriation Act for the Youth Enterprise With Innovation in Nigeria (YOUWin) programme. The programme was to provide a one-time equity grant for 1,200 selected aspiring entrepreneurs to start or expand their business initiatives and generates about 100,000 new jobs over a three-year cycle.
Although the programme was launched with a lot of fanfare by the president in October of this year, every available information so far reveals that not a single job has been created even though 2011 is coming to an end. This issue of non-implementation typifies the majority of the new initiatives and capital projects that were contained in the 2011 Appropriation Act. Worse still, the YOUWin programme, as designed, is flawed with many defects as it is in totality a drop in the ocean, given that in the most optimistic scenario, only 100,000 jobs will be generated in three years for the teeming unemployed Nigerian youths of at least 25 million.
One of the major flaws of YOUWin is that the so-called 1,200 young entrepreneurs will receive "an equity grant" that is tantamount to a government largesse or gift without any pre-identified objective criteria for selecting the winners and sustaining the programme without new capital contribution by the government. Thus, far from transforming the previous PDP government-led largesse known as National Poverty Eradication Programme (NAPEP); the Jonathan administration has simply replaced one dubious scheme with another; with some arguing that the YOUWin programme is worse than the NAPEP because some of the projects under NAPEP such as the Keke NAPEP are visible for all to see whereas beneficiaries of the YOUWin programme will have limited identity, with little or nothing to show for their jackpot.
In closing, the four areas of Recurrent Expenditure, Power Supply, Security and Job Creation elements of the 2012 Appropriation Bill analysed above provide answer to the question as to whether the 2012 Budget is that of Transformation or Retrogression. You be the judge!
FIXNG THE 2012 BUDGET:
Can this retrogressive budget be fixed? Of course.
It is a proposal which only becomes law when enacted by the National Assembly. As suggested on Twitter by my brother Bashir Yusuf Ibrahim, we must all rise up and call our representatives and senators to transform the proposal into a sensible, fiscally-sustainable budget by effecting the following amendments: (1) reduce the oil production assumptions to a more achievable 2.35 million bpd, and transferring all excess earnings to the sovereign wealth fund (2) raise the benchmark oil price to $75 per barrel, and include the increased revenue as a line item to subsidise the selling prices of kerosene and petrol in 2012(3) reduce recurrent budget proposals of all MDAs including the Presidency, the National Assembly and INEC by at least 30 per cent and transfer the savings to the capital components of infrastructure, civil security and human capital sectors, (4) raise import duties of agricultural commodities that we can produce domestically to levels that existed in 2007 to encourage our farmers, and (5) include a line item in the budget for a national price support system in lieu of fertiliser and other dodgy subsidies in agriculture.
The ball is now in the court of our legislators to be on the side of the ordinary Nigerian, and save President Jonathan from the anti-democratic path he has chosen to tread. He may be prepared to face a popular revolt, but only God knows how that will end. Avoiding it by doing what is fair, just and reasonable in the circumstances is what pragmatic leadership is about. We are waiting and watching.
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