Opinion: Interrogating the 2016 Budget – Gbenga Adesina

January 27, 2016

Our persuasion is that budget offers us an un-gilded window into the soul of a government as expressed in its fiscal priorities. Is a government pro-people? Does this government wake up thinking of you or is it just another incarnate of the political class and their tendencies?

Budget is how you know. Budget is how you measure a government’s change slogan as a function of mere mantra or as a function of well-heeled intentions.

Of course this analysis will not pretend to be exhaustive. There is an explosion of information and/or civic consciousness in our nation now and there’s the possibility, in our lifetime, of information equity because of the excellent pioneering work of some civic startups.

So here’s the précis: ₦6.08 trillion Naira in total (benchmarked on 38 dollars per barrel of crude and 2.2 million barrels per day production capacity).

This shows a 70/30 recurrent expenditure to capital expenditure ratio (i.e. ₦4.28 trillion/₦1.2trillion) and a ₦2.2 trillion deficit core.

Going forward, what does this say to us of the Buhari/Osinbajo regime? Is there a peek this offers us into the core of this government? How does this speak to the years to come?

For instance, the ₦200 billion special intervention (social investment) allocation speaks not only to the heart of the Buhari/Osinbajo mandate (as a government of the mekunus/masses). It signifies, as it appears to me, a clear economic philosophy departure from the preceding Obasanjo/Jonathan years.

You will recollect that these preceding regimes were essentially proponents of trickle-down economics i.e. the believe/policy thrust that more waivers, concessions, local content support or other government stimulus package (Aviation Fund, Rice quotas) for the big monies, for instance, an Alhaji Mondogo of the Mondogo Sugar Refinery Company, will inexorably lead to expansion and more jobs through which a semi-skilled Mr. Sule might be employed and empowered to pay his daughter’s school fees and set up his wife in a micro fried fish business. The wife in turn will buy and sow more clothes from Iya Kabiru etc. Trickle-down economics!

With the 2016 proposed special intervention package however, trickle-down economics will be bypassed directly to offer dignity and prospect nets for the most vulnerable in the society. The possibilities this proposes for a sub-demographic of our population is so vast if considering the scaled down vulnerability index of CRC 2008/2009:

• Insecurity (ranging from insecure environments to conflict and violence)

• Limited citizenship (lack of a meaningful political voice)

• Spatial disadvantage (exclusion from politics, markets, resources, etc., owing to geographical remoteness); and

• Social discrimination (which traps people in exploitative relationships of power and patronage)

Most of these funds will be channeled through micro credit grants/loans, school feeding and nutritional supplement programs, welfare stipends and conditional cash transfers which will find expression as Basic Income Guarantee (BIGs) and Poverty Reduction Accelerator Investment (PRAI) etc. Women, children and rural households will be the biggest beneficiaries. Unemployed youths are also targeted.

The argument for social protection/investment is straight up simple. I have made it a couple of times. It is not socialism or communism. For the children involved, it is the nation as a father to all. It is government saying look we understand that the circumstance of your birth or nurture or lack thereof has put you in a position of disadvantage.

And by God we wish we could give you the Dubai vacations and the merry things the Lekki kids have but we can’t. What we can give you is a good school, if you are willing to go; a great teacher and books to put the world within your grasp, if you promise to pay attention.

We will feed you so that hunger doesn’t break your spirit, we will give you healthcare so that you stay alive. And if you work hard, there will be paths and steps that lead ahead so that you can transcend the deficiency of earlier circumstances into a brighter life because let’s face it, the parents or grandparents of those Lekki kids started in circumstances much similar to your own.

It’s a simple bargain.

Hence, an opportunity of a reset button across generations. Your father’s lack doesn’t have to be yours if you are willing to work hard. It is the wheel of greatness, the very possibility of upward mobility across two or three generations.

And it is smart economics too.

You remember there is a per capital dimension to the GDP of nations? Social investment increases the return on investment/value on humans. The fish seller young woman could have been a doctor, I tell you. Education and opportunity is the gap.

More of our people will be included in a productive space of skills and capacities where they can provide and support families, break the cycle of poverty and illiteracy and the adjacent indexes that flow with them (maternal and infant mortality etc.). But this budget is not just about social investments (I could go on and on about social opportunities though; it is one of the central arguments of my life).

For instance, the 70/30 recurrent expenditure to capital expenditure ratio (as against 88/12, 77/23, 68.72/31.28 in the 2015, 2014 and 2013 budgets respectively) doesn’t in anyway, for me, rouse ovation. A huge chunk of this recurrent expenditure is bloated overhead/personnel cost.

Some fall disproportionately within the presidency itself where for instance the ₦3.9 billion budgeted for annual routine maintenance of Aso Rock far outweighs the ₦2.6 billion allocated to the construction of hospitals across the length and breadth of the entire nation.

But what is most shocking for me is that of the ₦2.2 trillion deficit, over 400 billion would be frittered on recurrent consumption. Awh! Who does that?

This is like you borrowing money from a shylock neighbor and then heading off to Chicken Republic to order two chicken laps, three large kegs of Yoghurt, four hot dogs and five meat pies and eating everything in one sitting.

Who does that?!

There is something even worse, and I suspect it’s the cause of the ache I have been feeling in my left lung for some time now. It will shock you too. This budget is only about 9 percent reduction in the recurrent expenditure of the Jonathan regime. Just 9 percent!

This is shocking.

There is something else, a highly deficient forecast capacity. The 2016 budget benchmark of 38 dollars per barrel is already under water as global oil price has already fallen to 27 dollars as at last week. The recent aggravation in the Niger Delta has already started, though not yet really statistically significant to scissor into the production benchmark.

The international Energy Agency has said things could bottom out with the price falling as low as 20 dollars per barrel. How do we run this budget if this happens?

It gets even worse. I’ll tell you why: the recent lifting of sanctions on Iran (and this was a long time coming, as early as the 2008 Democratic primaries debate when Obama said he would be willing to negotiate with Iran and Cuba with no pre conditions, you remember?) the oil glut will increase. South Africa and India might veer towards Iran for their energy supplies. What do we do then?

Things, however, are not all grey, okay? With proposed massive government fiscal intervention in infrastructure, education, health and social opportunities, there should be some cushioning effect/lag phase that stalls the day to day living harsh effect of recession on the people and perhaps to a large extent (not totally though) confine our woes to macro-economic details.

On a concluding note, a couple of weeks ago when the budget went missing, we were all aghast. When it was returned, the difference was largely the 1 billion Naira reduction in state house overhead and 3.2 billion reduction in what was budgeted for BMW saloon cars and SUVs for the presidency.

Was it the outrage of the people that got Mr. President to reconsider that exorbitant allocation or was it that he was never privy to the arrangement in the first instance? Was it that the people around him had just gone ahead with business as usual in architecting the budget for the most part?

And that leads to my most salient point and this is it:

Can we be sure that the handlers along the corridors of power will not infuse their own tendencies into the appropriation of this budget or policy spin offs?

In a budget, where the main thrust seem to be massive social investment and stimulus spending, the real crux will not lie with just an obviously determined and perhaps well intentioned president. It will be up to his aides (handlers), cabinet members and civil servants to make things happen. Can we count on them to execute and implement these policies with sheer tenacity and love for country?

Social policies fly on the back of a great civil service. Do we have one in place? The logistics is always an uphill task (you should google the initial hiccups of OBAMACARE). Can we surmount this, can we mobilize enough human resource, will power, private sector grade of discipline and drive to achieve this in a space essentially mottled by a sub-climate of self-love and averageness?

Please, don’t say: let’s wait and see.