As 2021 fiscal year winds down and the federal government settles for the implementation of 2022 budget, economic experts have made fresh calls on the federal authorities to be strive for inclusive growth in the implementation of the N17 trillion 2022 budget, with special focus on economically viable sectors of the economy.
The general view is that the government should build a template with the capacity to trigger productivity, value addition and transform the economy into a job creating one, with special focus on stable power supply and practicable transformation of the agricultural sector.
On sectoral basis, experts say government should focus on power, agriculture, manufacturing, telecommunications, IT and even access to relatively cheap finance.
Government is also expected diversify the economy with robust micro, small and medium enterprises (MSME) growth, invest in critical infrastructure, strengthen security and ensure good governance.
The budget has aggregate capital expenditure of N5.35 trillion (32.7 per cent of total expenditure). The provision is inclusive of capital component of statutory transfers, government owned enterprises capital and project-tied loans/expenditure.
Professor of economics at University of Benin, Hassan Oikhenan said government should give unstinting attention to the fixing of the power sector, given that it is in the sector that the battle to reboot the economy is fought and won or lost.
Prof. Oikhenan said productive expenditure must be made on the power sector if the manufacturing production and indeed overall industrial production must be revived.
“Does the government need any specialist to advise it that any effort to tame the burgeoning problem of unemployment and the ballooning inflation must begin with genuine effort to revive domestic production, the fundamental basis of which is the power sector?” he said.
According to Oikhenan, it is vexatious that the country keeps moving around in circles, repeating the same thing over and over again.
“I should just say that if the government has any atom of sincerity and genuinely wishes to use the instrumentality of the 2022 budget to lift the economy out of the comatose state into which it has plunged it since it came to power in 2015, it should focus on the power sector, and if this is gotten right, there is a reasonable likelihood that other things will begin to fall in place,” he said.
In similar vein, chief responsibility officer of Value Investing Limited, Seye Adetunmbi, said government should prioritise sectors of the economy that have capacity for value addition with indigenous content.
That aside, he advocated that focus should be on the small and medium scale indigenous entrepreneurs that can be more effective in value addition to the Nigerian economy with ultimate desired multiplier-effect in all facets of economic indicators.
Those priority areas are believed to have economic benefits for the Nigerian economy. According to Adetunmbi who is also the convener of Capital Market Roundtable in Nigeria, the more productively involved the indigenous entrepreneurs are in the formal sectors of the economy, the better for the nation.
Apart from the benefit of creating employment, he explained that the integrated and associated long term profit on the growing value chain will accrue to Nigerians more than when the major players in the nation’s economic sphere are foreigners.
At a time, the federal government is in search of better ways to mobilise revenue for implementation of the budget without necessarily borrowing to fund the deficit, many, including economic analyst Stephen Kanabe, told our correspondent that much effort should be dedicated to efficient application of available resources for economic growth.
For an economy that is already too exposed to debt, the experts said budgeting to finance new deficit to the tune of N5.01 trillion is rather too ambitious.
The 2022 fiscal deficit is standing at N6.26 trillion, which represents 3.39 per cent of estimated 4.2 per cent GDP. This is above the three percent threshold prescribed by the Fiscal Responsibility Act (FRA, 2007).
According to Adetunmbi, the solution is outright blocking the leakages in the system generally.
“Work on GOEs and enforce Finance Act 2020 by bringing GOEs down as low as possible,” he stated.
Kanabe also shared the same view with Adetunmbi who said the focus should be to reduce the Nigeria’s debt service-to-GDP ratio to less than 50 per cent from its present level which is among the highest among African leading economies.
“Taxing regime would be very effective when we have an accountable system and responsible political leadership that truly care for the people and have things to show for the justification of an efficient taxing system,” he stated.
Meanwhile, Oikhanan thinks the issue of revenue mobilisation is a secondary one, given that the problem, so far, “is not that of revenue mobilisation but inefficient utilisation of what has been mobilised.”
According to him, the starting point is for the government to be responsible in a fiscal sense as whatever revenue is mobilised will most likely be frittered away as usual with little or no impact on the economy and the welfare of the citizens.
Meanwhile, commenting on how the federal government fared in the implementation of the 2021 budget, former director-general at the West Africa Institute for Financial and Economic Management (WAIFEM) and chairman of the Foundation for Economic Research and Training, Professor Akpan Ekpo, said the government had performed well in some aspects of the budget implementation, but in some other aspects, it could have done better.
“The government has put budget implementation at 65 per cent but they tried compared to 2019, however, they could have done better. In respect of the capital projects, we have not gotten much report of the capital projects in terms of monitoring and evaluation of the projects, although there is a lot of capital releases.
“They tried to implement the programmes within the budget, which is commendable, but in terms of seeing what is happening, the government has not really done well and then there is the issue of debt profile. We are borrowing a lot and government is not that transparent about the projects being financed by the borrowing and how far the projects have gone,” he pointed out.
He also stressed the need for government to do more in terms of security which, according to him, has been a major disincentive for government, adding that the power issue had made it hard for small businesses to operate at full potential.
Also, an entrepreneurship and business management expert, Dr Timi Olubiyi, said there is the news that the federal government may extend the implementation of capital projects components in the 2021 Appropriation Act till next year following the inability of many ministries and agencies to conclude their procurement process until the last quarter of this year.
He stated that the 2021 Budget, with the theme: ‘Budget of Economic Recovery and Resilience’, which is designed against the backdrop of a global economic crisis and domestic impact of COVID-19, is expected to accelerate the pace of Nigeria’s economic recovery, promote economic diversification, enhance competitiveness and ensure social inclusion.
He noted that there is no data on the implementation so far, ‘but we will say that the government may not have a 100 per cent implementation.’
He stated that, going forward, budget revenue and expenditure plan of government should aim to achieve macroeconomic goals and promote socio-economic development.
“Investing in critical infrastructure, human capital development and enabling institutions, especially, in key job creating sectors should be the key focus in the budget,” he said.
On his part, a lecturer, Lagos Business School(LBS), Dr Frank Ojadi, said the 2021 budget was not well implemented “as we can see inflation rising and most things we are facing are not in the control of government, such as Covid-19 that is evolving into new variant all the time.
“Also, the exchange rate isn’t also helping and that won’t make for good planning. That civil servants are yet to be paid salaries is another index that things are not right. Overall, we will get into situations that we are into this year again next year because the indices of budget implementation in 2021 will be the same for 2022 because the 2022 budget is hurriedly put together,” he added.
The general secretary, Federation of Informal Workers Organisations of Nigeria (FIWON), Gbenga Komolafe has described the 2021 budget as mere wasted efforts.
Speaking with LEADERSHIP, Komolafe said most Nigerians were not aware of implementation of any budget as money was borrowed and spent without attending to the needed areas.
According to him, health and educational sectors were not carried along in the spending of public fund.
“To me, there was nothing like budget or budget implementation. All we noticed was arbitrary spending of money without touching the lives of the masses. They kept borrowing in the name of the country from external bodies like World Bank and others without investment in areas that ought to be touched. There are lots of unemployment. The number of unemployment has increased yet jobs were not created for the people.”
Lamenting the failure of government, he wondered what could make government come out with idea of subsidy removal and replacement of such with payment of N5000 to 40 million Nigerians.
Komolafe called on government to reduce the hardship of the masses through proper planning and execution of budget in 2022 to reduce level of unemployment.
He said channelling more funds in the creation of jobs would reduce the level of insecurity in the country.
Also he called on government to invest much in educational and health sectors to save the country from brain drain whereby many qualified medical doctors and nurses are being forced to seek employment outside the country while quacks are now taking over teaching in schools. He said it was painful to note that political leaders are only interested in travelling abroad for medical treatment at the expense of taking care of healthcare in the country.