I remember when as a young bank worker in 90s Lagos, we sewed our suits with different wannabe Nigerian ‘tailors’, with varying disastrous or comical effects. Some simply swelled around the shoulders, some developed bubbles in the front, for some the ‘stays’ fell off, making the jacket sag in different places, while some changed colours after a few wears. You dare not take them to the dry cleaners! The best tailor – sorry fashion designer – then, who dared to sew suits was Kese Jabari (he was last seen on AY’s hilarious flick – “30 Days in Atlanta” – wherein he acted the jaw-dropping role of the Nigerian-stuck-abroad husband of a beautiful black-American wife who ordered him about, much to the total chagrin of his visiting cousins – played by Ramsey Nouah and Ayo Makun himself).
In those days you showed up on a Monday, in your freshly sewn suit, which you collected from your tailor in Itire over the weekend, only for your boss to ask you ‘which carpenter ‘carved’ this your suit’, or something to that effect. Those with senses of humour took it on the chin. Others felt offended. The process was nicknamed within banking then, as ‘shredding’. Truth be told, some suits made people walk like robots, as the jackets took on lives of their own. Simply no precision and artistry; just an attempt to clobber something together that will hang on people’s shoulders. The Aba boys did their best then though.
…if no one is ‘shredding’ the Federal Government for what we are seeing being bandied as the Change Budget for 2016, I will step in and do the needful.
Enough of carpenter-manufactured office suits. But if no one is ‘shredding’ the Federal Government for what we are seeing being bandied as the Change Budget for 2016, I will step in and do the needful.
Budgets, A Time to Dream
You see, budgeting is no big deal. And what is more, the process of budgeting could actually be enjoyable. Budgeting is a time to dream. So budget is for dreamers. The way it works is that you cannot achieve it except you dream it. A time for budgeting is a time for one’s mind to roam, to seek possibilities, to conjure the almost impossible, which you then set machineries to achieve. It is indeed a time to let loose one’s imagination. Many times, those who budget know that they may not meet up 100 percent achievement of what they have imagined on paper. At other times, luck shines – plus a lot of planning, strategy and hard work – and people actually overshoot their budgets. What must never be done is to do budgeting as if one – let alone a nation – were in a pigeon hole. What is worse, whereas budgeting is a time for planners to create wonderful visions and bring to bear servant leadership, it has become a time for civil servants and politicians to plan stealing and usurpation of public resources, for many decades now in Nigeria.
I recall listening to Mr. Joe Abah, the current DG of the Bureau for Public Service Reform at the Economic Summit organised by the APC sometime in May, and he made the audience know that his first discovery upon being appointed, was that the average public servant does not see his role as one of service to the public, but to himself. No one has done anything to address that. And this attitude reflects in the budget.
And so we were promised a budget of change, which we looked forward to. At some point the rumour mill had it that the 2016 budget was going to be notching like N8 trillion. Many doubted, but as a person who understands the budgeting process, and the magic it can spin, I stepped forward and asked ‘why not?’ I based my argument on the fact that ordinarily, with the fraud in the Jonathan government, they were able to budget for Federal Government revenue of N3.7 trillion in 2015, out of a total Revenue (including State and Local Government of N10 trillion). The Federal Government then projected a deficit financing of about N1Trillion, representing about 22 percent of the entire budget (mind you I am not comparing the deficit – which is mostly borrowed – with GDP!).
I believe that the Ministry of Budget people did not have a lot of time to think around this budget. Between the time Ministers were appointed and when the MTEF (Medium-Term Expenditure Framework), and the budget itself was presented, very little time elapsed. The MTEF, upon which the budget is based was a hurriedly-put-together document, which basically seeks to continue doing things the way they’ve always done it. Well almost. That MTEF did not seek to rock the boat. So also the 2016 budget – from the figures we have been seeing so far.
I reckoned that now that the Jonathan government (still vilified and quite guilty), was gone, a lot of the trillions that some revenue-generating agencies were appropriating for their own comfort and convenience, should make it into Federal Government coffers. After all, for the year 2014, the Federal Inland Revenue Service (FIRS) had declared collections of N4.69 trillion, while N4.695 trillion was the entire budget for that year. The Nigerian Customs had equally declared collections of N970 billion as against its target of N2 trillion for 2014. Between the FIRS and NCS, Nigeria had a gross revenue of N5.7 trillion, which was above the entire federal budget for 2014 – given that 48 percent of the money belonged to other strata of government. I wondered aloud, what was concealed by the hundreds of revenue-generating agencies of government, whom we were told had developed minds of their own, flouting the Fiscal Responsibility Act, which mandates the remittance of at least 25 percent of all collections.
I was thus slightly disappointed to see a budget of N6.08 trillion. And what was more, N2.2 trillion of that (36 percent of the budget), is to be financed by debt!
I believe that the Ministry of Budget people did not have a lot of time to think around this budget. Between the time Ministers were appointed and when the MTEF (Medium-Term Expenditure Framework), and the budget itself was presented, very little time elapsed. The MTEF, upon which the budget is based was a hurriedly-put-together document, which basically seeks to continue doing things the way they’ve always done it. Well almost. That MTEF did not seek to rock the boat. So also the 2016 budget – from the figures we have been seeing so far. I believe the Federal Government did not want to delay the budgets and so stampeded everyone involved in the process. All well and good.
Which Carpenters put that budget together?
Problems With the Budget
The first problem is that the singular assumption upon which the budget is based, is Crude Oil; its price and the daily volume of production. Leafing through the MTEF at least, I saw a pointed refusal to think outside the usual box! If we were to have a budget of #change, where were the assumptions for other sectors that the federal government sought to reposition? And so, because the budget is based on crude oil and more crude oil, it ended before it began. The budget slipped and fell… on crude oil!
It would have been wonderful, and reflective of real change, if we had used this opportunity to set revenue targets across the sectors within federal control – as part of key budgetary assumptions – and then benchmark the CEOs of the MDAs, thereby institution a new regime of performance monitoring and evaluation. The TSA will surely help but we didn’t see the strictness in terms of revenue drive as against expenditure overdrive, from the budget. I mean it did not show that each revenue-generating agency will stick to the Fiscal Revenue Act’s requirement for AT LEAST 25 percent surplus of revenue over expenditure.
It is a travesty that at the top of that budget, and running through all pages, like an undesirable reminder, is the crude oil benchmark of $38 and expected daily production of 2.2 million barrels.
A proper budget will contain assumptions about different sectors that the federal government seeks to take ownership of. The budget will have broader assumptions upon which ministers and Heads of MDAs will be benchmarked, especially on the revenue side. Gradually, we are inching back, to the time of exuberant spending with no responsibilities, on the part of MDAs. It is a travesty that at the top of that budget, and running through all pages, like an undesirable reminder, is the crude oil benchmark of $38 and expected daily production of 2.2 million barrels.
Crude Oil Benchmark At $38?
A word about the $38, to underline why I think this 2016 is one put together by those kinds of carpenter-tailors of the 1990s. Algeria, our fellow African country did its last year’s budget based on $37 crude oil benchmark. That country of 40 million people has been so frugal and professional in the management of its resources. Its foreign reserves today stands at over $170 billion while Nigeria struggles at somewhere around $29 billion, forcing the federal government to start punishing poor Nigerians for the sins of the elites in the past. Statements by the CBN, to the effect that Nigerians were ‘spending the country’s external reserves on suitcases full of air-freshners and candles in Dubai’, was quite unfortunate and basically criminalises Nigerians who are struggling to survive, having been hemmed in by the lack of creativity and indeed criminality of their government and its apparatuses over the decades! I mean, which one is our own in all of these?
The same Nigerians that the government is asking to tighten their belts more, have been asked to tighten belts and suffer more since the time of Tafawa Balewa. The more we tightened this belt, the more we heard of fast guys and smart Alecs politicians and appointees, swindling the nation – with the assistance of government workers – to the tune of trillions of Naira. Yet, we are the criminals; the unthinking wasters and scoundrels?
Therefore, whoever brought the idea of setting crude oil price for this year at $38 must be living in lala land. Brent price is currently $37, having received a bump from the tiff going on between Iran and Saudi Arabia. Whereas the Iranian problem may lead to an upward swing, we hear that the USA has become an oil exporter for the first time in 40 years! Mind you, the USA had always produced something like 10 million barrels per day of crude oil. The shale guys have added a few more millions to that. Now the argument is starting – like it always does – between the Ministry of Finance (or Budgeting this time), and the National Assembly, as to this benchmark price. The Assembly usually wants something higher. I heard someone on either side asked Nigerians to pray for the price of crude to increase during the year! Must we always come to this impasse?
Of course on that basis, the National Assembly guys are gearing up for their usual jamborees. All the exotic cars are lined up. Mouths are watering. It’s no holds-barred. No change, except for more luxury. Let the poor Nigerians carry the can. We are the ones who get the insults, the reprimands, the hunger, the deprivation, and more belt-tightening. We hear the ‘presidency’ wants more exotic BMW cars too, among other luxuries, befitting their ‘status’. To those who manage to get into government in Nigeria, it’s enjoyment galore. That is why they do ‘thanksgiving’ in churches and elsewhere, even though what they’ve been called to do should be hard work.
The president has been trying to wing a lot of things. Only those who love him will tell him the truth. The rest – perhaps the majority – will help his administration, and his reputation, to its denudation.
Read what our Senate – according to Premium Times – is ordering, to understand their mindset:
“The Senate plans to buy 120 units of Toyota Land Cruiser, 2016 model… Other details of the vehicles included that they must be “American Brand, V8, VXR, 5.7, Auto Engine WITH INTELLIGENCE”… The senators also want the vehicles to come with integrated navigator cruise control, QI-Compatible wireless charging and Kinetic dynamic suspension system, as well as being “full option”… The Senate President, Mr. Saraki, and Deputy, Ike Ekweremadu, are to receive, each, a 2016 model Mercedes Benz S550, as well as four 2016 Toyota Prado jeeps, four 2016 Toyota Hilux SS (Auto) and a 2016 model Toyota Hiace Bus each for their convoys… An advertorial placed in one of the national dailies on November 13 shows that the House of Representatives is planning to buy two Mercedes Benz S550, 2016 Model; V8, 4.6L Twin Turbo; Full Option (Treated). An engineer familiar with automobiles told us that the description “treated” means the car should be bullet proof… Apart from the Mercedes Benz Vehicles, the House is also buying 14 Toyota Landcruiser SUVs, 5.7L petro Engine, Auto; Leather Seat; 2016 Model; Full Option; Keyless Entry…The vehicle would be for the use of the Speaker, Yakubu Dogara, and his Deputy, Yusuf Lasun.
Note the keywords: “Auto Engine With Intelligence”, “keyless”, “full option”, “leather seat”, “Kinetic dynamic suspension system”, “bullet proof”, “treated”, “2016 model”, “American brand” blah blah.
Does that look like a request from beggars? Does that look like what people praying to good for a conspiracy for prices of crude oil to go up should be ordering? Does that look like what a country that produces nothing should be aspiring for? Or does that look like the menu in the home of the hungry belt-tightener? The joke really, is on us. The president has been trying to wing a lot of things. Only those who love him will tell him the truth. The rest – perhaps the majority – will help his administration, and his reputation, to its denudation.
Nobody Pays Debt With GDP. Only Cash Flow Matters
Back again to the issue of debt. As usual, they compared the budgeted debt with GDP, by quickly reminding us that the amount to be borrowed (N1.8Trillion) was a mere 2 percent of the country’s GDP. You see, Dear readers, that is why I wrote this article. For many years we told Mrs. Okonjo-Iweala to try and report our economy differently. We asked that we not deceive ourselves. We wanted indices that told real stories that matter. She demurred. She towed instead, the path of the IMF and World Bank (I hear Lagarde is here). The way of these global bodies is to misdirect economies like ours. They come with intimidating auras and awe us into submission. Lagarde has come now to ‘help’ Nigeria, because of its ‘dwindling oil price’. Theirs is to keep reminding us that we are a commodity exporting country and are not meant to have any initiatives as a sovereign country.
The way of the global bodies is to compare anything and everything with GDP – a figure that is achieved by conjecture and guesswork in this country, as well as most other African countries. A totally meaningless figure! Simple lesson: nobody pays a debt with GDP. You pay a debt with your cash flow! And if your cash flow is bad, you’re screwed. Nigeria therefore has no genuine reason to increase the debt stock by almost $10 billion in one year; certainly not this year! Already, our debt stock is close to $70 billion. Recall that in 2006, we hit our peak at $45 billion before the ‘write off’. See where we are today? I agree with Dr. Teriba that we should do all we can to bring in Foreign Direct Investments rather than borrow to fund ‘capital expenditure’ especially the exotic car kind. I read Eze Onyekpere on the same issue too. I hope this budget is redrawn.
The government should also work on other areas of revenue generation. The government should look inwards. The government should reorganise Nigeria; not for the pleasure of supremacists but to benefit Nigeria as an economy, and Nigerians thereby. A simple way of generating much funds for infrastructure and other investments in society is the institution of a Car tax. It is simple, it is progressive, it is eco-friendly. We have advised in the past, government has pointedly ignored this. We still run an elitist government and hope to solve our many problems. It just won’t happen. Structural Adjustment Policies are about ‘adjusting’ the ‘structure’ of an economy. If IMF says it is all about deregulation, privatisation and devaluation, we can come up with an alternative; a local alternative. I suggest progressive taxation, especially on luxury items, as well as a focus on our youth who should be allocated the millions of jobs in the environment, health and educational sector. It is all about imagination. I disagree with the president that all our youth can do is to work in the farms for N5,000 per month. There are millions of jobs in our environmental sector.
We want to see the new sectors the government is planning on bringing on board, and their impact on the budget and the people. That is what we want to see. For now, this is a budget of carpenters doing the work of tailors; or fashion-designers, whatever you call yours.
So, we really want to see all the monies to be saved via TSA in that budget. We want to see imagination. We want to see the new sectors the government is planning on bringing on board, and their impact on the budget and the people. That is what we want to see. For now, this is a budget of carpenters doing the work of tailors; or fashion-designers, whatever you call yours.
In the meantime, hear Tidjane Thiam the recently-appointed Ivorien CEO of Credit Suisse on all these borrowings that African countries – especially Nigeria – does. In an interview with Bloomberg, published on October 6, 2015, this is what he had to say:
“I did a lot of infrastructure development in my life… To fund them with foreign currency is madness. OK? Madness… We are not going to reach the kind of growth trend that we need if we are unable to do this successfully. You can’t just borrow internationally… You have to be ready to discriminate between those who have reasonable funding strategies and those who have just borrowed in dollars… Warren Buffett joked when the tide goes down you see who has been swimming without trunks. Some of those economies will fall on their face because of that, that currency mismatch… You cannot control your economic destiny if you are not able to mobilise savings and then turn them into productive investment.”
There you have it; from the mouth of a private sector financier.
Other Specifics
Non-Oil Revenue for 2016 is put at N1.5 trillion. But in 2015, it was N1.684 trillion. Debt Servicing for 2015 was N943billion. For 2016, it is planned for N1.36Trillion, but this will be greater in 2017 with new borrowings of N1.8trillion. Fiscal deficit for 2015 was N755 billion (budgeted), while for this year, it is N2.2trillion, an increase of 191 percent.
People usually think better when they are low on cash and same goes for a country…We should take our eyes off petroleum, forever. Not even the IMF should convince us to keep worshipping petroleum or other commodities.
We understand that government revenue has dropped, but this is not a good reason to max out on borrowings. It is rather a great reason to look inwards and use the resources of the country to reboot its economy. People usually think better when they are low on cash and same goes for a country. You would be surprised at what one can achieve with limited resources. We should take our eyes off petroleum, forever. Not even the IMF should convince us to keep worshipping petroleum or other commodities.
Instead call me ‘thinking thinker’ or ‘critiquing critique’.
How the USA Beat the Great Depression
I usually like to recall how the USA actually beat the Great Depression which plagued it throughout the 1930s. It was not the New Deal that was the panacea, but a last minute effort by President FD Roosevelt, which saw to the ban on all new car manufacturing and purchases between April 1942 and 1944. They certainly weren’t importing new exotic cars from abroad. It was wartime. For Nigeria, it is also wartime; economic war. It has always been. Except we take really altruistic decisions, I see no way out. I wish Nigeria luck if we hope that borrowed monies spent on ‘infrastructure’ will suddenly lift the economy out of a lurch. On my own, I have compiled my best messages into a new book; Change is Going To Come, lest they be forgotten. That is the best I can do.
For Nigeria, it is also wartime; economic war.
Let me stop here because I don’t want to criticise this government. Those who know me know I’m one of those who fought for #change. So nobody should call me ‘wailing wailer’. Instead call me ‘thinking thinker’ or ‘critiquing critic’.
‘Tope Fasua, an economist and consultant, is CEO of Global Analytics Consulting.
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