The People’s Redemption party, (PRP), says the 2024 budget statement of the Bola Tinubu administration is built on a pack of cards that will scatter as it unfolds. A statement on the budget by the party and signed by Mallam Falalu Bello, the National Chairman argues that the budget is based on assumptions that will not materialize. The statement is reproduced in full below for the benefit of all stakeholders.
On Wednesday, November 29, 2023, President Bola Tinubu presented the 2024 Appropriation Bill to a joint session of the National Assembly. The 2024 budget, he said, is focused on employment creation, macroeconomic stability, investment promotion, human capital development, poverty alleviation, and social investment, as well as defense and internal security. The President also noted that his administration will ensure that states and local governments get improved allocations from the federation account in 2024 as he also aims to enhance law enforcement capabilities by overhauling internal security architecture and it would also focus on the green economy.
The 2024 Appropriation Bill has aggregated expenditure of N27.5 trillion with target revenue estimated at N18.2 trillion. The budget is predicated on the exchange rate of N750 to US$1 with crude oil output benchmarked at 1.78 million barrels per day at US$77.96 per barrel. In the 2024 Appropriation Bill, it is proposed that the economy will grow by at least 3.76%, which is higher than global averages, and inflation is expected to ease to 21.48% in the fiscal year 2024. Non-debt recurrent expenditure is also projected at N9.92 trillion, estimated debt servicing is N8.25 trillion, and capital expenditure projected at N8.7 trillion. The Bill has a budget deficit of N9.18 trillion, 3.88% of GDP, and 33.38% of the expected total budget outlay. The deficit is to be financed by N7.83 trillion new borrowings, N298 billion from privatization proceeds and N1.05 trillion multilateral and bilateral loans.
The statistics above look good on the surface. But a thorough look at the assumptions underlying the budget will show clearly that this administration is yet to be ready for nation building. Indeed, this government is still a relic of the past that it is jealously protecting the few oligarchs as it does not have a path to the good future we seek as a nation. This, though, is not surprising as it is a continuation of an APC 8-year administration we advised Nigerians not to reelect.
The assumption that crude oil price would be at US$77.96 per barrel is extremely high and ambitious given that the current price of crude oil is in the region of US$81 per barrel! A nation that has not invested much in its oil sector to improve productivity is budgeting a massive increase in daily crude oil production from 1.33 million barrels per day to 1.79 million barrels per day. This, to say the least, is superfluous and dangerous.
A government that claims it inherited bankrupt and empty treasury appears not to be circumspect of the state as its actions particularly in making appointments does not appear to show that the administration is indeed serious in its desire to provide “renewed hope”. Clearly, given the fact we are borrowing as a nation to fund our recurrent expenses, we should cut down on cost, manage spending, and block leakage, the administration is carrying on with “governance as usual”! A council of 48 ministers and hosts of assistants and advisers at a time when we should be cutting costs is certainly a wrong way to manage our economy as of today. Frugality, tight monetary, and fiscal policies as well as avoiding waste and unnecessary spending should be the order of the day for a serious administration.
A critical look and review of the sectoral allocation of funds further reveal the level of thinking of the people in government today, the somewhat deceitful approaches to revenue generation and spending and clear absence of any strategic thinking of how best to get us out of the doldrums.
The President claims to be aiming for a trillion-dollar economy in the not-too-distant future, yet projected GDP growth is pegged at 3.76% per annum! Elementary students of economics will tell you this is not a dream but a mere wishful thinking.
The assumption on inflation rate is also deceitful as everyone is aware that the current inflation level is well above the National Bureau of Statistics data of 27%. Food inflation is in the region of 35 to 40%, and the government is planning inflation to be at about 21% despite all its inflationary policies.
The somewhat euphoria by the Finance Minister that the 2024 Appropriation Proposal has a lower deficit estimate is laughable. When and where you remove subsidies on petrol prices, and you also devalue our currency, common sense will tell you that more money will accrue to the government. It’s thus a no-brainer that you record a lower deficit that, given the somewhat suspicious assumptions as stated earlier, may turn out to be worse than the estimated figures at the end of the period.
Further to all said above, the 2024 Appropriation Bill shows that the federal government plan to give more money to state and local governments, but the Government does not seem concerned about putting a functional machinery in place to ensure that such funds will be properly utilized, especially as it is a common knowledge across the country that the governors not only do not do enough to take development to the doorsteps of their people, they also strangulate local governments by not giving them access to the funds meant for them from federation accounts. This has crippled local governments all over the country. Without checking the state governors and ensuring proper local government autonomy, the federal government is only playing to the gallery on fiscal federalism.
Also, the emphasis on having to rely on foreign investors without recourse to Nigerian investors is another way of being on illusion in our developmental drive. In his presentation speech at the National Assembly, Mr. President noted that his government will partner with foreign investors to drive the economy. What then will the role of Nigerian investors be? Mr. President should remember his experience as an employee of a multinational company. The company refused to build a headquarters in Nigeria, preferring to rent, until the now president of Nigeria insisted on their building a Head Office in Nigeria. This is the trend among foreign investors in Nigeria. They are only here to milk from our economy, not to develop. Why should they be given preference above our local investors? Nigerian investors should be promoted, protected, and empowered. In fact, they should be the ones who will invite foreign partners if need be.
The strategy for social investment whereby people will get a meager share of items for relief is largely flawed. It has never solved any poverty challenges. Instead of spending to make Nigerians beggars, the funds should be invested in critical infrastructure, empowering youths to become entrepreneurs, and strengthening the operation of social insurance policies for insurance companies. This will not only reduce the burden on government, it will also enhance the social sector and boost government revenue through taxes and royalties.
As students’ loan is targeted at making students complete their academic studies, the proposed 2024 Budget is yet to address other salient areas of sustainably funding the university system. University autonomy is not negotiable, but it is not taken care of in the Appropriation Bill. The Governing Council of each university must be in charge of running them, while each department should commercialize their works and research outputs. They should also involve the students to work for and with them. This will bring income to the departments and students, reduce the propensity of hiking school fees as departments will earn much more than whatever they can realize from school fees, and provide substantial experience for the students. This will be a big boost for our education system.
The 2024 Appropriation Bill provides that N8.25 trillion, a whopping 30% of expenditure projection, will be used for debt servicing. This is more than 15 times the value of proposed expenditure on social investment, which is put at N534 billion, which is 2% of the proposed total expenditure. This amounts to paying lips service to poverty alleviation in a country where 130 million out of 220 million of her population are living in poverty. This is a sign that the government is not interested in the welfare of its people, especially as the most significant portfolio of the government for budget deficit financing is to borrow more when it should show restraints in expenditure, block leakage and improve tax collection and administration. Indeed, with the removal, or should we say reduction of subsidy on Petrol and the devaluation of our currency with a decree, the misery index has worsened. These policies were announced without any consideration to the state of affairs of the common man! The masses are dying in droves arising from hunger, malnutrition, and diseases. The government appears helpless, tactless, and unconcerned! How terrible and wicked can one be just a few months after winning elections!
The recent adjustment of the exchange rate announced by the Central Bank which further devalued the National Currency by about 27% has already derailed the 2024 Budget as it will increase amount required for debt servicing, increase borrowing and more important increase inflation with its dire consequence of increasing poverty in the land. Indeed, the poor and vulnerable people would increase in quantum with this further devaluation. The Bola Tinubu Administration must stop the continuous devaluation of the naira which it has done on a continuous basis since it came to power.
The 2024 budget as seen and analyzed in this address is one on which Nigerians should not place hope on to promote development and protect their welfare. It is just a cosmetic that is aimed at glorifying mediocrity and continuous impoverishment of our people. It’s our hope that the Town Hall Meetings by the two Chambers of National Assembly will serve as an avenue to hear Nigerians and to redress some of issues raised by us and many other concerned Nigerians so that we may have a decent place to call our country.
The Peoples Redemption Party in ending this review, condemn the inadequate provision for social investment and poverty alleviation, lip service to resolving pending challenges of our university system, lack of concrete framework to address local government autonomy and lack of political will to create opportunities for Nigerian investors. We also condemn continuous devaluation of the naira and very much, the incentive capital projects such as the renovation of the residence of the President and Vice President in Lagos, the budgetary provision to the office of the Chief of Personal Staff etc that ran into billions of Naira.