Dr Muda Yusuf is a former president of the Lagos Chamber of Commerce (LCCI) and Director, Centre for Promotion of Private Enterprise (CPPE). In this interview with IMOELAYO OYEDEYI, he shares his viewpoints on the 2024 budget and how far it will go in addressing the multi-layered economic downturn afflicting the country.
LOOKING at the key estimates of the 2024 budget, where we have N10 trillion for capital expenditure, N8.8 trillion for recurrent expenditure, debt servicing taking N8.2 trillion and statutory transfers taking N1.7 trillion. Do you see this budget truly renewing the hope of Nigerians this year?
Well, the budget cannot solve all problems, especially when you look at the size of the budget vis-à-vis the size of the economy. The economy is over N200trillion, but the budget is N28 trillion. So when you relate that, in terms of proportion and materiality, we should not expect too much from the budget. Of course, it is good for infrastructural development, and others. But we need to manage our expectations as far as the budget is concerned. That is one.
Secondly, we have a budget of N28 trillion, but N8 trillion of it is for debt-service. So in practical terms, what is available for spending is just N20 trillion. Out of this, almost half will be going for overhead and personnel cost, while the rest is for capital projects. So we need to manage our expectations on the budget. Again, if you look at the priorities in the budget, security was given the largest share. If you take police and defence, they account for over N3 trillion, which is the largest of the budget. Given what is happening to the security situation of the country, I think that makes sense, because most of the people so far affected by the attacks on security are ordinary people. So, it is good that the government is putting a lot of resources in that space. Then, I also need to add that for the first time in a long while, the capital expenditure is higher than the recurrent expenditure. Although we don’t know what will happen at the end of the day, what we have on the table now is something, I believe, we must commend. For close to 10 years, I haven’t seen a federal government budget that contains more allocations for capital expenditures than the recurrent expenses. So we must acknowledge this and hope that at the end of the day, the implementation will reflect this priority that has been given to capital expenditure.
Then, the foreign exchange assumption of N800 to a dollar, for me, is okay. It is realistic. But the assumption of 1.7 million barrels per day for crude oil looks a bit optimistic in my view, because of what is happening in the Niger Delta, the OPEC quota, and others. The stated oil price too looks a bit optimistic. I think it was pegged at 78 dollars per barrel. And the current oil price is around 77 dollars. Ideally, the oil price benchmark should have a much wider headroom between the current price and the presented price. But currently, the budget price is close if not slightly higher than the actual price of crude oil. So, I am not too optimistic about this. Otherwise, all other assumptions in the budget, to me, are fair, and achievable.
However, when we talk about budget issues, we should not be limiting it to only the federal government budget. This is because the state and local governments account for almost 50 percent of our resources. But we are not having enough conversation around the budget of the sub-nationals, who are even the closest to the people. We are talking about how the federal government will impact the people, but the closest government to the people is actually the state and local governments. But we hardly ask questions about their budgeting and expenditures. Ordinarily, the federal government should be focusing more on things like security, defence, and some major infrastructure. But it is the states that should be addressing issues of agriculture, Primary Healthcare, education, rural road development, and the likes, which are things very close to and will directly impact the people. But we are not having enough conversation around them. So when we talk about budgeting, we should not forget that it is not the federal government alone that is in control of the resources. The sub-nationals are controlling about half of the resources. And we must engage them and also bring them under some spotlights, so that we don’t over-concentrate on the centre.
Then for the private sector, their own expectation is more about policies than the budgets. You want to see a stable exchange rate, low interest rate, a regulatory environment that is conducive for investment, which are all policy-related issues, and not budget issues. So the policy aspect of this conversation is also very critical, because if you have the budget without right policies, the economy cannot grow.
The Trade Union Congress (TUC) has argued that with debt-servicing taking over N8 trillion, the 2024 budget lacks the capacity to stimulate national economic growth or even alleviate the prevailing poverty in the country. Do you agree with this?
No and that is why I was saying that we focus too much on the federal budget. Have the labour unions been asking about what is happening to the state and local government budget? We have more workers at those levels than even the federal. And talking of the N8 trillion debt-services, if you look at the budget, you will see that the revenue projections in it are much higher than what we used to have. And when you relate the deficit to the Gross Domestic Products (GDP), the percentage is much lower now. It is slightly over three per cent, because of all the reforms that are taking place. So we are likely to get more revenue, such that the effect of the debt-service will not be too heavy on the fiscal operations of the government. This will then make for what we call fiscal sustainability or consolidation. The hopes are much brighter now, because of the better revenue prospect that is coming to the government, following some of the recent reforms that have taken place. If you talk about the welfare of the people generally, the policy environment is as important as the budget, which is about appropriation. But investment is about policies and regulations. So if you get the policy environment right and we stabilise the macroeconomic environment, investment will grow and the economy will also develop and all the issues being raised by the labour unions will be substantially mitigated. So we need to have a much broader view of the economy beyond the budget. We should be looking at policies and regulations, which can spur growth. If you have the right policy environment, the private sector will breathe into the economy an amount that is much more than the budget that we are talking about. That is the reality, because they are the ones creating wealth.
The president has directed the MDAs to give monthly implementation reports of the budget. Some people have said this will ensure transparency and efficiency in the implementation process. How realistic can this be?
It is a very good policy. That is performance management. This is because if you don’t monitor and measure performance, you are not likely to get good outcomes, just as it is said in management that what you don’t measure, you can’t manage properly. And one of the ways to manage things properly is to ask for reports, which is a way to measure whether people are living up to expectation or not. So the emphasis of the administration on performance management framework is very commendable. It will help transparency, and make the MDAs to be on their toes to deliver.
However, with the way corruption and bureaucratic bottlenecks have sunk deeply into the fabrics of the country, do you see this being achievable, considering the fact that some corrupt officials within the MDAs may try to truncate and subvert the process?
I want to believe the present government is not resting on its oars as far as corruption is concerned. We have all seen what is happening to the director of the National Social Investment Agency. This shows the government is taking concrete steps on the issue of fighting corruption. The government knows very well that if it does not fight corruption, it may undermine the progress of its economic reform policies. But we can say is that the government institutions saddled with the responsibility of ant-graft war should also be up and doing.
But the present government has continued with the same national cash transfer programme that gave rise to severe corruption during the Buhari’s administration. Don’t you think it will again expand the range of corruption in the federal treasury as we have seen so far?
I think the current administration has a much better framework, which is what gave rise to the ongoing investigation into the past financial activities of the Central Bank of Nigeria and that of the cash transfer programme agency. The government knows that the extant corrupt system needs to be greatly improved. And that is why the current Minister of Poverty Alleviation and Humanitarian Affairs, Betta Edu, has been working to cleanse the existing register that will guide the disbursement processes. It is also part of the transparency process that has given rise to the several investigations of financial misappropriation of the past administration, because the government has to learn from all those past lapses to improve on the current system.
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