A look at budget 2024 of Renewed Hope, By Boniface Chizea
Dr. Chizea

Today January 04, 2023 I had 30 minutes virtual interview with Sun Rise Program on Channels Television on Budget 2023. This will then represent the second occasion that I have been privileged to be on the same program in one week.

The first appearance which happened last Thursday December 29, 2022 took place also virtually from my home base at Asaba. I thank Chamberlain Uso the coordinator of the Sun Rise program at Channels for his unflinching confidence over so many years now regarding my ability to interpret budget proposals and bore holes in such presentations. My other contacts at Channels should not worry because Budget discussions come up strictly once a year particularly since currently we don’t have the opportunity of mid-year reviews of National Budgets.

One must commend the President for this show of fidelity to his responsibility by sticking to his determination that not only is the Budget formulated and approved but to have some concern about its adequate implementation since to all intents and purposes at this point in time in the life of this administration; it is Lame duck!

It is axiomatic to note that not everyone involved with the drive to formulate, obtain Budget approval and commence implementation are in it for altruistic reasons. Some just have an eye focused on the opportunity therein for diversion of funds as the budget is being implemented. This is more so as some will be leaving the stage for at least some time come the expiry of the tenure of this administration by May 29, 2023 and will be glad to help themselves as they depart. But there are issues such as the negative impacts of flooding and how it has affected productivity in agriculture which I thought should be better left for the incoming Administration. We must decry any attempts to throw money on any problems. That is a recipe that guarantees poor value returns.

Let’s look at some of the legacies of this Administration. These are the introduction of Finance Bill which specifically focus attention on strategies for the funding of the Budget and the other is the return of the Budget cycle to harmonize it with the Calendar year as it is the case with most other countries of the world.

There are issues with this harmonization agenda. We often have situations whereby the President assents to the Appropriation Bill with the proviso that discussions will continue after that fact, with the President appealing for the understanding and cooperation of the Legislature for quick and speedy resolutions. And sometimes integral aspects of the Budget have not been concluded. For instance Budget 2023 was signed without consideration of deficit financing plan! What all that says to us is that the Budget finalization remains work in progress. Therefore there is the need to revisit budget preparation timeline by the fiscal authorities submitting the draft budget by the end of August instead of the current experience whereby the Budget is submitted in October. Draft Budget 2023, for instance was submitted on October 07, 2022.

Other matters include the fact that Budget estimates as submitted by the Executive are routinely increased by the National Assembly. In this particular instance a budget of 20.51 trillion Naira was submitted by the Executive which on approval has been increased to 21.8 trillion Naira representing a whopping increase of 1.3 trillion Naira with 50.8 billion Naira due to increases made to Ministries, Departments and government Agencies. The Legislature argues that it is their responsibility to oversee various activities and therefore must not be denied the privilege of increasing Budget estimates. But the reality as everyone knows is that this move is all self-serving. I am on record to have argued that this aspect of the approval process should be subjected to judicial interpretation. Increasing the budget allocations for MDAs by the National Assembly begs the question; who has responsibility for preparation of the Annual Budget? And as we have heard, there is the suspicion that MDAs go into sharing agreements with members of the National Assembly to get their allocations increased. Therefore if this is the case it gives the perfect setting for the entrenchment of corrupt practices. And as should be expected by all, in the upcoming dispensation there must be zero tolerance for corrupt practices which has contributed in no small measure to our under development.

We have recommended in the past that one known strategy for speedy; seamless approval of the Budget is to adopt collaborative approach between the Executive and the Legislature during the preparation stage. With this approach, legitimate interests of members of the National Assembly could be accommodated without much rancor beyond the glare of the public. This explains the imperatives for the existence of robust counterpart Budget office at the National Assembly

Some members of the National Assembly seem to be particularly eager to register their opposition to the request by the Executive to securitize the outstanding Ways and Means advances made by the Central Bank amounting to 23.8 trillion Naira over the life of this administration. There is so much ignorance on display as this matter is being discussed. It is by no means a fresh loan request. It is loan that the Central Bank has extended in response to exigencies as they occurred. If the Executive needed to incur an expenditure and there is no ready way out, recourse has been had to this source as we buy some respite. The only problem is that this funding as it has accumulated is in breach of extant regulations on the matter. In the first place, this loan is supposed not to be in excess of 5% of the previous year’s total revenue inflow. And no further accommodation is allowed until the outstanding has been settled to avoid accumulation as we have now witnessed. The loan accumulation in this regard is clearly in breach of the law. But the President has the good intentions to commence settlement by issuance of 40 year Treasury Bills. That signals the way forward as we struggle to come to terms with our debt overhang so as not to allow the debts represent a bottleneck in the management of the economy going forward. The President has alerted all concerned that if this proposed restructuring is not approved that it will automatically add 1.3 trillion Naira in additional interest payments next year. The National Assembly has no option but to give its approval. That will be the best thing to happen now in the greater interests of the National economy.

There has been so many complaints about the current Finance Bill. Particularly that the Executive has piled up multiple taxation on the private sector. It is argued that could be a veritable disincentive that has strong potentials for making Nigeria an unattractive investment destination. Although the Bill has been approved and signed into law, we recommend that the incoming Administration should open it up for consultations with concerned stakeholders for legitimate complaints to be promptly resolved particularly in instances where equity and fairness has been undermined.

The Executive also presented a Supplementary Budget to allow the implementation of outstanding capital projects up to March 31, 2023. Well if we kept to the Rolling Plan approach whereby at each point in time we had a three year plan to be rolled over yearly, this Supplementary Budget could have been unnecessary. The Rolling plan approach is particularly apt for the implementation of capital projects which often have implementation period in excess of the Calendar year.

Of course it goes without saying that the incoming Administration must prepare a supplementary Budget which will better accommodate its particular aspirations and objectives. This is an area of governance which must be reserved for an individual with proven subject matter expertise. In our collective interest it must not and can no longer be politicized.

I wish us all the best of luck with the outcomes of Elections 2023. We pray for a transparent and peaceful polls where the will of the electorate will prevail. And for God to show up during the polls for his will for Nigeria to be paramount. Shalom.

Boniface Chizea is an economic consultant and a former banker

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