The 2016 Budget of change (2)
Continued from yesterday
THE Budget also aims at prioritizing youth unemployment and to enhance the living conditions of a generality of the population and to achieve the diversification of the economy through the adoption of the strategies of import substitution and the growing of non-oil exports. There is no doubt that if we achieve commensurate implementation of Budget 2016, these objectives are realisable, at least considerable progress is expected to have been made.
Some of the targets in the Budget include a GDP growth rate of 4.37% which when considered alongside the fact that the economy grew by only 2.8% in the third quarter of 2016 would appear somewhat ambitious. The benchmark price for oil of 38 dollars per barrel is included in the Budget with a daily production level of 2.2 million barrels per day (bpd). Available data indicate that we averaged a daily production of 1.9 million bpd in 2015. The benchmark for oil is out of sync with prevalent reality that even the President observed during the budget presentation that the price had fallen at the international market as he spoke to 32 dollars per barrel. A rate of exchange of 190 Naira to the dollar had been included in the budget, same rate as in 2015 signaling the intention of the monetary authorities to stick to its template for the determination of the rate of exchange and therefore no currency devaluation is envisaged. There were no targets for rate of inflation; probably the fiscal authorities have left that index to be determined by the monetary authorities who have clearly indicated their preference for single digit level inflation.
It is time to consider some of the issues that made Budget 2016 different. The proper linkage of Strategic plan to the budget which was consummated following the transfer of the Budget Office to the Planning Ministry was a master stroke that radically alters the budget environment and at once augmented the probability of successful budget implementation. It is a pity that due to lack of adequate appreciation, this feat was not accorded its deserved accolades. The adoption of zero-based budget approach is tailor made for economies such as Nigeria which are challenged for inadequate resource flow to better utilize and optimize whatever level of resource is available to up the ante on the hitherto incremental approach to budgeting which erroneously assumes the prevalent level of expenditure as the take off base. It also ensures better alignment of budget expenditures to the fiscal objectives. The budget pointedly prioritizes the welfare of the citizenry by creating direct jobs through targeted employment of graduates and NCE holders who should number 500,000 to be deployed to primary schools thereby upscaling learning at that level and to enhance the potential for qualitative future wellbeing of a generality of our population. The proposal to upscale the financial management content of some small businesses through targeted training modules to make them better able to manage their businesses hit the bulls’ eye as a major problem confronting such businesses is at once resolved.
The proposal to reduce tax rates for small businesses as well as to extend subsidized credits to priority sectors of agriculture and solid minerals are well thought-out developments. So also the decision to extend conditional cash transfer is pro poor and recommended. But it is advisable to adopt due diligence in determining the extent of budgetary commitment which this measure would entail so that the country does not embark on a journey which is not sustainable. It is also more transparent to workout robust modalities for qualification as a beneficiary instead of the reported approach of compiling a register which is going to be subjective and leave room for the perpetration of conflict of interest. Home grown primary school children meal a day scheme as well free education for science, technology students and those majoring in education are well considered and supported as it has the potential to generate economic activities with multiplier which could contribute directly to the desire to reflate the economy and make available the desired caliber of manpower.
But we must find the resolve to terminate the scam infested subsidy scheme which, at an annual outlay of about one trillion Naira, is no longer sustainable. It is always a mystery to understand a subsidy situation which is not sensitive to the price of the product being subsidized. We should, however, engage with interested stakeholders to make them see reason why this country cannot continue to make itself a laughing stock by sustaining this scheme. Nobody buys fuel outside the major towns at the regulated prize and this is a fact. So it begs the question regarding who is subsidising who. We should agree palliatives with organised labour to win them over and promptly deregulate downstream petroleum market to put an end to all the agony and trauma. We also caution that we must leverage on the success recorded in some sectors of the economy by the immediate past administration particularly agriculture to obviate avoidable waste.
We salute the members of the National Assembly for their cooperation so far regarding the dispatch and promptness with which approval for MTEF was received without going into unnecessary rancour with the Executive regarding benchmarks which in the past left one wondering who really has responsibility for the preparation of the budget and to urge and encourage them to sustain the momentum for the speedy approval of the budget so that implementation could commence early as to underwrite the success of the implementation of Budget 2016 as it is backed up with robust monitoring and evaluation templates.
• Dr. Boniface Chizea wrote from Lagos.