2020 Budget: Long road to diversification

With a proposed aggregate expenditure of N10.33 trillion for 2020 by the Federal Government, this is the highest Federal budget. But this is where the good news ends. In real terms, Nigeria’s budget per capital is one of the lowest in the world. In Africa, N10.33 trillion (28 billion dollars) is just a half of South Africa’s 2019 budget of $120 billion . Nigeria ranks 79 compared to South Africa that ranks 32 in the league of countries by government budgets.

Nigeria also occupies miserable position in the ranking countries in budget perl capital compared to South Africa. Nigeria’s budget per capital is $149 compared to South Africa’s  $2116.7! Any wonder Nigerian immigrants rush to South Africa with better public service, better funded?  This means in terms of quantum of financial resources for our “socio-economic development agenda” Nigeria is miserably constrained by token budgeting. It has been estimated that for Nigeria to meet critical goals, not to talk of the 17 sustainable Development Goals of 2030, it needs annual budget of some $200 billion.

There certainly is a long road to growth and development going by our serial unambitious public spending since the era of Structural Adjustment programme (SAP) of the mid-eighties imposed by military dictatorships. The point cannot be overstated: it is not just President Muhamadu  Buhari alone that must catch “a cold” to meet the  deadline of under budgeting, all of us must be restless to generate enough wealth to meet the needs of our ever rising population. Nigeria needs triple trillion Naira annual budgets to ever talk of growth talk less of development.  We are far from this necessary tall ambition with this annual under budgeting.

But it is bad enough that the budget is low. However it is even unacceptable that, we are still allocating scarce resources as usual in serving the greed of the few vested interests and not the needs of the critical mass of Nigerians. With as much as N2.45 trillion (almost a quarter of the budget!) into Debt servicing, creditors are served at the expense of national needs. Indeed  N2.45 trillion into Debt servicing is more than N2.14 trillion of capital expenditure !. As much as N125 billion statutory allocation scandalously goes to the  National Assembly of some 500 senators and legislators.


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Indeed the budget per capital of the National Assembly at … per legislator dwarfs the national budget per capital of …. in fact, the total allocation to the National Assembly almost equals the total sums of N44.5 billion for the Basic Health Care Provision Fund (BHCPF) and N111.79 billion for the Universal Basic Education Commission (UBEC) expected to impact on millions of citizens. When it comes to annual budgeting, certainly National Assembly seems to be running  “a parallel Republic” as it were. N37.83 billion is for the North East Development Commission (NEDC) and N80.88 billion for the Niger Delta Development Commission (NDDC).

The allocations to the two commissions of the two most  troubled regions are the same as the allocations to the National Assembly. It is clear that in 2020, Nigeria will under budget as much as it is going to inequitably allocate the limited resources as it was in the past. Paradoxically year 2020 is the magical year in which just ten years ago, we all chorused that Nigeria would be one of the leading 20 economies. Just check the annual budgets of the ten leading economies and see where Nigeria fits in the budget spending.

Even more worrisome is the budget narrative  informed by the very  same assumptions of mono economy.

The “conservative” oil price benchmark is  US$57 per barrel, at daily oil production estimate of 2.18 mbpd and an exchange rate of N305 per US Dollar for 2020. Diversification remains the same promissory note to be driven by unspecified  “non-oil output”. Nigeria needs in its budget assumptions, expected capacity utilization rate which is miserably low now at less than 10 per cent for manufacturing. There should be assumption about electricity generation and distribution for a country permanently in darkness to overcome existing power poverty and put an end to factory closures.

The President has commendably pledged 100 million jobs in ten years. 2020 budgets should indicate how many of these jobs are expected with N 10 trillion Naira budget and from which sector. Nigeria more than ever before needs  beneficiation or value addition to its  endowed natural resources not just diversification of revenue base as 2020 budget envisions. Oil and gas are not inherently curses.

Many nations have  turned oil and gas into remarkable blessings through value addition, e. g  UAE etc. The  curse is our inability to add value to oil and gas or to any other mineral resources. There are as many as hundreds of derivatives in petroleum products. Yet Nigeria is the only member of OPEC without functional refinery. Nigeria could use its cheap and abundant gas to revitalize industry, encourage high value-adding downstream investments, and build institutional industrial strengths within the country. Economic Recovery and Growth Plan (ERGP) launched with fanfare in 2015  sets to reduce petroleum products imports by 80 per cent in 2018.

However in 2019 we are still importing 100 per cent petroleum products in the process exporting needed decent jobs in refineries and petrochemicals to importing countries, putting pressures on Naira and exchange market. Diversification must start with adding value to oil and gas not replacing export of raw crude oil with raw yam to in turn import yam flavor.

The new  Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari just revealed like his predecessors that the corporation is determined to ensure the refineries achieve optimum refining capacity by 2022. Interestingly the  2020 budget has not given the impression that Nigeria is import fatigued with the attendant mess that goes with it: notably  “subsidy” !!!

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