Prominent economists and financial experts have faulted assumptions that the N7.298trillion proposed budget for 2017 will enable the Nigerian economy to recover
from the current recession next year.
They expressed doubt over whether the budget would meet the expectations of the Federal Government in addressing the economic challenges confronting the country.
The experts argued that the proposed budget might not bring the expected succour to the Nigerian people unless certain adjustments were made on the proposed budget, particularly concerning the total expenditure, exchange rate and oil output.
Political economist and management expert, Prof. Pat Utomi, argued that the lack of seriousness usually demonstrated in the budget-making process in the country would
make the realisation of the Federal Government’s expectations difficult.
Utomi said that so long as a situation where what was eventually done by the government regarding the implementation of the budget was different from what was proposed originally, addressing the current economic recession with the 2017 budget would be a Herculean task.
Regarding the allocation of the largest chunk of the 2017 budget to the power, works and housing sector, Utomi stated, “In fairness, if you want to stimulate economic activities like building lots of houses, making sure power, which is really definitive of any activity, is regular, you don’t solve the power problem by ploughing money but by creating confidence that will bring private capital into power. The more money they spend on power, the more damage they will do to the economy because all the money will be stolen.”
Considering the implication on the economy, Utomi noted that it would be better if strategies such as putting in place a fair amount of money into the pockets of small people and consumption would lead to production than “spend our way out of recession.”
“Give a sector big money, it will enter the foreign exchange market and it will leave Nigeria,” Utomi said.
The Deputy National Coordinator of the Institute of Chartered Economists of Nigeria,
Prof. Oladapo Ganiyu, said that with the economic indicators, the budget would only
be workable if the exchange rate of N305 to a dollar was sustained. Ganiyu argued that if that was not done, the implementation of the budget would not
be effective.
“Looking at the N529billion for the Power, Works and Housing Ministry, you would realise
that though Nigerians are suffering over poor roads, housing and electricity, people are
not after the roads, electricity and housing issue because of the hardship they are going
through, especially in the agricultural sector, which is being given little or no attention.
Let’s take palm oil price, for instance, which has skyrocketed.
“The implication of focusing the budget most on the Power, Works and Housing sector
is that it is going to affect the Marginal Propensity to Save. MPS will be very low and it will increase hardship on the citizenry because these citizens are not enjoying the infrastructure directly. What they are after is, “put something on my table and let me eat.
“If they put more money on infrastructure, who are those that will implement it, looking at previous years down? Huge amounts have been budgeted to these sectors over time, yet no significant impact has been made so far because of funds that have been sabotaged.”
He added that the implementation of the budget could be effective if corruption was stamped out. The Director-General, Lagos Chamber of Commerce and industry, Mr.
Muda Yusuf, said that there was nothing spectacular about the 2017 budget proposal.
Muda said that there had not been any marked difference between the 2017 budget proposal and those of the past years. He noted that what had affected the real sector most at this period were more of policy issues. He said, “Although in the budget, there
is what is called appropriation. That is, how they allocate the money. There are also the
assumptions stated in the budget concerning the GDP, foreign exchange, inflation, oil price etc. which are fairly realistic except for the oil output that was benchmarked at 2.2mbpd and with the problems in the Niger Delta, we cannot confidently say that that assumptions can hold.
“Then, other significant issue is that the government is discontinuing the Joint Cash Call Arangement for the funding of the oil and gas sector. A new funding mechanism has now been adopted, which is good for the funding of the Oil and Gas sector, which will likely increase investments in the Oil and Gas upstream,” the LCCI DG said. Muda added that with the regular supply of electricity, Small and Medium Enterprises in the country would thrive. “All we need is appropriate policies to be put in place,” he noted.
