Budget 2013 performance: Positive strides despite target shortfalls

Appraising the performance of the 2013 Federal budget within the context of its broad key priorities of cost of governance reduction, strong strategy for managing domestic debt; bridging of the infrastructure financing deficit; job creation, support of real sector growth and gender empowerment and sports development and overall performance of the economy showed that the year could be described as relatively fulfilling for Nigeria. TOLA AKINMUTIMI reports.

The Federal Government had at the budget presentation and ministerial briefings promised to continue with the previous year’s agenda of fiscal consolidation with inclusive growth in the current year, and underpinned this with a projected oil production of 2.53 million barrels per day (mpbd) benchmark oil price of $79 per barrel, real GDP growth rate of 6.5 per cent and average Exchange Rate of N160/$.

As has been clearly demonstrated over the past 12 months, the government has not only been committed to achieving the set key priorities, despite constraining challenges, but also proved, even when the twin problems of unemployment and poverty remained unresolved, that efforts at re-positioning the nation’s economy on the path of sustainable growth were adventures worthy of pursuit to logical conclusions.

A cursory appraisal of the budget performance against the set priorities indicates that even when the targets were not totally attained, the year witnessed some positive developments that continue to show some hope for the economy and brighter growth outlook in the years ahead.

Cost Reduction

Firstly, on the agenda of cost of governance reduction, evidence showed that in the outgoing year, the Federal Government has achieved some measure of success as the implementation of the Integrated Payroll and Personal Information System, IPPIS, and the Government Integrated Financial Management Information System, GIFMIS, in the public service are helping to eliminate shady deals that had characterised the payroll system over the decades.

For instance, with about N119 billion saved by the government on personnel cost consequent upon the partial implementation of the e-payment system as at July this year, the Government, while inaugurating the Implementation Committee on IPPIS/ GIFMIS, also sets the end of the year deadline for full implementation of the IPPIS and the GIFMIS, even as it disclosed that at least 46,000 ghost workers had been discovered through the process. It also projected that by the end of December, all the 536 MDAs in public service would have been captured.

Again, the budget has also done fairly well in debt management agenda. As at the third quarter, Nigeria’s total debt stock, comprising external and domestic debts, stood at N8.32 trillion, representing an increase of 10.2 per cent over the December 31, 2012 figures, which stood at N7.55 trillion. But then, the point is not about the increase but the sustainability of the debt portfolio.

According to the Debt Management Office, DMO, the latest debt stock showed that the external debt component of debt for Federal and State Governments accounted for 15.50 per cent, totalling N1.29 trillion ($8.26bn at exchange rate of 155.75/$1), while the domestic debt component accounted for 84.50 per cent or N7.03 trillion.

A further analysis of the external debt stock indicated that it contributed about 13.59 per cent to the total debt as at Q2 2013 and that increased contribution of external debt to the total debt stock in Q3 2013, was “due to the benign interest rate environment in the international financial system, which the Federal and State Governments utilized to their advantage”.

Assessing the 2013 on its third priority focus of bridging the infrastructure financing gap reflected that even when the deficit remained huge, sundry initiatives were embarked upon by the Federal Government, including the launching of the National Integrated Infrastructure Master Plan, NIIMP, is a 30-year master plan for accelerating infrastructure development in the country.

The plan focuses essentially on core infrastructure, including energy (power and oil & gas), transport (roads, rail, ports and airports), housing, water and ICT. Other areas of interest classes include agriculture, mining, social infrastructure, vital registration and security

While launching the Plan in Abuja, the immediate past National Planning Minister, Dr. Shamsuddeen Usman, explained that the NIIMP was designed to raise Nigeria’s stock of infrastructure from the current 35-40 per cent of Gross Domestic Product, GDP, to 70 per cent of GDP by 2043”.

To ensure this, Usman noted that this would require huge investment of over $2.9 trillion (over N478.5trillion), and that it also implied that infrastructure expenditure would have to increase from the current 3-5per cent of GDP to an average of 9 per cent over the 30 year period with an estimated two per cent of the GDP spent on maintenance of infrastructure”, the minister projected.

Although the funds required are not available yet, setting the NIIMP remained a major developmental framework that would help Nigeria attract the needed investments. Already, international and local banks and other funds syndication entities are showing interest in partnering with the government to bridge the funding gap and create a solid infrastructure base for the sustainable growth of the economy.

Job Creation

On the job creation agenda, government has also sustained its efforts on the implementation of the SURE-P.

For instance, the implementation of the Graduate Internship Scheme, GIS, of the programme, which is one of the Social Safety Net, SSN, projects of the SURE-P is being sustained with the creation of the Public Works, Youth and Women Employment, PW/WYE, component, amongst other initiatives. The GIS provides the unemployed graduates youths with job apprenticeship opportunities that will expose them to skills and experiences relevant to the current labour market and enhance their employability.

So far, the Programme has created 130, 000 new jobs since its inauguration in February 2012. This is even as the government has also unveiled plans to empower 50,000 graduates by the year 2015, with quality work experience under the GIS.

Another challenge the budget was designed to address, according to the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo- Iweala, is gender empowerment such that priorities would be given to productive activities of girls and women who, over the years, have enjoyed little or no attention in funding in line with what obtained in other climes globally.

In the year under review, apart from the fact that the SURE-P offers special opportunities for female graduates, government has also demonstrated clearly to remove obstacles that hinder women from easy access to funding in the pursuit of their business goals.

In furtherance of its commitment to gender mainstreaming in governance, the government directed some key ministries, including the Ministries of Agriculture and Rural Development, Water Resources, Communications Technology, and Women Affairs, to kick-start a programme that would help in women are supported through budgetary allocations to boost their economic programmes.

For instance, in furtherance of the political and economic empowerment of women agenda, the Federal Government, through the Central Bank of Nigeria, launched the National Financial Inclusion Strategy, NFIS, as part of the monetary policy agenda of ensuring that financially excluded Nigerians in the grassroots, the majority of whom are women, are exposed to financial services in the banking sector.

The launching of the NFIS was followed by the launching of the N220 billion Micro, Small and Medium Enterprises Development Fund, MSMEDF, by the CBN which said that 60 per cent of the fund would be committed to providing long term credit at single digit interest rate to women in micro and agro-based businesses in the country.

Real sector woes

Despite the statistical evidence that the economy is doing better, the immediate impact on the real sector is yet to be felt significantly in view of the complaints of key players in the real sector who, although subscribed to the economic transformation agenda, are still lamenting the disenabling operating environment characterised by high cost of doing business and unfair trade regime.

For instance, while noting that the country lacks the capacity to harness her opportunities despite her position as the second largest economy in Africa with over $300 billion GDP, the immediate past President of the Lagos Chamber of Commerce and Industry, LCCI, Mr. Goodie Ibru, said at the last chamber’s Annual General Meeting held in Lagos a few weeks ago that the real sector was yet to enjoy the benefits of the ongoing reforms, despite the fact the economic growth in 2013 was satisfactory.

The industrialist said: “Ours is the second largest economy in Africa with over $300 billion GDP, what we lack is the capacity to harness these opportunities for our common good. However, some progress has been made in charting the right course.

“Economic and business performance in the year was mixed. According to the National Bureau of Statistics, Gross Domestic Product growth rate for the second quarter of 2013 was 6.18 per cent as against 6.56 per cent in the first quarter and 6.39 per cent recorded in the second quarter of 2012.

“However, when compared with global output growth, the Nigeria growth performance could be considered satisfactory. But from our perspective as private sector player, the economic conditions were difficult and the challenges of doing business remained formidable”, the LCCI chief added.

The Manufacturers Association of Nigeria, MAN, in its assessment also noted that as desirable as the various initiatives to reform the key sectors were to creating a stronger base for the nation’s economic competitiveness, the realities still showed that operators are contending with challenges that undermine their efforts to optimise their productive potentials.

The MAN at a recent forum of Nigeria’s Organised Private Sector where it did a post-mortem analysis of the country’s infrastructure deficit bemoaned the yawning gap, pointing out that Nigeria requires about $14.2 billion, about 12 per cent of the country’s Gross Domestic Product, GDP, yearly, over the next decade to meet the funding needs.

Also, at its recent Annual General Meeting (AGM) held in Lagos, the association President, Chief Kola Jamodu, estimated that Nigeria needs about $10.5 billion to fix federal infrastructure alone, especially power against the current expenditure of about $5.9 billion per year on federal infrastructure, which is equivalent to about five per cent of the GDP.

On the implications of poor infrastructure for the cost of doing business, Jamodu, a former Minister of Industry, said despite claims by government that the operating clime was improving; manufacturers are still encountering serious challenges in terms of infrastructure (availability, cost and efficiency), which has continued to hamper the contributions of the sector to the economy.

He said: “The cost of providing alternative power has increased substantially the cost of production. Added to this, is the condition of our major roads which has also created a constraint in moving raw materials and finished goods across the federation”

The Acting Director General of the MAN, Mr. Rasheed Adegbenro, who presented the scorecard of the manufacturing sector vis-a-vis the intractable power problems and infrastructure deficit, pointed out that the full potential of the sector was still hamstrung, thereby accounting for its low performance in terms of contribution to the GDP, export earnings, employment generation and wealth creation since 1980s.

Analysts are also of the view that despite the modest achievements of SUREP in job creation, the results of the programme when analysed within the context of the unemployed population are nothing to celebrate.

Tackling poverty

Also tangentially related to the unemployment problem is the growing level of poverty in the economy. As has been pointed out by experts, the peculiar paradox of the Nigerian economy is that the poverty level has for several decades been at variance with the country’s immense wealth.

Although the government has described as unacceptable the recent World Bank report on the poverty level in the country which indicated that about 100 million Nigerians have been trapped in the poverty crisis, the facts are there for any discernible mind to see that the multilateral financial institution may not out rightly wrong in its estimation of the poverty level in the economy.

Agreed that Nigeria was recently honoured for meeting the Millennium Development Goal, MDG, of reducing people living in absolute hunger by half, well ahead of the 2015 target set by the United Nations, the truth of the matter is that the exclusivity of the growth in the economy has continued to accentuate the poverty level. This, as some of the regulatory authorities including the CBN and the NBS have noted, is the challenge.

What all these imply in real terms to the real sector development is that even year 2013 has exhibited some signals that are critical to boosting productivity in manufacturing, agri-business and other commercial engagements, the impact of the reforms is yet to be felt broadly, particularly at the grassroots.

In view of the foregoing, what government needed to focus more as preparations for the 2014 financial year are assuming greater focus following the laying of the Proposed 2014 Appropriation Bill before the National Assembly a few days ago is how best to align the reform agenda to people-specific needs and by so doing, ensure that the budget and others in the future, impact meaningfully on the lives of Nigerians.

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