As the National Assembly begin consideration of the 2023 Appropriation Bill, the private sector and economy analysts have expressed a lack of confidence in the ability of the budgetary provisions to address key macroeconomic challenges facing Nigeria currently.
Analyst / Vice Executive Chairman, High Cap Securities Limited, David Adonri, commended the early submission of the 2023 budget.
He, however, expressed discomfort with some of the provisions stating: “The huge deficit is worrisome. The incoming administration may have to rationalize several frivolous expenditures to drastically reduce the deficit.
“The rising global interest rate environment compounded by Nigeria’s country risk will increase the cost of borrowing by FGN, thus worsening its financial health. Having found herself in a debt trap wherein new debt is required to service existing debt, restructuring of debt has become imperative otherwise, sovereign default by Nigeria is imminent.
“As an expansionary budget amidst rising inflation and dwindling public revenue, the 2023 FGN budget is unrealistic and the borrowing plan is reckless. The budget defies all forecasts indicating that global and domestic economies will slow down in 2023.”
Mrs Ronke Akinyemi, Assistant Vice President, Global Market, Parthian Partners, a Lagos-based investment house, said that what is most evident from the budget presentation held is that more revenue needs to be generated to narrow the deficit.
She indicated the need for strict adherence to tax collection and accelerated efforts to expand the tax base, adding that specific measures and policies to curb vandalism and oil theft should be put in place so Nigeria can fully enjoy the benefits of high oil prices.
It did not address exchange rate, revenue, jobs etc – Ex-NACCIMA boss
Also commenting the former, President, of the National Association of Chambers of Commerce, Industries, Mines and Agriculture, NACCIMA, Dr John Isemedi, said: “We thank Mr President for early consideration of the proposed budget. This proposed budget is historic in the sense that it is the last budget that President Buhari would preside over. Secondly, he is going to run it for five months while the incoming president will have seven months.
“We have 15 exchange rates in the country. So in the private sector which one are we going to rely on? There are multiple exchange rates and this is not helping the manufacturing sector. We have an N435 official exchange rate per dollar, how many people get it at that rate.?
“The N20.15 trillion budget when you divide it by over 200 million population, how much does it amount to per head?
Consider inflation of over 20%, how can the masses survive on this?
“In the case of borrowing, where does this take us to? We need inflow from export not borrowing. We should look inwards and address the issue of multiple exchange rates.
“The MDAs should be given targets for revenue generation and our tax net should be expanded and strengthened.
“In the case of revenue, what are we doing with oil theft since it is the major source of our revenue?
“I think that we can recall when Mr President gave us a target a few years on how we as a Nation can collectively create 10 million jobs per year. After 7 years we cannot see one out of the 774 LGAs, States, MDAs or the OPS with a plan or the usual way, drawing board. The picture is just debts, currency devaluation, borrowings from others, mass imports and no real export activities on a large scale to create jobs. This is really worrisome.”
No hope for the poor using borrowing to finance budget — Dr Nweze
Commenting, Dr Austin Nweze, a finance lecturer at Lagos Business School, said: “The proposed N20.15 trillion 2023 budget is laudable and ambitious. The problem is with revenue generation. Where will the government get the revenue to finance the budget? Already there is a deficit. So I don’t know where they are going to get the money from.
Most of the money to be realised has been from borrowing to pay the debt even with previous governments. We don’t have money to back this budget. Our source of revenue is very critical hear. “The poor will suffer most from borrowing to finance the budget. There is no hope for the poor man.
“All we need as a country is a production. How can we produce without manufacturing? We cannot go anywhere without manufacturing. The CBN needs to reduce the interest rate to expand the economy. Fighting inflation with monetary policy alone can’t address the country’s problem.
“When interest rate is reduced people and companies can borrow money to expand their operations. Doing this will create more jobs and reduce unemployment.
“If we cannot produce 70 or 80 per cent of what we consume then the country will remain where it is.”
It will enslave Nigerians more — Adeyanju
Describing the budget as bogus, the Convener, Concerned Nigerians, CN, Comrade Deji Adeyanju, said, “For this government, we have realized that it has completely lost touch with reality.
“Most of the budgetary items are repeated items from the previous years. So there is no attempt at hygiene whatsoever, or cutting the cost of governance which was what Buhari and APC government promised in 2014 and 2015 prior to the election that brought in this government and looks at the kind of reckless spending we are still seeing.
“The reason why there is a deficit in the budget is because of excessive waste. The situation where you are using N6.1 trillion to service debts is like budgetary allocation for two year period under the PDP government, you are using it to service debt alone.
“It just defines the total failure that the government represents, and you are not building factories, you are not doing anything to improve the economy.
“Look at what the government is targeting from oil revenue N1.9 trillion, and oil revenues are our main source of revenue. “What this budget simply implies is that they are planning to borrow more money; they are enslaving future generations.
“There is no way this government can get Nigerians out of the woods because it means that our legal tender the Naira will continue to lose value and the economy will continue to go down.
“From this budget, it means that inflation is going to be the order of the day. “The body language of the government seems to be a complete lack of a plan on how to get out of the woods.”
Revenue projection is unrealistic — ARM Securities
Commenting, Rotimi Olubi, Managing Director/CEO, ARM Securities, noted that the projected revenue is not realistic, saying that the assumptions of 1.69million barrels per day, mbpd, for oil production when the nation can’t produce 1.2mbpd is questionable.
He stated that the assumptions for the exchange rate at just over N400 and expected inflation levels in the budget are overly optimistic given the current realities.
Olubi also said that tax collection would be on the upside given the introduction of new taxes within the year.
He stated: “We still project a tough oil price environment in 2023. Production volumes will likely remain below quotas. We recall that the Finance Act of 2021 introduced a new excise tax on non-alcoholic beverages about N10 per litre, and increased education tax payable by companies from 2% to 2.5%.
“In addition, the FG signed the National Health Insurance Authority Act of 2021, which is to be sourced from a new telecommunications tax of at least one Kobo per second of GSM calls. We expect taxation could be on the upside.
“Interest rates are expected to keep rising in 2023 as the US Fed has mentioned its resolve to take inflation to 2%. Average Monetary Policy Rate, MPR, hike in 2023 is expected to be 4%.”
On debt and debt servicing projections, he said: “Assessing the country’s debt sustainability shows a drift from safe zones. Debt to GDP, though remaining below the IMF’s recommended band of 55%, has maintained an uptrend (estimated 23% for 2022, actual of 2021 for 22.47%).
“In my view, the amount to go into debt servicing might be higher. There is an urgent need to address Nigeria’s fiscal metrics both on the revenue and the rising cost of debt service sides. Revenue channels need to be consolidated to improve on the debt-service ratio.”
Implementation is seriously challenged — ICSAN boss
In its interim reaction to the budgetary proposals, the President of the Institute of Chartered Secretaries and Administrators of Nigeria, ICSAN, Taiwo Owokalade, commended the Federal Government for the early releases of the 2023 budget.
He stated: “As we are all aware 2023 is the final year of the President in office so we expect it to be a budget of consolidation on the past achievements of the Federal Government. We also note with concerns the challenge of implementation of the budget as critical aspects of it may be abandoned should the opposition party comes to power or the new President from the ruling party may disagree with some aspects and would want to assert his footprint on the policy by coming up with a supplementary budget to redirect the focus of the polity and the economy.
“ICSAN would like to acknowledge the milestones recorded in the area of road construction, airport expansion and important legislation on Corporate Governance which is very important to us as an Institute.
“We commend the Government for signing into law the Petroleum Industry Bill and the Commercialization of the NNPC. The Government’s effort to diversify the economy is also commendable and more needs to be done to make Nigeria less dependent of Oil and Gas.
“ICSAN is happy that the Government promised to implement policy measures aimed at positioning the manufacturing sector to generate more foreign exchange in the near future and create more jobs for young Nigerians both in the rural and urban centres.
“The debt servicing component of the budget is however very high indeed. An estimated 30% or N6.31trillion would go into debt servicing! One wonders what would be left for core developmental initiatives and programmes.
“National debt rose from N39.6 trillion in December 2021 to N42.8 trillion in June 2022 and it is still rising because of the lack of commitment to reducing the debt profile of the country.
“The Governments of today may appear to have a lot of challenges which the successive governments may still have to grapple with. We urge the government to block loopholes in the system to ensure its hard work impacts Nigerians across the board.
“Finally we hope part of the N470.0 billion budgeted for human capacity development would be utilized for settling areas of grievances between the Government and the ASUU. Nigerian students deserve a better deal than what they are getting now.”
Budgets never had any impact — MSME group
The President Association of Micro Entrepreneurs in Nigeria (AMEN), Comrade Prince Ichie, has expressed displeasure with the entire budgetary character of the present government, especially with regard to the real impact on the economy.
He stated: “This present administration, all the budget they have made since 2015, what impact has it made in the lives of Nigerians and the Nigerian economy? This is a government that entered into power promising heaven on earth and today instead of things going forward they are moving backwards. They have failed totally. They have failed Nigeria totally. All these budget is a way for the government steals money.
“They are budgeting on education and our children are at home for almost nine months now and we are not getting anything. They are budgeting on power and there is no power; they Budget on infrastructure and there are no good roads. This budget is what they want to use to fund their electoral campaigns.
“Nigeria’s economy is in a coma. The country is bleeding. Industries are folding up every day. What is the impact of all these budgets?
“I pity the next administration because this administration has drained the nation’s economy. Nothing is working.”
Credit: THE VANGUARD.
