Thursday, December 4, 2008

UPDATE (FEBRUARY 19TH, 2009): Nigeria's National Assembly finally passed a budget of N3,101,813,750,626. That amount was approximately N146 million more than original amount presented by President Yar'Adua. This increase was apparently due to additions made by the President.

After much delay, President Yar'Adua finally presented the proposed 2009 budget of N2.87 trillion ($24 billion) to Nigeria's National Assembly. The budget, which reflects a 8.4% increase from the last budget, was apparently parsed down to account for the continuing drop in the price of oil, Nigeria's main source of revenue, and the current global slow down. Consequently, this, the second budget presented by the Yar'Adua administration, presents a deficit of N1.09 trillion or 3.95% of national GDP. However, the deficit will be financed by funds unspent from the 2008 budget. The government will also retrieve $200 million from the Nigerian trust fund at the African Development Bank and will issue $500 million worth of bonds, for 10 years, on the international capital market to further plug the deficit.

The budget announcement was received by the international markets with a thud. Nigeria's currency, the Naira, fell against the U.S. Dollar from $120 to $129.5. The additional announcement by the federal government that it failed to properly implement the 2008 budget, also affected the price of oil.

Senator Omisore wrote a letter to the Minister of Finance in which he criticized the $500 million bond plan, stating,
"Nigerians are becoming concerned that the country is inadvertently going back to the era of unbridled consummation of external loans, a practice for which the nation and her citizenry had suffered severely in the past."
The Senator insisted that loans will not assist Nigeria in achieving the development it seeks and given the recent $3 billion loan from the World Bank, the Senator and others may have some cause for concern. He went on to state,
"...research has shown that no developing country can ever attain the feat achieved by the current developed nations by relying perpetually on external loans, but through trade promotion and substantial foreign exchange earnings."

In furtherance of the nation's development objectives, the final budgetary plan (the proposed budget can be changed by the National Assembly, which must vote it into formal existence) must be followed to the letter without the mistakes of the past. If not, the delays and revisions to the budget would have been a waste and ultimately, Nigerians will suffer.

However, the most important aspect of the budgetary announcement is actually the 7 'promises' Yar'Adua has made to improve the nation. Yar'Adua proposed specific significant progress in 7 key areas - power, petroleum, roads, transport, health, agriculture and Niger Delta.

These sectors are going to be crucial for development and although there is a deficit, it is clear that Nigeria cannot afford to not invest in these areas if the nation truly intends to be a stronger global economic competitor. Despite that, any loans taken and any monies applied to achieve these goals must be carefully considered and used strategically to improve the nation's prospects without burdening future Nigerian citizens.

Yar'Adua came to power promising to increase power generation, but soon reneged on that commitment, possibly because of the intense corruption in the power sector as exposed by the recent 'power probes'. The question I ask with regard to not just Yar'Adua's power promises but his promises on the other 6 key sectors of Nigeria's economy is - are the conditions in place for the President's promises to be kept? If this President does not believe that the conditions are in place to achieve these goals over the course of the next year or even his presidential term, then it would be better to promise that the impediments to such development will be eliminated before promising specific improvements in power, infrastructure, agriculture, health and the Delta region. As I have stated before with regard to the President's 'health issues' it is more important to provide some measure of the truth than it is to allow the seeds of doubt and speculation to create an unnecessary distraction. That same advice could be applied to the realities of Nigeria's development aspirations and this new budget. It is better to to be honest (even relatively so) than to create a situation where the administration will be hammered and criticized if it defaults on its promises as this in turn may lead to a repeat of this year's draconian measures against the press, bloggers and other concerned citizens.

Nonetheless, I hope that the price of oil will steady so that the budget does not have to be revised downwards in the near future, as that would only limit the funds necessary for several important projects such as the successful health initiative in Lagos State which has led to a reduction in new HIV/AIDS rates and others which are benefiting Nigeria's needy. I also hope that the administration will accomplish most, if not all of its goals for the nation's development as that will only help to make life better for Nigerians.

Thanks to the various readers who took the time to send numerous news reports on this issue. They were very helpful.

Click here to read the full text of the President's budget speech.
The guys at Nigerian Health Watch discuss what they see lacking with regard to health in Yar'Adua's budget announcement.

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13 Curiosities. Add Yours.:

guerreiranigeriana said...

...i haven't read this post yet...i'll come and read later...just wanted to let you know that according to bbc, Bishop" Sunday Ulup-Aya from akwa ibom state has been arrested as a killer of so-called child witches...dunno/can't remember if you wrote about this earlier...i may blog about it later, if i have time, but wanted to let you know also...the link to the article: go pick up my passport...but i will be back to read...

Sugabelly said...

Yar'Adua = Illegal douchebag that lies through his teeth.

I don't have the energy to type more. :(

N.I.M.M.O said...

From my days in the university, we used to spend a lot of time with friends and colleagues analysing and arguing about annual budgets announced by Nigerian rulers but that pastime waned during the Abacha years when budgets don't even get read till about April.

When poeple like Chu Okogwu, Kalu Idika Kalu, Olu Falae and Adamu Ciroma prepared budgets that actually made sense enough to even criticise while the ruler's implementation made nonsense of them.

With this, what does one even make of it?

With a deficit of over N1 trillion to be financed by local borrowing, do you think this government is serious?

It means any private person or organization should forget about major capital projects in 2009 and even beyond because the government will be competing for funds in the capital market.

We will also spend about N100 billion to generate 6000mW of power including from IPPs. But how much is being invested in the private power companies to enable them come on stream quickly enough and how much exactly is expected from them in the new year?

Maybe the minister will break this down later. Err, who is the Minister? How will he defend what he did not prepare?

We will finally start to build the 2nd Niger bridge but pray what about the roads that will lead to the bridge? Maybe we will just patch the ones there again.

How about a 4th Mainland bridge in Lagos?

What about Education? Nothing.

Housing? Oh, the Ministry of Foreign Affairs will get some new buildings and the FCT will build some more secretariats and offices for the ministires. Of course, the Civil Servants who will work there can continue to live under bridges.

Somebody described this as a Bugdget of Paradoxes. I don't even know what to make of it.

N.I.M.M.O said...

@GNaija: We read that Governor Akpabio of Akwa Ibom had asked for the self-styled Bishop to be arrested but me I will wait until I see him in the dock being tried before I believe anything.

Maybe somebody, somewhere is just looking for a new witchdoctor and wants to try the guy's powers.

The guy confessed on BBC to have killed 110 'witches'. That is 110 children - citizens of Nigeria - and it took them so long to arrest him.

One must give credit to the Lagos state government and the Office of the Public Defender for the swiftness with which they acted in the case of 'Reverend King' who killed one of his parishioners in what was an excorcist act.

'King' is on Death Row presently awaiting the outcome of his appeal.

Let's hope Akwa Ibom gives justice to the children.

Anonymous said...

My problem with our country has always been about thinking out of the box and @NIMMO´s "Maybe the minister will break this down later. Err, who is the Minister? How will he defend what he did not prepare?" has always been it. Great comment that should be printed and hung in Aso Rock. Why does our naked king not see his new clothes?

We have dwindling income as technology seemed hellbent on makng oil irrelevant, however, we are not building a future, rather, using cheap Chinese copycats. This budget does not appear sensible not to talk about improving it. Unless we stop and innovate, change everything, including the way we see ourselves, a Zimbabwe/Somalia/Congo hybrid nightmare future awaits.

Last on the Ministers, why do we need them? Stop. Fire them all. State Commissioners should take ownership for their ministries and their Governors responsible for championing their programs. The benefits? Google Japan 1990s.

Marin said...

Emm, all has been said by the previous posters, Just thinking about Nigeria gives me a serious headache right now. Every year the same BS. I won't be surprised if the house and senate add their own jara like last year.....

And the new ministers when are they going to be approved.

Say what you like about Obj, I was more optimistic during his regime than I am right now.

snazzy said...

I don't really have any comment on the budget, except that I would like to see a further breakdown of recurrent expenditure. As everyone has been saying around here implementation is key. Hopefully the house of reps wouldn't meddle too much.

With regards to the external effects of the budget, your analysis is wrong. I can pretty much tell you that you should never trust anything an unnamed expert says a la the daily independent article on all africa. For example the naira did not drop because of the budget. It dropped in interbank because CBN did not meet the demand for forex in the market. There was a demand for $1 billion at auction and CBN supplied a small fraction of that, which pushed the naira down in the parallel market. Also it is highly unlikely that failure to implement a 2008 budget passed in September was the reason for the oil price falling as it has been doing that constantly for a while.

I'll stop now cos I have talked to much, here's to hoping that the assembly passes it before the end of Jan, Laters.

TheAfroBeat said...

Thanks for sharing this Solo. As Nimmo points out the sentiments out there: a budget of paradozes. I had never thought about the fact that politicians never say they can't. But as you point out, if this administration is unable to tackle the impediments to the solutions of the big problems in those 7 areas, then they need to be honest with the people and say, look, these problems will not be fixed in the next year or even during this administration, but here is exactly what we plan to do in the meantime. Just a concrete plan of action with the actual ACTion to back it up, to show that people aren't just getting fatter on state funds in Aso Rock, would make a world of difference. But heaven forbid we get into the question of accountability today...

ChiefO said...

borrow all the way. gas prices would be $30 per barrel. then they would blame their lack of action solely on that.

Anonymous said...

Several key things missing and that come to mind:
1) Innovative ways to generate income for the country beyond its oil reserves. If our long time loyal patrons cannot afford to purchase Nigeria's oil/oil prices drop, Nigeria must have a strong plan B as an alternative to generate income for the nation. The President cites Agriculture but the percentage increase even in that sector is simply not enough.

2) Critical and tres tres important, I don't know how to stress this, is Nigeria's textile and clothing industry. From providing at one point 25% of employment in the nation, it is now in a state of complete collapse. 90% of Nigeria's textiles are imported. 90%!!!To compete both intercontinentally and certainly globally, the government must be ready, willing and committed to revamp the nation's textile and clothing industry.

Anonymous said...

Hello, I must say I greatly admire your initiative to dedicate a whole site to discussing pertinent Nigerian issues. One thing I must say though is that you seem to be rather comfortable with the status quo and are only proffering ways to make things better. But the fact of the matter is that Nigeria's problems go far beyond mere corruption and/or poor planning. Our problem is that government controls a substantial part of our economy and that is the source of both corruption and inefficiency in those very important roles of government such as security and justice. To me the solution is a total liberalization of our economy with government going back to its more legitimate functions.


@ Anon: thanks so much for stopping by and sharing your thoughts. I don't think you can truly garner what I think about Nigeria from one post, but I nevertheless appreciate your trying.

That being said, I see where you are coming from and would like to encourage you to expand a little more on your suggestion of smaller government. You would be surprised at how much our ideas are similar.

Thanks for swinging by and I hope you take me up on my request.

Anonymous said...

Budget or no budget, what is most paramount in the present Nigerian situation is the political will to do the right things and do them right. The Yardua administration has promised to deliver the dividends of democracy through its well thought out 7 point agenda, yet 2 years have almost gone down the drain without any meaningful achievement.

Indeed, Nigerians are getting weary and sceptical

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