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.