2008 BUDGET

As Usual, Not for the Ordinary Nigerian

Peluola Adewale

President Umaru Yar’Adua tagged the 2008 Appropriation the budget for the ordinary Nigerian. Not a few poor working masses will ask him to tell that to the marines. He informed that the budget “gives priority to, and makes ample provision for improving physical infrastructure, particularly, power and transportation, human capital development, the Niger Delta, and social safety nets”. On the surface, this appears heart-warming. But when he stated that the budget “builds upon and consolidates past macroeconomic and budget reforms”, it is clear the poor masses have nothing to cheer about. Despite the much-flaunted macro-economic success stories of the last 8 years like enviable GDP growth, single-digit inflation rate, etc, the living standards of the ordinary Nigerian have taken a free-fall. Any budget that is predicated to financing neo-liberal economic programme, as shown in the last administration, cannot guarantee basic needs for the people and requisite infrastructure for economic development.

The failure of the abracadabra macroeconomic policies to translate into improvement in the lots of masses is so stark that Yar’Adua could not afford not to acknowledge it. He stated “our collective challenge today is to translate these economic gains into tangible improvements in the living standards of our people”. The International Monetary Fund (IMF), which along World Bank prescribes anti-poor policy thrust as instrument of development, also admits that poverty in Nigeria is still high despite years of solid growth, while development indicators are low (Punch, February 18, 2008).

To make budget pro-masses, there must a clean break from neo-liberal economic policies and public ownership and democratic control of the economy’s key sectors. Expecting this from Yar’Adua is crying for the moon. He has not hidden his resolve to continue with the anti-poor economic philosophy of privatisation and other neo-liberal attacks. For example, the deficit in the budget is to be financed from proceeds of the sales of government assets, domestic borrowing and oil bloc signature bonus. This implies that we are going to witness another round of unwholesome sales of collectively owned public assets to private vampires, locally and internationally. This is despite that the current government has been forced to review the licences of buyers of government properties like NITEL, refineries, etc because of the inability of the new owners to turn around the companies as in the case of Transcorp and Nitel or public outcry as in the case of the refineries. It obvious that what we about to witness is a case giving to Lucifer what has been taken away from Satan.

Domestic borrowing is an avenue to provide market for sterile credits which banks refused to invest but stocked-up in their vault. Despite huge capital at the disposal of banks, there is no effective measure from the government that ensures that real sector has access to favourable credit facility. Banks give about 40% of their credit facility to the government while only 7% went to the manufacturing sector. Perhaps, in order to control inflation, the Central Bank mops-up dormant credits, which are not invested, from banks. In fiscal year 2007, for example, about N300bn or practically all realised non-oil revenue are used to subsidise banks as interest payment on bank credit pre-emptively mopped by the apex bank (Guardian editorial, October 18, 2007). Yar’Adua has informed us he will continue with this trend as he boasted, “based on our strong fiscal position, government intends to remain active in the debt market.” It is clear that the budget is made to serve corporate interest and not the interest of the ordinary Nigerian. N372bn on debt service this year is more than the proposed combined allocations to education and health sector. A large proportion of this figure about N115bn is tagged at interest payments on borrowing from banks.

Looking at areas that social indicators like education, its allocation of about 8.5% of the budget is grossly inadequate and far below the UNESCO recommendation of 26%. Yar’Adua talked of safety nets, but no amount is budgeted for fuel subsidy for instance. Nigeria should be prepared for increase in the fuel prices in the year.

While N139.78bn is voted for energy, nothing is allocated for power projects, at least, according to the government, until proper audit of the huge spending on similar projects by the past administration that have gone down the drain is carried out. Perhaps nothing typifies the failure of Obasanjo government than power sector. Obasanjo spent about $16bn, according to the Speaker of House of Representatives, on electricity with nothing to show for it. Whereas, the World Bank report titled, “Power and Poverty: World Bank Energy Report and Poor People” established in 2005 that an estimated $10bn was needed to ensure that at least 75 per cent Nigeria’s population had access to electricity (Yemi Kolapo, Punch, February 29, 2008).

The ordinary Nigerian, who has only witnessed outrageous power outage in the last 8 years, is billed to pay for egregious failure and misappropriation of the past government. The minister of energy (power), Fatimah Ibrahem was reported in newspapers to have said that Nigerians should expect increase in electricity tariff later in the year. This, she said, is imperative in order to encourage investors, who consider the current tariff very low and unprofitable, to come into the sector and thus ensure stable power supply. In her words, “The tariff is considered very low and investors are saying that with it, banks cannot come in and they cannot recoup their investment within reasonable time” Though the minister was forced to recant the statement by the president who perhaps consider it damaging to his government already legitimacy crisis, it appears that government is trying to be smarter than its shadow. Yar’Adua administration appears to be at its wit end on energy crisis, the best it has done is the refrain, “I will declare state of emergency in power sector”.

Without resolving the electricity crisis and other infrastructure problem, Yar’Adua is targeting 11% GDP growth rate in the budget. In reality this is based upon the continuation of high oil prices. But this is by no means assured as the US and other major economies appear now to be going into a slowdown or recession which could mean a fall in the oil price. However, while attainment of this figure is thus a moot question, what is important to the ordinary Nigerian is the percentage make-up of each component the figure. GDP is made of consumption, fixed asset investment, government spending and net current account (export minus import). The subsisting growth has been largely driven by high crude oil price. With the continued favourable net current account, the growth rate could be maintained. But, GDP is not a direct measure of standard of living. For the GDP growth to translate into improved standard of living, the percentage of the fixed asset investment, which indicates state of industrial growth, has to be impressive and dominant. It is this component of the GDP that ensures mass job creation. Thus, as the economy grows there would be increasing rate of employment. But the ruling class are not prepared to invest, both because imperialism’s grip on the world economy stifles local development and the prevailing primitive state of infrastructure. It is this vicious circle that has accounted for unabated closure of businesses and attendant job losses. Thus Nigeria’s economy is in for another year of “jobless” growth.

Yar’Adua budget also shows continuation of “legitimate” corruption of the last administration through the so-called excess crude account. Funds above the budget benchmark, which is put at $59 per barrel while oil is sold currently around $100, accrue to this fraudulent account. They are not appropriated, but got shared between the federal and state governments at discretion of the president and governors. In line with tradition of Obasanjo, Yar’dua did not mention his budget speech what would be done with excess crude revenue. The corruption and illegality associated with excess crude account was so brazen and outlandish that the Revenue Mobilisation Allocation and Fiscal Commission was forced to disclose that the revenues in 2004, 2005 and 2006 were “not only misused but not accounted for to date” (Daily Independent, January 2, 2008)

For poor working masses, whom Yar’Adua refers to as ordinary Nigerian, no fundamental improvement in standards of living and other basic needs of life should be expected on the basis of neo-liberal budget of Yar’Adua government. Workers and masses have to join the struggle for formation of a mass-based working peoples’ party that could wrest power from the thieving ruling elite, irrespective of tribes, religions or political parties, and commit the huge resources of the country to provision of basic necessities like electricity, water, housing, road, education, decent jobs, health care, etc for workers and poor masses as well as infrastructural development that aids genuine economic growth. However, for such party to be plan to to mobilise resources to actualise this programme on the lasting basis, it has to take into public ownership the commanding heights of the economy and resources of nature under democratic control and management of the working people themselves.