Democratic Socialist Movement

For Struggle, Solidarity and Socialism in Nigeria

By - DSM

2012 BUDGET: Transforming The Economy And Living Condition Of The Working People From Bad To Worse!

2012 BUDGET: Transforming The Economy And Living Condition Of The Working People From Bad To Worse!

By Peluola Adewale

President Goodluck Jonathan told the nation that his 2012 budget is a “stepping stone to the transformation of our economy and country in our walk to economic freedom.” The working people can only take this statement from the President as a gospel truth at their own peril. Nothing in the budget which has been passed by the National Assembly gives even a flicker of transformation except it is from bad to worse.

Jonathan had talked of transformation in budget speech on December 13 before he callously increased the fuel price from N65 to N141 on the New Year Day. He was forced by the biggest general strike/mass protest in history of Nigeria to reduce the price to N97. Yet, he said one of the ways to achieve the transformation is to target a single digit inflation of 9.5% in 2012. Given the high price of fuel it would have been much easier to turn stone to bread than achieving single-digit inflation. This shows that the President was simply out to insult the intelligence of Nigerians.

This deception was immediately exposed by National Bureau of Statistics (NBS), a government agency, when it announced the official inflation figure for the month of January 2012 which rose to 12.6% from 10.3% in December. According to NBS, “The biggest contributors to the consumer inflation were the high prices of some food items, liquid fuel and transport fares, and other miscellaneous goods and services which need liquid fuel and or transport fares for providing their services”. It further states categorically it is the “partial removal of oil subsidy”, that is fuel price hike to N97, that triggered a spike in food prices. (The Nation, February 20, 2012)

President Jonathan budgeted for himself and family a princely sum of N992.57million for food and general catering services in the year 2012. This perhaps explains why he is not bothered by the inevitable effect of the increase in fuel price on food prices and inflation.


The government has also relied on Public Private Partnership (PPP) to achieve the fabled transformation agenda. In his words, Jonathan states that government will, “in addition to ongoing critical infrastructure projects, execute new flagship projects with positive multiplier effects across the country through PPP arrangements in the next three years”. In the last few years when the PPP has become a policy thrust of the successive government, it has not contributed significantly to infrastructure development.

PPP is using public resources to gratify the drive for a private super profit. Hence, this explains why it has only brought pain in the neck rather benefits for the poor working people. The Senate President David Mark had once lamented the adverse effect of PPP on the economy. “One of the sources of public debt is public private partnership,” the senate president said. “They look attractive on the surface but if faced with challenges it becomes a debt on government”. (Next, November 14, 2010). This is perhaps a Freudian slip from David Mark. Being a pro-capitalist politician he is not fundamentally opposed to PPP. This explains why he went ahead to state that, “while we need the private sector to fast track infrastructural development, government must be ready to carefully scrutinize terms and conditions of every partnership to avoid pitfalls which can impact negatively on the economy and Nigerians.” He believes that private sector can fast track infrastructural development once terms and conditions are carefully scrutinized by the government. This is fallacious and utopian. Private sector operators are in business to make profit and not primarily for infrastructure development. Rather than bringing development, PPP has only contributed to the rising debt burden.


In this year budget, a whopping sum of N560bn is allocated for debt service. The debt service budget is more than total amount allocated to education (N409.5bn) or health care (N359.7bn). It is indeed much more than the combined capital expenditures on education (N66.8bn), health (N60.9bn), power (N75.5bn), petroleum (N8.1bn), Niger Delta (N80.9bn) and Agriculture (N48bn). The debt service budget has skyrocketed from N283bn in 2009 without anything to show for loans in term of infrastructural development. All this has shown that the government is out to serve the profit-first interest of the private sector vampires at the expense of infrastructural development, critical sectors of the economy like education, health and agriculture as well as welfare of the working people.

It was in 2006, the country gifted a whopping sum of $12.4bn to international financial sharks under the guise of debt repayment and with the false hope of debt free Nigeria. However, the shocking reality is that the debt stock has skyrocketed from $12bn after the Paris Club “debt relief” to about $43bn! Just within a year, Nigeria debt stock increased by 24.37% from N5.235trillion in December 31 2010 to N6.510trillion as of December 31, 2011 with domestic debt constitutes 86.36%.

The major sources of the debt burden are borrowing by government at the bond market and issuance of treasury bills. The FGN bond accounts for about 63% of the debt while Treasury bills make up about 31%. The government claims the fund raised through FGN bond is spent on infrastructural development. But there is nothing on the ground to justify the purported spending except the fat bank accounts of government’s functionaries and the private sector cronies. The Treasury bill is issued ostensibly to mop up excess liquidity in the system. The so-called excess liquidity is the idle funds banks refuse to lend to the real sector and left in vaults having known that it would yield a huge return when government comes for them. However, it should be stressed that refusal of banks to provide credit facility to the real sector actually reflects the depth of socio-economic crisis in Nigeria. In the face of pervasive infrastructure decay and attendant high cost of doing business, to the banks, the risk of granting loan to the real sector is unbearable.


From all indications, the public debt will continue to grow despite the huge revenue amassed by the government from oil and gas alone. The huge deficit in the current budget put at (N1.62trillion), which is more than two-thirds of the capital expenditure (N1.52trillion) will be financed by borrowing. If borrowing is meant for capital projects as government claims; it means that the government’s revenue from oil and taxes are primarily for recurrent expenditure out of which the outrageous amount paid to political office holders and their hangers-on constitute a bulk. Already, the recurrent expenditure constitutes 74% of the entire budget while the capital’s is 26%. In other words, it is only about meagre 9% of the expected income of the federal government, i.e. one third of 26%, that will be spent on capital projects!

This has shown that the budget is meant to serve the greed of the public office holders and super profit of the so-called private sector. For instance, in Jonathan’s budget proposal, N3.19bn was earmarked to be spent on the pensions and allowances of former Presidents, Heads of State, their deputies, former leaders of the National Assembly and their families in the year 2012. These are the same elements, most of whom unelected, who presided over the ruination of the economy of the country through barefaced looting of public resources and anti-poor policies. It is therefore not only laughable but also shamelessly deceptive when Jonathan told members of the National Assembly that, “the 2012 Budget, as our collaborative effort, has taken the welfare of Nigerians as top priority”.

Besides, while the budget benchmark is put at $72 per barrel, from all indications, given the crisis in Middle East especially the stand-off between Iran and western power, the crude oil is expected to be sold more than $100 throughout the year. This means that government will accumulate huge excess crude revenue, which experiences have shown, would not be spent on infrastructure and wellbeing of the people but largely shared among the politicians at all levels of the government. However, if on the contrary there is slump in the crude oil price, as was the case in 2009/10 global economic meltdown, it is the poor working people who did not benefit from the boom that would be asked to sacrifice with more neo-liberal attacks in the face of decline revenue.


The working people should not expect fundamental improvement in infrastructure, living conditions and other basic needs of life from this neo-liberal capitalist budget of Jonathan government. However, on the basis of struggles of working people, the government could be forced to grant, for a time, some concessions. For instance, the January struggle, the biggest general strike and mass protest in Nigeria, forced the Jonathan government to cut down the fuel price from N141 to N97. It had initially increased the price from N65 to N141 on January 1. But for the betrayal of labour leadership and the lack of working class political and economic alternative, the struggle had potential of winning much more including the overthrow of the government.

Therefore, one major lesson of the last January struggle is the need for fighting trade unions which also have working people economic and political alternative to the neo-liberal capitalist programme and government. The rank and file worker, genuine trade union activists and socialists must fight for the emergence of such fighting trade unions which in addition to uncompromising defence of interests and rights of workers at workplaces should also consistently demand the commitment of adequate public resources to public education, health care, road, power, integrated transport system, etc. and an end to anti-poor neo-liberal programme of privatization and deregulation.

However, it is not enough to demand adequate public spending. For instance, as the infamous power probe in 2008 revealed, about $16bn was purportedly spent on power projects but went down the drain. To the anti-poor corrupt pro-capitalist politicians allocating funds to capital votes or infrastructure is just another veritable avenue for looting of public resources. Public spending must be subjected to open democratic control of elected committees of workers, communities and relevant professionals in order to prevent corruption and ensure judicious application of the resources.

But on the basis of capitalism, especially the neo-liberal variant, the government will resist meeting such demands despite huge resources at its disposal, and even if Labour wins some of its demands government and employers of labour will seek ways to snatch these gains back. This is one of the reasons workers and poor masses have to join the struggle for formation of a mass-based working peoples’ party that could wrest power from the thieving ruling elite 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.