Another disaster with N745bn
There is economic poverty in Nigeria, but this is compounded by the poverty of ideas and the irrationality of leadership. In times of great economic crisis, like the extant one in Nigeria, government policies that involve the disbursement of humungous amounts of money should be products of critical analysis and founded on empirical evidence. Follow-up projects are guided by the lessons of earlier implementation whilst issues around opportunity costs and best value for money are taken seriously. It is against this background that this discourse examines the latest announcement by the Federal Government through the Ministry of Humanitarian Affairs, Disaster Management and Social Development to disburse N5,000 each to 24.3 poor Nigerians for a period of six months involving a total sum of N745 billion.
It is imperative at the outset to state that this columnist is not against the idea of poverty reduction or alleviating the conditions of the very poor in Nigeria. But interventions to be deployed for such alleviation should be very well crafted with sustainability in mind. Indeed, it should not necessarily be designed from the prism of poverty reduction per se but wealth and employment creation, value addition and facilitating economic recovery in this period of recession. Money should not just be spent, and it virtually disappears into thin air. After sharing this round of money, where will we get the next tranche of funds to continue the sharing?
There ought to be an evidence of the impact of previously spent funds. Pray, where is the evidence of the impact of the first set of disbursements to the poor, whether it is the conditional cash transfer scheme, Tradermoni or by whatever name called? How many Nigerians did those hundreds of billions spent so far lift out of poverty? Are we going back to the same list of persons whom we have purportedly lifted out of poverty for the new set of disbursements? So many unanswered questions that ought to be answered before N745 billion is thrown into the air. Furthermore, the prospects of the N745bn being a slush fund are just by the corner if we consider the experience of the COVID-19 relief funds where the same ministry claimed to have touched the lives of every Nigerian households – a lie and an insult on the intelligence of right-thinking Nigerians.
What is the fiscal position of Nigeria today? Can the fiscal balances justify this proposal to mismanage N745 billion? For 2020, the Federal Government had a retained revenue, (which is the actual earned income before borrowing) of N3.94tn and used N3.27tn to service debts, leaving a balance of N670bn. It had to borrow N2.521tn to complete the amount required to pay salaries and pensions. The situation in 2021 will not likely be different and the projected deficit in the 2021 federal budget is higher than that of 2020. The same regime that is borrowing to pay salaries is now programming N745bn for mismanagement. You borrow to distribute to the poor! How do you pay back? Alternatively, you get an inflow from previously stolen money which had been returned to you and you just distribute the same without any strategic thinking. This is fiscal insanity and irresponsibility of the highest order.
Did the National Assembly in its wisdom approve of this sum and for this purpose in the 2021 federal budget? Not to my knowledge. But if they did, they let Nigerians down. It was irresponsible of the federal lawmakers to have given approval to this kind of expenditure. If they did not give legislative approval to this expenditure, can they live up to their oath of office and recall that no public funds can be spent without appropriation by the clear provisions of Sections 80 and 81 of the 1999 constitution as amended. The legislature should assert its authority to stop this madness.
There are several ideas on how N745bn can be deployed sustainably to create value, jobs and still be available for future generations of Nigerians. So many areas of expenditure come to mind. How much did we budget for agriculture in the 2021 federal budget? A paltry N280.3bn and if we remove the recurrent cost, it comes down to N211bn. Can we imagine a scenario where we effectively deploy this money into agriculture or any other sector of the economy that has the capacity to create jobs, regenerate and add value? We can still target the poorest of the poor in the investment, may be, small scale farmers who produce the bulk of the food we eat. The Buhari regime has made a song out of the value chain approach to agriculture without a commensurate investment. We can invest in the agriculture processing value chains for our raw produce – from cassava, yam, cocoa, millet, sorghum, palm produce, etc. And these investments can be done in a concentric approach where the bulk of the capital is not exported but stay within Nigerian producers and suppliers.
Instead of continued borrowing from China, the N745 billion can be programmed to target two key infrastructure projects (roads, railways, ports) that will improve, for instance, transport or the general ease of doing business in Nigeria. This will have a multiplier effect on productivity. It can also be programmed to support access to the products of local vehicle manufacturing and assembling plants in an auto revolving loans scheme which will continue to grow if the money is disbursed at a single digit interest rate.
The argument is simple. We cannot continue to waste available resources and deploy them in a non-sustainable manner and still complain of paucity of resources. An economy in recession cannot continue to sink deeper due to failure of the leadership to take decisions that are in the best interest of the country. Government programmes and policies must be based on cost benefit scenarios where alternative deployment of resources will be compared based on their returns to society. We can have a scenario where the N745 billion can be spent and still be available for use in terms of the goods, services and construction it has generated. Alternatively, we can still deploy a small portion, not more than 10 per cent of the N745 billion and share it to poor Nigerians and from the investment of the remaining balance, we will have proceeds through taxation or service fees generated in coming years to continue the sharing.
Time has come to stop spending without evidence, without thinking it through and based on primordial spurs of the moment.