The controversies dogging the 2019 budget proposal may be far from over, as experts, gathered at the at the 2019 budget seminar of the Chartered Institute of Taxation of Nigeria (CITN), said the plan, as it is, fails to rise to the requirements of bravery, vision and determination.
Besides, the need to start paying attention to sub-national economic analysis, rather than a ritualistic focus on the “federal budget”, which does little for economic and social development and much less, for sovereign growth, was stressed.
The experts were of the view that until we focus on the unit of economic growth – the household, creating a nexus between the citizen and the state, managed by a critical mass of competent hands, it will not be possible for Nigeria to achieve aggregate greatness.
President of the CITN, Cyril Ede, said the seminar with the theme, “Accelerating Growth for Economic and Social Transformation”, was part of the institute’s drive to stimulate discourse that would lead to better and more result-oriented policy choices by government.
With the N8.83trn 2019 budget, and a provision for debt servicing accounting for 31 per cent of revenues, Ede said it is a cause for serious concern, as it shows that there is still a lot to be done in the area of internal resource mobilisation.
Similarly, the Managing Director, Investment Banking, Cordros Capital, Femi Ademola, who spoke on “Capital Investment: Defining the Critical Minimum for Growth Catalyzation”, said there is the need to improve infrastructure as a necessary condition to stimulate economic growth, which requires faithful implementations.
However, he said that government has limited financial resources to devote to increased capital expenditure for improving public services and face restrictions on its ability to raise debt, in particular, due to adherence to the principles of economic convergence and fiscal restraint enshrined in the Fiscal Responsibility Act.
According to the Founder of Proshare, Olufemi Awoyemi, the Federal Government’s N8.826 trillion 2019 budget is modest, mild and uninspiring, with a number of broad flaws, which is resting on a cushion of figures rather than a philosophy of progress.
Awoyemi, who spoke on “Fiscal Projections of the 2019 Budget: Challenges and Prospects”, at the seminar organised by CITN, said if the plan is to have any meaning to the lives of Nigerians, it has to find a bigger aspiration and a stronger set of hands, otherwise all the statistical noise will be nothing more than sound and fury, signifying nothing.
He said the cut back in the nominal size of the 2019 budget is an indication of the government being scared of its own fiscal shadow, rather than the alternative of taking a bold step towards fiscal restructuring and strategic expansion.
For instance, the paltry seven per cent of revenue projected for the education sector in the 2019 budget clearly reveals the lack of radical reasoning amongst economic managers.
He explained how Ghana spends about 23 per cent of its budget on education, hence the reason rich Nigerians spend about a $1billion yearly, training their children in that country.
According to him, educational spending would pay its way by raising Nigerian workers to higher levels of income, which would eventually be taxed at higher marginal rates, adding that entrepreneurs with better skills and larger visions will generate higher revenues that would produce more tax earnings for government by way of higher Company Income Tax.
He said the budget 2019 does not in any creative way, address the challenges of rising unemployment, as the country’s unemployment figure in third quarter of 2018 was estimated at 23.1%.
The economy has grown the absolute number of unemployed people by 15 million in the last three years, meaning that an average of five million new jobs need to be created yearly to keep unemployment rate at its present level. To do this, the economy must grow by between five and six per cent yearly.
With the soft global economy likely to continue right through first half of 2019, and oil price at about $62.70, weak global demand may still see prices drop below the $60 per barrel budget threshold.
He also said the economy will continue to be subject to shocks based on its inability to attract inflows, even in an era of global liquidity glut, because it has a low current account balance.