Jaye Gaskia, is the Coordinating Director at ThinkAct Consullts. In this interview with DAVID AGBA, the public affairs commentator insists that the 2017 budget is a farce.
How would you assess the economy in 2016?
By all measures and standards the economy performed poorly. We continued the trend of decline in the growth rate of the GDP as well as the contraction of the economy. I think it is important to point out that this decline in GDP and contraction has been on for the past five years. So if you look at the average of about 5-6 percent GDP growth annually, in 2011-2012, you will see that it started going down until we actually hit negative.
We entered a contraction and a depression in 2016. And four consecutive negative growth qualifies to be called a depression, its no longer a recession. The other thing worth to note is that the performance of the economy in 2016 was quite contrary to the expectation of the government because if you look at the 2016 budget document, its fundamentals and what it was based on, those expectations were outlandish.
The performance of the economy actually proved they are actually outlandish. They were not really based on a realistic view of the situation. But, I think that one of the reasons why we failed to stop the decline and even begin to revise the growth is the absence of coherent strategic policy and programme from the government. There were statements that were made that were responses and they were statements of intentions. People in government felt statements were policies themselves. Policies need to be clearer, more detailed; in terms of what the processes are. And also that cross linkages.
We didn’t have that in 2016. We had statements, we had ambitions and we had what you call panicky ad-hoc responses which was never deeply thought out, it then boomeranged. Rather than address the problem it compounded it. Our biggest challenge was simply about revenue. It was about the resources we had available to meet our needs. The pressure on the naira, the exchange rate.
The panicky measure of “floating exchange rate” then compounded the problem. It added further pressure on the naira and the value continued to decline. That instigated its own circle.
Is it not the reason why foreign investors are unwilling to come?
That is not what has prevented investments from coming. It is because there is no clarity. These different exchange rate mechanism are just free flowing, so it is not tied to a particular sector. For example, if you say health is a priority and you want to ensure that over the next three years,
you increase domestic manufacturing of pharmaceutical products then you target that sector with a specific exchange rate mechanism. It also means that the kind of foreign investment you want to attract is also the foreign investment into pharmaceuticals.
What we have at right now is that there is no clarity. You have different exchange rate mechanism depending on the platform you go to.
They are not tied to sectors, they are not planning-comprehensive investors will think, if I come through this platform and I find out that my goods will be exchanged in another platform, am I not going to lose money? Nobody is going to make a decision on the basis of that.
For local manufacturers it is even very confusing; extremely very confusing because you don’t know what this means in terms of what your balance sheet would be at the end of the day. That is what we need to tidy up. It needs to be focused. It needs to be sector specific. You need to ensure that it is only those sectors that can actually access that and it has to be tied to your own plan. You must have a plan.
For instance, if you say you want to improve domestic manufacturing of pharmaceuticals, for which purpose? Is it for your primary health care? You have to tie it to that. It means it should lead to availability of drugs in the health care system over a period of time. This kind requires long term planning and not the sprint we are engaged in. That is not what we are seeing. That is what gives investors confidence to actually invest their money. You have not dealt with the issue of multiple levies and taxation. The money to invest is already expensive to find; then you are adding all this other levies and taxation to it, at the end of the day, you ask yourself “how am I going to compete, even if I am a monopoly.
Do you see 2017 budget been implemented up to half with what is on ground?
I don’t think that this budget is realistic. I don’t think that the budget is based on any realistic and pragmatic expectation in terms of those external fundamentals. And even in terms of those internal fundamentals which is the preparedness of our own institutions to implement the budget. A serious government will first of all want to understand why budgets have not been performing since 1999. We have had a crisis of poor performance of budget.
The first thing is to understand why are we not performing? Is it a capacity issue with the MDAs, is it a planning issue? You then need to plug those loopholes before you continue. You have a bucket that is leaking and you think that it is not filled with water so you keep pouring water into the bucket with the hope that it will get filled.
The problem is not that you are not pouring water, the problem is that it is leaking. First of all block the leak and I don’t see this happening. Which does not mean that the GDP may not return to positive growth. It may, especially as oil price continues to rise because oil still contributes largely to that. But then that is what you call “bubble growth”. That was what brought us into this crisis in the first instance. The fact that we have had those outlandish figures, 7%, 8% since 1999 were simply based on oil production and crude material. You are not adding value, its not manufacturing.
With what we see from the budget proposal, it appears we are still running round in circles?
The first indication is that we have not learnt from the past. It is still business as usual. We are still using the same business template. So you have the same budget template with their different subheads which is why those things keep repeating themselves every year. Nobody has even done a tidy job of cleaning it up to say that by now we should have bought enough computers, we should have something else this year.
This is the first indication that nothing has changed. If you say you are doing zero budgeting rather than just allocate figures, it means you want people to justify why they are asking for N100 million for clearing grass, why should it not be N50 million. And that is a perversion of the concept of zero budgeting.
The idea and the concept of zero budgeting is that you start by planning-comprehensive needs assessment. What do you need? What do we want to do. Your needs assessment will inform your plan, you will then know what you want to do. You can actually have four budgets prepared for four years in advance because you have done your needs assessment and you know what your expenditure will be. So you have that kind of medium to long term vision. That is what zero budgeting should be in practice. But what we are doing now is a situation where bureaucrats and technocrats sit down somewhere and allocate figures to the different subheads and submit and you collate it and you come out to say that you have a budget. That is why, for example since 2011, you will always refurbish the State House canteen, you will always buy kitchen utensils etc.
