Last Friday, President Muhammadu Buhari presented the 2023 budget to the National Assembly. A look at the budget shows that N20.5 trillion (or $47.3 billion) was the proposed expenditure by the federal government to run the economy, which reflects the huge needs that exist in critical sectors of the economy. The proposed budget, which is 19% higher than the 2022 budget, is expected to take effect from January 2023 to address economic growth, fiscal sustainability, and security. The overall spending proposal of N20.51 trillion reduces to a non-debt spending proposal of N14.21 trillion once it is deducted, the proposed N6.3 trillion interest payments from the overall the spending plan. In reality, we do not have a N20.51 trillion spending plan on the table for we only have a N14.21 trillion spending plan.
The proposed revenue of N9.73 trillion does not reflect our peak revenue performance of N6 trillion in 2021. It notes that the 2023 budget is still at the proposal stage. The nation needs to toe the line of massive equity financing. Nigeria should, henceforth, use equity financing as an exclusive way of funding budget deficits for if we embrace equity financing, we do not have to make huge interest payments, and we can use some of the proceeds of our equity issuance to pay some of down debt, to make the fiscal situation more sustainable and rekindle much-needed confidence in our economic and fiscal resilience. The government should be encouraged to take advantage of the equity choice to bequeath a legacy that the incoming administration can build upon as we find our way back to the path of fiscal sustainability as a nation.
It would be recalled that, the federal government transmitted the 2022 budget to the national Assembly on October 7, 2021. The 2022 budget, titled “Budget of Economic Growth and Sustainability” valued at N17.126 trillion, was transmitted to the president by the National Assembly, on Friday, December 24, 2021. It is expected that there would be an earlier transmission by the National Assembly and signing into law with the strategic objective of the expenditure policy, which focuses on macroeconomic stability, human development, food security, improved business environment, energy sufficiency, improving transport infrastructure, and promoting industrialisation by focusing on Small and Medium Scale Enterprises (SMEs). Beyond the figures and policy statements contained in the 2023 Federal Government budget, seven recommendations are key for successful implementation of the budget.
According to the Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Chinyere Almona, these include an improvement in the performance of the 2023 budget by studying how the 2022 budget has performed so far, looking at what has worked well, what failed, and what must be corrected in the implementation of the 2023 budget; governments at all levels must put actionable policies in place to address the high costs of fuels and food. The high rate of inflation may continue to distort most of the budget assumptions and targets if not curtailed; particular attention must be put on investing more on transport infrastructure in resolving the many logistical challenges that have impacted the movement of goods across the nation. Aside oil revenues, the country can enhance its forex earnings through increased inflow of foreign direct investments.
There is the need to invest more in infrastructure and critical port reforms to reduce the bottlenecks in export logistics and processes that would boost non-oil production and exports; allocation of N470billion to revitalise the tertiary institutions and enhance salaries of university and show of concern about the plight of the university community in recent times. However, it must be accepted that the current funding model for our universities is not sustainable in the face of the many revenue challenges being tackled by the government. A more sustainable way is to grant financial autonomy to the universities with a new emphasis on equity investments for infrastructure; in addressing the most significant components of human development while governments at all levels should remain consistent in funding education, health, infrastructure, and security.
In addition, one-off funding cannot address the decay in these areas within a year. It must be a practice and tradition of seeking robust equity funding for these areas consistently. On a final note, it is can be said that the nation may not be able to source debts from foreign investors as in the past. Many factors have diminished our debt ratings, and this should push the government to consider immediate issuance of wholesale equity investment at home and abroad to fund idle assets to finance the deficits instead of borrowing more. The nation also needs to immediately block revenue leakages by curbing oil theft, pipeline vandalisation, and trimming excessive fuel, power, gas, and forex subsidies, as well as massive tax and duty waivers to lift revenue to N20 trillion to N30 trillion thresholds from the present N6 trillion to N10 trillion thresholds. Hence, it is hoped that the National Assembly would do the needful by ensuring early passage of the appropriation act for the benefit of all.
