In line with one of his statutory obligations, President Bola Tinubu on Wednesday, November 30, 2023, laid before the joint session of the National Assembly the budget for 2024. He indicated his intention to spend N27.5tn. In the budget, he prioritised defence and security, education and infrastructure. From the receipt side, N18.3tn is expected from oil, non-oil, tax and other revenues; creating a deficit gap of N9.18tn which is to be financed by new borrowing and drawdown on multilateral and bilateral loans.
For a very long time, the gap between recurrent expenditure and capital expenditure was always far apart. Sometimes, the allocation to recurrent expenditure doubles that of capital expenditure. This accounts for a serious and accumulated deficit of basic infrastructure over the years. So, having more on the side of capital expenditure will bring relative relief if the budget is faithfully implemented without the excuse for non-performance.
Reflecting on the 2023 budget of N24.8tn (including supplementary), only N13.7tn (55.2 per cent) has been spent so far as of September, leaving only three months for the full budget implementation to be over. The performance was not all that cheering. Various sources of borrowing had been implored; thereby becoming uncertain to get more loans. This is unconnected to the attention given to taxes in the 2024 budget as a prominent source of revenue. It is agreed that taxation is a good source of revenue when it is anchored on production. Tax itself is derived from production. Giving so much attention to tax rather than production first may not give the desired result in the long run. Every serious economy desires to keep the inflation rate at a single digit, keep unemployment rate at the barest minimum, and embark on policies that would positively influence macroeconomic variables. Most of the advanced economies of the world which we copy have a robust production system which makes it easy for them to generate enough revenue via taxation. Out there, a sizeable number of people are engaged in one activity or the other that adds value to the Gross Domestic Product.
The current inflation rate of 27.3 per cent is more of a cost-push than a demand-pull. The costs of operation to the businesses and surviving manufacturing firms have gone up exponentially; making the outputs extremely expensive for the common man to afford. The cost of transportation of items or persons from one point to the other, the cost of energy, the cost of credit and others, also drive inflation. Plans to moderate the inflation rate to 21.4 per cent as planned in the 2024 budget is attainable and can even be surpassed if structural factors that brought about the challenges are holistically tackled. Giving domestic refineries and modular refineries the necessary support for production without further delay to meet local demand substantially will bring succour to the citizens and also be beneficial to the nation’s economy. Even if the price of premium motor spirit is not reduced significantly as expected by some, whatever reduction we have will be beneficial and would also add value to us as a nation. Employment generation along the chain of production and the by-products will be an advantage.
Waiting till the third quarter of the year before evaluating the performance of the budget to see if it is tilting toward the desired result isn’t the best approach. Check to deal with any challenge in the early stage.
The allocation of eight per cent (N2.18tn) to education may not be up to the recommendation of UNESCO but there is a significant improvement compared to what was obtained in the time past. The N50bn student loan is a good move to assist indigent ones but the government should not see it as an opportunity to take its hands off subvention or reduce subvention to various institutions of learning. If the government does that, schools will load various charges under school fees to keep their heads above the sea level, thereby defeating the principal purpose behind the establishment of such loan.
If data released by the National Bureau of Statistics is anything to go by, GDP was observed to move up to 2.54 per cent (year on year) in real terms in the third quarter of 2023 from 2.25 per cent in 2022. The growth was driven by the service sector. Contribution from agriculture and industry sectors is less, which is why agricultural outputs are becoming scarce in the market. Of course, for any item short of supply to demand, price will dictate who gets such an item. Making agriculture at the forefront of economic drivers toward achieving 3.75 per cent economic growth in 2024 will not only put an end to hunger but will ensure food security. The security of lives and property propels economic growth. When people can sleep with both eyes closed, economic growth is assured. So, the allocation of N3.25tn to defence and security, making it the sector with the highest allocation, seems justified considering the period we are in as a nation. However, all those who are concerned with the defence and security of the country must all strive to ensure total security on the land, sea and air.
An average man on the street is no longer interested in the mathematics of budget or various statistics being churned out. He is after a bag of rice coming down to N30,000 from the current suicidal price of N60,000. An average housewife wants N5,000 in her purse to be enough for a pot of soup for a family of four for at least two days. Everyone is interested in the price of basic items to come down and in price stability. In the past six months or thereabouts, nothing has harmed the economy like price instability. Prices of goods and services were ticking upward every minute as if it were the clock causing the naira to lose its worth.
