SAN FRANCISCO, January 04, (THEWILL) – The recent disclosure by the Nigerian Government that it achieved over 90 per cent budget performance for 2020, has triggered divergent reactions from economists and finance experts.
The Director-General, Budget Office of the Federation, Ben Akabueze, in a television programme monitored in Lagos at the weekend, declared that the federal government recorded an overall 97 per cent performance in the execution of the 2020 federal budget.
In a tone of elation that underscores government’s own applause, Akubueze said the result was the first he had witnessed in his years of tracking budget performances, and that the outcome could humble skeptics.
“When the budget for N10.3 trillion was passed, many people were skeptical about the ability of government to implement the budget.
“But I am pleased to say that for 2020 we recorded the highest budget performance I know of, since I was old enough to start tracking Nigerian federal budget performance.
“We achieved an overall 97 per cent of that budget, which means that we planned to spend N10.8 trillion; we spent N10.5 trillion,” the former top banker and tsar of the Budget Office said.
Akubueze acknowledged that Nigeria has a tradition of recurrent budgets that heavily outweigh capital votes but affirmed that 2020 marked a positive disruption of the trend.
“Everyone knows that we usually record about a hundred per cent of the recurrent portion of our budget and the challenge has always been with the capital side of the budget.
“But for 2020, we recorded 89.1 per cent performance of the capital budget,” he said.
Some experts who spoke to THEWILL expressed divergent views on the government’s claim and the pontification over its 97 per cent budget performance for 2020.
Professor of Accounting and Finance and immediate past Vice-Chancellor of Nasarawa State University, Keffi, Muhammad Mainoma took a swipe at government’s claim of 97 per cent budget performance for 2020.
In an emailed reaction to THEWILL, he said the performance offers no reason to applaud a budget that concentrated on recurrent expenditure.
He recalled that the budget was revised on the outbreak of Covid-19 pandemic which ‘helped’ in achieving the “97 per cent performance” being celebrated by government.
According to the incumbent President, Association of National Accountants of Nigeria (ANAN), the budget was not a performance to be happy with as a lot needs to be done on infrastructure and eliminating poverty.
“It is not surprising that the budget performance was good.
“This is because of concentrating on recurrent expenditure.
“Recall that for almost half of the year the economy was closed down and the capital budget was significantly eliminated.
“If the performance is measured against the original budget of 2020 it would have been less than 60 per cent.
“It is not actually a performance to be happy with as a lot needs to be done in power and physical infrastructures, capacity building to take out our people from extreme poverty.”
He further stated, “Recall also that most of the 2020 expenditure was to address the pandemic.
“It was not a systematic investment to address development within the society,” he said in the email to THEWILL.
In his reaction, Chief Economist at PwC, Andrew Nervin, commended government’s efforts in executing the capital projects provided they are properly implemented. He, however, described the budget performance narrative as a “strange way to explain this”.
His concerns apparently aligns with those of Uche Uwaleke, Professor of Capital Market at Nasarawa State University, Keffi.
Uwaleke told THEWILL that the ability of government to achieve 89.1 per cent capital budget is commendable.
He noted that the National Assembly has extended the life of the 2020 budget to the end of March, 2021, to allow full implementation of the capital side of the budget.
The former Imo State Commissioner for Finance, however, expressed concerns that such declaration ought to have been based on verifiable data.
He wondered why the government was in a hurry to announce the budget performance when the capital budget has not been fully executed and the Budget Office Website not updated.
Uwaleke drew attention to the Budget Performance Implementation Report of the Budget Office which showed performance for the first and second quarters of 2020 only.
He queried how Nigerians could verify the claim of 97 per cent performance without the details.
Renowned Economist and Chief Executive Officer at BIC Consultancy Services, Dr. Boniface Chizea, said the government should be congratulated for achieving 97 per cent budget performance for 2020.
He, however, decried the little impact of the budget on the life of Nigerians.
“We say congratulations to them. They have the facts and figures; we cannot dispute their claim.
“But let us see the impact on the wellbeing of Nigerians; we want to see it tackle unemployment, infrastructure deficit, insecurity, poor health and education facilities,” Chizea said in a telephone chat.
A top official in a strategic government agency who requested not to be mentioned by name (to avoid jeopardizing his job) told THEWILL that the 97 per cent budget performance claim of government is only one side of the coin.
He condemned the haste in making such a declaration when the 2020 budget has up till the end of the 2021 first quarter to run.
According to him, celebrating 100 per cent performance in paying salaries, executing overheads and debt servicing has little meaning to ordinary Nigerians.
“The Budget Office should tell us the cost of achieving 97 budget performance at a time we experienced lockdown for close to half of the year over Covid-19.
“We are aware that most revenue agencies defaulted in their remittance obligations to the Federation Account, resulting in serious revenue shortfall.
“If you experienced serious revenue shortfall during 2020, yet achieved 97 per cent budget performance, it means that you borrowed to meet your recurrent expenditure, which is not something to celebrate,” the Abuja-based official said.
He further challenged the government to publish the capital expenditure items of the MDAs during 2020 because, according to him, filing cabinets, office chairs and tables … constitute capital expenditures.
Since the beginning of the Muhammadu Buhari-led administration in May 2015, Nigeria has been operating annual budgets that are difficult to ascertain their performance.
From confusion over the concept of “zero-based” budget to the initial parliamentary accusations of ‘padding’, funding challenge and late implementation reports, it is difficult to ascertain the performance and impact of the budgets.
Perhaps, much concern hinges on dwindling revenue budgets amid mounting debt profile.
In its publication on the 2020 Budget entitled ‘X-raying the 2020 FGN budget proposal’, PwC noted, “The cost of governance remains a cause for concern, as recurrent expenditure continues to grow annually.
“By 2020, cumulative FG personnel costs, pensions and gratuities (from 2011 to 2020) will be over 20 trillion.
“As of 2018, the federal government’s workforce was reported to be about 400,000 in total, signifying that about 0.2 per cent of the country’s population consumed about one-third (33 per cent) of the national budget.
“This figure is expected to expand further in coming years, especially given the low staff turnover in the federal civil service and the new minimum wage.”
Nigeria’s debt-servicing obligation has been rising exponentially since 2015 when the country spent N943 billion for that purpose.
In 2016, the amount rose to N1.36 trillion, then N1.66 trillion in 2017 and N2.23 trillion in 2018. It climbed to N2.14 in 2019; N2.53 trillion in 2020, N3.1 trillion proposed for 2021.
Mainoma stressed the need to address fundamental challenges that create dislocations in the economy, noting that the country’s educational system suffered a setback in 2020.
“Recall also that schools were closed, and the long-term effects shall be felt in due course.
“There must therefore be conscious investment now to address these dislocations,” he stated.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
