2022 budget: Hope on the horizon for Nigeria’s economy




The past two years have been demoralising for many Nigerians, especially with the Covid-19 impact and the recession that followed. However, with the improvement in the economy, analysts say despair is gradually giving way to hope; BENJAMIN UMUTEME reports. 

When the President Muhammedu Buhari-led All Progressive Congress (APC) assumed power, it promised Nigerians a change from the norm that characterised the close to two decades of rule by the Peoples Democratic Party (PDP). 


In his inaugural speech, President Buhari told Nigerians that he was going to tackle the country’s security challenge, fight corruption and fix the economy.


And indeed, the APC-led administration set itself to work, especially in the area of infrastructure, which was almost becoming non-existent. From bad roads to epileptic power supply, just to mention a few, the government did not relent. The implication is that it has left Nigeria groaning under a heavy debt burden that experts say is not healthy for the economy. 

With all the flak the government has been receiving over the years, the 2022 budget has shown that it was able to listen to experts’ advice as it drew up the budget.

Fiscal transparency

At the public presentation of the 2022 budget in Abuja, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said the objectives of this year’s budget were “promoting fiscal transparency, accountability and comprehensiveness in the allocation of funds to the different sectors of the economy.”

She said, “The 2022 budget is expected to further accelerate the recovery of our economy and facilitate the completion of critical projects, as well as simply improve the general living conditions of our people. The budget reflects the key execution priorities and strategies of the NDP2021-2025.

“The government will continue to create the enabling environment for the private sector to increase their investment and contribute significantly to job creation, economic growth and lifting millions of our citizens out of poverty.”

Overview

The 2022 Aggregate FGN Expenditure (inclusive of GOEs and project-tied Loans) is projected to be N17.13 trillionwhich is 18% higher than the 2021budget.

Recurrent (non-debt) spending, estimated to amount to N6.91 trillion, is 40% of total expenditure, and 20% higher than the 2021 Budget.

Aggregate Capital Expenditure of N5.96 trillionis 35% of total expenditure. This provision is inclusive of the Capital component of Statutory Transfers, GOEs Capital and Project-tied loans expenditures. At N3.61 trillion, debt servicing is 21% of total expenditure, and 34% of total revenues.

The provision to retire maturing bonds to local contractors/suppliers of N270.71billionis 1.6% of total expenditure. This provision is in line with the federal government’s commitment to offset accumulated arrears of contractual obligations dating back over a decade.

Also,theprojected aggregate revenue available to fund the 2022 budget of N10.74trillion(inclusive of GOEs) is 32% higher than the 2021 projection of N8.12 trillion. Without the GOEs retained revenue, the FGN revenue is projected at N9.01trillion.

To further enhance the government revenue, and boost growth and development, the government rolled out the National Development Plan 2021-2025.

Mrs. Ahmed noted that, “To further enhance Independent Revenue collection, the government aims to optimise the operational efficiencies and revenue generation focus of GOEs coupled with the introduction of new taxes and further increases in existing pro heath taxes for example, excise on carbonated drinks.”

She said part of the initiative to raise revenue for the government includes the imposition of a N10 per litre excise duty tax on all non-alcoholic, carbonated and sweetened beverages.

‘2022 budget presents hope’

Speaking with this reporter, an economist, Tope Fasua, said the 2022 federal government budget “presents hope for Nigerians.”

According to Fasua, the budget is an indication that the government is not narrow in its objectives for Nigerians across all sectors of the economy.  

“I think there is hope in the horizon for Nigerians in the 202 budget as presented by the minister, the numbers look good, not good enough. There is space for improvement because of the devaluation of the currency, but N17 trillion looks like a good number. A huge chunk goes to defense which is an attempt to tackle the security crisis without which you cannot do business as a private sector in this country.

“The government is beginning to look at par capital budgeting and to make more provisions for Nigerians across the board, and we believe that next year will be better as well. However, the development plan itself looks good, however, the problem the development plan has, in my own perspective, is that the majority of the funding needs to come from the private sector. And what I saw is about N50 billion which the government intends to add to that plan in the five-year period. I think that that is low. I believe that what the government is adding is the government’s budget.

“So, if it’s N17 trillion in one year, I don’t know how it dovetails into N50 trillion in five years?  If you are even going at N17 trillion and the government budget forms part of the GDP then we should be looking at N85 billion of the government’s contribution to that budget and in fact when you project it, you should be looking at N120 trillion to that plan. So, if the private sector then brings about N350 billion or thereabout, as promised, then we should be looking at that plan go over N500 trillion. It looks like a good plan that incorporates the factor of the private sector in the development of the country.”

Taxation

Meanwhile, the president of the Abuja Chamber of Commerce and Industry (ACCI), Dr. Al-Mujtaba Abubakar, does not share the same sentiment with Fasua as he noted that high taxation “is not healthy for small businesses which are in the majority.”

For instance, consumers of sweet and carbonated drinks would begin paying a N10 tax on any carbonated drink consumed.  

According to him, more people will enter the unemployment market as many businesses may close shop.     

“We suggest broadening the tax base and reducing the tax rates. The increasing level of inflation, high taxes, and high-interest rates contribute to increasing the cost of production.

“This has resulted in many businesses not breaking even and many are closing shops. The situation is further complicated by insecurity challenges and the exchange rate instability.



“We recommend easing the harsh business environment by transforming regulatory agencies into facilitating bodies. In a drive to generate funds at all cost, businesses in Abuja are subjected to more than five levels of taxation.

“This needs to change so that SMEs can thrive and employ more workers to ease the increasing level of unemployment,” he said.

Assurances

Despite the apathy by many, the minister assured that the government shall continue to explore available opportunities for public-private partnerships, concessions as well as climate finance arrangements to fast track the pace of our infrastructure development.

“Achieving government’s budget objectives require bold, decisive and urgent actions, and the government is determined to act as may be required. However, the government remains committed to implementing measures aimed at moderating the unintended negative effects of policies on the citizenry.

“Safety nets will be provided to cushion the impact of reform measures on the vulnerable segments of the population.”

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