Budget 2021: More poverty ahead

Nigeria’s unemployment and poverty problem has assumed catastrophic proportions. In a country with a workforce of less than 100 million people, more than 22 million are jobless. That has driven 15 million more people below poverty line since 2018. People are desperate. The story of Solomon Okon, a porter with Havana Hospital in Lagos, who lost his job during a rationalization exercise is a sad reminder of a nation that has lost all sense of care and protection for its citizens.

The 21-year-old attempted suicide by drinking insecticide after he was sacked. He somehow missed the unscheduled trip to the grave as he was rushed to hospital.

When he recovered, the police arrested him. Instead of sending him to a social welfare outfit for guidance and counselling, the police charged him to court for attempting suicide.

A magistrate in Yaba promptly handed him an impossible bail condition and railroaded him to detention.

He languished in detention for two months before a report by Punch Newspapers compelled human rights organisations to scramble for his freedom. His temporary freedom has been secured but the police prosecutor and a magistrate who is a willing toll in their hands are waiting to return him to where he would be frustrated enough to actually terminate his life. That is the irony of being the citizen of a rich country of poor people.

The agony of Solomon Okon who had a close shave with death would pale into insignificance compared to what the 2021 Appropriation Bill would impose on Nigerians. The proposal is a gargantuan consumption budget to be funded by a monstrosity of debts that would set the economy staggering into comatose.

It is built on a tall tale of economic projections that even the architects of the budget know would be impossible to attain. Nigeria is so broke that it could not raise enough revenue to fund its grandiose recurrent expenditure. 

The federal government expected revenue for 2021 is a paltry N7.8 trillion. However, government hopes to spend N8.7 trillion on recurrent expenditure and personnel cost. That alone is about 112 per cent of total revenue. In the past, government only borrowed to fund its capital expenditures. Now it even borrows to fund its unwieldy cost of governance. Nigeria can no longer afford its stupendous cost of governance.

Ironically government has arrogantly refused to cut its coat according to its cloth. It has insisted on cutting its coat according to its burly frame even when it has to borrow to buy the cloth.

One of the grandiose things government would do in a year of devastating cash crunch is to borrow N12 billion for the maintenance of the nine aircraft in the presidential fleet.

The cash crunch has failed to impose austerity measures on the rulers of Nigeria.

Government still buys expensive sports utility vehicles (SUVs) for its officials at outrageous costs, while very little is spent on people-oriented programmes. 

The projections in the 2021 Appropriation Bill are either decidedly fraudulent or inadvertently misleading. 

The projection on inflation rate is practically unattainable. In the last three years, government had repeatedly missed its budget inflation rate targets. In 2019 the architects of the budget expected to push inflation rate pretty close to single digit but ended the year with inflation heading deeper into double digits. The 10.9 per cent projected in the 2019 budget could not be attained as the year ended with inflation rate standing menacingly around 12 per cent.

This year the budget makers expect to end 2021 with inflation rate at 11.95 per cent. That is a tall order. Even the Central Bank of Nigeria (CBN) expects inflation rate to hit 14 per cent by the end of 2020.

The apex bank expects inflation rate to start climbing down after 2020 but even that is an ambitious wishful thinking. Everything in Nigeria points to higher inflation rate in 2021.

The organization of Petroleum Exporting Countries (OPEC) has increase its projections on global oil consumption for 2021 based on impressive recovery in China which is the world’s largest importer of crude oil.

That projection would impact oil price positively, probably pushing it pretty close to $50 per barrel during the year. That is good news for the federal government. But Nigerian consumers of imported refined petroleum products would have to pay more with rising crude oil price due to a weak naira and the deregulation of the downstream sector of the oil industry.

With crude oil price possibly at $50 per barrel, the pump price of imported petrol would sail perilously close to N170 per liter.

That would push up prices of goods and services as manufacturers and service providers transfer some of the higher cost of production to consumers. Inflation rate would rise proportionately.

The suspended electricity tariff hike would soon come into force and escalate the cost of production and inflation rate as well.

Besides, the federal government’s gargantuan deficit in the 2021 Appropriation Bill would mop up funds in the money market and inadvertently price private sector fund users out of the market by escalating the cost of funds and causing a spike in inflation rate.

The gross domestic product (GDP) growth rate of 3 per cent for the 2021 Appropriation Bill is equally ambitious and ridiculously unattainable. The International Monetary Fund (IMF) expects Nigeria’s economy to inch up by a scant 0.7 per cent in 2021 after the calamitous four per cent contraction expected in 2020.

That sounds more realistic than the false prophecies of Nigeria’s budget makers. Everything on ground points to very slow growth in 2021. In fact, the only prospect of employment during the year is the 774, 000 street sweeping jobs flaunted by the federal government.

Any other employment generating schemes would be shot down by dearth of funds and rioting insecurity. Even agriculture which dared the COVID-19 lockdown in the second quarter of 2020 and grew by a record 2.5 per cent might not perform the expected wonders as murderous Fulani herds men and the religious terrorists in the north-east make the farmlands more dangerous.

The expected high cost of funds to be triggered by government massive invasion of the money market to fill a yawning budget deficit would reduce the economy’s employment generation potentials and hinder growth as well.As employment opportunities thin out, many would be frustrated into following the path of Solomon Okon. Police would have many suicide missioners to prosecute.

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