by Oge Okonkwo

On October 10, 2012, when President Goodluck Jonathan presented the 2013 budget to the National Assembly, everyone was happy that the fiscal year was going to start early enough to take in developmental strides. One of the major problems that we have had to contend with, since the advent of the present democracy, is that of delayed budget preparation.

The National Assembly is in the eye of the storm once again. This time, it doesn’t involve a law that prescribes jail term for citizens that are freely exercising their constitutionally guaranteed freedom of speech or those targeting gays, lesbians, destitute, revenue sharing, life pension for their principals etc.

The battle has shifted to the 2014 budget.

A budget, which is the summary of intended expenditures and revenue plan for a coming year, acts as a guide for government’s activities over the year. It requires proper planning, careful and detailed deliberations, with a view to finding a balanced and acceptable document to serve as a template for the year. Because of this, the expectation is that it should be presented early to allow exhaustive discussions with a view to harmonizing all concerns and interests from all parties.

On October 10, 2012, when President Goodluck Jonathan presented the 2013 budget to the National Assembly, everyone was happy that the fiscal year was going to start early enough to take in developmental strides. One of the major problems that we have had to contend with, since the advent of the present democracy, is that of delayed budget preparation. It leads to delayed presentation, contentious harmonization, haphazard implementation and very poor performance level.

The joy of the early presentation by the president was short-lived however. The executive and the legislative arms of government bickered over almost everything and the end result is that the final amendment bill on the 2013 budget was passed in July 2013. It also brings to mind the issue of budget performance. How do we gauge the performance of the budget? How do we confirm if funds are actually going into the right places? What is the percentage of conformity and performance? I’m not an expert there but then these are pertinent questions.

The storm brewing up on the oil benchmark for 2014 budget is another unnecessary distraction that we have to contend with. The president and his economic team had proposed a conservative oil benchmark of $75/barrel while the Senate agreed to $76.5/barrel and the House of Representatives insisted on $79/barrel. Allegations of bribery rocked the House in the wake of their vehement refusal to go below their $79 price. At last, a compromise of $77.5/barrel has been agreed between the House, Senate and the Executives; but there are still very important questions to be asked.

In an article posted in the daily Punch on December 16, 2013 the writer showed why the conservative oil benchmark being proposed by the Executive is not reasonable and went on further to explain how the proposed $76.5/barrel from the Senate would “expectedly lead to annual revenue shortfall of about N1tn, that will inevitably require to be funded by borrowing at double-digit interest rates, which are traditionally inappropriate for such risk-free sovereign debts.”

Let’s establish this fact first: The 2014 budget (4.6Trn) just got presented on the 19th of December. A recess is coming soon…

Now that we’ve gotten that out of the way, it is important to let us know that the 2013 budget was premised on a $79/barrel oil benchmark. In the official reports for crude oil sold, the lowest average price per barrel between January and July 2013 was $103.92. Scratch that! The prices between January and July 2013 fluctuated between $103.92 – 118.09/barrel. So, what is this conservative oil benchmark all about?

It is all the more curious when you discover that the government borrows to meet up any deficit encountered as a result of the conservative oil benchmarks. These loans rack up double-digit interest rates with service charges amounting to over N700bn of expected budgeted revenue in 2014. What happens next?

The next thing is that the excess revenue is stashed in the Excess Crude Account. An account used to save oil revenues above the defined benchmark agreed in the budget. Its major aim is to delink government expenditures from oil revenues and act as insulation to the economy, where external shocks are involved. But what do we have? It now exists for the sole aim of fuelling corrupt practices where politicians bicker on what to do with it; how they are entitled to sharing for unspecified projects and acts as a last resort for the presidency to quell dissent among governors.

We borrow at double-digit interest rate to fund the budget because of a conservative oil benchmark set below any reasonable value but then consistently churn out an average revenue surplus of $10bn annually that sits idly, waiting to be shared, in the Excess Crude Account. It is outrageous really. The most painful aspect of the ruthless interest rates on borrowing is that we haven’t seen the impact. 70% of the population lives on less than $1 a day. There is scorching poverty in the land. We are chronically underdeveloped; all we hear are policies here and there but no attendant effect on lives.

We always come to this monster: corruption. The wealth is concentrated in few hands and some of these people are mere fronts for government officials – past and present – that have milked the nation dry. We have been told that over 400,000 barrels of crude gets stolen daily; the question is: by whom? Is it that convenient to steal such amount without someone or some people colluding with them through official channels? Then, what have they been doing with the legitimate 2.5 million barrel per day declared?

 

The Excess Crude Account has been depleted to around $4bn while the whirlwind that accompanied the letter from the CBN governor, his subsequent climb down to $12bn and Okonjo-Iweala’s acceptance of a $10.8bn shortfall, is yet to settle. The SURE-P fund – an inconsequential fund used to window-dress projects already properly budgeted for – is said to be missing, we keep dancing around the subject of accountability in government circles. Are we this cursed to perpetually foist selfish, self-serving and vain leaders on ourselves?

And when the time comes, we still vote with sentiments – when we vote – or not even vote at all, reserving all the noises and energy to bickering with each other online. These figures should scare us, and the fact that the future generations have been saddled with the repayment of today’s debts is alarming. We should be singing “Enough is Enough” come 2015!

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Debo Adejugbe is a trained Telecommunications/Electronics Engineer and a certified IT professional living in Lagos. Dad to amazing Hailey and an advocate against Sexual and Domestic Abuses. Debo has political sympathy for the Labour Party. He tweets from @deboadejugbe

 

Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija