Why do Nigerian governments, federal, state or municipal, make it look as if a broke government is the same as a broke economy or lean Gross Domestic Product? Whatever its size may be, government spending is still a part of the economy.
That is why Nigeria’s 2021 Budget is N13.6 trillion, whereas projected 2021 GDP is $466.88 billion or N177. 47 trillion, if you go by official dollar exchange rate, or N226.44 trillion, if you choose the parallel market rate. The difference, obviously, is clear!
No doubt, government spending, through salaries of public servants, contractors’ fees and spending of what has been corruptly diverted to private purses, affects the economy or the GDP. The reverse is also true; the economy affects government.
It might be apposite to define certain operational terms, as is the wont in academic circles, to clarify the confusion in mixing failure of government funding with the performance of the economy, even though there is a symbiotic relationship between the two.
Economy is the administration of the material resources of a nation; GDP is total value of all goods and services produced in a country, less income from foreign investments; and a budget is a plan of domestic expenditure by a government.
Funding for a budget is derived in most parts from remittances, like sundry taxations (customs duties, value added tax, personal income tax, and company tax), revenue from government-owned enterprises and borrowings.
When Zainab Ahmed, Minister for Finance, Budget and National Planning, complains that, “The crash of the crude oil prices really hit us very hard in terms of revenue, we have very low revenues, (and) we have very high expenditures,” she is concerned about government’s low revenue, though the macroeconomic policies of the government she serves pauperise the economy.
Government revenue, according to Ahmed, is directed to “make sure salaries are paid, pensions are received every month; that we send funds to the judiciary and the legislature; (and) that we meet our debt service obligations.”
Her exclusion of spends on infrastructure is probably a Freudian slip, confirming government’s usual pleas that capital projects fail because cash receipts do not always match projected cash revenues, though government never fails to find the money to meet the aspect of the budget that concerns their staffs, namely salaries, leave bonus, training and lavish touring advance and estacode.
She also forgot government’s payment of subsidy –ingeniously described as underrecoveries– for petroleum products and the continued retention of the Nigerian National Petroleum Corporation whose staff are unable to productively run the four essentially moribund petroleum refineries, even as they take home unconscionable remunerations.
What Nigeria’s state actors fail to address is the unnecessarily Big Government that takes good money from the commonwealth and squanders it on wasteful ventures. Have you seen the convoy of cars trailing a local government chairman?
Consider also the train of special advisers, assistants and aides that pander to sundry emptyheaded, vacant, and idle officers heading public offices. The deputies to the deputies of the deputies are literally all over the corridors of power.
The cabinet of America’s President Joe Biden, who runs the world’s biggest economy, is a mere 15 individuals, whilst that of Nigeria is a legion, in compliance with a constitution that prescribes that at least one (idle) minister must be appointed from each state.
Former Imo State Governor, Senator Rochas Okorocha, who needlessly honoured former South African President Jacob Zuma with a monument, appointed his younger sister as Commissioner for Happiness and Couples’ Fulfilment, that the Igbo call, “onye oriri,” to “guide Ministries and Departments on what they must do to guarantee the citizens’ happiness and contribute better to society.”
Osun State Governor, Gboyega Oyetola, reportedly appointed a woman as Personal Assistant to her husband, who is a Commissioner for whatever, to demonstrate the efficacy of conjugal pillow talk in good governance!
You wonder what Ọyọ State Governor Seyi Makinde wants to do with a N1.2 billion “governotorial” mansion in the Federal Capital Territory. Maybe, he will relocate his government to Abuja.
Vincent Nwanma, economist and columnist with Daily Trust newspaper, recently commented on what may have informed the N60 billion that Edo State Governor Godwin Obaseki alleged the Central Bank of Nigeria printed to shore up Federal Allocation Accounts Committee dole to state governments in March 2021.
He says: “Two opposing forces acting on the Nigerian government’s public finance have led to the current unfortunate, but inevitable, situation (of printing money. Government) revenues have fallen and continue to fall; on the other side of the finance equation, the government’s needs have widened or increased and continue to do so.
“The deficit created by (Big Government, obviously), has led to the ugly situation where it has been said that the government had to ‘print money.’ Sure, deficits (created by Big Government) must be funded… and ‘printing money’ is one of the possible ways to do so.”
Vincent cautions: “The key issue with ‘printing money’ is its unsustainable nature… because frequent resort to it by government has detrimental effects on the economy. Its biggest drawback is the inflationary impact, which ultimately undermines the strength of the currency and the welfare of the citizens.” He that has ears should hear.
The following loan gambles are further proof of Big Governments’ insatiable quest to spend “too much money” on frivolities, as long as they can find plausible, if also asinine, explanations for the jamboree:
The $1.5 billion World Bank loan that the Senate approved for the financing of projects of state governments facing challenges ostensibly from the COVID-19 pandemic, food insecurity and a need for general economic stimulus.
Another profligacy waiting to happen is the anticipated receipt of €995 million loan from the Export-Import Bank of Brazil to finance Federal Government’s Green Imperative Project for mechanisation of agriculture to improve food security.
These types of convenient justifications used by nearly all governments in Nigeria to take both foreign and domestic loans are what cynics refer to as famous first words– intentions that are generally not expected to be fulfilled.
Despite suggestions by the President, Major General Muhammadu Buhari (retd), that governors should apply Paris Club refunds paid to them to defray outstanding workers’ salaries, most of them still owe– because they wilfully frittered the refund on extravaganza or pilfered it.
If those who run Nigeria must continue to spend on Big Government, maybe they should borrow the grace notes of former British Prime Minister Winston Churchill, who determined that his excessive needs must inform his expenditures, rather than be limited to his meagre resources, and vowed to work to increase his income.
The best way that government can to do this is not just by borrowings or by “printing money,” but to improve the revenues of government-owned enterprises and increase taxation by implementing policies that will always grow more tax-paying companies.
To put it another way, there is a need to balance the budget, using the law, so that irresponsible and profligate government spending is curbed, and no one will plan expenditure without finding the Ways and Means to do it; that is, cut their coat according to their cloth.
