The director-general, Budget Office, Mr Ben Akabueze has expressed worry over the country’s budgeting system, noting the the system produces un-implementable fiscal plans.
This according to him is responsible for the over 20,000 abandoned projects, heavy deficits, and debt servicing, despite that Nigeria has one of the lowest debt-to-GDP ratio in Africa.
Akabueze stated these while addressing elected members of the National Assembly on Wednesday at day-3 of their induction programme in Abuja.
He said due to facility deficit, Nigeria’s national healthcare system has about 40,000 physical structures called primary healthcare centers which came through constituency projects but are not necessarily functional, adding that if the country has as many as 10,000 functional primary healthcare centres, over 70 percent of Nigeria’s healthcare needs would have been solved.
“Members have to balance national and regional interests. As it is right now, we have a practically unimplementable budget. Every year, we have over 20,000 abandoned projects because they are not properly monitored. That is why the number or abandoned projects kept increasing every year.
“That is why I talked about balancing national, regional and constituency interests, today, our national healthcare policy requires that if we have 10,000 functional primary healthcare centres, 70 percent of our healthcare needs would have been met. But today, we have nearly 40,000 physical structures called primary health care centres. A large number of these come through constituency projects.
“In one constituency, you may have one primary health care center built by a member and instead of equipping it and making it functional, the other member coming in-built another structure and the community ends up having two structures that are useless to them. So, we need to streamline these things in the national interest.
“We are not even an oil-rich economy. To classify oil-rich economies, you talk of countries like Saudi Arabia where they are 34 million of them and pump 10 million barrels of crude per day, or Kuwait where there are 3 million of them and pump 3 million barrels per day. There are over 200 million of us and we are currently pumping about 1.9 million barrels per day. So, we are not a rich economy and must resist the temptation that we are an oil-rich economy. Let me make it clear that we are a potentially rich country, but we are not,” he said.
The chief budget officer of the country argued further saying, “I often hear people say that Nigeria is not short of development plan, but that the problem is implementation and I disagree because a plan that cannot speak to implementation is not a good plan. A development plan in Nigeria dates back to the early 90s, but you can argue that it has not been successful in the desired manner. Annual budgets are essentially backed by the sizes of development plans. They contain achievable objectives within a year. A budget that seats outside the development plan is not a good budget.
“For us to be able to fix the infrastructural needs of the country, we need to be spending about 100 billion dollars annually as a country, including private spending on infrastructure. The aggregate budget of the Federal government is only about 30 billion dollars and the aggregate of the states and FCT budget don’t even add up to the federal budget. This means that even if we spend everything, we will still be left with a huge infrastructural deficit,” Akabueze added.
He explained that each country has to determine the budget system that works for it, saying “budget is multi-dimensional in coverage. One, it is political because it allocates scarce resources of the country among multiple competing and sometimes, competing interests. It is also an economic document because it helps as the primary fiscal instrument for stimulating economic growth, ensuring employment and maintaining economic stability. It is an accounting document that provides ceilings and is legally binding for government to operate. It is also a moral document. You can know what a country cherishes by looking at its budget document.
“The federal government of Nigeria does not have an organic budget law. It is really unfortunate that we don’t have an organic budget law. Hopefully, there is one in the work in the 9th Assembly and may be passed before the Assembly winds up. Better BG a Nigerian myself, I don’t know any serious country in the world that does not have an organic budget law.
“You may have heard that we have one of the lowest GDP to debt ratio in the world. While the size of the FG budget for 2023 created some excitement, the aggregate budget of all government in the country amount to about N30 trillion. That is less than 15 percent in terms of ration to GDP. Even on the African continent, the ratio of spending is about 20 percent. South Africa is about 30 percent, Morocco is about 40 percent and at 15 percent, that is too small for our needs.
“That is why there is fierce competition for limited resources. That can determine how much we can relatively borrow. We now have very limited borrowing space, not because our debt to GDP is high, but because our revenue is too small to sustain the size of our debt. That explains our high debt service ratio.
“Once a country’s debt service ratio exceeds 30 percent, that country is in trouble and we are pushing towards 100 percent and that tells you how much trouble we are in. We have limited space to borrow. When you take how much you can generate in terms of revenue and what you can reasonably borrow, that establishes the size of the budget. The next thing would be to pay attention to government priority regarding what project gets what.
“The budget is not a shopping list. In the last the budget only contained expenditure, but we have changed that. Today, we are scored low in the budget credibility index and this is measured. What is contained in the budget and what is actually implemented,” he said.