President Muhammadu Buhari is reputedly too obdurate to apologise. But he recently did. Well, except that it was for the wrong reason! Presenting his 2020 Budget to the National Assembly on October 8, the President said: "I will start by asking you to pardon my voice", adding: "As you can hear, I have a cold as a result of working hard to meet your deadline!"
So, President Buhari caught a cold and lost his voice because he was "working hard" to meet the legislators' deadline for presenting the budget. Sorry to hear that, Mr President! Yet, one must add, working hard isn't enough; results also matter! And given how far removed from reality and how misguided in prioritisation the budget is, one might say the president shouldn't have gone to the trouble of toiling so hard as to catch a cold and lose his voice!
That said, President Buhari should, indeed, have apologised in the Budget speech, but for a different reason. Instead of asking for a "pardon"for his voice, he should have started by apologising for the failure of the 2019 budget and then for presenting a 2020 one that seems headed in the same boringly predictable ending: budget failure.
I have been fascinated by the names President Buhari gave to his budgets since the first one in 2016 and how each failed utterly to live up to its name. I mean, think of it. The 2016 budget was named "Budget of Change", but what change did it bring? Zilch! The 2017 budget was titled: "Budget of Recovery and Growth", but with the economy growing at 0.82% in 2017, that budget didn't do what it said on the tin. What about the 2018 budget? Well, it was called "Budget of Consolidation", but it only led to more debts, not fiscal consolidation. The 2019 budget was named "Budget of Continuity". Okay, to the extent that the name signalled the continuity of the Buhari administration's anti-growth policies, it was rhetorically true. But in terms of its substantive promises, the budget was a failure. Now, we have 2020 Budget,dubbed "Budget of Sustaining Growth and Job Creation"!
Truth is, President Buhari's budgets have routinely over-promised and under-delivered. In 2017, the then Senate President, Bukola Saraki, said: "The Senate is tired of having budget documents that, at the end of the day, when it comes to implementation, don't mean anything". That, sadly, was the fate of the 2018 and 2019 budgets.
But why have Buhari's budgets routinely failed? Well, one reason, apart from the utter lack of technical competence and delivery capacity, is unrealistic revenue projections. A key rule of budgeting is to avoid optimism bias. Yet, although Nigeria relies on oil export, with embedded price volatility, for over 70 per cent of its Federal Government revenue and has a very low level of economic activities, government always makes overestimated projections of revenue intakes. The result, of course, is a perennial failure to meet those targets. For instance, as President Buhari said in the Budget speech, the revenue performance, as at June this year, was only 58% of the 2019 Budget's estimate, with oil revenues falling below target by 49%, while non-oil revenues were well below expectations.
Yet, the 2020 Budget shows that the lesson of optimism bias, of unrealistic revenue targets, has not been learned. The N10.33 trillion budget is based on an estimated Federal Government revenue of N8.155 trillion, which is seven per cent higher than the 2019 estimate of N7.594 trillion. But how would a government that failed to meet its 2019 revenue target meet a higher 2020 projection? The government said only N2.64 trillion (about 32%) of that estimate would come from oil revenue, while the rest would come from "other revenues".
Surely, if nearly 70 per cent of the estimated Federal Government revenue would come from "non-oil tax revenue and other revenues" as the budget said, that must be predicated upon robust economic growth. Well, here again, President Buhari made an unrealistic growth projection of 2.93% in 2020, from the current 2%. Unrealistic because the estimated growth rate would be "driven largely by non-oil output as economic diversification accelerates, and the enabling business environment improves". This is pie-in-the-sky economics,not least because the economy is too sluggish and nothing in the budget is intended to give it the much-needed shot in the arm to boost growth.
I mean, here is a budget of N10.33 trillion, of which only N2.14 trillion (about 20%) goes to capital expenditure, while the rest is spent on recurrent expenditure (N4.88trillion) and debt servicing (N2.45trillion). Yet again,spending on staff salaries, overhead costs and servicing Nigeria's burgeoning debt is stifling the country's ability to invest in basic infrastructure and human capital, both critical to economic growth.
Surely, when a country spends only N48 billion in a budget of N10.33 trillion on education and only N46 billion on healthcare, you must question its priorities. You must also question the pro-growth priority of a government that reduces investment in basic infrastructure by 23% on a previous year's budget without any credible guarantee, despite so-called tax credit, of attracting significant private capital and investment. The government says the extra revenues from its planned increase in the VAT rate from 5% to 7.5% would be spent on education, health and infrastructure!So, why has spending on them stagnated or fallen?
Truth is, the 2020 Budget suffers from unrealistic projections and misguided prioritisation. Sadly, this has been the predictable pattern of President Buhari's budgets, with the equally predictable pattern of unachieved targets, poor implementations and budget failures. These are precisely what the President should have apologised for, not his lost voice!