Budget 2012 – Transformation or Retrogression?
Let me start by apologizing for the inevitable absence of this column in the past two weeks; just as I would also like to express sincere gratitude to all those that visited, called or sent condolence messages to my family for our bereavement.
Moving on to the subject of this discourse, in the light of the passionate debate on the removal of fuel subsidy with which the country has been bedevilled in previous couple of months; the issue of whether the 2012 Appropriation Bill is a budget of fiscal consolidation or retrogression is as timely as it is topical. Transformation is a huge word that the Jonathan administration thoughtlessly use to describe its aspirations. Is there anything transformational about the 2012 Budget proposals?
In the course of presenting the Draft Budget, President Jonathan in paragraph 1 of 81 of his address states “this budget is a stepping stone to the transformation of our economy and country in our walk to economic freedom” and concludes in paragraph 76 thereof that “Mr. Senate President……the Proposal I lay before you this day seeks to sustain sound micro-economic growth that will translate to achieving socio-economic transformation, and gainful employment for our people”.
Meanwhile, and perhaps by divine providence, in the afternoon of the same Tuesday, 13th of December; the News Agency of Nigeria (NAN) reported that Nigeria’s biggest power generating plant, Egbin thermal station, with an available capacity of some 1,080MW out of the nation’s meagre total of about 4000MW has been shut down on account of poor maintenance!
Thus, whilst the President was preaching a sermon of transformation in the National Assembly, Nigerians were simultaneously experiencing practical retrogression. Worse still, the raging debate on the removal of fuel subsidy to which the President was reported last weekend to have said he would “rather confront mass revolt than keep the subsidy” raised its ugly head by way of deaf silence with which the issue was foreclosed as not a single kobo was provided for subsidy in the so-called budget of transformation; just as not a single word on the subject was included in the 81-paragraph Proposal. Is this transformation or retrogression?
In order to fully answer the question, we shall focus for now on just four elements of the budget – Recurrent Expenditure, Power Supply, Security and Job Creation. This will enable us to have a meaningful dialogue on whether the country is making progress (let alone transformation) from the advent of the YarAdua/Jonathan administration in 2007 up to the 2012 Budget Proposal.
RECURRENT EXPENDITURE:
In the 2007 budget, spending on capital investments was dramatically increased from N567 billion in 2006 to N830billion, representing a year-on-year increase of 46%; whilst total recurrent expenditure accounted for 64% of the total budget. Since then, the annual budget has made a quantum leap of 107% from N2.3 trillion to N4.75 trillion. Concurrently, the capital element grew from by slightly less than 60 percent to N1.3 trillion, whilst recurrent expenditure has ballooned by over 133% from N1.47 trillion to N3.4 trillion, thereby outgrowing the pace of the total budget by over 25%.
Although President Jonathan understands the critical importance of putting a cap on government spending when he states in his 2012 Budget address that “this underscores the need to intensify our efforts to curtail recurrent expenditure, which we have already embarked upon under the policy of fiscal consolidation as evident from the Medium Term Fiscal Framework. The share of recurrent expenditure in the 2012 Budget proposal is 72% down from 74.4% in 2011, and we intend to continue in this downward trend”; the statement is at best a half-truth if only because recurrent expenditure nonetheless went up by a staggering sum of N91 billion between 2011 and 2012.
In the circumstance, Nigerians are still saddled with a bloated administration where over 70k out of every Naira of the near N5 trillion revenue is spent on running the government; consumed by about 1 million people that work for the Federal Government, whilst the same administration is imposing a punitive tax of N8,00 on every man, woman and child by unilaterally ‘withdrawing fuel subsidy’ The government has dared the people to put up or shut up. Would it not have been transformational for the size of the government and the waste and corruption of its officials to have been reduced as opposed to eliminating any subsidy?
POWER SUPPLY:
As alluded to previously, Egbin power plant has been shut down, meaning we now generate less than 3,000MW for a population in excess of 160 million. This means that power generation for each Nigerian is less than 20 watts of electricity whilst a Ghanaian enjoys about 4 times at 88 watts; a Brazilian enjoys almost 25 times at over 500 watts; a South African enjoys over 50 times at about 1,093 watts not to talk of an American at about 150 times at 3,252 watts of power generation!
In the “Road Map for Power Sector Reform” that was launched in August 2010 by President Jonathan, it was started that “the medium-term expectation is that 14,000MW of Power generation capacity would be available by December 2013″. The additional 10,000MW Power that must be generated for this target to be accomplished would cost about $10 billion. Even if we assume that the Independent Power Plants (IPPs) and other power plants under construction would add about 5,000MW to the existing pool, there exist nonetheless a shortfall of 5,000MW that will cost $5 billion, whilst only N161billion – a little over $1 billion is the total earmarked for recurrent and capital spending of the power sector in the 2012 budget. Where is the transformation?
Clearly, in the unlikely event that we are able to appropriate $4billion in the 2013 budget for Power sector; we will still not be able to meet the said target if only on account of the gestation period of a couple of years that is required for power plants to be built. Here again, the concept of transformation is more of a wishful thinking rather than a realistic prospect.
SECURITY:
Security has become our primary challenge as a nation, and the budget proposal loudly earmarked N922 billion for the sector. Compared to infrastructure (N774 billion)and Human Capital (N714 billion), it looks sizeable. What is not apparent to many people is that the amount proposed is about N250 billion LOWER than the N1,174 billion budgeted to cater for the capital and recurrent needs of our for armed forces, police, the NSA, amnesty programme and the para-military agencies that make up our security sector. Today, our civil intelligence and security system has collapsed with the administration having to deploy the Nigerian Army in active, but totally inappropriate combat duties in 34 out of 36 states and the FCT. Our Army has never been so deployed in as many states even during the civil war!
And the spending of over N1.1 trillion on “security”, about 26% of the 2011 budget has brought nothing but greater insecurity, needless deaths and destruction of property of Nigerians. What has happened to our internal security is certainly retrogression, not transformation, and proof of a totally inept and dysfunctional governance!
JOB CREATION:
The only tangible element of direct intervention by the Federal Government to create jobs was the N50billion that was set aside in the 2011 Appropriation Act for the Youth Enterprise With Innovation in Nigeria (YOUWIN) program. The program was to provide a one-time equity grant for 1,200 selected aspiring entrepreneurs to start or expand their business initiatives and generate about 100,000 new jobs over a 3 year cycle.
Although the program was launched with a lot of fanfare by the President in October of this year, every available information so far reveals that not a single job has been created even though the year 2011 is coming to an end. This issue of non-implementation typifies the majority of the new initiatives and capital projects that were contained in the 2011 Appropriation Act. Worse still, the YOUWin program, as designed, is flawed with many defects as it is in totality a drop in the ocean, given that in the most optimistic scenario, only 100,000 jobs will be generated in 3 years for the teeming unemployed Nigerian youths of at least 25 million.
One of the major flaws of YouWin is that the so-called 1,200 young entrepreneurs will receive “an equity grant” that is tantamount to a government largesse or gift without any pre-identified objective criteria for selecting the winners and sustaining the program without new capital contribution by the government. Thus, far from transforming the previous PDP government-led largesse known as National Poverty Eradication Programme (NAPEP); the Jonathan administration has simply replaced one dubious scheme with another; with some arguing that the YOUWin programme is worse than the NAPEP because some of the projects under NAPEP such as the Keke NAPEP are visible for all to see whereas beneficiaries of the YOUWin programme will have limited identity, with little or nothing to show for their jackpot.
In closing, the four areas of Recurrent Expenditure, Power Supply, Security and Job Creation elements of the 2012 Appropriation Bill analyzed above provide answer to the question as to whether the 2012 Budget is that of Transformation or Retrogression. You be the Judge!
FIXiNG THE 2011 BUDGET:
Can this retrogressive budget be fixed? Of course.
It is a proposal which only becomes law when enacted by the National Assembly. As suggested on Twitter by my brother Bashir Yusuf Ibrahim, we must all rise up and call our representatives and senators to transform the proposal into a sensible, fiscally-sustainable budget by effecting the following amendments: (1) reduce the oil production assumptions to a more achievable 2.35 million bpd, and transferring all excess earnings to the sovereign wealth fund (2) raise the benchmark oil price to $75 per barrel, and include the increased revenue as a line item to subsidize the selling prices of kerosine and petrol in 2012(3) reduce recurrent budget proposals of all MDAs including the Presidency, the National Assembly and INEC by at least 30% and transfer the savings to the capital components of infrastructure, civil security and human capital sectors, 4) raise import duties of agricultural commodities that we can produce domestically to levels that existed in 2007 to encourage our farmers, and (5) include a line item in the budget for a national price support system in lieu of fertilizer and other dodgy subsidies in agriculture.
The ball is now in the court of our legislators to be on the side of the ordinary Nigerian, and save President Jonathan from the anti-democratic path he has chosen to tread. He may be prepared to face a popular revolt, but only God knows how that will end. Avoiding it by doing what is fair, just and reasonable in the circumstances is what pragmatic leadership is about. We are waiting and watching.
Very well analyzed, there wouldn’t be much need for me to tear up the budget any further.
However, in as much as i really appreciate your efforts to be objective and less judgemental, i still feel the truth stares at us right in the face.
1. Though the 2011 polls produced new diverse faces in the National Assembly, it is still safe to say that it is business as usual, as the newbies have either been indoctrinated or have started to exhibit their “Nigerian: Me, Myself and I” characteristics. this makes it nearly impossible for them to care about anything in the budget (that is if they heard or read anything when 60% must have been sleeping and waiting for “I and NE”)
2. The budget as you rightly pointed out sir, typifies the ineptitude of these men, so i am not surprised. It clearly exhibits true purposeless agendas of this administration further reveals itself as a LOUD MOUTHED but MUTED CEREBRAL government. At this point i must also point out that i am still expecting a “budget-annex” to identify the 36 new Airports and 36 new Federal institutions.. someone thoughtlessly boasted about….
3. Security???? i laugh! For someone who comes from a sound military background. All i can say is “Clueless Mortals”. If not that the military is less concerned about what democrats do with “their country” or that most of them have also rained in the relaxed and “me, myself and i” mentality, i would have boldly said that the budget and other related security actions just set us up NICELY for A Military C***
Oh are you guessing ? its COUP (yes i said it)
We are fighting wars against ourselves? When Some people are preparing for WW3.
4. Power? oh you mean the stuff that comes on and cant turn on my florescent or my fridge oh… Nice! 4000mw .. interesting Now i believed that Governance is synonymous to Lies. The truth is the we could always have gotten to 4000 from our 2500+ but it was safer to remain there cause of the Nigerian Cancerworm of corruption, the event at Egbin would always be inevitable.
5. Mindless youths! just cajole them some more with N50b, do some more facebook and twitter stunt, sponsors more purposeless “talent or handout” shows… so they dont Wake up from their slumber… while u allocate the funds to the names i will you and then EAT the rest.
Sir, you are being very generous when you stated 100,000 jobs. for where???!!!
There are alot of things better left unsaid about the Ruling party and its Pilot.
Like i always said GEJ would have been a man of Honor if he didn’t contest in April. He would have been so respected by all as a “Great” man, as we would not have been privileged to see his exhibition of ineptitude and tactless leadership.
twitter @hardrold
Mallam Nasir El-Rufai, my sincere condolence for the lost of your daughter, Yasmin. I enjoy your objective and brilliant socio-economic and political analysis. You’re a special Nigerian. The eye glasses is save and still looks brand new – my apologizes, I had no way of contacting you.
Sir i really educate about budget that propose by GEJ goverment. But your solution to contact the legislation is almost mission impossible because most of them are not coming home. Even if they arrive ,they just encircle themselve with yes sir people . And any jack and harry want to get a kitchen change from them.
Corruption is killing the country and its worst now. With amnesty oil boom we should be better but worst
This is a brilliant, informative contribution. What is more remarkable is your ability to rise above the personal grief that must have enveloped you and to contribute to National Discourse, with clarity and purpose, at an obviously difficult time. I remember when for military president’s wife passed away, he (conveniently?) avoided some pressing national issues that required his intervention. May Allah continue to help and support you and your likes. And please accept our condolence once again.
… when a former military president’s…
Very retrogressive budget! Time will tell Sir.
Mallam,whats the purpose of ur ill-intend analysis? To cause disaffection among the people and their leaders. Every discerning Nigerian knows what you are out to achieve but the almighty God will not allow you and ur likes to have ur way. Critizing every act of the Govt is not a patriotic act considering your history. Get used to a Niger Deltan being the president of Nigeria.
Good analysis sir but don’t forget to also inform us when government is getting it right.
Sir, do accept my heartfelt condolence. I pray God to continually grant you the fortitude to bear the exit of your beloved daughter. I earnestly pray that the National Assembly should drastically readjust the 2012 budget.
Mallam, walahi we’re waiting. Nigerians should know by now that what we have is worst than a military regime, our democracy as run by Jonathan and his cohorts in pdp and their private sector collaborators are not the messiahs that we’ve been waiting for. Nigerians are in trouble because this group will stop at nothing to appropriate more money for stealing, even at the cost of a revolt. We’re waiting …………
kudos el rufa’i..to conclude, GEJ is not just competant enough to rule this nation.
Don’t you think the 1.1trillion voted for security is part of the budget for quelling the pro subsidy riots, It shall be well with Nigeria.
Good analysis. But i wonder y CBN boss and finance minister, support oil subsidy removal? Pls sir, we need more analysis on this issue because its really complicate many nigerians.
Bashir Ogido
Accept my condolence sir. The problem we have in this country is that people like you are very few in the country at the moment.May you live long.
Business as usual, the breakdown of 2012 budget is more disturbing than anything i have seen so far…….Carry on Elrufai, we stand by you
As a bonafide member of the CPC and also a member of the renewal committee under your able chairmanship, I am exceptionally proud of your constant contribution to our national discourse and your valuable insight in dissecting our artificially grown national complications. However from this write-up of yours sir, I can see you also support the creation of the Sovereign Wealth Fund (which I am yet to fully grasp) as one of the depositories of government for future uses right? Pls sir, I want to understand what is the clear difference both in operational mechanisms and framework, between an SWF and foreign reserves which is still mismanaged at will by the federal government? What is the guarantee that it will not be depleted by either corruption, mismanagement or a global financial melt down? Thank you sir
Salam,
Am one of those who have been blindfolded before now that you are only proclaiming “a holier than thou attitude” adjudging from the demolishion/sales of land in FCT & BPE.
Moreso, that you decided to pitch tent with my mentor(Gen. Buhari) because you have been scheme out in the power equation of PDP.
Please do pardon me for my sense of judgement cos recent events have vindicated you. Permitt me to use this opportunity to condole you, your well-wishers & relatives over the Demise of your Daughter. May Allah (SWT) forgive her shortcomings & grant her Aljanat-firdaus.
Please don’t relent in your struggle cos we the younger generation are looking up to people like you.
Maasalam
Sir,
I do really appreciate you, and your concernfor this nation. I have always supported you, even when you were modernising FCT and even demolished my brother’s house.
People like you are supposed to pilot the affairs of this nation. I even appreciated you more when you aligned with my mentor, Buhari to save this nation from collapse. Unfortunately, people were too short-sighted not to see where GEJ may likely lead us to. I strongly analysed his one year leadership before the election, and concluded that he has no clue.
let us keep praying for this nation, and also be prepared for an inevitable revolution. It MUST surely come, especially now that subsidy is removed. Please keep educating the populace and keep the fight on. I am strongly by your side. We shall deliver this nation from the hands of these blood sucking demons.
Remain blessed. Yesmine, your daughter is surely in God’s paradise, asking God to give you the strength to fight on. I sincerely condole you for the earthly loss. Remain strong.
@dubem you are the sort of folks who opt for parochialism, ethnicity e.t.c to the detriment of the objective and biase free truth. everyone in nigeria today knows the kind of (seemingly, and unavoidable to say) rudderless, inept, insensitive, and tactless helmsmanship that we have at the top. it would be only honourable for, GEJ to step aside and allow more qualified personce the chance come 2011. otherwise… GOD HELP US.
What baffles me is why so many Nigerians are allergic to the truth, we must not forget that it’s only this truth that can set us free. Thanks Mr. El-rufai for this new part u have chosen, we pray for your likes to be touched by God to help us in the struggle for true Democracy. @Dubem, wake up from your slumber or maybe u are not even in/a Nigerian, ok……….. A parasite of the worthless govt in question. God has already blessed us with all we need to be USA, whatever is left in definitely in our own hands… God protect Nigeria!
Mallam,whats the purpose of ur ill-intend analysis? To cause disaffection among the people and their leaders. Every discerning Nigerian knows what you are out to achieve but the almighty God will not allow you and ur likes to have ur way. Critizing every act of the Govt is not a patriotic act considering your history. Get used to a Niger Deltan being the president of Nigeria.
@Dubem, U warm my heart with this. God bless u cos it is well said. I can’t add more. U said it all.
May almighty Allah preserve u live long sir,
I am sure Nigerians will know where to face in 2014
Sir,i must confess it’s a privilag 2hav read ur analysis. It’s a retrogression indeed! Hw I wish ur transformation points will be noted. May Allah continu 2guide and strenghten u and those who hav our gr8t country Nigeria @heart. Kudos!
Mallam I appreciate the leadership characters Ɣ☺u have demonstrated in the face of the upheavals that rocked our political scene. However I want to believe that all politicians R̶̲̥̅̊ the same,whether from the South,the North or East. Everything Ɣ☺u R̶̲̥̅̊ doing R̶̲̥̅̊ things political practitioners do before getting to the corridor of Power,therefore I want to ask Ɣ☺u as a man of insight to answer 2 questions;
1. Looking @ *NG* of today who do u think ȋ̝̊̅ڪ best suited to rule this Nation and why?
2. Asides the social media patronage that Ɣ☺u R̶̲̥̅̊ enjoying what other measures or structures have Ɣ☺u erected in all the geo-political zones in this country that will adress misplaced priority during electioneering in 2015.
Lastly I will like to inform Ɣ☺u Mallam Rufai that many of us R̶̲̥̅̊ fan of urs,we have watched Ɣ☺u on several programmes discussing the state of our Nation. My condolences and may the almighty God give Ɣ☺u the fortitude to bear your irreplaceable loss. However I feel Ɣ☺u should carry us along as it concerns your plans for politiking in this country not jus analysing it,make it known to us all now so dat it will stick on our memories
God bless the Federal Republic Of *NG*!!
my sincere condolence for the lost of your daughter. May Allah grants her Aljanna firdaus. Quite educative analysis. Pls keep it up!
It is good to criticize objectively but when I remember that when our people get to the top their language changes it breaks my heart. God bless Nigeria.
El Rufai,
Please accept my condolence on the demise of ur daughter. Please keep up the good work.
Objective analysis, Thank You so much sir, given the current situation in Nigeria,it’s only a Myopic youth that won’t be bothered by what’s going on, when the onus lies wit us to seek for change and not business as usual, God who sees the heart of man knows who is seeking God’s intervention, wit this information, i think our destiny as a nation lies in our hands, what we do wit it is solely up to us!! I really admired ur position during d fuel Subsidy drama, you are really a force to reckon with,thumbs up for you sir!!
this is not fair, there is no way d president’s decision can favour everybody. Many has come & gone, nothing was done. many wil still come & go, things wil remain d same, unless we stop being selfish & be transform within our selves, things wil never change
oga el-rufai. u are a master piece of infalible insight in matters that cut across all facet of endeavors. ur practical disection of the inadquacies containd in the budget is to say the least educationaly renovating. may u increase from strength to strength, wisdom to wisdom, caurage to caurage. u are the bam……..
Haba El-Rufa’i, do you expect the masses to so soon forget your attrocities as the most wicked, selfish and sadistic human being ever? You think you will charm us to forget how you chased the poor out of their jobs and houses; and thereafter fraudulently took over the organizations and properties with your cohorts? Did you forget when you enjoyed setting fire on food items and other materials worth billions of naira putting many in agony across the country? Because of your cruelty you insisted that such goods should not be even distributed to the teeming masses in the country or outside as against the suggestion of other humane ministers and even the President. I am confident that if not for Almighty ALLAH saving us that you are not in the corridors of power presently, you would have been arrogantly and mercilessly at forefront insisting that a liter of petrol must be above (N300 three hundred Naira). Indeed we shall rather remain ever under the present government than to be governed by any where you are even an adviser. In fact you are a SMALL HITLER and we pray that may Almighty ALLAH nip you forever for humanity to survive
Pl accept my condolance you are d man we like you mush.
Mallam thank u & God bless u.Nigerian are getting wiser by the day.GEJ,has lost focused,he was doing the job he did not prepared for, but was forced on him & his predecessor by some past leader to cover their past misdeed.God save Nigeria.Please accept my condolence sir.
My condolences Sir, Thanks for this analysis u are d best. I read were u said u cannot serve as a minister again but we need u in governance.
Mallam accept my condolence on the demise of ur daughter. Let us face the fact when u were enjoying the national cake with Obasanjo, nothing was wrong with Nigeria and the way it was governed now u come out and preach sanity to us. If given the opportunity you will do worse than the present administration. We cannot be fooled anymore. Spend your time on mote on more valuable things rather than criticising the government you were once part of.
Malam, I will sit on the fence with regard to ur analysis. Quite frankly u have spoken well enough.I am one of those who believed this new administration is taking us to the middle of no where.However, not every policies made by it is totally condemable as u have pointed. I will take u up in d line of the YouWin program.Although u may say d creation of 100,000 jobs in 3years in nothin compared to 25m jobless youths.I will add that,if this is actually realiseable,it is worth commending.Remembr,Rome wasn’t built in a day! And to say dat the process of selection is not outlined is falsehood.I am one of those selected,though not for the grant yet,but doing the training process under-gone,I tell you nothin can be better.I only hope the final process will be done d same way the first was done.This doesn’t mean I support this administration hook line nd sinker.I feel pained wen I see pple wallowing the street begging for food nd jobs with all our endowment in the country.Our govt is not doin things right.Our recurrent exp is shamful to tell a foreign friend about.Few pple steal our funds and many re made to suffer for it.One politician wil steal 20b nd he wud on a worst scenerio go to jail for 3months.A poor man will steal a mobile phone,which he intend to sell so dat he can eat(since he had no option) will be arrest nd will spend min of 2yrs imprisonment.That is if he is not left to die there.I am not advocating that stealing is right bcos I will never do such.But wat can this people do when they have no means of livelihood?Which way Nigeria? Why re WE doin this to the masses?Why do we forget that someday,we wud all leave this crooked world without anythin.Its sad! I av travelled far nd wide and I can’t help but to shake my head for our country.We have a lot,yet we suffer the most.The removal of fuel subsidy by this administration was the height of it all.Not this time Mr. President. Right things must b done at the right time.We av lost trust,hope nd confidence in govt. To Mallam El-Rufai, u re not left out of this too.I challenge you to tell the world what you did while in OBJ’s govt too. We never rily witnessed any change that affectd indepth the live of the common man.During this admin.,fuel subsidy was removed abt 2-3times.Mallam,wat did you do?what advice did you give?Did u even challenge that govt atall?I bet u didn’t bcos u were part of it.Am in my mid 30s.I avnt seen any govt that has meant well enough for us.Our many of our govt official have all their family in this country?Perhaps 0.25%. That is even if atall! I will leave you all with this “The future will have no mercy on those men who posses the exceptional privilege of speaking the word of truth to their oppressors.But who av rather seek refuge in form of mute indifference,and sometimes of cold complicity” I have said mine. Wish there is a better avenue than this. All glory to God that I av a job,no matter how little I get paid.I av one.Millions of people don’t av any! Millions of Nigerians die of hunger. A few persons steal the money yet sit nd decide policies dat impoverish d masses more. Pls take a cue from Obama.He wud rather die dan see the poor people of America suffer.Thats d expression always on his face. God will judge everyone of us!
On the YOUWIN program, I believe the criteria is set as a good proposal would enable one get the grant but on its sustainance, I think It is an issue. The Governemnt rather than give grant it should be considered as loan which should be paid back so that more entreprenuers can and will be able to access it. Let us still see the outcome of the shortlisting exercise to know how sincere the government with respect to this program.