ECONOMY: The Director-General, Manufacturers Association of Nigeria, MAN, Mr Segun Ajayi-Kadir, said: “Debt servicing and recurrent expenditures amount to N7.15 trillion or nearly 74 per cent of the planned total budget of N9.78 trillion. The provision for debt servicing is more than the allocation to capital expenditure, while recurrent expenditure it twice the size of capital expenditure. This is worrisome.
“I think a major concern here is whether the planned N2.05 trillion capital expenditure is adequate to deal with the yearning gap in production. Will it give an adequate fillip to the government’s economic diversification objective, as well as improved productivity? If the answer is no, then the manufacturing sector may be negatively impacted and its competitiveness impaired, especially as we inch towards the implementation stage of a continental free trade agreement.
“There is no debate about the need to grow the non-oil sector of the economy, especially manufacturing and the government has consistently made this a major focus in its economic policies. But the evident inability to consistently commit the requisite and indispensable resources has been a constraining factor.
The government needs to creatively manage the budget expenditure pattern to promote and support local production and competitiveness.’’
It will worsen already low infrastructure deficit- NASME President
Similarly, the President and Chairman, National Association of Small and Medium Enterprises (NASME), Prince Orimadegun Agboade said: “The proposed cut in capital expenditure in 2020 budget by the federal government will lead to failure to execute developmental projects, such as roads, rails, electricity, housing, and hospitals.
This proposed cut in the budget would worsen already low infrastructural deficit, which will negatively affect all aspects of life. The effect would also result in reduced productivity in the manufacturing sector.”
Also speaking, the National President, Nigerian Chamber of Commerce, Industries, Mines and Agriculture, NACCIMA, Hajiya Saratu Aliyu said: “Capital expenditure and investments are critical to economic growth and competitiveness. Besides reducing the cost of doing business in an economy, it also spurs economic activities and job creation.
Nigeria has always lagged behind the 4-8 per cent of Gross Domestic Product, GDP, required for healthy economic growth. Further reduction in this number would only forebode direr economic times in the future for Nigerians.”
It’s a reflection of fiscal challenges—LCCI
The Director-General, Lagos Chamber of Commerce and Industry, LCCI, Muda Yusuf said: “The scaling down of the capital budget in the 2020 fiscal year is a reflection of the serious fiscal challenges facing us as a nation. In the last few years, funding capital projects had been very difficult. It has also been increasingly difficult to meet revenue targets. I believe this is just a matter of facing the reality of the moment. It also underscores the challenges of fiscal viability that we need to begin to deal with. Some tough choices would have to be made if we must fix this problem. Recurrent expenditure is increasingly crowding out capital spending. It is not a good omen for the development of our infrastructure and the progress of the Nigerian economy.
HEALTH: ‘We won’t see any major improvement’
By Chioma Obinna
Speaking to Sunday Vanguard, National President of Nigerian Medical Association, NMA, Dr Francis Faduyile said the development may worsen the problems in the health sector.
He said:” It is rather unfortunate that we are having a budget that does not show any sign of addressing the problems Nigerians are facing daily. If the federal government is planning to reduce capital vote from 32 per cent to 22 per cent in the face of all the challenges, it shows that there is nothing to be happy about in the next year’s budget. We have a lot of deficits in terms of manpower, in terms of physical development, and in terms of equipment in the health sector. The Nigerian health sector is having a lot of problems in terms of our ability to do the necessary things to revamp the health sector. For example,
Nigeria cannot produce even the smallest quantity of any vaccine that is used for immunization. We need to know that many of our primary healthcare centres and tertiary institutions do not have the required equipment in place. I would not be surprised if the federal government continues to budget less than five per cent for the health sector. If we want to put salary under recurrent, which I think is good enough, we should also let the government know that they need to employ more health workers in our health institutions. What we have now is a lot of health institutions that are not properly being manned by physicians. I think the reduction of the capital vote to 17 per cent spells doom for this country and it shows that we are not going to expect any major improvement in the health sector and other areas.’’
AGRICULTURE: Stakeholders kick raise concerns about food security
By Gabriel Ewepu
Reacting to the development, the National Vice President, All Farmers Association of Nigeria, AFAN, Chief Daniel Okafor, said the move should be halted because of the grave impact it may have on food security.
Okafor, who also doubles as the National President, Potato Farmers Association of Nigeria, POFAN, said the government should rather think of increasing budgetary allocation to the agricultural sector.
He said: “The reduction of the 2020 budget would seriously impact negatively on the agricultural sector if the government goes on with it. The projects and programmes in the sector would not be executed and it would lead to food insecurity.
If they do that we will resist it, but I will advise the government not to reduce the budget because food security is the first goal in any country.”
Also speaking, the National Programme Coordinator, Association of Small-Scale Agro Producers In Nigeria, ASSAPIN, Adu Charles, cautioned the government not to go on with the decision.
He said: “Does the Nigerian government use its population projection for planning processes?
“Does the government bother to fulfil its commitment made in the African Union, AU, CAADP, and other bilateral and global commitments? If the answers to the questions are positive, why thinking of reducing the 2020 budget?
EDUCATION: Govt should seek means to fund education
By Elizabeth Uwandu
Speaking on the likely effect of the proposal on the education sector, Mass Communication scholar at the University of Lagos, Professor Ralph A. Akinfeleye, urged the government to have a rethink.
He said: “It is going to affect our economy, lifestyle and our purchasing power. It is going to negatively affect the education sector.
It appears to be an unequal exchange in terms of the policy. What is to be done is to reduce the salary of the lawmakers.
It will be good for the government to reconsider this proposal and make life easier for the citizens. When things get better, people would not even think of going to places like South Africa.
The government should seek other means of funding to revamp the education sector
There is a need to encourage philanthropists to invest in our economy, especially in education. Nigerians who have money should stop taking such money abroad. They should invest it in human and capital development.
Director of Quintessence, Mr Moses Ohiomokhare, said “Budgeting is a projection of what to expect in a New Year or any period. It is a guarded forecast. It depends on external and internal factors.
“When the budget is adjusted downwards in comparison to the previous plan, it is bound to affect distribution. Education is more about investment in people, not profit-making. Reducing capital vote means there would be less development of infrastructure.
INFRASTRUCTURE: FG’s housing programme may suffer neglect
By Kingsley Adegboye
Built environment professionals expressed mixed feelings over the proposed reduction in capital expenditure by the federal government in the 2020 budget.
While some believe the decision would lead to a reduction in capital vote across all sectors including the housing sector, others said the move would not encourage economic growth.
Managing Director and Chief Executive Officer, Propertygate Development and Investment Plc, Mr Adetokunbo Ajayi, said: “This may likely affect the government’s housing programme. I am however not in support of governments becoming housing merchants.
“That should be left for the private sector. The role of government should be the creation of enabling an environment for operators to thrive. The government should not be voting huge funds for direct housing construction. If the funds are available, they should be used to complement the weak mortgage finance in the country.
“Raising recurrent expenditure may not be a bad thing, as long as the basis for this is not frivolous. What we should be asking for are the details of these proposals to enable us to engage in meaningful citizens’ discourse.
“For instance, if an increase in recurrent expenditure entails paying rise for the workforce and employment of additional workforce in required areas, it will mean the enhancement of purchasing power to these groups.’’
FG’s decision’ ll discourage competition—Awobodu
However, President, Nigerian Institute of Building NIOB, Kunle Awobodu, said the move is a two-edged sword depending on how it affects the nation’s housing industry.
According to NIOB President:” Reduction in capital expenditure would not encourage economic growth. What would stimulate growth in the economy is a massive funding of housing construction which would, in turn, create job opportunities for Nigerians, thereby stimulating economic growth in the country.
“Rather than reducing capital expenditure as being proposed, the government should instead boost capital expenditure to stimulate the growth of the nation’s economy.
“The federal government should increase capital expenditure to stimulate activities in housing construction.’’Read Full Story