Segun Sango
1 January 2009
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Lagos — FOR the poor working masses, as usual, there is nothing to cheer at the 2009 budget presented by President Umaru Musa Yar'Adua.
The woe of poor Nigerians has in fact been compounded by the global economic meltdown which has expectedly taken its toll on the oil revenue which accounts for about 98 per cent of the foreign earnings and over 80 per cent of annual revenue.
Sadly, when there was a boom which saw the price of crude oil reach the all time high of $147 in July, there was no fundamental improvement in terms of living standards and infrastructural development.
Resources which ought to have been spent to develop infrastructure and also effect improvement in masses living standards were simply looted by the capitalist elites, whose main incomes come not mainly from industry and agriculture like their counterparts elsewhere, but from primitive looting of crude oil wealth.
Underscoring the misfortune that has blighted the Nigerian economy in the coming period the oil is now sold below the proposed budget benchmark of $45. On the basis of this benchmark, the 2009 Budget has had an all time deficit of N1.09 trillion which already is a big pain in the neck. Yar'Adua did not state in his speech the exchange rate used for the budget. But some arithmetic puts the budget estimates at N117 to a dollar, whereas the naira is on free-fall against the dollar which saw it shedding about N15 in less than two weeks.
At present the exchange rate is above N130 to a dollar and with the continued slide in the price of crude oil, the naira will most likely continue to depreciate. Therefore, both the budget benchmark and exchange rate are too optimistic.
Though, Yar'Adua did not make such categorical statement, the government will tend to squeeze the poor masses and workers that did not benefit from the boom to pay for offsetting economic slump with increased taxes and neo-liberal attacks that will make them pay more for education, health care, self power generation as well as goods and service.
Labour must be prepared to mobilise workers, youths and the poor in the struggle against all neo-liberal attacks and specifically fight that public resources be really committed to socially-beneficial programmes like housing schemes, quality health care and education for all, stable and affordable water and electricity services, etc.
However, in his budget speech that is laced with half-truths and sweet-talks, Yar'Adua made futile attempt to give the false impression that all is well with Nigeria's economy. Due to the prevailing global capitalist economic meltdown, about two-thirds of the total revenue from crude oil exports has presently disappeared, no thanks to the dramatic collapse of oil price internationally. Yet the President in a very laughable manner still lives in self-delusion. Hear him: "Notwithstanding the global downturn, Nigeria's economic growth remains on track"!
Yar'Adua said that the 2009 Budget provides 91 per cent of the capital votes to five key priority sectors which include critical infrastructure, human capital development, agriculture and water resources, Niger Delta and security. On the surface, this appears cheering. But there is nothing to celebrate; emphasizing 91 per cent is just playing up figure to deceive. In reality, compared to the 2008 budget there is reduction in the allocations to the sectors identified by Yar'Adua as critical to his fabled Seven-Point Agenda.
For instance, education, health and transport have seen the capital components of their allocation reduced from N47.8bn, N49.37bn and N94.36bn respectively in the 2008 budget to N33.6bn, N39.6bn and N35.2bn respectively in the 2009 proposed budget. Also, the capital allocation to the Niger Delta has plummeted from N84bn to N77.12bn shared between the newly created Niger Delta Ministry and Niger Delta Development Commission. Worst still, there is zero allocation to the housing sector!
This informs why Yar'Adua fraudulently compared the 2009 capital allocation to that of 2007, instead of 2008. He had gleefully stated: "More crucially, the capital vote of N796.7 billion is significantly higher than the actual capital expenditure of N491billion in 2007".
But while there is reduction in capital allocations, the total budget put at N2.87trillion "represents a 4.45 per cent increase over the N2.748trillion initially appropriated in 2008 and an 8.42 per cent increase over the 2008 Amended Budget's level of expenditure of N2.647trillion". This has raised question on which areas or items the differential increase in the budget has been allocated.
This is more so, when the government has created an impression of austerity measures with the suspension of investment in non-priority outlays like acquisition of new vehicles and construction and furnishings of offices as well as reduction in the cost of gallivanting within and outside the country.
This is though a tokenist measure in the face of gargantuan economic downturn. A critical look at the budget, however, reveals that the beneficiaries of the budget increase include the politicians in the Presidency and legislature which have seen 10 per cent rise in their emoluments (Vanguard December 4, 2008).
While government expects people to tighten their belts, it has increased the pay package of its functionaries who already loot the treasury on daily basis. Thus, Labour and pro-masses organisations must not allow themselves to be blackmailed by the declined oil revenue, rather they should immediately raise the demand for a living wage at all levels for workers and opposition to retrenchment to cushion effects against the effects of the global economic meltdown.
What is sauce for the goose is also sauce for the gander. More so, the poor masses that did not enjoy anything from the boom must not be forced to pay for financing economic slump with increase in VAT and other taxes.
With the increase in the budget it should have been expected what to be increased is the capital votes for the enormous developmental challenges facing the country, more so when by government own admission the 2008 budget could only achieve about 40 per cent implementation.
But for this self-serving government run on neo-liberal capitalist principle the responsibility of economic development and improved living standard has been ceded to the private sector through public private initiative, leaving huge public resources for looting and over-bloated pay for the politicians. Yar'Adua has said that, "private initiatives are expected to complement the Government's interventions in key areas of our economy with the overarching objective of making a positive, tangible and enduring difference to the life of the ordinary Nigerian".
But the meager capital allocations suggest that the government expects the private sector to play the lead role. Shamsudeen Usman, the Minister of Finance has been categorical in this regards when he said that the private sector was a "more preferred" method of financing infrastructure provision (ThisDay October 24).
The United Nations Conference on Trade and Development (UNCTAD) had in a report in 2007 expressed the utter incapacity of the private sector as the driver of development. The reports states inter alia: "The widespread market failures, along with the huge financial resources involved in implementing the earlier stages of development imply that private sector cannot be expected to play lead role" (BBC September 27, 2007).
But the Yar'Adua government has thought otherwise even at a period when advanced capitalist economies are injecting huge funds into the economy with a view to avoid deep recession. Yet there is capitalist logic in what is happening now. The imperialist countries are moving heaven and earth to try to stabilize their economies, but even in these countries this is at the expense of working peoples' living standards today and the likelihood of inflation and spending cuts tomorrow.
In countries like Nigeria more crucially is the question on whether the private sector will raise fund to finance infrastructure in the face of the rampaging global financial meltdown. Already, the world's big banks have cut down the credit lines to Nigerian banks. But even when the oil price was high before this worldwide economic crisis started the Nigerian ruling class refused to invest in Nigeria. The ruling elite's long established looting policy reflects Nigerian capitalism's inability to develop in a world economy dominated by the imperialist powers.
This is why Keynesianism, the bourgeois alternative to neo-liberalism, will not fundamentally develop Nigeria with its policies of state support for capitalism.
Determined to help the private sector vampires out of the credit crunch, the Yar'Adua government is proposing to raise $500 million in naira denominated bonds, from the international capital market. This has shown the so-called private sector's lack of both will and financial capacity to develop infrastructure.
The government is therefore providing them with funds to finance infrastructure and make huge profit from the users; while the Nigerian working masses will be saddled with new international debts. The Yar'Adua government, like its predecessors, is in power to gratify corporate profit interest at the expense of poor working masses. It is the same way government pays huge interest from public resources to banks under the guise of mop-up of excess liquidity.
Whereas the so-called excess liquidity is the idle funds banks refuse to lend to the real sector and left in vaults knowing fully well that it would yield a huge return when government comes for them. However, it should be stressed that refusal of banks to provide credit facility to the real sector actually reflects the depth of socio-economic crisis in Nigeria. In the face of pervasive infrastructure decay and attendant high cost of doing business, to the banks the risk of granting loan to the real sector is unbearable.
The payment for the banks' idle funds constitutes a huge part of the domestic debt stock. Already N283.6bn budgeted for debt service in 2009 appropriation bill is more than the combined capital votes for power (N88.5bn), education (N33.6bn), health (N39.6bn) and transportation, including railway (N35.2bn).
This fact alone shows the utter bankruptcy of capitalism prioritising debt repayment to both international and local finance speculators at the expense of critical economic and human needs! Just less than three years ago, a whopping sum of $12.4bn was paid to international capitalist vampires under the guise of debt repayment and with a false promise of a debt free Nigeria.
Mr. Sango, a social activist, writes from Lagos.
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