Home » News » [OPINION] Nigerian Budget – Evaluation, Analysis And Proposal By Emeka Richard

[OPINION] Nigerian Budget – Evaluation, Analysis And Proposal By Emeka Richard


With the eventual presentation of the 2016 budget to the House of Representatives and the Senate, several important truths came to the surface. These truths are intrinsically important and critical to the implementation of the budget.

I was thus compelled to digest them, and express succinct views of their implications.

Macroeconomic factors for planning, microeconomic factors for implementation

The dominating rhetoric that accompanied the 2016 budget from its birth was that of “Job Creation”. This rhetoric seems two sided in itself. For one, it is truly consistent with the major challenge facing our nation today, in another vein; it seems to be the best by-line to keep Nigerians as quietly expectant as possible. Whatever the true rationale behind the adoption of the job creation mantra, I sincerely do hope it’s the former.

In planning a national budget, the generally acceptable standard is to use available Macroeconomic data as guide posts. Although in countries with excellent data harvesting culture, even microeconomic data is available for use and is usually considered as well. However in the case of Nigeria being the country that it is, we must make do with the macroeconomic data that we have at our disposal. I personally have strong faith in the authenticity of the 2016 budget largely due to the quality of personnel employed in its planning. In tandem, the adoption of the Zero-based budgeting model showed economic prudence. My worry however lies in the path to implementation.

To be able to implement any budget to an appreciable percentage, the largest part of our focus must move from the macroeconomic to micro-economic metrics. When planning a national budget, the sentence “we have 50% unemployment among youths” is easy to grasp. However, during the phase of implementing budget plans built around that sentence, numerous important reality questions can easily be extracted from that simple policy sentence, some possible ones include;

What fraction of these youths is educated? ; What fraction already has skills but lack jobs? ; What fractions need both skills training and access to jobs or business capital?; What is the concise demographic dynamics of these youths (15-24 rural, 25-35 urban etc)?

Once a simple guiding statement during the policy planning phase, that singular statement – “we have 50% unemployment among youths” – begins to rear hidden nodes that would require commitment and meticulous innovation to navigate or else they could easily serve as the little foxes that spoil the vine.

From day one of the implementation of our 2016 budget, we must almost completely let go of the umbrella figures we used to plan and focus deeply on micro-economic data. Those small figures that will make our policy benefits reach out to the multitude of rural youthful farmer’s working day in day out to put food on our tables, to the indigenes of our resource rich communities who sorely bear the brunt of mineral resources exploration all over the country and to numerous other categories of Nigerians. It is often almost impossible to directly touch the lives of these people when you quote “60% of aqua-culture farmers across Nigeria are under-producing due to lack of tools” but when the statement becomes “fifteen thousand fish farmers in Bayelsa State will greatly increase their monthly production if given proper aquaculture training and storage facilities” the path to implementation drastically changes.

Nigeria in the last decade has hardly witnessed up to 50% implementation of annual budget provisions. For this administration, the key to breaking this trend will lie in a sharp change of Perspective.

The entrepreneurship model isn’t guaranteed, it doesn’t work everywhere, it requires full careful handling.

Indeed, there are several men whose importance to Nigeria’s future at least in the next four years cannot be over stated; The President, the vice president, the Minister of Labor and all the governors. These men for all things physical have nothing in common. However, in the recent months they seem to be harmoniously singing a three part harmony of the same song: “We need Entrepreneurship to boost the local economy”. A song that seems to have found favor among members of the Nigerian ruling class and is currently being chorused everywhere.

I must however sound a note of warning; Adopting the idea of Boosting the local economy through entrepreneurship, is not a genie in a lamp. It won’t automatically grant us all our fiscal and socio-economic wishes Entrepreneurship itself is an economic model. It does not come with a guaranty and it does not work everywhere.

Nigeria needs more entrepreneurs at these critical economic times. That in itself is a self-evident truth. Nevertheless we must understand and dutifully develop the kind of entrepreneurship that will excel in the Nigerian market and seek to intelligently deploy that model without distraction. Entrepreneurship has variations and though all are good, not all variations work for all societies. Two simple and relatable forms are given below;

The Quantity Model: In the early days of the rise of China, the nation had one curse and one blessing – A massive population. With no “golden geese” natural resource, it was almost impossible to feed all the mouths they had but they quickly realized one sound truth, they had enough hands to do almost anything for the whole world. When they started planting rice, they planted enough for as many customers who would come from all over the world. When they went into technology manufacturing, they designed their factories to produce for the world. In their pharmaceuticals, they studied local diseases and any foreign infirmity they could handle. Today Chinese pharma-products help the world. That has always been the Chinese model of entrepreneurship. They developed around the purpose mantra: Whatever we do must have the potential for global value. That’s why for a while they intentionally devalued their currency against that dollar. That way they could make FOREX profits from even the smallest international trade.

The Quantity Model: Israel is a small country. No matter how hard Israeli leaders wish or pray, Israel can never be a big nation. The early leaders of this nation realized this truth from the early days and strove to build the economy around this reality. Whatever the Israeli people did, they did to conquer global standards. When they began expanding their agricultural practice (in one of the worst places on earth to practice agriculture) the Jewish government pushed the limits of science and technology to be able to feed their nation. As they kept pushing for survival using all available technology, they began to open up new horizons of agro-allied technology. Soon they moved from survival mode to leadership role in Agricultural science and Engineering. Today, anyone who knows anything about the global agricultural market knows Israeli products hardly ever come second. Haven witnessed the success in Agriculture, they adopted the same quality model to technology development as a consequence, Israeli engineers and scientist have contributed immensely to the development of the mobile phone technology the world uses today, the fast processor technology available in most personal computers originated in Israeli, all of the worlds vehicular camera technology can be traced to Israel as well as much of today’s medical technology innovation. Before they ever set out, they knew that unlike China, they couldn’t produce for the whole world, so they decided to make products that would lead the world.

Several other Entrepreneurship economic models can be deduced by studying the success of others societies.

In the end, one thing is of sovereign importance; The Entrepreneurship model must be built around a foundational purpose. A purpose that is sensibly consistent with our available resources, population and socio-economic realities.

Do we want to make products for the world, for Africa, West Africa or just for ourselves? Will the Nigerian Entrepreneurship model be built in line with the Quality Model, Quantity Model, Efficiency Model or Some other Nigeria-centric model?

This and other allied intelligent questions will lead us to the core of what we should do. Setting up an entrepreneurial economy isn’t cheap. It requires functional institutions, healthy markets, Skills transfer, and prime process flows. These things are expensive. If we can’t do it completely right, let’s not do it at all. The financial cost alone will break us.

As a logical consequence of the realistic premises above, the choice of Nigeria’s leaders to adopt an entrepreneurship driven economy in 2016 should be followed by an intermediate process of “Purpose Formation”. This purpose will accordingly serve to guide us thorough out the phase of implementation. It will inform us on how to create new or expand existing economic channels, it will help orient our perspective on the national, regional and global economy and direct us on which part of the value chain we can shoehorn ourselves into and gradually begin to expand.

Creating a flat and favourable surface for all to operate

To say that this is a good time for Nigerian entrepreneurs may seem paradoxical considering the current state of our economic health – but it is indeed true. With programs such as the NITDA-OIIE entrepreneurship grant for NYSC members, the Bank of Industry’s current drive to boost small and medium enterprises with loans and mentorship, and the commitment of government at both federal and state levels to mint new entrepreneurs, the grass is indeed becoming green on this side. However, I believe we should be vigilant so as not to fall into a recursive pattern of un-impactful growth. In more comprehensive terms, I believe Nigerian leaders and business stakeholders should not be so concerned about spinning out new entrepreneurs that we forget to pay attention to the millions of entrepreneurs and MSME operators that already exist and have been working hard for a long time to power our local economy.

As an ardent follower of the Nigerian business space (formal and informal), I have noticed that so much of the schemes, programs and projects the government is presently turning out is focused on new entrepreneurs. This is a good move – but if by pursuing this policy, we make an already large and thriving entrepreneurship base the opportunity cost of birthing new entrants into the MSME space, then that cost is large and unnecessary.

Our current government which I believe is made up of so many intelligent men and women must endeavor to look both ways at the same time. As we seek to revive our economy through job creation, skills acquisition and entrepreneurship stimulation, we should help the new ones stand; while at the same time aiding existing businesses survive and expand.

For every NYSC member, for every government sponsored participant in a skills acquisition program, and indeed for every entrepreneur seeking government funds to succeed, there are a thousand autonomous, hardworking and innovative entrepreneurs and business people helping to develop society independent of government aid and who are constantly asking a simple question:

1. If I work hard to raise my capital, and I innovatively design a functional business model, will I find within the Nigerian business space all the necessary elements that my business needs to start, survive and expand?… 2. Will I find the right amount of economic stability and pro-business ambience that I need to fulfill my entrepreneurial potential?

This is the cardiac question that the multitudes of existing Independent, innovative and hardworking entrepreneurs are throwing at the Nigerian leadership and all stakeholders of the “Nigerian 2016 Entrepreneurship agenda”.

No matter how large the government allocation to labor and job creation is, it will be a drop in the ocean if all Nigerian entrepreneurs submitted applications demanding a share for their businesses. In the light of this truth, while the Nigerian leadership puts in effort to tenderly care for the nascent entrepreneurs they plan to create, let good attention also be paid to those entrepreneurs who have been working hard and navigating uncharted economic waters.

For these business heroes, I pray our leaders to strive to make the surface upon which they stand flat and favorable.

Intra-national Commerce

Commerce is at the heart of humanity. Its existence predates the invention of all financial tenders and economic instruments and it serves as the strongest motivation for invention and innovation. 2016 will be a critical year in Nigeria’s economic history and for us to fully maximize the potential of this pivotal year; we must make 2016 a year of intra-national commerce.

As the government drives to diversify the Nigerian economy and make it more resistant to external shocks, I believe our first point of call should be opening up our local markets to all our local merchants. Innovations in the south should be able to quickly and safely reach shelves in the east. Farm produce and other agro-allied products from the north should be able to transition to final food items or consumables all over the country as quickly as possible.

2016 should be the year, a “Map of Commerce and Trade” is finally developed showing local and foreign investors, what and how goods and services flow across the country and this flow must be with as little friction as possible. A strong intra-national commerce situation is one of the brightest jewels that serve to increase the attractiveness of a country to foreign investors.

As we develop our national infrastructure, which fortunately is one of the biggest targets of the current administration, priority should be given to infrastructure that promotes trade within Nigeria and amongst Nigerians. Road networks, business space provision, pro-business policy formation, whatever it will take really should be done quickly and intelligently to foster commerce within our own borders. This is one of the smartest way to quickly grow real GDP (another way is to push for FDI – this latter method has never really helped us).

The frequent and often macabre clashes between the Fulani herdsmen and their host communities are an example of a point where intra-national commerce is failing within the country. This prevailing negative issue should be resolved immediately using all instruments of policy, conflict resolution and economic innovation at our disposal. The allocation of designated plots of land as temporary transitional grazing points, may be one way to tackle this challenge, however the possible solutions are limitless.

Within the country, regional markets and economic clusters should be revived or setup to promote local craft and informal manufacturing. My brief exposure to international trade in Lagos, Nigeria; Cotonou and other areas of Benin Republic helped me understand that markets survive based on their reputation.

Boosting the local economy does not rise and fall on the provisions of lines of credit. Occasionally, the key lies in implementing a meta-idea that will serve as a passive incubator for other independent ideas to materialize. For example, a recent study showed that the famous Niagara Falls in the USA attracts around twenty million visitors a year. Nigeria’s Owu falls in Owu-Akajola community of Kwara state is an amazing natural edifice which is often described as the highest waterfall in Africa. Sadly though, our Owu falls can hardly boast of a thousand visitors a year. The simple act of getting to the actual falls in the first place is an almost impossible task – the roads are largely inaccessible by vehicle and the local community is bitingly underdeveloped. Upgrading such natural assets however, holds the potential of opening up the market of Owu-Akajola’s crafts, farm produce and general commodities to visitors from all over the country and beyond; Consequently helping to expand intra-national trade, and silently fetching the country significant trickles of foreign exchange (indeed it is often the trickles of revenue that make some nations rich and others poor).

To significantly stabilize and expand the economy, the current administration may need to avoid chasing everything at the same time – this often leads to catching nothing. The current Leadership of Nigeria will need to device instruments of stimulation in different sectors of the economy. These instruments of stimulation may assume several forms – opening new markets, expanding existing ones, Developing centers of attraction, subsidizing certain areas of the Agricultural value chain, expanding the docking capabilities of local Nigerian ports and improving logistics and fulfillment infrastructure, Partnering private organizations to expand Nigeria’s capability in Materials Science and Materials Engineering etc.

The key thing however, is not to neglect any entity that can serve as a stimulant for local commerce – whether tangible or intangible. Often it is the simpler economic stimulants that create the most impact.

Involving the Ivory Towers

The rhetoric that most Nigerian tertiary institutions are below global par and are underperforming in key areas is mainstay. It doesn’t need to be restated. One silent and often latent truth however is that a lot of improvements have taken place over the last decade. Many institutions have taken almost all of their administrative processes into digital format and have increased their deliverables across board. Nigerian tertiary institutions have also witnessed an increase in infrastructural capacity and in the quantity and quality of academic staff. Even as equally commendable is the work of the Nigerian Universities Commission aimed at ensuring uniform adherence to quality standards across intuitions. With the ready availability and access of ICT facilities in most Nigerian tertiary Institutions, excellence has become more of a matter of choices made by individual students than a matter of lack of privilege. We are today producing better graduates than we have ever produced before. As this is the case, the excellence of our best and brightest youths, needs to put to the service of their fatherland.

Without much ado or irrelevant verbosity, the fundamental message here is: our leaders must relentlessly find ways to involve the best and brightest of our youth. If they want a better country for themselves, both now and in the future, they must be involved. We must not necessarily wait for them to come, if it called for the leadership must go to them.

Some of the answers we direly seek lie in their fallowed minds.