The N28.7 trillion 2024 Appropriation Bill was recently signed into law by President Bola Tinubu. The budget was N1.2 trillion higher than what the President proposed to a joint session of the National Assembly on November 29, 2023. The ‘Budget of Renewed Hope’ will be used to complete critical infrastructure projects that will positively impact on the economy and improve the living condition of Nigerians.
According to the President, the budget will also address job-rich economic growth, macroeconomic stability, a better investment environment, enhanced human capital development, poverty reduction and greater access to social security.
The aggregate expenditure of the budget shows that statutory transfers received N1.74 trillion, recurrent expenditure, N8.76 trillion, capital expenditure stands at N9.9 trillion, debt servicing at N8.25 trillion, while gross domestic product (GDP) was pegged at 3.88 per cent. With effective implementation, the budget can achieve some of its objectives.
The key components of the budget include oil benchmark of $77.96 per barrel, daily oil production of 1.78 million barrels per day, and an exchange rate of N750/$. Other parameters of the Appropriation Act include an inflation rate of 21.4 per cent. But the inflation rate for the month of November 2023 was 28.2 per cent, and projected to hit 30 per cent for the month of December 2023. The budget deficit of N9.18 trillion is 3.88 per cent of the GDP, and lower than the N13.78 trillion deficit recorded in the 2023 financial year. It also represents 6.11 per cent of Nigeria’s GDP. This huge deficit will be financed by new borrowing, totalling N7.83 trillion, while N298.49 billion is expected from privatisation proceeds, and N1.05 trillion drawdown on multilateral and bilateral loans.
Unfortunately, the National Assembly was allocated N344.85 billion, representing 74.23 per cent, the highest allocation since 1999. This brings the total budgetary allocation to the National Assembly to N3.132 trillion in 25 years. The initial allocation to the NASS in the 2024 budget proposal presented by President Tinubu in November 2023 was N197.93 billion. The N344.85 billion was insensitive, especially at this time that the economy is wobbling, many factories shutting down and many businesses grappling with high cost of raw materials and job losses. On sectoral allocations, defence and security got the lion’s share of N3.25 trillion. This represents 46.39 per cent above what was allocated to the sector in the 2023 Appropriation Act. Education got N2.18 trillion, a 101.85 per cent more than what it received in the 2023 budget. Of this amount, N1.23 billion is voted for the Federal Ministry of Education and its agencies, N251.47 billion for the Universal Basic Education Commission (UBEC), and N700 billon as transfers to Tertiary Education Trust Fund (TETFUND), while the Students Loan Scheme received N50 billion.
Health got N1.33 trillion, of which N1.07 trillion has been provisioned for the Federal Ministry of Health and its agencies, N137.21 billion for GAVI/immunization funds, including counterpart funding for donor-support programmes, and N125.74 billion as transfers to basic healthcare provision fund; N1.32billion is earmarked for the provision of infrastructure in the power sector, transportation, water resources, aviation, works and housing, while N534 billion is budgeted for social investments and poverty reduction programmes. Government will generate internally generated revenue (IGR) of N10.4 trillion in 2024 from taxes, while targeting public-private partnership to finance critical sectors such as roads. The budget should improve the economy and the living condition of Nigerians, with priority attention to good governance, inclusive growth, cost of governance and inflation. It should create jobs and curb multiple taxation. Although experts have faulted some of the assumptions on which the budget was anchored, for instance, the $77.96 oil price per barrel and a projected oil production of 1.78mbpd, nonetheless, the government should strictly monitor its implementation.
Let the President expand the production base, reduce spending on food importation and stimulate economic growth. Government should lay emphasis on agriculture and other non-oil sectors. Our refineries should be made to work so that we depend less on imported petroleum products. To stimulate industrial growth, the power sector must be prioritized. The volatility in the exchange rate market may hamper the implementation of the budget because rising exchange rate is bound to increase the cost of servicing external loans and further widen the budget deficit.
The financing of the N9.18 trillion deficit will affect the cost of capital for companies and the stock market. Unlike past budgets, where the amounts voted for new borrowings were evenly split, in the 2024 expenditure plan, domestic borrowing will take a bigger vote of N6.1 trillion out of N7.8 trillion, representing about 78 per cent of expected new borrowings. The productive base of the economy must also be protected.
The government can explore more opportunities for concessional projects capable of repaying the huge loans. This will help boost forex reserves and stabilize the exchange rate. The ‘Renewed Hope’ agenda will be a ruse without proper implementation of the budget. For many years, the federal budgets have not recorded more than 40 per cent implementation due to paucity of funds or lack of proper monitoring. Let the 2024 budget be different. The government should put in place effective mechanisms that will track the implementation of the budget in the ministries, departments and agencies (MDAs).