…As FG plans leaner budget of N8.6trn for 2019
Following Nigeria’s poor ranking for the second time in commitment towards reducing inequality in the country, BudgIT has called on the Federal Government to invest in its people with an aggressive investment in education, health, access to capital and growth poles that expand youth employment.
But the Federal Government has said despite considering a reduced N8.6 trillion budget proposal for 2019, against the N9.1 trillion approved by lawmakers for 2018, it would give priority to human capacity development, particularly on allocations to health, education, pensions and other benefits to retirees.
The Commitment to Reduce Inequality (CRI) Index, the second in the series, was recently released by Development Finance International (DFI) and Oxfam, which measures the commitment of governments to reduce the gap between the rich and the poor.
BudgIT in Lagos during the week said Nigeria has the unenviable distinction of being at the bottom of the Index for the second year running, noting that more investments is needed in sectors that improve on human development capacity of its people and bridge the gap between the haves and the have-nots.
In view of this, BudgIT called on the Government to increase its commitments in policy impact and actions by improving efforts on progressive spending, taxation, and workers’ pay and protection as a matter of urgency in order to move more Nigerians out of the poverty line.
The group said, “We affirm that Nigeria needs to invest in its people with an aggressive investment in education, health, access to capital and growth poles that expand youth employment. We also take note that on the World Bank Human Capital Index, Nigeria ranked 152 out of 157 countries.
“Beyond the current social investment programmes, President Buhari should forward stronger action in tackling inequality especially systemic long-term investments. We believe this should a major issue towards the 2019 general elections”.
BudgIT added that Nigeria’s social spending (on health, education and social protection) is shamefully low. As seen in the index, the scale of economic inequality has reached extreme levels as evidenced in the daily struggles of the majority of the population and as well with the recent report that Nigeria recently overtook India as the “poverty capital of the world.”
The index, which is based on a new database of indicators, now covering 157 countries, which measures government action on social spending, tax and labour rights – three areas are found to be critical in reducing the gap.
Just recently, Nigeria was ranked 157th out of 157 which shows that the country is currently spending way too low on key sectors such as health, education and social protection.
Nigeria also ranks very low, 104th, on the progressivity of her taxation policy, a stagnated minimum wage, and consistent abuse of labor rights. The CRI index shows that in the past year, Nigeria has seen an increase in the number of labor rights’ violations. The minimum wage has not increased since 2011, put at 55 cents per day.
Meanwhile, the Minister of Budget and National Planning, Udoma Udoma, on Wednesday in Abuja, said the Federal Government plans to submit a leaner 2019 budget to the National Assembly before the end of November.
He disclosed this at the consultative forum on the medium term expenditure framework (MTEF) and fiscal strategy paper (FSP) 2019-2021.
The Minister noted that the government plans to cut down the level of borrowing in the budget from N1.6 trillion in 2018 to N1.5 trillion, while the deficit component would be reduced from N1.9 trillion in 2018 to N1.6 trillion.
Consequently, he said allocation for pensions and gratuities would be increased from N241 billion in 2018 to N527 billion next year, to assure workers of their benefits.
Udoma said one per cent of consolidated revenue fund (about N51 billion) would be set aside for basic healthcare fund as well as provision of counterpart funding for immunisation of children.
This will be in line with the requirement of the National Health Act 2014.
On basic assumptions underlining the proposed budget, the minister said government was looking at a 2.3 million barrel per day oil production capacity (including condensate), reduced from about 2.4 million bpd target proposed in the National Economic Recovery & Growth Plan (NERGP).
Despite the recent oil output drop to about 1.9 million barrels a day, Udoma said government was optimistic the 2.3 million barrels a day target was achievable with production now rising to about 2.15 million barrels a day and new oil productions being put into play.
Although a $50 per barrel oil price benchmark was proposed in the ERGP, he said with a significant rise in the price above $80 per barrel currently, government has proposed a $60 a barrel oil price for the budget.
He said N305 was proposed as exchange rate to the dollar, with government working to keep inflation down after slight increases in the last two months on the heels of 18 months consecutive decline.
The projected target gross domestic product (GDP) growth rate for the budget was put at 3.01 per cent, reduced from 4.5 per cent in the ERGP; 3.6 per cent in 2020 and 3.9 per cent in 2021.
“Growth is expected to increase from 0.8 per cent in 2017 to 2.1 per cent this year and 3.01 per cent in 2019 with the continued implementation of the ERGP in 2019 and improved outlook for oil prices,” he said.