Actionaid Nigeria advises FG to adopt bottom-up approach to budget creation

Actionaid Nigeria, an ant i - pover ty non- governmental organisation working to combat poverty and promote social justice in the 36 states and the FCT for 20 years, believes that poverty can be eradicated if rights, redistribution of resources and resilience are prioritised.

It is in line with this belief that Actionaid Nigeria (AAN) has followed with keen interest the implementation of the 2020 budget and the presentation of the 2021 budget proposal to the joint sitting of the National Assembly on Thursday October 8th, 2020.

In a press statement issued to journalists in Lokoja and signed by the Country Director, Ene Obi, it disclosed that the total budget of N13.08tn with an aggregate revenue projection of 7,886tn were perceived very ambitious, adding that the downward spiral trend of the economy compelled the Federal Government to review the 2020 budget, in which total Federal Government expenditure was revised downwards from N10.594 trillion to N10.523 trillion. Likewise, key benchmark revenue assumptions were revised downwards. Crude oil price benchmark price was revised to $25 pb from $57 pb, crude oil production to 1.94 mbpd from 2.18 mbpd and average exchange rate adjusted from N305/$ to N360/$1. This revision of the 2020 budget was announced during the Federal Executive Council ( FEC) meeting which held on the May 13th, 2020.

She stressed that there has been continued shortfall in revenue from oil due to the Covid- 19 pandemic, which may render Nigeria incapable of meeting her 2021 revenue targets.

“A budget def i c it of 5.19trillion is expected to be funded through loans from both the international and domestic institutions. This constitutes about 24percent of the total Appropriation Bill. With the dwindling revenue occasioned by falling oil prices, nonremittances, leakages etc, the tendency that borrowing will continue in 2020 to fund the budget is likely. This is a major concern as the debt profile keeps pilling and to substantiate this, the Debt Management Office (DMO) showcases the nation’s total debt stock at N31.009 ($ 85.897b) as of June 30th, 2021”.

Ene equally pointed out that the Health, Education and Agricultural sectors were not yet given the attention required given their strategic importance in pioneering the economy, adding that report from World Poverty Clock, has shown that Nigeria has overtaken India as the poverty capital of the world and the most vulnerable groups include women and children. Nigeria currently has more than 82million of its people dwelling under poverty.

Act i onaid there fore, recommended that “Ministries, Departments & Agencies ( MDAS) should adopt a bottom-up approach to budget creation. States and Local Governments should aggregate their own budgets, to exert deeper developmental impact in the rural communities. Above all, the budgetary process should be participatory and encompassing”.

According to the group, “The budget allocations in the 2021 budget to these 3 key sectors should be reviewed upwards, given that they are already falling below the international benchmarks. For example, for agriculture, the international recommended benchmark is 10%, according to the AU 2003 Maputo Declaration. Unfortunately for Nigeria, Agricultural allocation is mere 1.73%, health 4.16% and education 7.54%. Further reduction will exacerbate poverty and inequality in the country”.

“A coordinated framework should be established to ensure that funds allocated to Health, Education and Agriculture are properly administered, ensuring value for money and an integrated approach.

“The budget should be devoid of vague and abstract terms, the budget information should be complete and concise. All allocations should be channelled towards concrete deliverables, targeting human and infrastructural development”.

“The Nigerian Government should open up public debate before entering loan contracts and should enhance its capacity to offset these loans before obtaining more of the same. Furthermore, loans should not be used for recurrent expenditures such as salaries, traveling allowances,” Obi further recommended.