Following the presented budget by the President of the Federal Republic of Nigeria, which stands at ₦10.3 trillion, the Lagos Chamber of Commerce and industry has applauded the president for demonstrating an unequivocal commitment to the return to the January – December cycle of the budgets.
In a press statement by the director-general of LCCI, Muda Yusuf, he said the move would accelerate planning by key players in the economy and reduce the uncertainty that has characterized the late presentation and passage of the budget in recent years.
In his opinion, the key assumptions underpinning the budget are realistic except for the exchange rate assumption of ₦305 to the dollar. He described the assumption as difficult to justify, especially at a time when declining revenue has become a major issue both for the government and the citizens.
He further recommended that the 2020 budget numbers underscore the need to be more innovative in boosting revenue, reducing leakages and ensuring those revenue-generating agencies of government remit what is due to government.
Furthermore, the private sector looks forward to the details of the finance bill proposed by the government in order to ensure appropriate engagement with the legislature before its passage into law.
In part, the statement read
“We note that the total budget size is ₦10.3trillion. The recurrent component is ₦4.88 trillion, debt service is ₦2.45 trillion. Together, these two budget items amount to ₦7.33 trillion, which is 90% total revenue estimates. And from the track record of revenue performance, the percentage may be much higher when related to the actual numbers. All of these indicate that the hope for an impactful investment in infrastructure is dim and would remain so for some time to come.
This underlines the imperative of appropriate policy choices to attract domestic and foreign private-sector capital for infrastructure financing. The government needs to look beyond tax credit in its quest for more complementary funding sources for infrastructure. We should be looking more in the direction of equity financing. But for this to happen the policy and regulatory environment must be right.
It is heartwarming that the president is proposing to present an Executive Petroleum Industry Bill in a short while. This would hopefully address the key reform expectations in the oil and gas sector. The truth is that the sector has not been able to attract the desired level of investment because of grave policy limitations and the associated uncertainty in the sector. It is important to make the crafting of the new bill an inclusive process, taking into account the perspectives of key stakeholders.
We welcome the decision of the government to put in place a framework for government-owned enterprises to contribute better to revenue. The introduction of benchmarks within a cost to revenue ratio framework is a move in the right direction. We believe the many government-owned enterprises can do better in their remittance of surplus to the federation account.
Debt service commitment and recurrent spending are beginning to crowd out capital expenditure. This scenario is not in alignment with the aspiration to build infrastructure and a competitive economy. Debt service of ₦2.46 trillion is more than the capital budget of ₦2.14 trillion. ₦305/$1 Exchange Rate
The director-general also expressed their optimism as they look forward to the details of the Finance Bill referenced by the President in the budget presentation to the National Assembly.