On December 22nd, 2015, President Buhari presented the N6.08 trillion 2016 budget to the National Assembly for approval. The size of the budget triggered debates throughout the country. In the face of the current liquidity crises the country is experiencing, is it optimal to increase the budget by about 35% relative to 2015 budget? Where would the government obtain the revenue needed to fund the budget? Will the size of government spending have a corresponding effect on the average Nigerian? These questions amongst others have been asked by many Nigerians.
Lack of confidence in the country’s economy due to the fall in oil price, the failure of the Buhari administration to hit the ground running as soon as they were elected and the fight against corruption have caused a confidence driven liquidity crises. Economically speaking, the increment in the size of the budget would have two effects – an increase in output and a decline in inflation rate, given the nature of the liquidity crises. With the country’s inflation rate reaching a record high level at 17.6% and the GDP growing at -2.06%, its slowest pace since the ushering of civilian rule in 1999, the increment of the size of the budget couldn’t have come at a better time!
The incessant bombing of pipelines in the Niger Delta creeks coupled with the low oil price has greatly tapered down our revenue given that oil accounts for about 75% of Nigeria’s revenue. Nevertheless, the government of the day is exploring non-oil sectors such as agriculture and mineral resources together with, increasing the tax base in a bid to increase non-oil revenue. More so, the monies obtained from the fight against corruption are soon to be a part of the country’s revenue as soon as the corruption cases are over.
In itself, the increment in the budget size has the ability to improve the standard of living of the average Nigerian through various means – job creation programmes such as N-Power Programme, building more infrastructures across the Transportation, Power, Aviation sectors, the fight against terrorism amongst others. However, in addition to focusing on the accumulation and maintenance of physical and human capital, institutional reforms, improvement in the business climate and improvement in the accountability of government officials is to be focused on in order for the budget to have a larger impact on the welfare of the typical Nigerian.
In conclusion, the impact of the 2016 budget is also influenced by external forces like the level of implementation achieved, leakages, fluctuations in the Naira exchange rate, increase in interest rate and commodity prices. Nonetheless, the 2016 budget may be the first step to achieve the change we desire, the change we need.