By Lateef Adams

On New Year’s Day, President Tinubu signed the 2024 budget of N28.78 trillion into law. The National Assembly, eager to “return” the budget cycle to January-December, swiftly assented to the bill having padded it with an additional N1.2 trillion into the initially proposed N27.5 trillion presented to the house in late November 2023. Many Nigerians had anticipated the unveiling of the president’s inaugural budget, given the neoliberal capitalist agenda enforced since the inauguration day had contributed to a persistent escalation in the cost of living and a sharp surge in the inflation rate within the country. 

Before the signing of the budget into law, many bourgeois analysts have expressed no hope in the budget to restore any economic growth, sighting unending challenges in insecurity, tax and import duty provisions in the Fiscal Policy Measures, inflation, and weak business environment, among others. The Manufacturers Association of Nigeria (MAN) have lamented the harsh economic challenges which had crippled the sector and plunged it into a state of near-recession. Even the United Nations, through its World Economic Situation and Prospects report for 2024 projects, also express similar worries “The United Nations has said that Nigeria’s rising debt, increasing inflation rate and its impact on the welfare of the citizens, puts the nation at risk of declining economic growth in 2024”. (Punch January 8, 2024):

The government had planned the budget on some unrealistic assumptions, amongst which include pegging the oil production rate at 1.78 million barrels per day (mbpd), putting the oil price benchmark at $77.96 per barrel, and the exchange rate to remain at N800 to $1. These benchmarks are however a tall order that cannot be attained by the current crop of the ruling elites in Nigeria. They have proven to be unproductive with their mono-economic plan. It has continued to depend mainly on sales of crude oil without steps to even refine it locally or explore another sector of the economy. The adoption and implementation of the crudest element of neoliberal capitalism ie deregulation and privatisation in the the neocolonial contraption of an underveloped productive sector can only means that exisiting productivity activity will collapse. This is what is manifested even the oil sector, which continues to be the main stream of the economy.

Benchmark:  1.78 Mbpd Oil Production & $77.96 Oil Price per barrel 

Setting the oil production rate at 1.78 mbpd raises concerns, primarily because the country consistently fell short of its projected targets in the previous budget cycle. The 2023 budget, for instance, aimed for a crude oil production of 1.69 mbpd. However, based on the drilling performance data from the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), the highest oil production level in October 2023 was 1.35 mbpd, indicating a challenge in meeting the projected targets.

This discrepancy implies that the anticipated revenue may not be achieved, leading to an increased deficit and an inability to meet expenditure requirements. Notably, in 2022, Nigeria experienced its lowest crude oil production data in recent years due to crude oil theft. This ongoing trend suggests that, for years, Nigeria has struggled to meet the OPEC quota.

There is no unique method for determining crude oil price benchmark for the international market. However, crude oil prices currently hover around $70 to $77 per barrel, and the assumptions may not be out of place. The concern with our elites is always what they will get at the immediate, not considering any future occurrence that might affect the price.

Similar to previous administrations, the Tinubu regime persists in underfunding critical sectors of the economy, including education and health. Meanwhile, it maintains excessive spending on political officeholders and allocates approximately one-third of the total budget to debt servicing. 

Unending Debt Servicing and Borrowings to finance the budget

For several years, the country’s budget has witnessed an increase in the cost of debt services. The 2024 budget breakdown shows that N8.27 trillion (29% of the total budget) is set aside to service debt, and the same budget has over N9 trillion deficit. Borrowings will again finance this deficit, further increasing the country’s debt profile. The figures are so worrisome at this period that many Nigerians risked their sanity face a completely unreasonable rising cost of living. 

With this government’s current anti-poor policies, predicting that 2024 will be tougher for many Nigerians may not be out of the context. “Nigeria will spend at least six times more on servicing its debt next year than on building new schools or hospitals in the West African nation, where more than 40% of the population live in extreme poverty” is the way describe the situation. The Tinubu regime continued to remind Nigerians how miserable the Buhari APC administration looted Nigeria’s economy into bankruptcy, but the regime is continuing the legacy and programmes of the same regime it’s criticizing. The Debt Management Office (DMO) figure on the debt profile shows that Nigeria’s total public debt rose to N87.38 trillion in the second quarter (Q2) of 2023, indicating an increase of 75.29%.

With a 2024 budget of N9 trillion deficit that will be financed by new borrowings, can only lead to a rising debt profile, which will in turn result to an increasing cost of debt servicing. The 2024 budget  therefore condemns the economy to cyclic gyration between borrowing and debt serviceing in an enclosed dome of continuous underdevelopment. 

Borrowings vs Revenue

According to the debt projections in the Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) 2024-2026, the federal government is set to borrow N7.81 trillion in 2024, N8.54 trillion in 2025 and N10.07 trillion in 2026. That is a total of N26.42 trillion for the three years. N29.92 trillion, according to the fiscal policy, will be used to service debt in three years.

This amount of debt calls for concern, especially when compared to the amount of revenue generated. The previous administration was swamped in the same pool of debt crisis. The former Minister for Finance Budget and National Planning, Zainab Ahmed, told Nigerians that the country’s debt service to revenue ratio is 80.6%. This figure is alarming because it means only less than 20% of revenue generated will be plugged into the economy, that is if the corrupt capitalist elites are not interested in siphoning it into their private account, as we are witnessing the scandal rocking the humanitarian ministry. 

President Tinubu’s Borrowings Amidst Extravagance Spending on Luxury Cars

While the Tinubu government is asking the Nigerian working masses to “tighten their belt” as a result of the country’s serious economic challenges caused by the regime’s neoliberal policies, the government, on the other hand, is spending extravagantly and at the same time, seeking for a $7.8 billion and 100 million euros loan.

President Tinubu, a few months ago, in its letter to the Senate, sought speedy approval to borrow $7.8 billion and 100 million euros when, in actual fact, the administration is spending extravagantly on luxury cars for the national assembly members and the recent N2.28 trillion supplementary budget for the purchase of fleets of cars and Yacht among others. This loan implies that the country is further plunged into a severe debt crisis following the huge debt profile the corrupt APC-led Buhari regime left it. 

From day one, the Tinubu government has been shown to implement anti-people policies when the regime hiked the cost of petrol and threw millions of Nigerians into harsh economic hardship from soaring food prices and massive job losses as a result of the high cost of production. The meagre salary being received by workers has been eroded by this unjust hike, and rather for the government to invest resources to cushion the effects, it wishes to spend lavishly on SUVs for the First Lady, renovations and presidential Yacht for pleasure.

In a Television broadcast in July 2023, Mr President told Nigerians during his speech, “In a little over two months, we have saved over a trillion Naira that would have been squandered on the unproductive fuel subsidy, which only benefitted smugglers and fraudsters…” This statement, after barely two months in office, is an indication that the regime should have saved nothing less than N5 trillion after the regime’s seven months in office. But unfortunately, the country is in a state of economic crisis, with food inflation at a record high. 

It is infuriating to state that, despite the cost of living crisis in the country, political officeholders are wasting the little and scarce resources on jamborees, buying feet of SUVs worth N57.6 billion for the House of Representatives, the 109 members of the Senate will also get one SUV, each according to report cost taxpayers N160 million. To make matters worse, the Executive sent a supplementary budget of N2.28 trillion for renovations and fleets of cars for the president and the wife.

The Movement for a Socialist Alternative (MSA) calls on the Nigerian working masses to condemn this regime’s unproductive spending, which will further affect the already dwindling economy. The trade unions also have an enormous role in this struggle to free the country from the neoliberal policies of this government. Nigerians must reject capitalist programmes that only make the poor poorer and fight for the system that will nationalize the commanding sector of the economy and place it under democratic management and control. That is the policy that will use the country’s resources for the vast majority of people.