By Merit Ibe
Members of the Organised Private Sector (OPS) have decried Federal Government’s plan to borrow more from internal and external sources to finance the N6.258 trillion deficit in the proposed 2022 budget, saying it can spell doom for the real sector.
In separate interviews, the members gave their views following the N16.39 trillion 2022 appropriation bill presented to the National Assembly by President Muhammadu Buhari, recently.
The OPS noted that more borrowing, which would continue to add to the burden of the country’s fragile economy and lives of the common man in general, is not the best way out, rather, government should reduce governance wastage and shore up internally generated revenue in the country.
Chairman, Manufacturers Association of Nigeria (MAN), Apapa Branch, Frank Onyebu, opined that the manufacturing sector of the economy should normally be happy with a huge government budget which would be expected to reflate the economy.
Onyebu said, however, when the budget is only supported by borrowing and more borrowing, it could only spell doom for the real sector, because the resulting high rate of inflation would eat up whatever gains that could come from the higher volume of money in circulation.
“I believe that the size of our budgets will be drastically reduced if the government does something about the expenditure side of things. We currently have a situation where a huge percentage of the budget is used to service debts. It is even speculated that some of the new loans are being used to service maturing loans. This is clearly not acceptable, and certainly not sustainable.
“What the government needs to do is to take a look at its expenditure, especially its recurrent expenditure. We need to reduce wastage to the barest minimum.
“We would not need the kind of figures that are being put forward if we drastically reduce the size of government. This could be achieved by way of merger of government agencies and parastatals, and by selling off agencies which could be better managed by the private sector of the economy.
“Again, we need to do something about the hydra-headed monster called corruption. An unacceptably high percentage of the budget still ends up in the pockets of corrupt officials. This has to be decisively dealt with.”
The National Association of Chambers of Commerce Industry Mines and Agriculture (NACCIMA) applauded the timely presentation of Budget 2022 to the National Assembly and the decision to inject affirmative action into the budget through its gender component, thus making it gender friendly.
President of the association, John Udeagbala, however cautioned on the upward swing of borrowing to finance the budget.
“There is need to watch the rising profile of our debt. An increase in deficit to N6.26 trillion, which is to be funded by borrowing is worrisome.”
“While it is an accepted fiscal option across the world, for countries to resort to borrowing to finance short falls in their budgets, there must be caution in what component of the budget will be financed by the budget. A sustainable debt profile requires that borrowed funds must be used for critical infrastructure projects that will enable payback of these loans. Udeagbala opined that there must be continued efforts to diversify the economy, improve significantly on non oil revenue and deliver on upgrade of infrastructure and improvement in security situation, adding that this will enable increase in productive activities.
“Perhaps most importantly the private sector should be encouraged to tap into the opportunities under the budget. We therefore, welcome the decision under the budget to further strengthen the framework for concessions and public private partnerships (PPP) and that capital projects that are good candidates for PPP will be developed for private sector participation.
“We however, hope that in its implementation it will be a budget of inclusive economic growth, a growth trajectory in which no one will be left behind especially the poor segment of our population.”
Former president of Lagos Chamber of Commerce and industry (LCCI), Mr Babatunde Ruwase, explained that resorting to borrowing at a period insecurity was taking a toll on national revenue would bring more problems to the country’s fragile economy.
He warned that Nigeria should be very careful with channeling and relying on China for loans, saying that the Chinese Government was already taking economic actions against countries it borrowed monies for defaults in debt servicing obligations.
“The fact is that it’s never right for government to borrow to fund our budget despite us having revenue problems. So, the only thing is to see what we can do to reduce waste and duplication of expenditure too in certain areas of the projects.”
“But we have to look at the details of where to get it and how to get it. Eurobond could be one of the things. But we have to be careful as we are aware of what is going on in China now where the Grandees are not being able to meet up with their obligations.
“I think we should just look inward at where we can reduce cost and see how we can shore up our revenue.