President Buhari has presented his proposal for Nigeria’s 2020 budget to a joint session of the National Assembly in Abuja, and blamed the poor performance of the 2019 budget on the underperformance of oil and non-oil sources and dwindling revenue from VAT. Buhari added that the projected revenue fell short of the actual receipts. “The 2019 Budget of Continuity was based on a benchmark oil price of $60 per barrel, oil production of 2.3 mbpd and an exchange rate of ₦305 to the US dollar. Based on these parameters, we projected a deficit of ₦1.918 trillion or 1.37 per cent of GDP. As at June 2019, the FG’s actual aggregate revenue (excluding government-owned enterprises) was ₦2.04 trillion. This revenue performance is only 58 percent of the 2019 budget’s target. Oil revenues were below target by 49 per cent as of June 2019.” The expenditure he proposed for the 2020 financial year is ₦10.33 trillion. The proposal shows that about a quarter (₦2.45 trillion) will be used for debt servicing, while capital expenditure is expected to gulp ₦2.14 trillion, excluding the capital component of statutory transfers. A budget analysis presented by the President included statutory transfers of ₦556.7 billion, non-debt recurrent expenditure of ₦4.88 trillion and provision for a sinking fund to retire maturing bonds issued to local contractors of ₦296 billion. The budget was prepared on the assumption of $57 per barrel with crude oil production of 2.18 million barrels per day and the exchange rate assumed at ₦305 to $1. Other assumptions include real GDP growth of 2.93 percent while “inflation is expected to remain slightly above single digits in 2020.”

Labour unions in Nigeria have threatened to embark on a nationwide strike from 16 October if deliberations on minimum wage adjustments do not resume. Speaking after a meeting with the trade union arm of the Joint National Public Service Negotiating Council (JNPSNC), Ayuba Wabba, the Nigeria Labour Congress president, Quadri Olaleye, the Trade Union Congress president, and Simon Anchaver, the acting chairman of JNPSNC, said they have demonstrated restraint and patience with the government and warned that the unions would “not guarantee industrial harmony” if their demands are not met. They noted that the unions have had to moderate their initial position of having 66.6 percent upward salary adjustment for workers on salary grade levels 7-17 by accepting downward adjustment of 29 percent for officers on salary levels 7-14 and 24 percent adjustment for officers on salary grade levels 15-17. They said despite their “patriotic gesture”, the FG has kept insisting that it can only pay 11 percent for officers on grade levels 07-14 and 6.5 percent consequential wage increase to public workers for officers on levels 15-17. The nonchalant attitude of the government negotiating side has dragged negotiations for consequential wages adjustment unduly, the unions said. The new national minimum wage of ₦30,000 per month was signed into law by President Buhari on 18 April but has not been implemented because the FG and the unions have failed to reach an agreement on the adjustment of salaries.

Nigeria’s Vice President, Yemi Osinbajo, has suggested that the country needs to enact state policing measures. Osinbajo said that the country can become stronger and more prosperous if states have more powers. Speaking at the 59th Independence Anniversary Lecture, on Friday, Osinbajo said Nigeria’s population and diverse ethnic groups have necessitated that states in the country be strengthened to enable them to contribute more to national productivity and development. This can be achieved with stronger, more autonomous states that are able to generate and control more of their resources, he said, explaining that the country cannot be wealthy when its component parts – the states – are poor. The VP said the devolution of more power to the states will enable them to control more of their resources and make more administrative decisions such as the creation of local governments, the establishment of state and community police forces, state correctional facilities and special courts and tribunals of equivalent jurisdiction to high courts.

A former President of the Benin Republic, Nicephore Soglo, has accused Saudi Arabia and Qatar of funding Boko Haram, an insurgency that has grown to constitute a threat to the Western African Region. Soglo, who spoke at the constitutional term limits summit in Niamey, Niger Republic, said Africans must stand united to solve their own problems including all security challenges and be able to identify its friends. Soglo emphasised multiple times that “Boko Haram is funded by our friends from Saudi Arabia and our friends from Qatar.” Nigeria’s former President, Goodluck Jonathan, is attending the event which is organised by the National Democratic Institute (NDI).

Commentary

  • Few things are surprising in Nigeria anymore, but where a President reveals a 58% revenue performance on one hand and an even more aggressive revenue target on the other hand one, it is necessary to shake one’s head. Nigeria’s budget continues to be a work of fiction, only believed by its authors. Only this week, an IMF staff team visited the country to discuss recent economic and financial developments and issued a statement which criticised over-optimistic revenue projections for leading to higher financing needs than initially envisaged. This, they say, has resulted in an overreliance on expensive borrowing from the CBN to finance the fiscal deficit. The statement further indicated that the FG’s interest payments continue to absorb more than half of revenues in 2019. In a nutshell, the country’s finances are in a quagmire and approaching levels where drastic measures such as subsidy removals and a VAT increase will make little difference in turning things around.
  • The positive is that since the start of discussions, the unions have now shifted ground from their initial demand. Whilst acknowledging the limited finances of the government, it is hard to justify only an 11 percent increase in salaries for senior civil servants after a six-year freeze in salary increases given that inflation has been in double digit territory for the last four years. The government needs to propose a figure which will be more acceptable to the unions because an industrial action could be the final blow that plunges the fragile economy into another recession. That being said, a smart government would have used this salary increase as a bargaining tool for removing petrol subsidies and perhaps reducing its personnel costs by negotiating new terms of engagement that allow it a more effective control exits from the public service, thus freeing up much needed funds for pressing national development priorities.
  • Mr Osinbajo is taking the lazy approach. By simply suggesting the need for state policing without offering concrete actionable steps for achieving it, he has turned a serious policy conversation into a debating exercise. The VP suggested that Nigeria needs stronger, more autonomous states that are able to generate and control more of their resources, yet refuses to back calls for restructuring, which is likely to involve collapsing states into regions. Mr Osinbajo must recognise that the time for talk is long past considering the new realities facing the country. Having said that, the Vice President’s position on federalism and state policing is consistent with that of the ACN wing of his All Progressives Congress which predates the APC’s formation. However, it is doubtful that his superior, President Buhari shares the same beliefs. More consequentially, it is doubtful that the APC holds the same beliefs professed in its 2014 manifesto. Barring the support of the President and the party, it is unlikely there will be a bill before the National Assembly or an executive directive aimed at actualising the dream of devolution. What it does bring to the fore however, is an increasing rift within Nigeria’s ruling party, a rift that is likely to become more prominent as governance takes a back seat to politicking; even this early into the APC’s second stin as Nigeria’s ruling party.
  • President Soglo did not offer any evidence to back up his accusations but simply echoed widely held beliefs that the Saudi and Qatari governments tacitly support Sunni Islamist extremism either directly, or by ignoring the activities of jihadists, especially as they raise funds for their activities within their countries. This alleged tacit support extends beyond just Boko Haram but also to the Islamic State and al-Qaeda. Saudi Arabia has often been accused of spreading extremist Salafi ideology through the World Muslim League which it funds to build mosques and train clerics all around the world. Broadly, Saudi charities have funded Salafi/Wahhabist movements in Nigeria for years. This is not the same thing as saying that they are funding Boko Haram. It is important to note that these accusations have not hurt the West’s relationship with these countries: Saudi Arabia’s relationship with the United States has gotten stronger under President Trump, while countries such as France remain close to Qatar. Also, countries affected by Boko Haram continue to maintain excellent diplomatic relations with both countries. Ironically, Qatar and Saudi Arabia have had a break in diplomatic relations since 2017 with Saudi (backed by the United Arab Emirates) tornically accusing Qatar of sponsoring terrorism. Finally, it is worth noting that Boko Haram has embedded itself firmly in the economy of the far North-East, with its involvement in the cattle business, fishing in the Lake Chad area and illegal oil bunkering. It also runs extortion rackets, effectively “taxing” communities. It has also found some success in seizing armaments from raiding military bases that it is fair to say that the Nigerian government is inadvertently arming an insurgency that is increasingly becoming harder to grapple with.