The Organised Private Sector (OPS) of the Nigerian economy has called on the federal government not to rely much on oil revenue for the effective implementation of the proposed 2021 budget due to the usual burst and boom cycle of crude oil prices.
They also urged the federal government to use the budget to reboot the economy by aligning the budget with the Economic Sustainability Plan (ESP), which was unveiled and designed as the first line of defence to mitigate the effects of the COVID-19 pandemic.
President Muhammadu Buhari had on Thursday presented a proposed budget of N13.08 trillion to the National Assembly for the 2021 fiscal year.
But the Director-General of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Ambassador Ayo Olukanni, has raised the alarm that revenue would be one of the biggest challenges in implementing the 2021budget and advised the federal government to truly diversify the economy by paying more attention to sectors like the creative industry, agriculture, and mining and their entire value chain.
Olukanni said: “We see this budget as a continuum of the ESP, which was designed to tackle issues such as improving agricultural production, food security, provision of jobs and social safety net for the most vulnerable segment of society.”
The Director-General of Nigeria Employers’ Consultative Association (NECA), Mr. Timothy Olawale, also called on the government to block the leakages that still permeate the system in order to promote accountability and transparency, adding that “a more strategic need is to reduce the dependence on revenues from oil and strategised ways and means in stimulating the non-oil economy to provide the needed revenue for funding of the budget,” Olawale said.
Speaking in the same vein, the Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, noted that “revenue is very key and very central to the budget. If you look at the last three years there has been large variances, large negative finances in the revenue targets and it is not likely that what we will have in the 2021 budget will significantly be different.
“So, the revenue will continue to be an issue if we continue to have the economy the way it is and for as long as the private sector continues to struggle with all the challenges in the business environment,” he said.
Commenting on the debt profile of the country, Olukanni said that NACCIMA is worried by the steady rise of both domestic and foreign debt portfolios of the country.
“Under the 2021 proposed budget, N3.12 trillion has been set aside for debt servicing which represents an increase of N445.57 billion over the N2.68 trillion for 2020. This is worrisome. We might have met our debt service obligations so far. Steps must be however be taken to prevent our debt from spiraling out of control and prevent a return back to the days of our status as a debtor nation.”
In the same manner, Olawale said that NECA foresees Nigeria’s debt hitting N45 trillion by the end of 2021.
He said: By the end of year 2020, the debt profile of the country would have reached N35 trillion. Adding the N5.19 trillion anticipated in 2021, and we believe there would still be addition borrowings, which could suggest that the country could reach a N45 trillion debt mark by end of 2021.
“It is also interesting to note, that the value of the debt service in the 2021 budget is equivalent to 87.1 per cent of capital expenditure.”