By Eze Onyekpere.

The economic challenges facing Nigeria appear to have strong foundations rooted in the absence of the rule of law or the lack of a systematic evidence-based revenue and expenditure forecasting and policy implementation framework. The rule of law here refers to government’s income and expenditure being in tandem with legal and policy frameworks and the presence of an overarching environment of peace, security of lives and property and the facilitating environment necessary to promote economic growth and improvement of livelihoods.

It was reported in the draft Medium Term Expenditure Framework 2022-2024 that the gross oil and gas revenue for 2021 was projected at N5.19tn. Incidentally, “as of May 2021, N1.49tn was realised out of the prorated sum of N2.16 trillion. This represents 69% performance. Oil and gas deductions were N189.93 billion (or 44.8%) more than the budget. This is mainly attributable to petroleum subsidy cost which was not provided for in the 2021 Budget”. This is an acknowledgement of a great constitutional breach. It is a fundamental aphorism under Section 81 of the 1999 Constitution that expenditure must only be done on the authority of appropriation. Petroleum subsidy was not provided in the federal budget and both the executive and legislature knew the subsidy regime was going to continue in 2021 but failed to provide for it. The Nigerian National Petroleum Corporation without legal authority and at a time the Federal Government had announced the withdrawal of petroleum subsidy continues to make undue deductions from money that should accrue to the Federation Account. Going forward to 2022, there is no projection and indication of a subsidy regime in available budgetary related documentation, yet the subsidy regime will continue. Even with the passage of the Petroleum Industry Act, the authorities still insist the premium motor spirit subsidy regime will continue. Why do we make laws and policy declarations we are not ready to implement? Where is the rule of law in the continuation of this subsidy?

A review of some of the objectives of government’s macroeconomic projections in the MTEF will show some inherent challenges with evidence-based forecasting and logical consistency. The first objective is engendering active private-sector participation and inclusive economic growth. The MTEF states that “Nigeria’s economy is now expected to grow by 2.5% in 2021. It is hoped that the economy will grow faster in the medium term, rising from 4.2% in 2022 to 2.3% in 2023 and 3.3% in 2024. The expenditure plans to be implemented in 2022-2024 will support the achievement of these real GDP growth targets”. This projection was done before the 5.1% second quarter growth reported by the National Bureau of Statistics. However, there is a challenge with this projection. It does not seem logical and backed by the evidential trajectory of growth that an economy which grows by 4.2% in 2022 will revert to 2.3% in 2023 before rebounding to 3.3% in 2024. Unless there are expected headwinds and countervailing circumstances, the momentum and progression generated in 2022 should propel growth either at a higher level or at least at the same level in 2023. If our plans do not have a logical consistency in their projection, implementation may suffer a worse fate.

The second objective is creating adequate productive employment and preserving jobs. The MTEF states that it wants to tap the demographic dividend and create opportunities for youths to be employed; to gain skills for employability, entrepreneurship and ensure that growth is job rich. But when you match these promises with recent governmental action especially in relation to the Twitter ban and sanctions against youth-led enterprises following the #EndSARS crisis, the objectives and promises are contradicted by governmental action. The Twitter ban violated the right to own, establish and operate any medium for the dissemination of information, ideas and opinions which is provided in Section 39 (2) of the fundamental rights chapter of the 1999 Constitution. The right of Nigerian youths to earn a livelihood is a component of their rights to life and human dignity. Under the duties of state, government has obligations to respect (refrain from violating existing rights), protect (stop third parties from violating rights and effective use of regulation and law enforcement to promote rights) and fulfil the rights of citizens (budgetary, administrative, judicial, etc., measures). If the government relies on absence of resources as an excuse for its failure to make direct interventions for the benefit of the youth, it is unfortunate that it is taking action to take away existing jobs that the youths have created for themselves without any assistance from the state. All it needed to have done was to refrain from those actions. The state requires no resources to restrain itself from violating the rights of young Nigerians.

The MTEF states an objective in maintaining macroeconomic stability. It discusses the galloping prices and the high level of inflation and states that a combination of fiscal, monetary, exchange rate, and trade policies will be used to address the key sources of inflation in the medium term complemented by job creation interventions. But central to achieving growth, creating jobs and stabilising the macroeconomy are the overwhelming need to reduce insecurity. The security challenge is fundamentally a rule of law issue. It is about non-state actors overwhelming the state with violence and the state lacking the capacity for an effective response to reclaim the space.

No measures or new policies will improve growth, add value or create wealth in an environment where every day, Nigerians in major parts of the country can no longer engage in their normal livelihoods or can only do so at great risk to life. Recent reports indicate the default rate (inability to pay back loans) in the Anchor Borrower’s Programme meant to facilitate increased productivity and value addition in agriculture is as high as 70%. A good part of this default is attributable to insecurity. So, how would we reduce food inflation by mere proclamation without government attending to the challenge of insecurity? How would our balance of trade become favourable when we are massively importing food, when legislators and top members of the executive request and get approval for foreign brands of vehicles in the budget? How would our balance of trade become favourable when the President despite the provisions of the National Health Act attends foreign hospitals at the public expense, paid in foreign currencies at a time Nigerian doctors are on a long-drawn strike?

The rule of law, evidence, respect for policies must take central place in our quest for economic rejuvenation. The leaders cannot be busy making decisions based on the rule of the thumb, ignoring extant laws and policies and yet pretend to expect results based on the trajectory of the ignored laws and policies.