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Lagos Chamber of Commerce and Industry (LCCI) says late passage of the 2018 budget has slowed down Nigeria’s economic recovery process by postponing the multiplier effect of government spending.
The chamber states that it has equally stunted the provision of critical infrastructure needed to boost industrial activity, thereby hurting the country’s ability to export locally made products, while reducing revenue and foreign exchange from non-oil exports.
In a statement released weekend, Muda Yusuf, director-general of LCCI, said capital expenditure such as infrastructural development, construction work and payment of contractors were also being affected, worsening unemployment and hitting hard on private sector operators depending on it to plan their activities for each fiscal year.
“If funds for critical projects are not disbursed on time, the tempo of economic activities will be reduced, dragging the economy into a state of inertia and economic decline,” Yusuf warned.
“The late passage of the budget is therefore a threat to achieving the Economic Recovery and Recovery Plan (ERGP) targets and to Nigeria’s goal of becoming one of the top 20 economies by 2020,” he said.
He stressed that there was also the issue of inadequate absorptive capacity as the country might not be able to spend so much money in such a little time, resulting in dislocations in the macro-economy.
The National Assembly passed a N9.12 trillion budget on May 16, but that has been on the desk of President Muhammadu Buhari, who is yet to assent to it to fulfil a constitutional requirement. This is six months into the year, but the most important document is yet to be signed owing to the altercations between the executive and the legislature.
“The problem with the 2018 budget began with the late approval of the 2018-2020 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), which is the policy document that articulates the assumptions underlying the budget and, thus, should ordinarily precede the presentation of the budget to the National Assembly,” he recalled.
He suggested that going forward, the executive order of May 2017 by Vice President Yemi Osinbajo, which placed emphasis on the timely submission of the annual budget estimates of MDAs, should be strictly adhered to.
“The executive order directs all federal government MDAs to submit their schedule of revenue and expenditure estimates for the next three years to the minister of finance and that of budget and national planning on or before the end of May of every year. It also directs the MDAs to forward their annual budget estimates to the two ministers on or before the end of July every year.”
