Concerned by the Federal Government’s revised 2022 national budget, the Lagos Chamber of Commerce and Industry (LCCI) has stated that the Federal Government, as a matter of urgency, should allow the private sector invest in some infrastructure projects that are commercially viable to generate revenue to fund her budget instead of debt financing.
The Director-General of LCCI, Dr. Chinyere Almona, disclosed this to New Telegraph, while reacting to the revised 2022 budget. She said that current economic realities had shown that the country’s revenue fundamentals were weak, so the ideal thing for government is to reduce the cost of borrowing and look at a model of bringing private sector on board to share the burdens of financing Nigeria’s budget.
Thr LCCI director-general explained that, no doubt, most of the items for which more fund ing are sought were recurrent expenditures, saying that the chamber visibly understood that government may be under pressure regarding these recurrent expenses. She said that the private sector operators can act as sweetener in this regards relating to financing on-going infrastructure, especially the commercially viable ones in the country than government continuing to resort to borrowing to executive them. Almona advised the Federal Government to also focus more on non-interest asset-linked securities as these unlock revenue and growth in the long term will help overcome the huge debt deficits in the country’s economy. According to her, the chamber had noted in the breakdown of the budget that more revenue is expected from government owned enterprises (GOEs) some of which are regulators of some sectors.
She stated that good corporate governance principles and practices should be adopted. In this sense, the pressure to push for more revenue should not compel the GOEs to undermine the health of the business environment in the pursuit of revenue targets, for instance, introduction of fresh multiple taxes. While breaking down the country’s revised 2022 budget, the LCCI boss said that the original budget document submitted by the Executive, which was passed by the National Assembly, had revenue projected at N8.762 trillion, while the aggregate expenditure level was projected to be N13.98 trillion (inclusive of GOEs, grants/donor-funded projects).
She noted that the aggregate expenditure was made up of Statutory Transfers of N613.36 billion, Debt Service of N3.61 trillion, Sinking Fund of N292.71 billion, and Recurrent (non-debt) expenditure of N6.21 trillion. According to her, it should be noted that a total of N4.79 trillion (inclusive of N750.04 billion for GOEs) was provided for personnel and pension costs, an increase of N534.40 billion over the 2021 figure. This was already about 57 per cent of projected aggregate revenues for 2022. Almona stressed further that the revised total expenditure for 2022 is projected to increase by N2.47 trillion, from N13.98 trillion to N16.45 trillion (includes Government-Owned Enterprises (GOEs) and project-tied loans).
She said: “We have noted that the increased expenditure in the revised 2022 budget is meant to cover N100 billion additional provision to INEC, to cater for the 2023 general election, N54 billion to NASENI (one per cent FGN share of federation account); N510 billion in the Service Wide Votes to cater for National poverty reduction with growth strategy (N300 billion), Police Operations Fund (N50 billion), Hazard Allowance for Health Workers (N50 billion), Public Service Wage Adjustments (additional N80 billion), and MDAs’ Electricity Bills Debt (additional N37 billion).” On the Chamber’s major concerns in the revised 2022 budget, Almona said: “Looking at the FGN’s revenue performance, as of June 30, 2021, FGN’s retained revenue was N2.23 trillion (67 per cent of the N3.99 trillion pro-rated budget).
“The shortfall of 33 per cent is attributable to the underperformance of both oil and some nonoil revenue sources such as the Electronic Money Transfer Levy (EMTL), Recoveries & Fines, etc. “Government must explore cheaper alternative sources of financing away from debt. In the revised budget as passed by the National Assembly, the projected retained revenue was raised to N10.3trillion against the N10.13trillion proposed in the revised 2022 budget.