The Lagos Chamber of Commerce and Industry (LCCI) has commended the Executive and Legislative arms for timely preparation and presentation of the 2020 Appropriation Bill for enactment and listed some steps that should be taken by government in order to achieve the budget’s developmental objectives.
The Organised Private Sector (OPS) group in a statement by its Director General, Mr. Muda Yusuf, noted that the timeliness of the laying the bill before the National Assembly on Tuesday by President Muhammadu Buhari was good for planning and had the potential of reducing the uncertainty that has characterized the late presentation and passage of the federal budgets in recent years.
While pointing out that the key assumptions underpinning the budget were realistic, the group however, expressed concern about the exchange rate assumption of N305 to the dollar.
Yusuf stated that the exchange rate assumption was difficult to justify, particularly at a time when declining revenue has become a major issue both for the government and the citizens.
According to him, although the 2020 budget numbers underscore the need to be more innovative in boosting revenue, reducing leakages and ensuring that revenue generating agencies of government remit what is due to government, we need to do things differently if we must get a different result.
The economic analyst stated further that in view of the critical revenue situation reflected in the budget numbers and previous revenue performance, no effort should be spared to attract private capital for investment in key infrastructure that may be considered bankable as this would reduce the funding gaps that currently exists.
The LCCI boss stated that the private sector was looking forward to the details of the finance bill proposed by the government in order to ensure appropriate engagement with the legislature before its passage into law.
On the 2020 budgetary proposals, the OPS group’s Director General noted that the total budget size was N10.3 trillion with the recurrent and debt service provisions amounting to about N7.33 trillion or 90% of total revenue estimates, adding that from the track record of revenue performance, the percentage may be much higher when related to the actual numbers.
He explained further that all these indicated that the hope for an impactful investment in infrastructure was dim and would remain so for some time to come.
Noting how crucial a strong infrastructure base underlines the imperative of appropriate policy choices to attract domestic and foreign private sector capital for infrastructure financing, Yusuf stated that government needed to look beyond tax credit in its quest for more complimentary funding sources for infrastructure.
On how best to close the gap in infrastructure financing, he advised that government should focus more on equity financing, adding that for this to happen, the policy and regulatory environment must be right.
While commending the Executive on its plan to present an Executive Petroleum Industry Bill in view of its positive implications for reforms in the oil and gas sector, the Director General noted that the sector had not been able to attract desired level investment because of grave policy limitations and the associated uncertainty in the sector.
To achieve the goal of the legislative initiative, he pointed out that it was important to make the crafting of the new bill an inclusive process, taking into account the perspectives of key stakeholders.
He expatiated: “We welcome the decision of government to put in place a framework for government owned enterprises to contribute better to revenue. The introduction of benchmarks within a cost to revenue ratio framework is a move in the right direction. We believe the many government owned enterprises can do better in their remittance of surplus to the federation account.
“Debt service commitment and recurrent spending are beginning to crowd out capital expenditure. This is a scenario is not in alignment with the aspiration to build infrastructure and a competitive economy. Debt service of N2.46 trillion is more than the capital budget of N2.14 trillion.
“We welcome the indication given by the president to ensure the creation of a single window to strengthen trade facilitation process in the country. The provision of the single window has been curiously elusive over the years. We hope that this time, the necessary political will be mustered to ensure that the single window project becomes a reality. Related to this is the absence of scanners at the nation’s ports and border posts. It is unfitting that with our stature as the biggest economy on the African continent, we have grossly failed in the use of technology to facilitate our international trade process”, Yusuf added.
This is even as he stated that the OPS group was looking forward to the details of the Finance Bill referenced by the President in the budget presentation to the National Assembly as it is important to ensure appropriate engagement with stakeholders to make their inputs before the passage of the bill into law.