LCCI PICKS HOLES IN 2012 BUDGET
The Lagos Chambers of Commerce and Industry (LCCI) say it has critiqued and identified a number of shortcomings in the Federal Government's 2012 budget.
In a position statement signed by its Director General, Mr. Muda Yusuff, said their expectation of a major restructuring of the budget turned out to be misplaced because it did not happen.
'The numbers did not show a significant paradigm shift. What was presented was only a marginal reduction in recurrent budget, which was reduced from 74.4 percent to 72 percent of the total budget compared to 2011 budget, a mere 2.4 percent reduction. This is not a significant reduction.'
He said that the Chamber was of the view that in an economy that is in dire need of infrastructure investment, committing 72 percent of the budget to recurrent spending would not promote the cause of economic transformation.
' And going by record of budget implementation, performance of recurrent budget will be much more than that of capital. Therefore, the portion of the budget that would go to capital spending may even be less than the proposed 28 percent'
'The allocation of N161.4 billion to power sector, which is a paltry 3.4 per cent of the total expenditure, is inadequate. This allocation contrasts with that of security which is N921.9 billion or 19.4 percent of the total expenditure. It is evident that the government is no longer inclined to invest in hard infrastructure in the power sector. This is a major shortcoming of the budget.'
'The appalling state of the power sector is the biggest challenge facing the economy today. It is true that the power sector reform has heightened expectations of increased private investment in the sector; this should not mean a complete abdication of responsibility in the provision of power supply to the citizens.
'There cannot be any transformation without a dramatic improvement in the power supply situation in the country. While it may be impossible for the government to do this alone; it would also be impractical for the private sector to do it alone. Public investment has to complement private investment in the provision of this critical infrastructure.
There is a risk in leaving the fortunes of the power sector entirely to the optimism of private sector investment. We need to be cautious in our optimism. It would be a major error of judgment to think that the experience of the telecommunications sector would be readily replicated in the power sector. The risks, challenges and complexities of investment in these two sectors are considerably different. The rising cost of debt service is of grave concern. In the 2012 budget, N560 billion was earmarked for debt service.
This is high when viewed against the backdrop of the other national priorities. The opportunity cost of committing such huge sums to service debt is substantial.'