 Great to have you back on the breakfast here on Bloss TV Africa. Our next conversation moves to talk about Nigeria's economy in 2022 and, of course, the prospects that it might have as the National Assembly has passed the 2022 budget of 17.126 trillion Naira. I was speaking this morning with an economic analyst, Mr. Mukta Mohamed. Good morning, Mr. Mohamed. Thanks for joining us. It's always my pleasure to be here. Good morning. Compliments on the same to you. I saw something that I was just going to quickly share, you know, just a line that I want you to respond to. It says an expansionary budget should stimulate growth, create jobs, increase output, reduce poverty, and, of course, also push infrastructural growth. When you hear these things, do you have these same expectations, you know, for the 2022 budget? Definitely not. I may have had those expectations when I saw the budget as was released by the presidency, where they tried to make sure that the oil benchmark was put as low because of the poor activity. And also they tried to look at how to reduce debt servicing. I think I agree with all those points, but they nearly went to the National Assembly, the budget had been jacked up. And most jacked up of the project we don't know. We talk about constancy project, we talk about giving money for agricultural expansion. And so you just wonder, I think I was thinking for the first time, because the government was very conservative in their project projection, especially in the oil benchmark. I thought for the first time, the legislators and the executive would be on the same page, but unfortunately they have done what they normally do, and which is normally to jack up the price, put in a project that we don't know, put in a project that they won't tell us. And sometimes they go as far as putting in a state project into a federal project. So it's shocking, but that is what it has always been when it comes to budgetary in Nigeria. Well, it doesn't really change much, you know, between the 16 trillion Nair and the 17 trillion Nair. So let's look at what the president at first had sent to the National Assembly, just a little above 16 trillion Naira. Would that have been more exciting? And why do you think that maybe would have made more sense without the additions from the National Assembly? You're talking about 16 trillion, you're talking about 17 trillion, that's almost 1 trillion added to it, that's not small when it comes to economic terms. That is, do you know what 1 trillion would have done, and being in the savings of the Nigerian Coffins, which are the result, what would have happened to us if we had 1 trillion that is saved for the future generation? Sure. Even if it's to pay the debts that this government is already incurring for the future generation, do you know what that would do for Nigeria? No, it's not about strategy, it's all about what are your programs, what are your vision? Budget is the roadmap towards actualizing your electoral promises or your vision. So once budget becomes a subject of controversy where we have to go back and forth and it's not meeting the required targets any longer, and you need to look at budget in Nigeria has never made expectation where you're talking like you're talking about in terms of job creation, infrastructure development, let's look at the area of job creation. It has never made it, even last this present year, it was about 70% Nigerians, huge, huge, we're talking about 70% unemployed, about 40% undiemployed. So you see that as a time bomb and the status are not looking at point this money into area that will create jobs, they are looking at point this money into area that will benefit them in the long run to say during this time at the National Assembly was able to achieve this. Remember, this is going to be the last budget that they are going to have, that we're going to hold in full year for them to come 2023, we'll have an abridged budget or may not even have the budget pending what the administration decided. This is what I'm trying to clarify, because from your earlier statements you said that you may have had some hope until you saw the additions that were made and how they weren't necessarily put in the right direction. So did the initial budget seem like it was going to achieve much for Nigeria, the initial one that was sent to the National Assembly? Yes, yes, yes, especially in the area of depth servicing and oil benchmark, that was what excites me, the oil benchmark was very conservative. At $57 a barrel? $57 for a barrel and at the time they did this, the oil benchmark at that time was almost 70 something dollars for a barrel. I remember that for the previous two budgets that we passed into law, at the time the presidency was putting the oil benchmark at $60 for a barrel and when the president was making the budget, the oil benchmark was even $58 for a barrel. This is the first time we have been very conservative and no, now listen, the difference between $67 for a barrel would have been going into our SS code account, which would have been something that we could use to generate to the sovereign wealth fund for development of key infrastructure projects, like they are involved in the development of the second Niger bridge. You know what that would have done? That would have reduced the depth in terms of depth servicing to the Nigerian government. So that was what really excites me about the budget. I remember that in terms of depth servicing, in previous budget we were doing like for every one Nigerian N, we used an 80 copper to service debt, but in this budget we're looking at, for every one Nigerian N, we're looking at using 60 copper to service debt. Those were just, those were things that were exciting me about the budget going forward, but like I said, the legislators have always done what they know how to do best. Okay, so let's also look at some other issue. The Center for Promotion of Private Enterprise is saying that the 2022 budget will be very difficult to fund and that's for them. They are saying that the budget is very ambitious. It does not reflect the current realities of our country and looking at the fact that depth servicing, we're looking at 3.61 trillion N. I want you to share your thoughts on this. Do you agree with this group of persons? I agree with them. I remember that they didn't say this when the president passed the budget. I mean read the budget to the National Assembly. They are saying it now after the last budget. Because if you look at the budget that was passed by the president, it was very conservative. It was realistic, especially like I said in the terms of benchmark, oil price and other indices. It was very realistic and even in depth servicing. But what we've seen the legislators do is to jack it up and make it very, very unrealistic over ambitious. I agree with them too. So do you think it's difficult to fund the budget? Even the previous budget that was going to be passed that was, I said it was going to be difficult to fund. We're already thinking of borrowing to fund those budgets in other areas. When in terms of borrowing, we're looking to borrow to fund the budget in terms of infrastructure, talk less of now that we're, I mean it's going to be most difficult because they've jacked it up. So it's going to be more difficult. I don't expect what, I don't know. Like we said, it's the ruling government. I don't expect the presidency to sign this budget into law. But if it does, you know, they always have an agreement or sign it or sell it to supplementary budget like that. Maybe that is what will happen. But looking at the budget as it stands now, I don't think it's implementable at all. All right. Speak a little bit more. At all. Mr. Mahmoud, speak a little bit more about, you know, the plans to, you know, raise, to fund this budget, you know, and raise revenue. President Mahmoud Bahra, of course, you know, and the current administration and their plans to generate or to grow revenue to fund the budget are talking about tax waivers here and there. They're also talking about enhancing taxes, improving custom revenue through tech and, you know, and some other things. Do you look at all of, do you hear any of these? And, you know, and, you know, it seems like these might be ways that will, you know, actually increase or grow revenue for Nigeria to fund this budget. No, no, no. You see, what government is doing? Government is just thinking of revenue, revenue, revenue, revenue, revenue. I've said it on your program before. I mean, using taxes as a way of raising revenue is ancient these days. What every reasonable economy does is this is looking at using tax as a revenue to grow the economy. If you look at this current budget, realistically, projects, whatever they call it, it's all about revenue. It's all about customs, it's all about FRRS, it's all about income tax, revenue raise. It's all about capital acquisition, revenue. It's all about revenue. And what when you talk about revenue, revenue, you're just thinking of raising funds to do your own project. Nobody's looking at the businesses that are going to bring this revenue. How can we have this business? When you're talking about tax waivers, how many really, really SMEs have really gotten tax waivers? Most of the tax waivers you see are actually those that are close to government that are able to pull their way through government to get the tax waivers. We are not seeing developing companies. We are not seeing companies that are creating jobs coming into this country and you're giving them tax waivers, tax holiday from the next three to four years. All we see is that businesses that are there, you are putting more taxes on them. You are just thinking of that. Look, in a move to your economy, what we think about is job, using your tax revenue as a means to create job. And how do you do that? When you give them tax bracket, they are able to employ more people. Remember, people they are employing from are not exempted from paying tax. So you have a snowball. If the more of your citizens that are employed, the more tax you collect. But it's unfortunate that this government, since its inception, has never thought of looking at tax as a means to grow the economy. All they see about its tax as a means of revenue to fund their own project that they think Nigeria needs, not really how to grow these businesses that will in turn be able to bring taxes and those projects will be formed realistically. Okay, so this is also another part of, you know, budgeting that always consents a lot of economic expats. We're lucky to share your thoughts on that just yesterday, while we're just talking about it on the side. Again, the capital expenditure is pegged at 4.89 trillion, and you have the real current capital or expenditure at 6.8 trillion era. And you can actually see that we're going to pay more attention in real current expenditure, rather than capital. But some people are saying that this is actually an increase after four years, 60% increase. I'd like you to share your thoughts on that as well. When you look at that, a part of the government that was telling us they're going to reduce expenditure, remember they went to even sometime, the president was saying that we don't need six private jets that I'll be taking you know about, we may be sending some of those jets to make sure we get revenue. To reduce the current expenditure has always been the talk of this government. When you talk about the current expenditure, you begin to ask yourself, who are those people that are doing this current expenditure? Why is it always jacking up? You look at this all from the presidency to the legislators. It's not even the civil servant because you cannot say they have employed more civil servants. Remember, there's an embargo on employment. So it's all about debt, sir, because when you talk about how it's like making a scenario. Why does the president of the federal public manager need to sue media advisors? Why does he have a senior special advisor? Does he have a senior special advisor on media? Does he have a senior special advisor on media? Does senior special advisor will have his own TV? Does he have his own secretary? Look, it's all about using the current expenditure as a means of social investment. Or I mean, whatever you call it, we call it like they call it a local palace to market infrastructure because all they think about is how many of the people that helped me come to power, can I give political appointment and in turn they are going to be paid. So it's not about the people. You're looking at the current expenditure being jacked up for almost two trillion. It is not done anywhere. And how many migrants are going to benefit from this? So it's surprising that the government that are proud to be one of the government that will come the most prudent in the history of Nigeria have turned out to be the government that every year we keep seeing an increase in current expenditure. Yeah, but you know, in fairness, you know, and maybe you could also advise on this one, you know, you would expect, you know, before an economy that wants to grow that there would be more interest in capital expenditure instead of a current. But can we afford to increase the figures, you know, for our capital expenditure without borrowing more? We cannot. Other than the capital expenditure, we cannot. And you have seen that. But the other thing I always say that we should do the public private partnership where PPP, whereby the government in turn provides their own, they bring their own project as their own capital into this project. And you tell the private sector, look, you're going to build this project, you're going to build and maintain for the next five years. And after that 25 years, the government will take it over. So what government is doing is using their project as like a warranty or like a guarantor that you can take it, you give a look, we don't have to spend so that government can use this money also in developing or in meeting other social investments for the people. That's what I expect to be, especially during the, during the work we suffered all over the world because of the pandemic. So you, but I'm surprised that we're not looking at that, even when we are looking at that, it's even the private sector that in turn going to government to ask for that, which you see in terms of the Enubu, Enubu, Enubu in the road in the south is that MTN might be sited, the Dangute also have taken over some roads. So I expect that government should have been reaching out. And that is what we talk about, we develop these roads, we're going to give you a bracket for social security, you take care of this power project, this is what you're going to enjoy from us. That is what PPP, that's the new model of Porando in terms of every development economy, even the developing economy. If you look at the American infrastructure, that is what they are trying to achieve also using the PPP. So for me, I think that is the only way that we'll get more projects done and then not also involving us taking more loans for the financing of this project. Okay, so just still on that, what would be the implication of this on the economy come 2022? I mean the fact that we're going to be paying more attention to a recurrent expenditure rather than capital expenditure, would there be an implication for that? Big implication, not to forget that 2022 is an election year. You should have that in the back of your mind. And governments take the back seat. I don't expect them to see governments after the first three to four months of this year. Then you see governments take the back seat and politics become the top of the town, become the top of the day. And also you must forget that even the government have seen that, maybe the governor read that, that's why they are saying that they want to extend their life span of the 2021 budget to March because they know that governments will take the back seat. So what are we going to expect? I don't think there will be anything. Rather we will see more recurrent expenditure. There are more political appointees for those that are going to leave government are trying to also see how they can pacify those that they didn't pacify for the past eight or four years. And also for those that want to come back, they'll also be using that as a use stick also to make people vote for them to get some people back to the political center state. So governments is going to take the back seat. But the only thing about we talked about is economy. That is why we say the CBN that is supposed to be the monetary policy have become both the monetary and physical policy. So that is where you see the CBN begin to function. In both what the physical should be doing, they will do both the monetary and the fiscal policy because they know governments will take the back seat. That is the only positivity that can come up in 2022. Maybe the CBN will begin to do more direct intervention even if we have a reservation on product is better than not. One thing that we don't speak about enough is implementation of each year's budget. You know, we're not sure how much 2020 budget was implemented. And of course, you know, pretty much the same thing will happen in 2021. Mr. Mahmoud, do you think that if we can truly pump in 4.89 trillion Naira of our capital expenditure into Nigeria's infrastructure every year, we will actually see a difference? Definitely, if we do that completely, if we do that holistically, if we do that without quality point of tune, if we do that without any corruption invited in it, we could, we would have been seeing that. And you need to give it to this institution that keeps saying in terms of infrastructure, they don't very well. Even if they borrow today, you could see that some of this infrastructure, you could see that with your physical eye compared to before when you get some money. But we should always remember the slogan that was once said by one of the former minister and also a politician that said, budget approved is not money released. So money release is always a problem because sometimes this budget approved, but like you said, there's no capital to pack up the implementation of this budget. And also not to forget that sometimes, especially when it comes to infrastructure, it's only Nigeria that you see the government would have given the project before they begin to ask for the visibility study, the design for this project. Although in a developed country, you know that you're going to pass a budget for a project. You need to call the companies that want to beat for this project. You need to negotiate with them. After the negotiation, you need to approve their plan and everything. That's why you take it to the national assembly for approval. But our own is the other way around. You approve before you ask people to come and be. And that's why the challenge is that we normally have. So what would be the high point for you of the 2022 budget? And if we have to go back in time, if you know, probably correct one or two, what would be the area that you want us to pay attention to? Number one, the area I want to pay attention to is let's reduce our benchmark on oil. Let's make it as low as possible so that we can have money to save for the future generation. That's how great economies are grown. That's why that's how the economy in Dubai has grown. That's why the economy in Qatar has grown. That's how most developed economy, especially oil-driven economy, have been able to grow. They use those benchmark, use those revenue that are saved in terms of their benchmark to begin to develop other stream of income, which in turn, when there's volatility in this sector, those are the stream that comes in to help them. Unfortunately, we are not with that. That is what I want the government to do. Then I want to see the PPP more private sector coming in the area of infrastructure development, why governments save their revenue for social investment that will reduce the rate of poverty in the land. For me, who can do these kids, these two key things, I can tell you, it won't be long. Prosperity will be in the land. How would you rate our or the current administrations moves towards diversifying our economy? It was one of the things that was said a lot in 2015 and also in 2019. We have just a little above a year before the next elections. Do you think that they've done well enough with diversifying our economy or still where we were? You said 2015, say 2019. Remember, 2015, why did they say that the price of oil crude was about $40, $35 when they came? They were shorting diversification. 2019, why did they say that the price of crude came down? The pandemic was there. They started shorting diversification. Once the price of crude has gone to $70,000 to $80,000, how much noise did we have about diversification? So, diversification has become a deep services. The only place that we see diversification work is those diversification that we see direct intervention by the CDN, especially the anchor borrowing scheme that has to do with the rice production. You also will see diversification in the area wheat production that they are trying to do. This is diversification in order that you need to give it that in terms of the non-oil revenue, it has been one of the best so far thus far because we've seen that oil in the last report that we're given by NBC, oil was even contributing more. I mean, non-oil sector was contributing more in positive to the negativity that we saw in the oil sector. So, when you look at that, but you need to say that those things, those interventions have come from the monetary policy instead of the fiscal policy. You could imagine if the fiscal and monetary policy are on the same page, the same synergy in terms of implementation of crude, whether monetary or fiscal, then would have seen astronaut cargo. Have they done well? I think they've done the best they can in terms of in the non-oil sector. I think they tried in that way. But would they have done better? They would have done better if they really have matched their words with action, especially times when the price of crude was at its lowest level. But again, you must realize that what we need to know is that it's just like you're working in an establishment and you are earning revenue. Your key revenue is where you are working. So, the salary they pay you in the month. What you do with your salary in the month is to diversify into other states of income so that it will augment your salary. So, our key revenue is still oil. So, we cannot run away from that. But what do we do? We use that oil to begin to develop other sector. That is what we have not done thus far. So, why has that been a major concern for us and an issue? Because we, of course, this morning we hear that the government is making plans to launch the national new development plan and what have you. And the talk for diversifying the economy would always come with development plans. So, that has been ongoing with successive governments. You've had from 1966, there about shortly after trying to recover from the Civil War up until this point. So, you have different agendas, the different development plans. And why have we been able to you know, have a handle on diversification? All the infrastructure, the political way to implement, all the structure to implement some of this, of this document. Now, you're talking about a five-year development plan that the government is trying to launch. Remember that we have the economic recovery group plan that was supposed to be one of the pillar of this ambitious, it was supposed to be like a 10-year plan. That plan has its depth, it has its depth, but even until it took the war richest man, then they'll get to pick a hole in that economic recovery group and before the government took it up and say they're taking it to the laboratory. And now we're coming from the laboratory, we are playing five-year developmental plan. And what we keep saying is that in terms of plan, plan is not the problem. What are the structures that you're putting in play that these plans are implementing? That is the major challenge. You don't just drive up a white elephant with it and you don't even have the manpower, you don't even have the financial capability to go. So in terms of that, I think it's lack of political will. And again, it's lack of government-ready to do the work. Government is not ready to do the work. Remember that it takes, it doesn't take them so much. You just take our food outside, you get the revenue. But when you're talking about diversification in the non-OEA cycle, you know you need to do the work. You need to do the work. You need to meet the people. You need to begin to think out of the box. And that is one area that you know. Governance is not good at thinking out of the box. All they think about is what is the easier way out of the problem. So that's why we have had those programs because we've not had a government that begin to think out of the box and begin to see how we can group this non-OEA sector. And when you want to build a non-OEA sector, then you need to look at the informal sector. When you are looking at the informal sector, you need to look at infrastructure. So that is why it has been a big challenge for us. Well, Mokhtar Mohamed, like you've projected and like you've said, let's enjoy the first three, four months of 2022 before politics can start. And hopefully, you know, there would be some benefits from the budget that we would enjoy before we are all, you know, put on the back seat for politics. Thank you very much for your time this morning. And compliments of the season once again have a very interesting Christmas. I like your Christmas party. I wish you a good one. Thank you. You can. Good one and once again. All right. All right. And this is where we end the conversation this morning. A couple of days to Christmas, we're wishing you a very, very interesting celebration in the next week plus all the way to the new year. But of course, remember to stay with us every day. And if you missed out on any part of our conversation, it's simply a plus to the Africa on Facebook and Instagram. Same with our YouTube channel. Yes, a Class C, the Africa lifestyle. And do not forget to always protect yourself, wear your nose mags, respect the social distancing and be paranoid with washing your hands. I am messy hopeful. I am Osaogi O'Born.