Kansas City Shuffle- Naija Style

We all know what has been happening in Nigeria in the last few weeks, with the Acting President taking over, dissolving the cabinet and then replacing the cabinet with new ministers. Again, we all know that there are going to be elections at the start of next year.

So this is why I find it quite interesting, and also not so surprising that the 2010 budget was passed by the National Assembly at a time when the executive was in disarray i.e. when there were no ministers. Normally, there are intense negotiations between the Executive and the Legislative on the items in the budget before it is finally passed- this year, that wasn’t really the case.

The budget for 2010 was passed on March 25th- 3 good months after the start of the year- meaning that it has only 9 months of implementation left in it!!!! Again, like in my previous notes, I will apologize for my naivety, but when I say that I expected increased spending this year, especially as it is a pre-election year, I didn’t really think it would be this bad. What is worse, is that it happened without anyone noticing? Like what they called it in the film, ‘Lucky Number Slevin’- it was a near perfect "Kansas City Shuffle".

The National Assembly increased the budget expenditure by about 13% compared to the proposal that was submitted to them!!!!! Let me try and put things in perspective- this is a 48% increase in spending compared to last year-and I ask you, what has changed? I’ll tell you what hasn’t changed:

1. Budget implementation is still below 50%
2. Nigeria is still vulnerable to the swings in international oil prices- at a time when the global economy is still trying to stabilize itself
3. There is still widespread corruption in Nigeria
4. Capacity in the Ministries, Departments & Agencies which are meant to implement this budget is still very low!!

I'll re-iterate what has changed:

1. Next year is an election year
2. There were no ministers to scrutinize these increases

Ok, so you ask me, what are the numbers…?

Expenditure (in trillions):

• 4.608 (2010 Budget Passed)- i.e. 48% increase from 2009
• 4.079 (2010 Budget Proposed)
• 3.10 (2009 Budget)

Benchmark Oil Price ($/bbl):

• 67 (2010 Budget Passed)
• 57 (2010 Budget Proposed)
• 45 (2009 Budget)

Oil Output (million barrels per day):

• 2.350 (2010 Budget Passed)
• 2.088 (2010 Budget Proposed)
• 2.290 (2009 Budget)

Two key things to note:

1. It assumes an oil price of $67/bbl…quite high in my opinion
2. Oil production of 2.35 million barrels per day…until the Niger Delta conflict was resolved by Yaradua…Nigeria’s oil production was still below 2 million barrels per day…there are still uncertainties as to the sustainability of the measures taken to resolve the conflict..so again, this number is quite optimistic.

This increased spending/ debt comes at a time when the excess crude account has been depleted. You should equate the excess crude account to an emergency savings account that you could use in an emergency when you don’t have any more money. Due to the economic recession, the Excess crude account which you would equate to your personal savings was at $20.1bn at the end of 2008, and $7.8bn by the end of 2009. Now its currently at about $3.2 bn!!!!

After looking at this, I thought, it might be wise to see the National Assembly’s share of this money & how they plan to spend it….and I was quite shocked!!!

There are about 109 senators in Nigeria, this would equate to a rough 17million naira salary for each senator. What shocks me most is the budgeted spending on things like Office Materials & Supplies- it is 1.6 billion. Are you telling me that pens, paper, pencils and office files cost 15 million per senator for a year??? I don’t know about you but I wanna buy whatever pen they are buying…cos it must be made with gold dust. We’ve all heard about sitting allowances, and by my rough calculation the number comes to about 139 million naira per senator??? And this is for sitting for about 3 times a week to deliberate bills. But yet, we still havnt had the electoral reform bill, the petroleum industry bill and several other key bills which need to be passed. In fact how many bills did they pass in their sittings last year?

Be a Nigerian...Mahmoud