Nigerian foremost business group, the Lagos Chamber of Commerce and Industry (LCCI), has identified grey areas in the 2013 budget presented Wednesday by President Goodluck Jonathan, saying that it would not favour the private sector.
The private Guardian newspaper on Friday reports that the position of the group was made known by its Director-General, Mr. Muda Yusuf.
In the proposal, President Jonathan presented a 4.93 trillion naira budget to parliament, increasing spending but shrinking the deficit and cutting the share taken by recurrent expenditure.
The LCCI boss was quoted as saying that the allocations for infrastructural development and some other critical sectors of the economy were grossly inadequate.
Yusuf said that there was the need for the government to do a lot more in the areas of electricity, roads and agriculture.
The LCCI boss also noted that the allocation is a combination of both recurrent and capital, which implies that the capital content was even much lower.
He said the budget speech also lacked monetary policy content.
According to him, “It would have been useful for the president to highlight the thrust of monetary policy as this is critical to the realization of inclusive growth and fiscal consolidation. This is even more so at a time when businesses are facing severe challenges with regard to access and cost of credit.
“The banking system currently has zero tolerance for risk and this is stifling private sector growth and the capacity of entrepreneurs to create jobs. Collateral demands for loans are as high as 200 per cent. This is a negation of the objective of inclusive growth and a real threat to financial intermediation.”
He also observed that the government was progressively crowding out the private sector in the credit market, stressing that these were fundamental issues that needed to be addressed to stimulate growth and create jobs.
Yusuf noted that the adjustments of 3.7 per cent in reduction in recurrent expenditure from 72.43 per cent to 68.7 per cent and the increase of 2.8 per cent in capital budget from 28.5 per cent to 31.3 per cent were not profound enough to provide the needed infrastructural support to stimulate the economy.
He expressed concern over the growing level of domestic debt and the high cost of debt servicing.
“Domestic borrowing is proposed to reduce from 747 billion Naira in 2012 to 727 billion Naira in 2013, a mere 2.3 per cent reduction.
However, the provision of 100 billion Naira sinking fund for the repayment of maturing debt obligations is a welcomed development,” Yusuf said.
He, however, noted that the imposition of the 100 per cent levy on rice, which is a staple food, may have some unintended consequences if there was no adequate supply side response on the domestic front.
Yusuf assured that the business group was in full support of the self-reliance aspirations in food production, stressing that for such a policy to be sustainable, there should be a deliberate policy and practical steps to build capacity to fill the demand-supply gaps that would be created.
But the chamber commended the Federal Government for the early presentation of the 2013 budget to the National Assembly, saying it would allow sufficient time for deliberations and passage of the budget by the legislature as well as enhance implementation.