Economic or trade unions all have something in common; to form a sizable market that can position its member states in a vantage standpoint needed to influence trade negotiations or expand the economic prosperity of its people through joint policy.  Economic unions or blocs are not necessarily formed to increase population size, promote consumerism or extend geographical space. They aim at enhancing market efficiency, promoting healthy competition, attracting foreign direct investment, expanding trade, promoting the economic interest of member states.

Instituted through the Lagos Treaty on the 28^th of May 1975, the Economic Community of West African States (ECOWAS) now has 15 members, occupies a geographical area of about 5,114,162 km² and market size of over 350 million people. With a combined GDP of approximately US$716.7 billion, ECOWAS possesses the required tools to improve West Africa economy. Forty-three (43) years down the line, some successes have been recorded, but yet the pace of influence and development have been slow. But we strongly believe that ECOWAS could be a catalytic entity for the emancipation of West Africa countries in the committee of Nations.

Custom, Manufacturing Capacity and Trade

Although within a trade bloc, the joint promotion of the regional welfare is emphasized, yet the member states with strong producing capacity tend to recoup most benefit.  While this is so, it could promote intense competition among member states thereby ensuring surplus output, varieties of good and services, and reduced prices for consumers. The ultimate result of these chains of actions will be expanded exports and foreign exchange inflow for member states. In 2016, the combined export value of ECOWAS was about US$101.4 billion, far below the export value of individual countries such as Turkey ($157.3 billion), Malaysia ($188.2billion) and some hosts.

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ECOWAS, 2016

While, it would have been expected that the member states trade more with each other, but the intra-trade trend shows that ECOWAS members trade less with each other, recording a yearly average of US$ 12.9 billion worth of goods and services from 2011 to 2016. There still exist some levels of barriers in trading with each other, an indication that the Economic/Trade Union did not result to Customs Union.  In addition to these, ECOWAS export to the outside world has been unstable and tumbling downward at a geometric pace, losing an average of US $10.5 billion every year and about the US $ 55.4 billion every two years. Examining the bloc’ s trade partners shows that about 83.7 percent of ECOWAS exports are to Europe and the Americas, about 16 percent en route to Asia and Oceania, with only 0.3% to the Middle East. The export composition still reflects the dominance of primary goods with little or no value addition.  All these are signals that the manufacturing capacity of the ECOWAS states are still lagging behind and the bloc needs a workable export strategy to create the needed prosperity and jobs among its member.

The Prosperity Joystick

ECOWAS states are not yet fully integrated economically. The bloc needs to focus more on economic integration through the following:

• Capital and Talent mobility: Despite the attainment of the ECOWAS passport, the inability to implement a vibrant custom and immigration union has been hampering free mobility among member states. The borders of member states are heavily armed with tank and armoury such that people and goods spending hours for documentation and It should be noted that without joint policing across the border, the free flow may not be fully achieved. This can be improved upon.
• Monetary integration: The existence of money brings in liquidity and easy flow of trade. With the US dollar as a third party currency, the full actualization of stress-free trade among members may not be completely achieved. But, the introduction of ECOWAS currency will necessitate joint monetary coordination and harmonization of macroeconomic policy among members.
• Friendly Investment Policy and Joint Trade Strategy: ECOWAS could facilitate FDI into West Africa and can support member states with research-based trade strategy, for instance, on the need to expand trade to the Middle-East region. This should also be considered for quick implementation" alt="" width="700" height="416" />

Morocco could be the Game Changer

The willingness of Morroco to join the union despite its geographical located in the North shows the presence of a pull “incentive-like” factor in ECOWAS not fully explored by the old members; the large market, massive labour or trade advantage. The country formally belongs to the Arab Maghreb Union (UAM) but has disagreements with the bloc, especially Algeria. In the past decade, Morocco trade with ECOWAS member states had grown up to US$ 1 billion in 2016. Nigeria, Côte d’Ivoire, Senegal, and Mauritania happen to be the biggest importers of Morocco goods such as foodstuffs, machinery and chemical goods. With a strong domestic manufacturing base, Morocco stands the chance of replacing some part of ECOWAS importations from Europe and Americas, while addressing its wider current account and trade deficit, in addition to improving its unstable economic growth. As the Manufacturers Association of Nigeria (MAN) continues to oppose the admission of Morocco into ECOWAS, such moves will not add to Nigeria’s productive capacity. Even as Morocco’s admittance will promote competitiveness, Nigeria will, therefore, need to reform its productive base to able to enjoy the benefit of the membership of any trade bloc it belongs to now or in the future.

In conclusion, as the economic pie grows big, everyone stands will have a bigger share. As the productive capacity of member states increases and trade activities with each other expands, more business opportunities will spring up, jobs and income in the region will increase. With the growing population in West Africa, this is partly what the ECOWAS needs to tame the Africa-Europe migration/refugee challenges and as well as achieve the sustainable development goals (SDGs).

The impact of tobacco use on health, mortality as well as economic and social well-being is enormous. Tobacco use is the most preventable cause of death worldwide with an approximate 6 million deaths per year. Interestingly, the current trend portends that tobacco use will cause more than 8 million deaths annually by 2030. The attendant consequences of tobacco use has necessitated discourses on tobacco prevention and control in global policy spaces.

Although tobacco use and control in Africa has received little attention relative to other regions of the world like Asia, due to the perceived low smoking prevalence, smoking prevalence is rising. For instance, a 2012 study revealed that Tobacco use was responsible for 25 percent of all preventable deaths in Sub-Saharan Africa. In Nigeria specifically, tobacco related diseases was responsible for about 17, 500 deaths in 2015 (this translated to about 207 men and 130 women per week) and about 250, 000 cancer diagnoses.

Tobacco smoking is highly addictive and despite measures taken to limit its consumption, smoking prevalence is rising. Globally, governments are taking stringent measures to control tobacco use, and tobacco companies are responding innovatively through creation of other forms of tobacco including smokeless tobacco, cigars, pipes, hookahs (water pipes). However, as research has shown, the composition of all forms of tobacco products are harmful to health.

Composition and Dangers of Tobacco Smoke

Tobacco smoke contains more than 7, 000 chemicals and at least 250 of these chemicals have drastic consequences on health. Among the 250 harmful chemicals in tobacco smoke, at least 69 cause cancer. Some of the cancer-causing chemicals include carbon monoxide, copper, arsenic, benzene, ammonia, formaldehyde, nicotine, acetone, toluene, methanol and methane.

Tobacco smoke is a causative agent of cancer of the lung, esophagus, larynx, mouth, throat, kidney, bladder, liver, pancreas, stomach, cervix, colon and rectum. It also causes heart disease, rheumatoid arthritis, erectile dysfunction and arthritis amongst others. Tobacco smoke has adverse effect on pregnant women. For instance, tobacco smoke increases risk of miscarriage, premature delivery and ectopic pregnancy. The effects of tobacco smoke on children are not more charitable as it causes respiratory infections (bronchitis and pneumonia), asthma induction, Sudden Infant Death Syndrome (SIDS) among others.

Second-Hand Smoking

Unfortunately, non-smokers who are exposed to tobacco smoke risk exposure to cancer. Secondhand smoking which is also called passive smoking, is exposure to either the smoke exhaled by a smoker or the smoke from a burning tobacco product. According to research, inhaling second-hand smoke causes lung cancer and is estimated to cause about 600, 000 premature deaths per year.

Impact on the Economy

The effects of tobacco smoke spills over from health to economic and social well-being. It is widely accepted that tobacco use and poverty are intertwined and their presence could forestall economic development. In the poorest of households, especially in low-income countries, as much as 10 percent of total household expenditure is spent on tobacco, making money less available for other basic items such as food, education and health care. In 2015, the economic losses incurred by tobacco smoke in Nigeria were estimated at 591 million dollars. With a rising smoking prevalence of 4 percent each year; from 11.3 percent in 2000 to 17.4 percent in 2015, the question of tobacco control is one the Nigerian policy space can no longer shy away from.

How then do we control this endemic?

This has been the question of policy-makers, civil society organizations, researchers, advocates of tobacco control and international development partners especially as tobacco is a legal product and as such cannot be banned. Among several control measures such as banning smoking in public places; restricting sale to certain populations; effectively controlling borders from smuggled products etc., the World Health Organization (WHO) considers tobacco taxation as the most effective control tool. Tobacco taxation has the potential of simultaneously delivering on the tasks of reducing tobacco consumption, improving public health and raising substantial government revenues that can be used to fund tobacco control projects.

For effectiveness, the WHO recommends a tobacco excise tax burden of 75 percent. However, in Nigeria, the excise tax burden is 20 percent per unit of cost of production, representing 15. 87 percent of the retail price of most consumed cigarettes. This is a far cry from the WHO recommended benchmark.

Is Nigeria’s New Tax Policy Substantial Enough?

Recently, the Nigeria government approved an additional ₦1 specific tax on each stick of cigarette (₦20 per pack), which would increase to ₦2 per stick in 2019 (₦40 per pack) and eventually ₦2.90 per stick in 2020 (₦58 per pack) while maintaining the current 20 percent ad valorem tobacco excise duty rate. This new excise duty on tobacco which amounts to a 17 percent excise tax burden is still way below the WHO recommended 75 percent excise tax burden. No doubt, this policy decision reflects the commitment of the Government to tackle the tobacco endemic, reduce cigarette consumption and improve public health. However, the new excise tax burden of 17% is not substantial enough to deliver on effective tobacco control.

Conclusion Government efforts in tobacco control needs to be sustained till the WHO recommended benchmark is attained. It is expected that the increase in excise tax on tobacco products would inadvertently create a setting for illicit trade in tobacco to thrive. Therefore, the government needs to be proactive in monitoring, evaluation and efficient manning of borders.

Human development indicators show that Nigeria does not adequately invest in its people. Nigeria continues to perform abysmally in key health and education indicators. The country is the Download File">second largest contributor to the world’s maternal mortality rate. Worse still, pregnant women are not the only ones faced with this bleak reality as the average Nigerian is expected to die at Download File">age 53. On education, Download File">10.5 million children are not enrolled in school, the world’s highest number of out-of-school children, and Download PDF">four out of five children who have completed primary education cannot read.

The country’s low human capital has caught the attention of philanthropists: the founders of the Download File">Tony Elumelu Foundation, Dangote Foundation, and more recently, Download File">Bill and Melinda Gates Foundation. While at the National Economic Council in March 2018, Bill Gates, co-founder of the Bill and Melinda Gates Foundation pointed out that the government’s low investment in the education and health sectors has contributed to these poor outcomes. In 2018, the proposed national budget for education as a percentage of GDP is a meagre 0.005 percent which is a significant shortfall from the UN-recommended 6 percent. In the same year, the budget share for health stood at 4 percent, significantly lower than the AU-recommended 15 percent.

However, increased funding is not the sole pathway to positive outcomes in these sectors. According to Gates, availability of facilities, stock of medicine and equipment, among other non-financing mechanisms, are equally critical in achieving improvements in the health sector. A Download File">paper by my colleague, Joseph Ishaku, shares the same opinion. The study shows the importance of school quality - class size, textbook availability, school organization, and feeding programme – in the learning outcomes of children.

Alternatives to Increased Funding

With the same funding, the government can deliver better education and health outcomes by leveraging on the skills and resources of relevant stakeholders. Partnerships with the private sector, donor community and development institutions will share risks and expertise, promote coordination and prevent duplication of efforts. On education, Abia state is a notable example on public-private partnerships. Abia, which has topped WAEC results across the country for three years (2015, 2016 and 2017) in a row, adopted the Download File">Friends of Abia School Adoption Initiative (FASAI) in 2015. Through FASAI, indigenes of the state contribute to the state’s educational system by paying for the fees of school children and/or renovating school buildings.

Infusing technology is another means to help the government accomplish more for less. In the health sector, technology can aid in providing access to healthcare services in rural areas and fragile zones, curtail diagnostic errors and reduce mortality. In 2009, Ondo state government demonstrated how technology can be deployed to solve a health problem. The government initiated the Download File">Abiye (Safe Motherhood) Program which offered cell phones to expectant mothers in order to connect them to health workers, increasing skilled-attendance of birth by fifteen-folds.

Lastly, improved data collection is critical in deploying proven methods rather than wasting time and resources by reinventing the wheel. Establishing a unified data collection system at both federal and state levels will aid in making fact-based decisions, utilize scarce resources more efficiently and track improvement in outcomes.

According to economic theory, investments in human capital – skills, knowledge and health of people - is essential to a country’s economic growth process. U.S. history tells the story of how five men - Download File">Cornelius Vanderbilt, John D. Rockefeller, Andrew Carnegie, J. P. Morgan, Thomas Edison and Henry Ford –  and their workers transformed the U.S. into a global super power. Chinese entrepreneurs, in part, transformed the former communist nation to capitalism, turning China into the second biggest global economy. Nigeria with its young population structure (over half of the population is below age 18) stands a great chance of reaping significant demographic dividends if its citizens are productive and actively participate in the economy. Investments in education and health sectors will develop Nigeria’s most valuable resource – the Nigerian people - and engender long-term economic growth.

1. Stifling of economic growth: Firstly, government spending contributes directly to the economy through transfers and capital expenditures. This means that a delay in budget implementation would reduce government’s contribution to economic growth. Secondly, the government’s plan on revenue generation and expenditures (otherwise known as fiscal policy), influences other economic agent decisions like whether government is going to spend more (expansionary) or spend less (contractionary). A budget delay would therefore bring about uncertainty in the government fiscal policy direction. Thirdly, budget delay only affects capital expenditure such as infrastructural development. It doesn’t affect recurrent expenditures like payment of salaries. This means that infrastructural development such as building of hospitals, schools, construction of roads etc. would be significantly constrained.
2. Poor budget implementation: It is quite logical to also expect that budget delay would bring about poor budget implementation. For example, Projects may be carried out haphazardly in order to meet up with the expected time. Additionally, budget delays introduces lack of accountability into the budget process, which could lead into diversion of public resources.
3. Negative impact on Domestic investment: Budget delay brings uncertainty not just on the Government’s fiscal policy direction, but also on the decisions of the private sector. Since the private sector play a critical role in job creation, budget delay would indirectly affect employment level. For Nigeria, with an unemployed population of over 15.9 million people, budget delay further complicates the problem.

Public budget plays a crucial role in economic management and broader development policies. Importantly, it is the main transmission mechanism of fiscal policy and the key tool through which government could stabilize and influence the economic direction. Global experience in public budgeting indicates that countries adopt a defined time horizon or standardized budgetary calendar. The budgetary calendar does not necessary synchronize with the Gregorian dating but only requires a fixed start and end periods for each fiscal cycle. The importance of having budgetary calendar is to reduce uncertainty that could affect optimization behavior and expectation of economic dramatic personae.  The rigid time frame also ensures discipline and enhances coordination.

In the case of Nigeria, public budgeting is expected to follow the Gregorian dating, beginning on January 1 and ending on December, 31. Based on Section 82.1 of the 1999 constitution, it is anticipated that appropriation bill will have been passed before the beginning of a financial year. In fact, the constitution considers delay in budget passage as an aberration, such that new government expenditure is restricted and only functional spending, which is fixed to the corresponding period estimate, is  allowed. However, in the past two decades of democratic governance in Nigeria, budget delay has become a norm, with the standardized budgetary calendar adhered to only twice in the past twenty years. In this piece, we shed light on economic impact of budget delay, to highlight on an important area for public sector reform.

The Nigerian budget cycle and the source of budget delay

The budget cycle starts with the executive articulating its vision and plan for the economy to the Ministry of Finance (MoF) and the Budget Office of the Federation (BOF) through the medium-term fiscal framework. Depending on the division of functions, the MoF and Ministry of Budget and Planning alternate this role. After this, the BOF and MoF introduce a form of transparency by involving stakeholders such as NASS, the National Economic Council organized private sector, Civil Society and Public Sector through series of interactive sessions. Through this multi-stakeholder process, the revenue is estimated and MDAs expenditure ceilings are set. Thereafter, the FMF circulates the Budget Call Circular in June of each year, which is a formal invitation for MDAs to begin budget submission.

Figure 1 shows how budget proceeds from the stage when the MDAs submit their estimates, in line with zero-based budgeting. All submissions are evaluated and consolidated by the BOF and the draft is presented to the President and the Federal Executive Council for approval. The proposed budget is then submitted by the President to the National Assembly for review, deliberations and approval around October of each year. The budget is at this stage scrutinized and evaluated separately by the Senate and Representatives through debates and various committees. However, there is no time limit for the National Assembly to draw up the final budget. Final phase involves the assent of the appropriation bill and implementation by the executive.

Figure 1: Nigerian budget process

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The budget process in Nigeria has never been as smooth as expected. The cause of the delay is multifaceted. However, the budget is substantially delayed at the legislative action phase. This is because the two legislative layers separately review the budget and subsequently harmonize it into a single budget document. Also, disagreement between the legislature and executive on the expenditure items and level could drag the process, playing back-and-forth between the legislative action and the final phase.

Measuring the cost of delay

To provide a sense of economic impact of budget delay, we compare economic growth in quarter(s) before and after budget is passed. The rationale is that if budget delay is costless, growth in the two periods should not be significantly different. The result is shown in Figure 2. We interrogate the economic effect further by fitting the trend line and deriving the regression coefficients between budget delay and various economic outcomes. The results are graphical displayed using scatter diagram in Figure 3 Budget delay is measured by numbers of days between January, 1 and the when the President assented the budget. Also, we focus on four economic outcomes: GDP growth, FDI growth, domestic investment growth and the percentage of budget implementation. The analysis covers 2000 to 2017, the entire fourth republic.

Figure 2: Comparison of economic growth in quarters before and after budget signing

Data source: NBS, 2018 and Authors compilation

Figure 3: Scatter diagram of Budget delay and GDP growth, FDI, Domestic Investment and budget Implementation

Data source: NBS, 2018 and Authors compilation

The emerging facts

Based on analysis in Figures 2 and 3, the following observations can be drawn on the economic cost of budget delay:

• Budget delay impacts negatively on economic growth: We found an inverse relationship (-0.025) between the budget delays and economic growth. Specifically, a 100 days delay in the budget implementation tends to depress the economy by 2.5 percent. Similarly, a comparison of quarterly performance indicates growth is higher by about 1.82 percentage point in quarters after budget passage than before. Several factors could explain this trend. First, government contributes directly to economy through government spending (transfers and capital expenditure), which means that budget delay depresses its contribution to GDP. Second, other economic agent decisions are influence by government fiscal plan, whether expansionary or contractionary policy. Uncertainty on government policy direction therefore amplify the economic cost due to the delay. Lastly, budget delay only affects capital expenditure, as recurrent expenditure falls within functional activities. This means infrastructural development which is a key enabler for economic growth will be significantly constrained.
• Budget delay leads to poor budget implementation: Unsurprisingly, the poor implementation are more pronounced in fiscal years with considerable budget delay. A negative correlation coefficient of -0.001 was found between budget delay and percentage of budget implementation. Poor budget implementation no doubt at the root cause of poor service delivery. Budget delay also introduces opacity into the budget process, which could induce diversion of public resources.
• Domestic investment is negatively affected: The analysis also finds a negative relationship (-0.040) between domestic investment and budget delay. One explanation for this is the uncertainty induced by budget delay on decision and expectation of private sector. In addition, given the crucial role the private sector plays in job creation, the budget delay indirectly affects employment level.

Conclusion

Public budget is an important policy document that provides a roadmap for government activities and programmes for a fiscal year. To meet this goal, it needs to operate within a define time horizon and engender economic stability. Nigeria’s experience of endlessly dragging the budget process has needlessly imposed substantial economic costs on the public and private sectors. The policy implication is obvious—policymakers must ensure a standardized budgetary calendar. Less obvious is whether there is an alignment of political interests to realize it. It is not clear who benefits from the delay, but budget actors seem to stall the process in a ‘war of attrition’ to maximize their benefits. Essentially, budget delay reflects the power and interest frictions among political actors. In this respect, it might be exigent for Nigerian fiscal rule to be broadened to also include a mandatory standardized budgetary calendar and a define timeframe for each budget process