President Muhammadu Buhari on Tuesday presented a N7.298 trillion 2017 budget before a joint session of the National Assembly, stating that the budget was designed to drive infrastructure, enhance growth and investment, boost local production and consumption and create jobs.
Buhari, who arrived the chamber of the House of Representatives at 1.59 p.m., said the budget comprised N2.98 trillion non-debt recurrent expenditure, capital expenditure of N2.24 trillion (including capital of statutory transfers) and a fiscal deficit of N2.36 trillion (about 2.18 per cent of gross domestic product (GDP).
He said the deficit would be financed mainly by projected borrowing of about N2.32 trillion, while N1.067 trillion or about 46 per cent of the borrowing would be sourced from external sources and N1.254 trillion to be borrowed from the domestic market.
Furthermore, he said the budget consisted of statutory transfers of N419.02 billion, allocation for debt service of N1.66 trillion and a sinking fund of N177.46 billion for the retirement of certain maturing bonds.
The president added: “Based on these assumptions, aggregate revenue available to fund the federal budget is N4.94 trillion. This is 28 per cent higher than 2016 full year projections.
“Oil is projected to contribute N1.985 trillion of this amount. Non-oil revenues, largely comprising company income tax, value added tax, Customs and Excise duties, and Federation Account levies, are estimated to contribute N1.373 trillion.
“We have set a more realistic projection of N807.57 billion for independent revenues, while we have projected receipts of N565.1 billion from various recoveries. Other revenue sources, including mining, amount to N210.9 billion.
“With regards to expenditure, we have proposed a budget size of N7.298 trillion which is a nominal 20.4 per cent increase over 2016 estimates, of which 30.7 per cent of this expenditure will be capital, in line with our determination to reflate and pull the economy out of the current recession.
“Distinguished members of the National Assembly, the 2017 budget is based on a benchmark crude oil price of US$42.5 per barrel; oil production estimate of 2.2 million barrels per day; and an average exchange rate of N305 to the US dollar.”
Buhari, who said the budgetary allocation to the judiciary had been increased from N70 billion to N100 billion, added that the increase was meant to enhance the independence of the judiciary and simultaneously enable the judges to perform their functions effectively.
He gave the breakdown of recurrent expenditure to include N482.37 billion for the Ministry of Interior; N398.01 billion for Ministry of Education; N325.87 billion for Ministry of Defence; and N252.87 billion for Ministry of Health.
According to him, the government had decided to maintain the personnel cost of about N1.8 trillion in order to complete the work that had been started, which he said would include the elimination of all ghost workers from government payroll.
He pointed out that adequate provisions had been made in the budget to ensure that all civil service personnel who had not been enrolled on the Integrated Personnel Payroll Information System (IPPIS) platform were captured.
The president also informed his audience that the Efficiency Unit of the Federal Ministry of Finance had been mandated to cut certain overhead costs by 20 per cent in order to eliminate all non-essential costs and consequently free resources to fund the capital expenditure.
A breakdown of capital allocations to various sectors as presented by the president shows that the Ministry of Power, Works and Housing got the lion share of the budget with N529 billion. This was followed by the Ministry of Transportation with N262 billion.
Others are: Special Intervention Programme, N150 billion; Ministry of Defence, N140 billion; Ministry of Water Resources, N85 billion; Ministry of Industry, Trade and Investment, N81 billion; Ministry of Interior, N63 billion; Ministry of Education, N50 billion; Universal Basic Education Commission, N92 billion; Ministry of Health, N51 billion; Federal Capital Territory (FCT), N37 billion; Niger Delta Ministry, N33 billion; Niger Delta Development Commission, N61 billion; Presidential Amnesty Programme, N65 billion; and rehabilitation of the North-east, N45 billion.
The budget also includes N100 billion for Special Intervention Programme “as seed money into the N1 trillion Family Homes Fund that will underpin a new social housing programme”.
The president said: “This substantial expenditure is expected to stimulate construction activity throughout the country.”
He said higher allocations had been made for infrastructure projects because they would have multiplier effects on productivity, employment and would boost private sector investments in the country.
The president added: “Efforts to fast-track the modernisation of our railway system will receive further boost through the allocation of N213.14 billion as counterpart funding for the Lagos-Kano, Calabar-Lagos, Ajaokuta-Itakpe-Warri rail line and the Kaduna-Abuja railway projects.
“As I mentioned earlier, in 2016, we invested a lot of time ensuring the paper work is done properly while negotiating the best deal for Nigeria. I must admit this took longer than expected, but I am optimistic that these projects will commence in 2017 for all to see.
“Given the emphasis placed on industrialisation and supporting (small and medium enterprises (SMEs), the sum of N50 billion has been set aside as federal government contribution for the expansion of existing, as well as for the development of new export processing and special economic zones.
“These will be developed in partnership with the private sector, as we continue our efforts to promote and protect Nigerian businesses.
“Furthermore, as the benefits of agriculture and mining are starting to become visible, I have instructed that the export expansion grant should be revived in the form of tax credits to companies.
“This will further enhance the development of the agriculture and mining sectors, thereby attracting more investment and creating more jobs. The sum of N20 billion has been voted for the revival of this programme.
“Our small and medium-scale businesses continue to face difficulties in accessing long-term and more affordable credits. To address this situation, the sum of N15 billion has been provided for the recapitalisation of the Bank of Industry and the Bank of Agriculture.
“In addition, the Development Bank of Nigeria will soon start operations with US$1.3 billion focused exclusively on small and medium-sized enterprises.”
Buhari further said agriculture remained the expression of the federal government’s commitment to diversify the economy with what he described as an historic allocation of N92 billion to the sector.
He said the sum would compliment the efforts by both the Ministry of Agriculture and Central Bank of Nigeria (CBN) to boost agriculture output “through increased intervention funding at a single digit interest rate under the Anchor Borrowers’ Programme, commercial agriculture credit schemes and the Nigeria Incentive-Based Risk-Sharing System for Agricultural Lending”.
The president also said the government’s agriculture policy would “focus on integrated development of the sector by facilitating access to inputs, improving market access, providing equipment and storage, as well as supporting the development of commodity exchanges”.
He also said the government in 2017 would pursue job creation by improving the skills of the labour force, especially young people and consequently work with the private sector and state governments with a view to establishing and operating model technical and vocational education institutes.
Buhari said the government had proposed to boost healthcare through the expansion of coverage to primary healthcare centres and the National Health Insurance Scheme (NHIS).
On the Special Intervention Programme, the president added that the 2017 budget proposal had retained the allocation of N500 billion for the programme which he said would comprise the Home-grown School Feeding Programme, Government Economic Empowerment Programme, and the N-Power Job Creation Programme,
The N-Power programme, he said, would provide loans for traders and artisans; effect conditional cash transfers to the poorest families and provide funds for the Family Homes Fund (social housing scheme).
“The N-Power Programme has recently taken off with the employment of 200,000 graduates across the country, while the School Feeding Programme has commenced in a few states where the verification of caterers has been completed,” he added.
He said the government had also made significant allocations to the Ministry of Water Resources, explaining that in pursuit of economic recovery and inclusive growth and development, significant importance must be attached to integrated water resource management.
Against this background, he said many river-basin projects would be completed in 2017 while an increase of N9.52 billion, representing a 92 per cent increase, had been allocated to the Ministry of Environment as a mark of the government’s attention to environmental matters including climate change and the clean up of the Niger Delta.
Also giving an account on the implementation of the 2016 budget, Buhari said: “On the basis of the budget’s assumptions, aggregate revenue was projected at N3.86 trillion while the expenditure outlay was estimated at N6.06 trillion.
“The deficit of N2.2 trillion, which was about 2.14 per cent of GDP was expected to be mainly financed through borrowing.”
However, he said the assumptions were not achieved as a result of relatively low oil prices in the first quarter of 2016 and disruptions in crude oil production, which he said led to significant shortfalls in projected revenue.
He said the situation slowed down economic recovery and negatively affected revenue generation by the Federal Inland Revenue Service (FIRS) and the Nigerian Customs Service (NCS).
The president said that as of September 30, 2016, the government only generated N2.17 trillion revenue (25 per cent less than prorated projections); spent N3.58 trillion on recurrent and capital expenditure, amounting to 79 per cent of the prorated full year expenditure estimate of N4.54 trillion at the end of September 2016.
He explained that N753.6 billion was specifically released as capital expenditure during the period, an amount he said exceeded the aggregate capital expenditure budget for 2015.
Buhari was accompanied to the session by the acting Chief Justice of Nigeria, Justice Walter Onoghen, Secretary to the Government of the Federation (SGF), David Lawal, Minister of Finance, Kemi Adeosun, Minister of Budget and National Planning, Senator Udoma Udo Udoma, Minister of Power of Power, Works and Housing, Babatunde Fashola, Minister of Information, Lai Mohammed, Minister of Communications, Adebayo Shittu, and Minister of State for Petroleum, Ibe Kachikwu, among others.
In his welcome address, Senate President Bukola Saraki stressed that the N7.3 trillion budget remained a proposal which the National Assembly is constitutional empowered to work on, even as he expressed confidence that the legislature has received a well articulated budget proposal.
He stated that for the country to get out of the recession, private sector investment must be encouraged to play a central role in the economic recovery efforts, backed by a highly coordinated process of engagement with investors.
Saraki said while the 2017 budget process had benefitted from greater cooperation and consultations between the executive and legislative arms of government, the problems with Nigeria’s budget and budgeting process were deeper than the progress recorded.
He, however, pledged the readiness of the National Assembly to implement the recommendations of the report of the Executive/Legislative Committee on Budget Reforms, which reviewed Nigeria’s budget system and identified ways to make it more transparent, participatory, result oriented and effective.
The highlights of the report as listed by the Senate President include pre-budgetary consultation and engagement, greater information sharing and recording, public hearings on the budget bill, drafting of an Organic Budget Bill and amendment of the Public Procurement Act.
“Our hope is that the remainder of the recommendations of this report will be implemented within the 2017 budget year with the passage of the Organic Budget Law,” he said.
He also said that the National Assembly would speedily work on the 2017 budget, alongside 11 Economic Reform Bills due to the urgency needed to alleviate the sufferings brought on Nigerians by the recession.
Speaking on the role of the private sector in economic recovery, the Senate President said the country cannot rely on the public sector alone, to save the country.
It is therefore critical, he said, that private sector business and investment be mainstreamed into the economy, to make it easier and more efficient for people to invest and do business in Nigeria.
“Further to this, we are also aware that if we must attract private investments to play a central role in our economic recovery efforts, we must make deliberate efforts to market Nigeria as an attractive brand through a very robust and highly coordinated process of engagement.
“This effort must necessarily start with injecting confidence in the market through clarity and consistency of policies. We must speak the right language and show that we are open to and ready for legitimate business,” Saraki said.
He also called for continued engagement with all sections of the country particularly the Niger Delta and other regions where instability is impacting on national economic and security aspirations.
The Senate President stressed that Nigerians are grappling with the effects of the current economic hardship, and demanding that their elected officials justify the trust reposed in them.
“Mr. President, the feedback we get from visits to our various constituencies is that there is hardship in the land. We can see it and we can feel it.
“This situation therefore commands all of us as government to a greater sense of urgency. We cannot work magic, but we must continue to work the clock… It is in times like this when we are challenged from all sides that we need to develop new relationships and cultivate more friends.
“No one can clap with one hand and expect to be heard. This is the time when compromise and engagement are the tools necessary for successful collaboration and cooperation,” Saraki said.
Speaker Yakubu Dogara, in his address, called for the extension of the 2016 budget, particularly the capital component until May 2017, twelve months from when the current budget was signed into law.
Dogara said this was necessary because whilst the recurrent component of the budget is usually implemented to an appreciable level, the implementation of the capital component is usually very low.
“It is crystal clear that the capital component of the 2016 budget cannot realistically be implemented for only six months considering the time required for procurement process and the raising of revenue including loans by government,” he said.
On this basis, he asked that the Appropriation Act be allowed to run uninterrupted for 12 months.
He warned that the 2016 budget would become another failed budget if the lifespan was not extended, resulting in a vicious cycle replicated every year.
“It is certainly frustrating that we go through the annual budget cycle/process of budget presentation by Mr. President, the processing of same by the National Assembly, passage and signing into law every year, without unlocking the full potential of such budgets for our citizens.
“This is because implementation and execution of the agreed budget are always the major challenges year in year out.
“Sometimes, the implementation rate is as low as 30 per cent, at the best of times, it is never higher than 50 per cent. This has led to unacceptably high rates of abandonment of projects and distortions in Nigeria’s economic planning.
“Of course, this is an inherited problem for Mr. President as he has only effectively passed through one budget cycle.
“We must therefore put on our thinking caps and ensure that the change promised Nigerians is reflected in our budget process, as we cannot really make appreciable progress as a nation without significant implementation of the capital component of the budget,” Dogara said.
Dogara further urged the president to add the distorted budget cycle, abandoned capital projects and white elephant projects to the list of corrupt practices which must be killed.
This, he said, would establish a new order, making the existing order an obsolete one and creating real change.