By Bimbola Oyesola, Louis Ibah and Adewale Sanyaolu
When President Muhammadu Buhari, presented the 2017 appropriation bill estimate of N7.298 trillion, to the joint session of the National Assembly on December 14, 2016, most Nigerians remained largely optimistic that the legislators would quickly settle down to work on it considering the hardship the economy was witnessing as a result of the recession.
The 2017 budget, tagged “Budget of Recovery and Growth”, was higher than the 2016, N6.08 trillion Appropriation by about 19.95 per cent.
But nearly a month since the document was presented to the National Assembly, debate is yet to begin.
Indeed, Nigerians had expected that the exigencies of the economy at the moment would have compelled the lawmakers to call off their recess and in sacrifice to the country, shelve their Christmas and New Year break to commence work on the bill. But this was not to be.
But, beyond politics and the usual delay often associated with the budget processes by the National Assembly, Nigerians have urged the legislators to quickly pass the budget while also advising the executive to begin implementation as soon as it is passed.
Their concern stems from the fact that the delay in the passage of the 2016 budget, was partly responsible for much of the economic woes associated with the year, insisting the trend should not be allowed to repeat itself in 2017 if the country plans to pull through recession.
X-ray of 2016 budget performance
Buhari, had during the 2017 budget presentation to the National Assembly, disclosed that, at the end of September 2016, 59 per cent of Nigeria’s 2016 budget had been implemented.
‘‘As at 30 September 2016, aggregate revenue inflow was N2.17 trillion or 25 per cent less than prorated projections, although, N3.58 trillion had been spent by the same date on both recurrent and capital expenditure. This is equivalent to 79 per cent of the pro rated full year expenditure estimate of N4.54 trillion as at the end of September 2016,’’ Buhari had said.
Though, this figure is subject to debate as Nigerians have consistently faulted it, considering that the realities on ground do not support such claims in the face of the high inflation rate, huge job losses and a skyrocketing exchange rate
Key components of 2017 budget:
i. Statutory transfers of N419.02 billion;
ii. Debt service of N1.66 trillion;
iii. Sinking fund of N177.46 billion to retire certain maturing bonds;
iv. Non-debt recurrent expenditure of N2.98trillion; and
v. Capital expenditure of N2.24 trillion (including capital in Statutory Transfers)
Key capital spending provisions in the budget:
• Power, Works and Housing: N529billion;
• Transportation: N262 billion;
• Special Intervention Programmes: N150 billion.
• Defence: N140 billion;
• Water Resources: N85 billion;
• Industry, Trade and Investment: N81 billion;
• Interior: N63 billion;
• Education N50 billion
• Universal Basic Education Commission: N92 billion
• Health: N51 billion
• Federal Capital Territory: N37 billion;
• Niger Delta Ministry: N33 billion; and
• Niger Delta Development Commission: N61 billion;
•2.2 million barrels per day production at $42.5 per barrel on an exchange rate of N305
How FG intends to drive the budget
According to the Finance Minister, Mrs. Kemi Adeosun, the Federal Government will painstakingly fashion out appropriate measures to reflate the economy, affirming that it had adopted a potent strategy to stem the economic recession through spending on capital projects.
Adeosun said investing in capital projects, including roads, railway projects, housing and education, among others, would trigger a ripple effect on the economy and impact potentially on the populace, stressing that infrastructure was not only the fulcrum, but the superstructure on which development revolves.
She said the quest to make massive spending on capital projects had ignited government’s move for external borrowing because of the cheap interest rate potential inherent in foreign loans.
“Currently, it’s cheaper to borrow internationally than to borrow locally.
“So, what we are looking at doing is working with the DMO to try and refinance some of the existing debt, not just the new debt… over the medium term to get lower interest rates. Restructuring will reduce the cost of our debt service, and increase the amount of money available for capital projects.
“That’s just really a strategy of getting us out of recession. It’s not just to spend the stimulus from government, but to spend on capital projects. That’s our priority,” she said. But how far the government can go with this proposal will only be seen later in the year.
OPS expectations
However, if the assurances of the Organised Private Sector (OPS) is anything to go by, then the 2017 budget may afterall, bring some succour to the economy. That also means that the Federal Government must be faithful to its implementation .
Director General, Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, said the success of the 2017 budget will be hinged on avoiding the prolonged effect of illiquidity in the foreign exchange market on the real sector, advising the Federal Government to develop a framework to ensure liquidity in the market by restoring investors’ confidence in the economy.
He advised that the exclusion of the 41 items from the official foreign exchange market should be reviewed to exempt the critical manufacturing inputs, as listed by the Manufacturers Association of Nigeria, noting that import exclusion policy should be managed within the context of the trade policy framework.
Yusuf stressed that a framework to ensure the liquidity of the foreign exchange market should be urgently put in place to restore investors’ confidence, enhance forex inflows, boost foreign direct investments and foreign portfolio investments, and reduce the level of uncertainty in the economy.
In his contribution, President of the Institute of Management Consultants (IMC) of Nigeria, Prof. David Iormen, urged President Muhammed Buhari to engage the services of both foreign and local consultants to monitor the implementation of the 2017 to guarantee its success. Iormen in an interview with Daily Sun said the poor implementation of budgets over the years could be linked to a high level of corruption among civil servants charged with the responsibility of executing projects.
“The issue of stealing government money hasn’t changed in Nigeria even under President Buhari and the money they usually steal comes from the money allocated for projects in the budget,” Iormen said. “Because the implementation of budget is the most essential aspect of it if you want to make impact in infrastructure development, I am of the view that the government should engage the services off local and foreign consultants to monitor the implementation of the 2017 budget if we are to get a different results from previous years budget. Monitoring and evaluation is critical for the success of this year’s budget,” Iormen added.
For its part, Manufacturers Association of Nigeria (MAN) noted that going by the budget presentation and new year message of President Muhammad Buhari, the manufacturing sector, Small and Medium Entreprenuer (SME) and trade may perform better this year, especially with the improvement in the crude oil price.
MAN President, Frank Jacobs in an interview said the budget talked about developing SME , manufacturing and trade in so many ways.
He said, “For instance, recapitalisation of Bank of Industry (BoI), resuscitation of Export Expansion Grant (EEG), development of local inputs for manufacturers and the emphasis on infrastructure are some of the pronouncements made in the budget presentation that tend towards the development of SME, manufacturing and trade.
He added that small scale businessmen and women would be encouraged by creating enabling environment for their products to be patronised.
Jacobs opined that the next important issue would be the quantum of forex allocated to the manufacturing sector as this would determine the sector productivity level in the sector.
“While we commend CBN for the policy of 60 per cent allocation of all available forex to the manufacturing sector for importation of raw-materials and machinery, we urge the effective enforcement and monitoring of the policy”, he said.
He however expressed that the paltry 30 per cent allocated to capital infrastructure was not good enough to galvanise the country’s economy from the current position.
The same view was echoed by the Director General of the Nigeria Employers Consultative Association (NECA), Olusegun Oshinowo, who stated that infrastructure development remains paramount to the resuscitation of the economy from the recession.
According to him, a budget of less than 35 percent will not go anywhere in the restructuring of the economy.
President Buhari, had said N2.24 trillion, representing 30.7 per cent of the 2017 budget, will be committed to capital expenditure aimed at pulling the economy out of recession.
But Oshinowo lamented that the domestic debt owed to the local contractors was still high, stating that government decision to pay part of the debt would go a long way to boost recovery.
He added, “For the budget to deliver the economy from recession, government has to embark on prudent spending and be faithful to the implementation. Last year by October, only 40 percent of the budget has been implemented, that is not faithfulness. But now that it has started pretty early, we hope the National Assembly will support, because any delay will affect faithful implementation and spending.”
The NECA Director General equally advised the government to ensure that the foreign exchange coming from the rebound in oil revenue is allocated to the key sector of the economy for speedy rejuvenation of the country.
But the former Director General of Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, Mr. John Isemede said government should give prominence to how the budget would be funded in order to have balance of payment.
He expressed that Nigeria as a nation had in the past had series of budget, from surplus, deficit and others, but managing the economy has always been a problem.
According to him, Nigeria in so many areas could be self sufficient like Malaysia, Kenya, Ghana in agriculture and export, but for lack of planning, proper coordination and over dependence on importation and oil, which he said was a slippery product.
“We based our budget on oil, which I considered slippery. If the price goes up there would be windfall, how do we manage the windfall and the shortage, how do we shore it up?
“What we need is not N5,000 stipend paid to the people, but the economy that would provide enduring job, support the manufacturing as well as export. Our silos are empty, when a country like Malaysia of lesser population can shore up its economy with $30 billion from agriculture”, he said.