FG Seeks More Investment From UK

Udoma Highlights Priority Areas Of 2017 Budget

The Minister of Budget and National Planning, Senator Udo Udoma on Thursday said Nigeria will require more Foreign Direct Investment from the British government, to stimulate the country’s private sector.

Senator Udoma made this known at a meeting in Abuja, with a delegation of British government officials, led by the country’s Secretary of State for International Development, Priti Sushil Patel.

The British government delegation are in Nigeria to assess the situation in the country’s north east and address the situation, as well as other development initiatives.

In line with this, the minister acknowledged various interventions by the British government to ease some of the country’s challenges.

Udo-Udoma Presents 2017 Budget

The Minister of Budget and National Planning, Udoma Udo-Udoma is about now making a public presentation of the 2017 budget in Abuja.

Seated are foreign diplomats, the Nigerian business community, economists, ministers and top officials of the Ministry as well as the Finance Ministry.

Udoma is expected to give a breakdown of the 2017 budget and give a highlight on key areas expected to impact on the common man and the economy generally.

The public presentation is taking place at the conference hall of the Ministry of Foreign Affairs in Abuja.

This is coming just about a week after Acting President, Prof. Yemi Osinbajo signed a budget of 7.44 trillion Naira into law.

Federal Government Pledges To Clear Pension Arrears

Federal Government Pledges To Clear Pension ArrearsNigeria’s Minister of Budget and National Planning, Senator Udo Udoma, says the government is committed to ensuring that every pensioner is paid their entitlement.

The minister gave this assurance while appearing before the House of Representatives accompanied by the Minister of Finance, Kemi Adeosun and other heads of agencies in the country’s pension sector.

The ministers said salaries and pensions are the government’s number one priority, adding that the administration would look for creative ways to raise the funds needed to settle the arrears.

Adeosun, who touched on some of the steps taken so far, noted that the sum of 42 billion Naira to clear all the arrears. “Everything that has been appropriated up to date has now been paid,” she said.

The National President of the Nigerian Union of Pensioners, Abel Afolayan, on his part, expressed appreciation over the efforts of the Federal Government.

The ministers are expected to complete their work on the total figures needed to pay the pension arrears as soon as possible after which they would work with the National Assembly to ensure that the 2017 budget captures the figures.

President Buhari To Launch ERGP 2017-2020

Buhari Extends Return To NigeriaNigeria’s President, Muhammadu Buhari, will formally launch the Economic Recovery and Growth Plan (ERGP) 2017-2020 on Wednesday, April 5.

A statement issued on Tuesday by the President’s spokesman, Mr Femi Adesina, revealed that the ceremony will take place at the Council Chambers of the Presidential Villa in Abuja, the Federal Capital Territory.

The statement explained that the launch is “in furtherance of the current administration’s drive to sustain and build on the successes so far recorded in tackling corruption, improving security and revamping the economy.

“The Medium-Term ERGP, which had been approved by the Federal Executive Council (FEC), has amongst its broad strategic objectives: restoring sustainable, accelerated inclusive growth and development; investing in the people; and building a globally competitive economy”.

The ERGP, which unveils a road map for Nigeria’s economic recovery, growth and sustainable development, was made public on March 7, while President Buhari was on his medical vacation in the United Kingdom.

The Media Adviser to the Minister of Budget and National Planning, Akpandem James, had said the ceremonial presentation will take place when the President returns from his vacation.

FEC Celebrates Acting President Osinbajo At 60

osinbajo The Federal Executive Council (FEC) has reiterated its commitment to getting Nigeria out of recession before the end of 2017‎.

The resolve was made during the FEC meeting chaired by the Acting President, Professor Yemi Osinbajo, who clocked 60 on Wednesday.

osinbajo2

Although members of the Council may not have rehearsed very well, they honoured Professor Osinbajo with a warm song.

The meeting was brought to a close with the cutting of the birthday cake as some of the ministers joined the Acting President in a photo session.

osinbajo1

Briefing journalists on the outcome of the meeting, the Minister of Budget and National Planning, Udo Udoma, said the 2017 budget has been structured to pull Nigeria out of recession.

The Minister added that the government was anxious to get the budget passed in order to begin its implementation.

He also noted that the release of the budget would fast-track the implementation of the Economic Recovery and Growth Plan (ERGP) recently released by the Ministry of Budget.

The Council thereafter, approved the contract for the construction of the Greater Abuja Water Supply Project at the cost of $470 million.

The Minister of the Federal Capital Territory (FCT), Mr Mohammed Bello, stressed the importance of the project to provide potable water to residents of the greater part of the FCT.

FG Releases Economic Recovery Plan

FG Releases Economic Recovery Plan (ERGP)The Federal Government has released the Economic Recovery and Growth Plan (ERGP) which unveils a road map for Nigeria’s economic recovery, growth and sustainable development.

This was according to a statement issued on Tuesday by the Media Adviser to the Minister of Budget and National Planning, Akpandem James.

According to the statement, the development of the plan went through a rigorous process including wide consultation and robust engagements with stakeholders from a range of relevant fields.

They include: economic experts from the public and private sectors, academia, the Organised Private Sector, Civil Society groups, Organised Labour, sub-regional governments, International Development Partners (including the World Bank, International Monetary Fund and African Development Bank), the National Economic Council (NEC) and the National Assembly.

The statement hinted that the Plan has been approved by the Federal Executive Council, adding that its ceremonial presentation would take place when President Muhammadu Buhari returns from vacation.

Achieving Structural Economic Change

The statement read: “The core vision of the Plan is one of sustained inclusive growth. There is an urgent need as a nation to drive structural economic transformation with an emphasis on improving both public and private sector efficiency.

“The aim is to increase national productivity and achieve sustainable diversification of production, to significantly grow the economy and achieve maximum welfare for the citizens, beginning with food and energy security.

“The Plan envisages that by 2020, Nigeria would have made significant progress towards achieving structural economic change with a more diversified and inclusive economy. Overall, the Plan is expected to deliver on Five key broad outcomes namely: a stable macroeconomic environment, agricultural transformation and food security, sufficiency in energy (power and petroleum products), improved transportation infrastructure and industrialisation focusing on small and medium scale enterprises.

“Realising that the country’s economy would remain on a path of decline if nothing was immediately done to change the trajectory, the present administration, when it assumed office, embarked on strategic moves to halt the trend and redirect the course of the country’s economy and growth process.

A Knowledge-Based Economy

“The process started with the development of the Strategic Implementation Plan (SIP) for the 2016 Budget of Change as a short-term intervention. The ERGP, a Medium Term Plan for 2017 – 2020, builds on the SIP and has been developed for the purpose of restoring economic growth while leveraging the ingenuity and resilience of the Nigerian people.

“The Plan seeks to eliminate the bottlenecks that impede innovations and market based solutions, recognises the need to leverage Science, Technology and Innovation (STI) to build a knowledge-based economy, and is consistent with the aspirations of the UN’s Sustainable Development Goals (SDGs).

“The ERGP differs in several ways from previous strategies and plans as it:

  • is anchored on focused implementation which is at the core of the delivery strategy over the next four years;
  • outlines bold initiatives such as ramping up oil production to 2.5mbpd by 2020, privatising selected public enterprises/assets, and revamping local refineries to reduce petroleum product imports by 60 percent by 2018;
  • builds on existing sectoral plans such as the National Industrial Revolution Plan and the Nigeria Integrated Infrastructure Master-plan;
  • signals a changing relationship between the public and private sector based on close partnership.
  • utilises the value of the merger of budget and planning functions into one Ministry to create a better and stronger link between annual budgets and the ERGP; and
  • provides for strong coordination with the States to ensure that the Federal and sub-regional governments work towards the same goals.

Vision Of Inclusive Growth

“The thinking behind the development of the Plan was driven by several fundamental principles, including a focus on tackling constraints to growth; leveraging the power of the private sector and promoting national cohesion and social inclusion, as well as allowing markets to function.

“The Plan has three broad strategic objectives which are expected to help achieve the vision of inclusive growth: restoring growth, investing in the people, and building a globally competitive economy.

“The ERGP focuses on achieving macroeconomic stability and economic diversification by undertaking fiscal stimulus, ensuring monetary stability and improving the external balance of trade.

“The delivery mechanism has been identified as a major determining factor in the successful implementation of the Plan. The implementation strategy therefore focuses on prioritising the identified strategies, establishing a clear system of accountability for well-defined assignment of responsibilities, setting targets and developing detailed action plans, allocating resources to prioritised interventions, creating an enabling policy and regulatory environment, developing an effective monitoring and evaluation system to track progress, and using effective communication strategies”.

Osinbajo Inaugurates Road Safety Advisory Council

Yemi Osinbajo, Nigeria, MSMENigeria’s Vice President, Professor Yemi Osinbajo, has inaugurated the National Road Safety Advisory Council.

The advisory council created to offer advice to the Federal Road Safety Corp (FRSC) on what should be done to reduce carnage on Nigerian roads consists of six state governors drawn from each geopolitical zones of the country; the Secretary to the Government of the Federation, Babachir Lawal and some ministers.

The council’s inauguration took place on Thursday at the Council Chamber of the Presidential Villa in Abuja, shortly before the National Economic Council (NEC) meeting was held.

Statistics have indicated that over 4,000 lives were lost through road crashes in the country in 2012.

Such startling statistics have jolted the United Nations to declare the period 2011-2020 a decade of action for road safety.

The governors are: Akinwunmi Ambode of Lagos (southwest), Willie Obiano of Anambra (southeast); Ifeanyi Okowa of Delta (south-south) Abdulfatah Ahmed of Kwara (north-central), Ibrahim Dankwabo of Gombe (northeast) and Ahmed El-Rufai of Kaduna (northwest).

The Minister of Budget and National Planning, Senator Udo Udoma, explained that the council would be guided by the mandate for every member nation of the United Nations to put adequate measures in addressing the scourge of road accident by the year 2020.

Senator Udoma urged State governors to buy in and ensure adequate budgetary provision for maintenance of roads in their respective states.

The FRSC Corp Marshal, Boboye Oyeyemi, pointed out some of the challenges faced in tackling road accidents across the country.

He also highlighted some of the duties of the advisory council in order to achieve the FRSC’s vision of reducing road traffic fatalities by 35% by 2018.

FG Denies Recommendation To Raise N5tn From Sale Of Assets

Assets Sale, Economy Recovery and Growth Plan, ERGPThe Federal Government has distanced itself from reports indicating that it is planning to raise about five trillion Naira from the sale of assets in the next four years.

The government made the declaration on Tuesday in a statement issued by the Media Adviser to the Minister of Budget and National Planning, Akpandem James.

Mr James noted that some publications had claimed that the projected amount was contained in the Economy Recovery and Growth Plan (ERGP) being finalised by the Federal Government.

He, however, stated that there was no recommendation to raise such amount of revenue from the sale of assets.

“It has become necessary to state that the ERGP that is being finalised and which will soon be presented to the public, has no recommendation for raising that amount of revenue from sale of assets.

“To achieve the strategic objectives of the plan, 60 strategies have been developed for implementation with four key execution priorities: stabilisation of the macroeconomic environment, agriculture and food security, sufficiency in energy (power and petroleum products) and industrialisation focusing on Small and Medium Scale Enterprises,” the statement said.

Presidency Analyses 2017 ‘Budget Of Recovery And Growth’

2017 Budget Proposal, Udo UdomaThe Nigerian Government has presented a breakdown of its budget proposal for the 2017 fiscal year.

The analysis follows the presentation of a ‘budget of recovery and growth’ by President Muhammadu Buhari to a joint session of the National Assembly on Wednesday, December 14.

The budget is based on a crude oil benchmark price of $42.50 per barrel, with an output of 2.2 million barrels per day.

Government’s expenditure is to be funded with the sum of 4.94 trillion Naira while oil is to contribute 1.98 trillion Naira of the amount.

The breakdown was made on Monday by the Minister of Budget and National Planning, Senator Udo Udoma, at the National Assembly in Abuja, the Federal Capital Territory.

He assured Nigerians that the government had no plans to increase the Value Added Tax which is set at 5% in 2017.

The breakdown of the budget, as presented by the Budget Minister, is contained in the statement below:

PROTOCOLS

I am pleased to welcome you to the presentation of the 2017 Federal Government’s Budget proposal christened Budget of Recovery and Growth – the second full year Budget of this Administration, which was recently presented by the President to the National Assembly.

1.0  BACKGROUND AND CONTEXT

  1. As you are aware, the 2016 Budget was presented to the National Assembly (NASS) by Mr. President on 22nd December, 2015. The budget was however not signed into law until May 6, 2016; effectively therefore, the 2016 budget has only been operated for about 7 months.  Nevertheless, as will be evident from the review of the 2016 budget performance that I will get to shortly, we have made reasonable progress on its implementation.
  2. The 2017 Budget was presented to the National Assembly by His Excellency, Mr. President on 14th December, 2016. The budget reflects our commitment to restore the economy to the path of sustainable and inclusive growth.  Efforts have been made to ensure that the budget aligns with Nigerian’s Economic Recovery and Growth Plan (NERGP).
  3. My profound appreciation goes to His Excellency, President Muhammadu Buhari and His Excellency, the Vice President, Prof. Yemi Osinbajo under whose leadership the 2017 Budget was prepared. I also wish to thank my Cabinet colleagues for their understanding, especially as we all had to work within very tight schedules in the preparation of this budget.
  • REVIEW OF 2016 BUDGET PERFORMANCE
  1. The 2016 Budget, christened the Budget of Change was the first full year budget of the Buhari Administration. It was prepared against the background of general slowdown in global economic growth and massive decline in crude oil prices. It was based on the Zero Base Budgeting (ZBB) principle which requires that Ministries, Departments and Agencies (MDAs) justify every item of revenue and expense, as well as projects/programmes in the budget, a departure from the traditional incremental Budgeting approach that simply adjusts (usually upwards) amounts included in the previous budget. The 2016 Federal Government Budget was predicated on certain key parameters, including:

(i)       Benchmark oil price                  –        US$38/b

(ii)        Oil production                          –        2.2mbpd

(iii)       Exchange rate                          –        N197/USD

(iv)       Deficit (Fiscal Deficit to GDP ratio) – N2.20 trillion (2.14% of GDP)

(v)        Inflation                                   –        N9.81%

(vi)       GDP Growth Rate                      –        4.3%

 

2.1   2016 Budget Performance Against Set Target

  1. With respect to the 2016 Budget set targets, the performance as at Q3 of 2016 is as follows:
2016 Budget Performance against Set Targets
S/NoDescription(FY 2016 Budget)Q3 TargetActual (as at Q3 2016)
1Real GDP Growth (%, YoY)4.37-1.55
2.Oil Production (mbpd)2.21.81
3.Oil Price ($pb)3842.09
4.Inflation Rate (%)9.8117.85
5.Exchange Rate (N/$)197305
6.Revenue (N’trillion)3.862.892.17 (75%)
7.Expenditure (N’trillion) out of which;

(a) Capital Expenditure     N’trillion)

6.06

 

1.77

 

4.55

 

1.33

3.58 (79%)

 

0.75.6*(56%)

8Fiscal Deficit/GDP (%)-2.14-1.44

SOURCES: NBS Report: OAGF, Appropriation Act

*Capital spending as at end of October 2016 was N753.6 billion

2.2   Oil Revenue Performance in 2016

  1. The FGN’s oil revenues decreased sharply in 2015 and 2016 because of oil production shut-ins and sharp decline in oil price since 2014. The oil price steadied at an average of $110 per barrel from 2012 to 2014, but dropped to a record low of $29 per barrel in February 2016, a drop of  70%.  Although for most part of the year crude oil prices exceeded the 2016 benchmark price of US$38 per barrel, there has been a significant shortfall in projected revenue caused by the disruptions in crude oil production as a result of militant activity in the Niger Delta.

2.3   Revenue Performance As At Q3 2016

  1. The FGN’s 2016 revenues have been low because of the sharp decline in oil-production. In particular, the revenue target for January to September 2016 was N2.8 trillion as against the sum of N2.2 trillion realised during the period.  The projected independent revenue was N1.1 trillion as against N0.2 trillion realised during the period.  The projected revenue for Custom was N0.3 trillion as against N0.2 trillion realised, while the projected non-oil tax receipts for the 1st – Q3 of 2016 is N0.8 trillion as against N0.5 trillion realised during the period.

3.0   BACKGROUND TO THE 2017 BUDGET

  1. Global economic activities remained sluggish in 2016. In particular, Global GDP growth rate is projected at 3.1% for 2016 from 3.2% in 2015. Due to:

(i)     Lower-than-expected economic activity in the U.S

  • Uncertain economic, political and institutional implications of BREXIT
  • Slowdown in China’s growth
  • Weak demand in advanced economies and its spill-over effects
  • Geopolitical tensions in several countries
  1. In spite of the foregoing developments, the Global outlook remains bright. In this regard, global GDP growth rate is expected to rise to 3.4% in 2017.

3.2   The Domestic Environment in 2016

  1. The Challenges in the domestic environment include:

(i)     Crude oil production shut-ins resulting from vandalism of oil facilities.   In particular, 4 strategic oil fields affected including Trans-Niger Pipeline and Nembe Creek Trunkline axis as well as the Qua – Iboe Terminal

  • Insurgency in parts of the North East
  • Fuel shortages and increase in electricity tariffs, kerosene and PMS prices in the first half of the year
  • Foreign Exchange (FX) scarcity

 

  1. The foregoing factors have constrained fiscal operations, real sector activities, and the external accounts. Other challenges in the domestic economy included:

(i)     Contraction in growth         (-2.24% in Q3)

  • High unemployment rate (13.9% as at Q3)
  • Higher inflation rate (18.5% as at November 2016)
  • Pressures on foreign reserves ($25.04 billion as at 14th December)
  • Slow down in corporate sector resulting in lower credit quality and rising non-performing loans.

4.0    THE NIGERIAN ECONOMIC RECOVERY AND GROWTH PLAN (NERGP)

  1. A Medium Term Economic Recovery and Growth Plan (ERGP 2017 – 2020) is being finalised which addresses the current economic challenges and is aimed at restoring growth. The Plan builds on the existing Strategic Implementation Plan (SIP), and contains strategic objectives and enablers required to revive the economy.  The strategic objectives of the NERGP are: (i) Pulling the economy out of recession; (ii)        Investing in our people (iii) Laying the foundation of diversified, inclusive and sustainable growth.
  2. The NERGP focuses on 5 broad areas namely:

(i)     Macroeconomic Stability

(ii)    Competitiveness

(iii)   Growth and Diversification

(iv)   Social Inclusion

(v)    Governance & Enablers

 

  1. The 2017 Budget proposal reflects many of the reforms and initiatives in the SIP and NERGP and in the 2017-2019 Medium Term Sector Strategies (MTSS), as well as the 2017-2019 Medium Term Fiscal Framework. A Multi-criteria analysis (MCA) approach was adopted to prioritize and select 2017 capital projects for 14 large capital spending MDAs involved in the MTSS.  Projects were linked to government policies and strategic priorities.  MDAs that were not involved in the MTSS process used the Rapid Appraisal Project Identification and Prioritization System (RAPIPS). Zero-Base Budget (ZBB) principles were used in preparing the Budget. ZBB ensured that expenditures in the 2017 Budget are linked to government’s strategic reforms and initiatives for economic recovery.
  • APPROACH TO THE 2017 BUDGET
  1. The 2017 Budget is designed to expand partnership between public and private sectors, including development capital to leverage and catalyse resources for growth. Other key objectives of the 2017 Budget include:
    • focusing on critical on-going infrastructure projects such as roads, railways, power, ICT, etc., that have quick positive effects on the economy;
    • utilizing Special Economic Zones and Industrial Parks as vehicles to accelerate domestic economic activity for innovation and wealth creation;
    • contributing to food security and creating platform for agro-business in agriculture supply chains through the Agriculture Green Alternative Plan;
    • establishing a Social Housing Fund to deepen the mortgage system and expand its availability across all states of the Federation;
    • encouraging and stimulating the growth of small and medium scale industries for innovation, job creation, productivity and wealth creation; and
    • providing social safety nets for poor and vulnerable Nigerians.

 

  • KEY ASSUMPTIONS AND MACROFRAMEWORK FOR THE 2017 BUDGET

 

  1. The key assumptions and macro-framework for the 2017 Budget are:

(i)     Oil production                            – 2.2mbpd

(ii)    Benchmark oil price                    – US$42.5/b,

(iii)   Exchange rate                            – N305/US$

(iv)   Inflation rate                              – 15.74%

(v)    GDP Growth Rate                       – 2.5%

(vi)   Nominal Consumption (N’trillion)  – 87.95

(vii)   Nominal GDP (N’trillion)              -107.96

  

6.1   Key Budgetary Reform Initiatives

 

  1. The Key Budgetary Reform Initiatives to improve the revenue base of the country include:

 

  • Subjecting the JV operations to a new funding mechanism, which will allow for Cost Recovery. Additional oil-related revenue include: Royalty Recoveries, Marginal Field Licenses, Early licensing renewals, etc;
  • Sustaining the use of TSA to monitor the financial activities of over 900 MDAs from a single platform;
  • Broadening the tax base, improve effectiveness of revenue collecting agencies, improve tax compliance etc;
  • Reducing leakages by tacking trade mis-invoicing and introducing the single window to drive customs efficiencies;
  • Improving the performance of independent revenue of government by ensuring that all MDAs (particularly revenue generating MDAs) present their budget in advance, and remit their operating surpluses as required by the FRA;
  • Extension of the Integrated Personnel Payroll Information System (IPPIS) to all MDAs.

7.0   2017 Budget Revenue Proposals – Where the Money is Coming    From?

(a)    An Overview of the Revenue framework

  1. Based on the key assumptions and budgetary reform initiatives, the 2017 Budget envisages a total FGN revenue of N4.94 trillion, exceeding FY 2016 projection by 28%. The Projected revenue receipt from oil is N1.985 trillion and Non-oil is N1.373 trillion.  The contribution of oil revenue is 40.2% compared to 19% in FY 2016 driven mainly by JVC cost reduction, higher price, exchange rate and additional oil related revenues.
  2. The details of the revenue as summarised below:

7.1   2017 Budget Expenditure Proposals – Where The Money is Going

  1. The 2017 Budget has an outlay of N7.298 trillion. This represents an increase of 20.4% over the 2017 budget provision of N6.06 trillion.  The details are:
  • Statutory transfers of N419.02 billion
  • Debt service of N1.66 trillion (22%);
  • Sinking fund of N177.46 billion (2.4%) to retire certain maturing bonds;
  • Non-debt recurrent expenditure of N2.98trillion (40.8%); and
  • Capital expenditure of N2.24 trillion (30.7%) inclusive of statutory transfers.

 

7.2   Financing the Deficit

 

  1. The overall projected budget fiscal deficit of N2.36 trillion for 2017, which is about 2.18% of GDP. This is within the threshold stipulated in FRA.  The budget deficit is to be financed mainly by borrowings which have been projected at N2.32 trillion.  Of this amount, N1.067 trillion (46% of this borrowing) is intended to be sourced externally, while N1.25 trillion will be sourced domestically. The debt service to revenue ratio is projected to be about 33.7% in FY2017.

7.3   Break down of Recurrent (Non-Debt) Expenditure

  1. The Recurrent non-debt expenditure of N2.98 trillion is made up of:
  2. Personnel costs – N1.86 trillion    (63%)
  3. Overhead – N229.81 billion (7%)
  • Service-Wide Vote pensions                 – N89.98 billion   (3%)
  1. Consolidated Revenue Fund Pensions – N191.63 billion (6%)
  2. Other Service-Wide Votes – N116.50 billion         (5%)
  3. Presidential Amnesty Programme         – N65 billion       (2%)
  • Refund to Special Accounts – N50 billion, and (2%)
  • Special Intervention Prog. (recurrent) – N350 billion     (12%)
  1. The largest recurrent allocations are for the following four MDA’s namely:
  2. Ministry of Interior                 – N482.37 billion;
  3. Ministry of Education                 – N398.01 billion;
  • Ministry of Defence                 – N325.87 billion;
  1. Ministry of Health                 – N252.86 billion.

 

  1. These four MDAs collectively take up about N1.46 trillion (about 70% of the combined provision for personnel and overhead). They have the largest share because of the size of their personnel. Some of the agencies and parastatals under these MDAs are yet to be captured on the Integrated Personnel Payroll Information System (IPPIS) platform. The sum of N2 billion has been provided in the 2017 Budget for the capturing to ensure all personnel that are not enrolled on the platform are captured.

7.5   Capital Expenditure in the Proposed 2017 Budget

  1. The Administration has committed to allocating at least 30% of the Budget to Capital from 16% allocation in 2015. In dollar terms, the 2017 budget proposal at ($23.80bn) is lower than 2016 estimates ($30.76bn).  As a % of GDP, we have grown the size of the Budget from 4.7% in 2015 to 5.9% in 2016 and to 6.7% in 2017.  Compared with South Africa (20.7%) and Ghana (19.2%) as at 2015, this is very low.  The ratio of capital spending in total increased from 16% in 2015 to 30% in 2016 and 30.7% in 2017.  The increase in infrastructure spending is expected to enhance revenue generation opportunities and over time significantly reduce deficit.

 

7.6   MDAs Capital Allocations by Pillar

  1. A significant part of the budgeting provision was allocated to reflect the Administration’s development priorities. This is aimed at engendering good governance practices and providing enablers for economic recovery and growth. Some of the key sectoral capital allocations in the 2017 Budget are as follows:

(i)         Infrastructure                                     56%

(ii)        Governance and Security                     20%

(iii)       Economic Reforms/Growth                  12%

(iv)       Social Development                             7%

(v)                States and Regional Development         4%

(vi)       Environment                                       1%

 

7.7.  Major MDA Capital Allocations

  1. There is a need to emphasize that the thrust of the 2017 Budget is to partner with private and development capital to leverage and catalyse resources for growth. By setting aside N2.24 trillion (inclusive of capital in statutory transfers), which is 30.7% of the total budget for capital expenditure, the objective, as set out in the SIP, of devoting at least 30% of the budget to capital expenditure has been achieved. Much of the capital provision is directed at those projects which will facilitate economic growth, diversification, competitiveness, ease of doing business, social inclusion, jobs as well as governance. This will ultimately engender the attainment of the Sustainable Development Goals (SDGs). In this regard, focus will be on initiatives in sectors such as agriculture, manufacturing, solid minerals, and services. Consequently, capital allocations to MDAs within these sectors were significantly enhanced.
  2. The largest capital allocation goes to Federal Ministry of Power, Works and Housing – N564 billion (7.7%) (25% increase over 2016 estimate). To address contractors’ liabilities the Federal Government intends to issue over N2 trillion worth of bonds to clear outstanding contractors’ liabilities. These bonds would have a 10-year maturity and the amortisation is expected to begin in 2018. With regard to existing liabilities on bonds which were issued to contractors by past administration, we have set aside the sum of N177.46 billion in the 2017 budget as a sinking fund to retire the maturing bonds. The second largest capital allocation is for the Ministry of Transportation which has the sum of N277 billion.
  3. The 2017 Budget is an Infrastructure Budget. A total of N1.047 trillion is dedicated to key infrastructural spending, made up as follows:
  4. Power, Works and Housing:                 – N529billion;
  5. Transportation: – N262 billion;
  • Special Intervention Programmes: – N150 billion.
  1. Defence: – N140 billion;
  2. Water Resources: – N85 billion;
  3. Industry, Trade and Investment:      – N81 billion;
  • Interior: – N63 billion;
  • Education – N50 billion
  1. Universal Basic Education Commission – N92 billion
  2. Health:         – N51 billion
  3. Federal Capital Territory: – N37 billion;
  • Niger Delta Ministry:                          – N33 billion;
  • Niger Delta Development Commission – N61 billion
  • Agriculture – N91 billion

 

8.0   Strategic Focus of the 2017 Budget

  1. The thrust of the 2017 Budget is to partner with private and development capital to leverage and catalyse resources for growth. Much of the capital provision is directed at those projects which will facilitate:

(i)     economic growth

(ii)    diversification

(iii)   competitiveness

  • ease of doing business
  • jobs and social inclusion
  • improved governance and security
  1. The spending focus will be on critical economic sectors that have quick transformative potentials such as infrastructure, agriculture, manufacturing, solid minerals, services and social development.

8.1    New Initiatives in the 2017 Budget

  1. Some of the new initiatives introduced in the 2017 Budget are:
  • A new Social Housing Programme
    • N100 billion provisioned for a new Social Housing Programme towards a N1 trillion fund

 

  • Special Economic Zone Projects
    • N50 billion for Special Economic Zone Projects to be set up in each of the geo-political zones to drive manufacturing/exports

 

  • Export-Expansion Grant (EEG)
    • N20 billion voted for the revival of EEG in the form of tax credit

 

  • Recapitalization of Bank of Industry (BOI) and Bank of Agriculture (BOA)
    • N15 billion provisioned to support these development finance institutions to support Micro, Small and Medium Scale Enterprises (MSMEs)

 

  1. These new initiatives will support economic diversification and inclusion in our growth-drive.

8.2. Some Projects in the 2017 Budget

  1. The highlight of some of the projects in the 2017 Budget are as follows:
  • Power
  • N20bn Rural Electrification projects in Federal Universities
  • 7bn as counterpart funding for the construction of 3,050mw Mambilla hydropower project
  • 12bn for the completion of power evacuation facility for 400mw Kashimbila hydropower plant.
  • Housing
  • N41bn federal government National Housing Programme nationwide.

 

  • Works
  • Over 65 roads & bridges construction and rehabilitation projects across the 6 geo-political zones of the country.
  • N20bn nationwide intervention fund for roads.
  • 5bn for the rehabilitation/reconstruction and expansion of Lagos – Shagamu – Ibadan dual carriageway sections I & II in Lagos and Oyo states.

 

  • Education
  • N5 billion for the provision of security infrastructure in 104 colleges (Perimeter fencing, Solar Street light, solar powered motorised borehole & CCTV).

 

  • Transportation
  • 14bn for various railway projects (Lagos-Kano, Calabar-Lagos, Kano- Kaduna, Ajaokuta-Itakpe-Warri, Kaduna-Idu) / counterpart funds and other rail projects
  • 03bn for the construction of terminal building at Enugu airport.
  • 08bn for airside rehabilitation of Abuja airport.
  • 47bn for the construction of an inland river port and supply of cargo handling equipment at Baro, Niger State.

 

  • Health
  • 72 billion for joint venture investments in tertiary institutions with Nigeria Sovereign Investment Authority.
  • 65 billion for procurement of vaccines and devices.
  • 46 billion for Global Fund and GAVI counterpart funding.

 

  • Water Resources
  • 86 billion for water supply schemes nationwide.
  • 3 billion for construction and rehabilitation of dams nationwide.

 

  • Agriculture & Rural Development
  • 5bn Rural Roads and Water Sanitation programme
  • 61bn Promotion and Development Of Wheat Value Chain
  • 13bn Guaranteed Minimum Price payment.

 

 

  • Mines & Steel Development
  • 0 billion for the establishment of mega regulatory agency for the sector
  • N 2.58 billion for detail mineral resources evaluation, equipping national geo-science laboratories and other projects.

 

  • Communications
  • N1 billion for extension of government service portal and deployment of additional National Spectrum Management System.

 

  • Niger Delta
  • 55 billion for dualization of East-West Road {Sections 1 to 5 covering Warri – Kiama – Ahaoda – Port Harcourt – Eket – Oron – Calabar}.
  • N8 billion counterpart fund contribution for East-West road

 

  • Social Intervention Programmes
  • N500 billion for FGN Special Intervention Programme (including Home Grown School Feeding Programme, Government Economic Empowerment Programme, N-Power Job Creation Programme, Conditional Cash Transfers and Social Housing Fund).

 

  • Regional Interventions.
  • N65 billion for reintegration of transformed ex-militants under the Presidential Amnesty Programme.
  • N45 billion North East intervention fund.

 

  • SDGs
  • N20 billion for SDGs conditional grants and social safety nets.

 

9.0   CONCLUSION

  1. Nigeria is in recession. Inflation and unemployment have been rising. As a Government, we are determined to bring succour to our people. The only way we can do this is by taking strong action to change, in a fundamental way, the current trajectory of the Nigerian economy. This is not the time for a timid and cautious approach. This is a time for bold and focussed action. To get out of this recession and back on the path of growth, Government must find the resources to spend on infrastructure, and to spend to reflate the economy. This spending will help to stimulate and attract private sector capital and private sector spending. This is what the 2017 Budget proposals seek to do.
  2. We should not allow ourselves to be discouraged by those who say we can’t find the money to fund the spending required to implement this budget. We must, and we can, find the resources. We will challenge our revenue generating agencies, particularly the FIRS and Customs to improve their efficiencies and broaden their reach so as to achieve the targets set for them in the 2017 Budget. They must be tasked to leverage technology to drive revenue collection. We will be issuing new guidelines and templates for computing the operating surpluses of the various Government Agencies so that we can achieve the targets we have set for independent revenues.
  3. Most importantly, we must maximize the revenues we can generate from the oil and gas sector. We cannot determine the price of crude oil but we can engage more extensively with the communities and people of the Niger Delta to minimize disruptions to oil production. We can introduce creative measures to improve on the efficiencies in that sector so as to increase the Government take. Indeed, a Cabinet Committee has been set up by President Muhammadu Buhari to come up with innovative and creative ways to raise additional revenues from the oil sector, and other sectors, to support the funding of the 2017 Budget. The report of this committee will be ready in time for the National Assembly to take this into account in considering the Budget in the New Year, when they return from their Christmas recess.
  4. Finally, our experience this year shows clearly that we have not just a revenue problem, but specifically, a foreign exchange problem. We must find ways of solving our foreign exchange shortages. 95% of our foreign exchange comes from the oil sector so the work we are doing on improving the level of our oil sector receipts will certainly help.
  5. However, we need to do more than this. Much more. We must reduce the demand for foreign exchange by producing as much as possible of what we need in Nigeria. From refined petroleum products to textiles, clothing and most of our food items. But we will continue to need imported items so we must increase the supply of foreign exchange by tweaking some of our policies to make them more investor friendly, and by creating the right incentives for non-oil exports. Ultimately, the sustained growth of our economy must be on the back of an export led revival. The proposals in the 2017 Budget are aimed at creating the right incentives for Nigerians to achieve all these. The 2017 Budget proposals are therefore also a call to action.
  6. These are difficult times, no doubt. But with the indomitable spirit of the Nigerian we can turn these difficulties into opportunities. It is to that indomitable spirit that this Government now appeals. I am confident that Nigerians will respond to this call to action. To truly revive this economy, we must turn Nigeria into a nation of producers.
  7. I wish you all a Merry Christmas and a better New Year during which we shall get out of recession.

Udoma Says No Plans To Increase Value Added Tax

Udo Udoma, Value Added Tax, Budget BreakdownThe Nigerian government says it has no plans to increase the Value Added Tax which stands at 5% in 2017.

The government, however, said 11% of its projected revenue would come from recoveries of looted and misappropriated funds which currently stand at 258 billion Naira.

The Minister of Budget and National Planning, Senator Udo Udoma, on Monday allayed fears of possible tax increase, as the nation battles to recover from economic recession.

At a budget breakdown session in Abuja, Nigeria’s capital, Senator Udoma expressed optimism that the proposed revenues would help fund the 2017 budget.

The session follows the December 10 presentation of a budget proposal of 7.298 trillion Naira by President Muhammadu Buhari to a joint session of the National Assembly.

President Buhari proposed that the implementation of the budget be based on Nigeria’s economic recovery and growth strategy.

The 2017 budget is based on a crude oil benchmark price of $42.50 per barrel, with an output of 2.2 million barrels per day.

Government’s expenditure is to be funded with the sum of 4.94 trillion Naira while oil is to contribute 1.98 trillion Naira of the amount.

Greater Cooperation

Meanwhile, President Buhari, in a statement by his spokesman, Garba Shehu, solicited for greater cooperation between the executive and legislative arms of government.

He noted that the collaboration would ensure the smooth implementation of government policies and programmes.

The president said that despite the Principle of Separation of Powers, both arms of government should be united in the promotion of the common good of the people.

He added that whatever differences that might occasionally arise between the two arms of government should not be allowed to compromise their common goals of promoting the greater progress and development of Nigeria.

FG Reviews Parameters In MTEF

Medium Term Expenditure Framework, MTEFThe Federal Government has reviewed the parameters in the Medium Term Expenditure Framework (MTEF).

The Minister of Budget and National Planning, Senator Udo Udoma, made this known at an interactive session with the Senate Committee on Finance.

Speaking on Tuesday in Abuja, Senator Udoma noted that the Federal Government set the benchmark price of crude at $42.5 per barrel.

He adds that the new deficit to GDP ratio is now at 2.18 while the official exchange rate is now 305 up from 290 to a dollar earlier set.

Economic growth rate has also been reduced from 3.02% to 2.5%.

Meanwhile, the Senate is to probe the Nigerian National Petroleum Corporation (NNPC) over the failure of one of its subsidiaries, the Nigerian Petroleum Development Company (NPDC) to remit over five billion dollars to the Federation Account.

Senator Dino Melaye, in a motion, alleged that since 2013 to date, the NPDC has continued to lift crude oil from divested oil wells OML 61, 62 and 63 worth over $3.487 billion without remitting to the Federation Account.

The Senate has mandated its committees of petroleum upstream and finance to investigate the level of the alleged corruption with a view to recovering every fund due to the Federation Account.