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BUHARI’S 2016 BUDGET: WHAT IT HOLDS FOR NIGERIANS

BUHARI’S 2016 BUDGET: WHAT IT HOLDS FOR NIGERIANS

By Ifeanyi Ottah

On assumption of office on May 29 2015, President Muhammadu Buhari in his inaugural speech left no one in doubt that his government was prepared to give Nigeria quality leadership by turning around the economy of this country.

Corruption had been described as the biggest among the challenges facing Nigeria. There was no doubt that the level of corruption in the country was found in all the entire sectors of the country and it was endemic in the system. Nigeria, which is the most populated country in Africa, had, been ranked high in corruption by Transparency International Index and other notable organizations that checkmate the level of corruption in any country.

The President also said that the trial of former public officers who looted the national treasury under the Jonathan administration and stashed the funds in foreign banks will commence in few weeks.

Buhari declared that his administration was irrevocably committed to doing all within its powers to break the vicious cycle of corruption, unemployment and insecurity in Nigeria. He said those who have stolen the national wealth “will be in court in a matter of weeks and Nigerians will know those who have short changed them.”

The arrest and prosecution of former National Security Adviser to former President Goodluck Jonathan, Mr. Sambo Dasuki and former Minister of State for Finance, Alhaji Bashir Yuguda for their involvement in the sharing of $2.1 billion security fund among some notable Nigerians, is a pointer to the fact that President Buhari in his ant- corruption war, wants to take Nigeria to the next level.

However, many Nigerians are criticizing the anti- corruption war of the present administration describing it as being selective. According to them, the anti-graft war should cut across party affiliations, religious and ethnic divide if Buhari administration’s ant- corruption fight really wants to be taken seriously.

The 2016 budget, which the President to a joint sitting of he National Assembly last week took all these factors into account.  Presenting a comprehensive budgetary estimate of 6.08 trillion naira, President Buhari disclosed that the Governor of the Central Bank of Nigeria (CBN) had assured him that the was “currently fine-tuning its foreign exchange management to introduce some flexibility and encourage additional inflow of foreign currency to help ease the pressure” on the Naira.

Buhari, who arrived at the chamber of the House of Representatives at 10.01 am, was accompanied by Vice-President YemiOsinbajo. They were ushered in by Deputy Senate President Ike Ekweremadu and the Clerk of the National Assembly, Alhaji Salisu Maikasuwa.

Also in the president’s team were the Minister of Information and Culture, Mr. Lai Mohammed; Minister of Finance, Mrs. Kemi Adeosun; Minister of Works, Power and Housing, Mr. Babatunde Fashola; Minister of Solid Minerals, Dr. KayodeFayemi; and Minister of Communications, Mr. Adebayo Shittu.

According to Buhari, the state of the Nigerian economy, which he said, had been made more precarious by unbridled corruption and security challenges, was of utmost concern to many Nigerians.

Elaborating on the challenges businesses, traders and Nigerians had encountered accessing foreign exchange to meeting their international obligations, the president said he was aware of their difficulties.

“From our traders and business operators who rely on imported inputs, to manufacturers needing to import sophisticated equipment and spare parts, to our airlines operators who need foreign exchange to meet their international regulatory obligations; to the financial services sector and capital markets who are key actors in the global arena.

“These are clearly due to the current inadequacies in the supply of foreign exchange to Nigerians who need it. I am however, assured by the Governor of Central Bank that the bank is currently fine-tunning its foreign exchange management to introduce some flexibility and encourage additional inflow of foreign currency to help ease the pressure,” he said.

He, however, added that the federal government was assessing the exchange rate regime, keeping in mind government’s willingness to attract foreign investors but at the same time, managing and controlling inflation to the level that would not harm the average Nigerian.

“Nigeria is open for business. But the interest of all Nigerians must be protected. Indeed, tough decisions will have to be made. But this does not necessarily mean increasing the level of pain already being experienced by most Nigerians.

“So to the investors, business owners and industrialists, we are aware of your pains. To the farmers, traders and entrepreneurs, we also hear you. The status quo cannot continue. The rent seeking will stop. The artificial current demand will end. Our monetary, fiscal and social development policies are aligned,” he added.

The President said after reviewing the trends in the global oil industry, the federal government opted to set an oil benchmark price of $38 per barrel and a production estimate of 2.2 million barrels per day in 2016, adding that the government would focus on non-oil revenues by broadening the tax base and improving the effectiveness of revenue collecting agencies.

He pointed out that the government hoped to ensure macroeconomic stability by achieving a real gross domestic product (GDP) growth rate of 4.37 per cent and effectively managing inflation by aligning fiscal, monetary, trade and industrial policies.

According to him, the 2016 budget proposal is predicated on N1.8 trillion capital expenditure, accounting for 30 percent of the budget, which he said, was an improvement over the N557 billion budgeted in 2015.

“This increased capital expenditure commits significant resources to critical sectors such as Works, Power and Housing – N433.4 billion; Transport – N202.0 billion; Special Intervention Programmes – N200.0 billion; Defence – N134.6 billion; and Interior – N53.1 billion.

“These investments in infrastructure and security are meant to support our reforms in the agriculture, solid minerals and other core job creating sectors of our economy,” Buhari explained.

Non-debt recurrent spending, he added, is N2.35 trillion, down from N2.59 trillion in the 2015 budget.

While noting that the increase in capital expenditure was a fulfillment of his party’s promise to deliver development objectives to Nigerians, he said that the nine per cent reduction in recurrent spending was in fulfillment of his administration’s promise to run a lean government.

He added that the government had proposed a 223 per cent year-on-year growth in capital expenditure in demonstration of its desire to make Nigeria more competitive and commence the journey to deliver sustainable development in the country.

Furthermore, he said the government had budgeted N300 billion for the special intervention programme, which he said had raised the total amount for non-debt recurrent expenditure to N2.65 trillion.

Buhari also said the budget was predicated on a revenue target of N3.86 trillion, resulting in a deficit of N2.22 trillion.

The deficit, he added, would amount to 2.16 per cent of Nigeria’s GDP, which he said would “take our overall debt profile to 14 per cent of our GDP”. He said this would remain within acceptable fiscal limits.

The president revealed further that the budget deficit would be financed by a combination of domestic borrowing of N984 billion and foreign borrowing of N900 billion, amounting to N1.84 trillion.

He also said the government expects to increase revenue and reduce overheads in the medium-term with a view to bringing the fiscal deficit down to 1.3 per cent of GDP by 2018, even as he noted that in 2016, oil related revenue was expected to contribute N820 billion to the budget.

On the other hand, he said non-oil revenue comprising Company Income Tax (CIT), Value Added Tax (VAT), Customs and Excise Duties, and Federation Account Levies, would contribute N1.45 trillion to the budget.

He also said the sum of N113 billion would be set aside for a sinking fund towards the retirement of maturing loans, disclosing that N1.36 trillion was also provided for foreign and domestic debt service.

The president further noted that by enforcing strict compliance with the Fiscal Responsibility Act and Public Expenditure Reforms at all MDAs, the government had projected to earn up to N1.51 trillion from independent revenues.

“As I mentioned earlier, the efficiency unit set up by this administration together with effective implementation of the Government Integrated Financial Management Information System (GIFMIS) and Integrated Personnel Payroll Information System (IPPIS), will drive a reduction of overheads by at least seven per cent, personnel costs by eight per cent, and other service wide votes by 19 per cent.

“Distinguished and honourable members, this budget will be executed to provide optimum value by ensuring every naira spent by this government counts. We will devote a significant portion of our recurrent expenditure to institutions that provide critical government services,” he added.

Giving a breakdown of recurrent sectoral allocations, he said N369.6 billion would go to Education; N294.5 billion to Defence; N221.7 billion to Health, and N145.3 billion to the Ministry of Interior.

“This will ensure our teachers, armed forces personnel, doctors, nurses, policemen, fire fighters, prison service officers and many more critical service providers are paid competitively and on time,” he explained.

On the fuel subsidy question, Buhari said he had directed the Petroleum Products Pricing Regulatory Agency (PPPRA) to adjust its pricing template to reflect competitive and market-driven components.

“We believe this can lower input costs and attain efficiency savings that will enable PPPRA to keep the selling price for all marketers of petrol at N87 per litre for now,” he said.

He also apologized for the prolonged fuel scarcity in the country, stating: “The current fuel scarcity with long queues at petrol stations all over the country causing social dislocation is very unfortunate. Government profoundly apologizes to Nigerians for this prolonged hardship and misery. It is as a result of market speculators and resistance to change by some stakeholders.”

Buhari said the planned investment in infrastructure and security were meant to support government’s reforms in agriculture, solid minerals and core job creating sectors of our economy.

He added: “We will invest to safeguard lives and property. We will invest in equipping our farmers with the right tools, technology and techniques. We will invest in empowering and enabling our miners to operate in a safe, secure and humane environment.

“We will invest in training our youths through the revival of our technical and vocational institutions, to ensure they are competent enough to seize the opportunities that will arise from this economic revival.

“Indeed, the future looks bright. And I ask that we all work together to make this vision a reality.”

While expressing concern over the drastic fall of the price of crude oil in the international market, Buhari said: “The answers to our problems are not beyond us. They exist on our farmlands; our corporations; in the universities; in the hearts and minds of our entrepreneurs; through the gallantry of our Armed Forces; and the resolute spirit of Nigerians, especially the youth who have refused to give up despite all the obstacles confronting them.”

Buhari, who said the budget proposal would stimulate the economy and make it more competitive by focusing on infrastructure development; delivering inclusive growth and prioritising the welfare of Nigerians, added that the budget would also assist industry, commerce and investments to pick up.

He also said the government would as a matter of urgency, address the immediate problems of youth unemployment and poor living standards of extremely poor and vulnerable Nigerians, adding: “In the medium to longer-term, we remain committed to economic diversification through import substitution and export promotion.

“This will build resilience in our economy. It will guarantee that the problems we have today will not confront our children and their children. This shall be our legacy for generations to come.”

He further noted that despite the weak emerging market growth rates, Nigeria’s domestic security challenges, declining oil prices and attendant difficulties in providing foreign exchange to meet market demands, the Nigerian economy grew by 2.84 per cent in the third quarter of 2015.

While assuring Nigerians that the country has and would continue to implement strategies meant to maintain macroeconomic stability and as well manage the oil price shocks being experienced, the president said his government had appointed new leaders to head revenue generating agencies.

He listed such agencies to include the Federal Inland Revenue Service (FIRS), Nigerian National Petroleum Corporation (NNPC), Nigerian Communications Commission (NCC) and Nigerian Customs Service (NCS).

He however failed to admit that the Treasury Single Account (TSA) was an inherited policy from the administration of former President Goodluck Jonathan by presenting it like the initiative of his administration.

He said: “We implemented the Treasury Single Account (TSA) which, so far, has provided greater visibility of government revenues and cash flows.

“We intervened to support states to navigate their fiscal challenges by restructuring their commercial bank loans and by providing facilities to enable them to pay salary arrears.”

The president said as an emergency measure, the government would address the chronic shortage of teachers in public schools across the country by partnering state and local governments to recruit, train and deploy 500,000 unemployed graduates as well as holders of National Certificate of Education (NCE).

He said the teachers would be deployed to primary schools and consequently enhance the provision of basic education especially in rural areas.

The president also promised that his government would provide free education for pupils.

He, however, acknowledged that despite the laudable promises contained in the budget, most Nigerians might not believe and would rather say “l have heard this before”.

In this regard, he blamed the people’s sense of apathy towards government activities after years of failed promises.

However, commenting on the budget’s highlights, Senator Bukkar Abba Ibrahim (Yobe South) said the promise of free education to pupils by the president was laudable, describing it as budget of hope, while Senator Solomon Adeola (Lagos West) said it was cheery to see the budget taking care of social interventions such as school feeding and social welfare for the unemployed.

On his part, Senator Bassey Akpan (PDP, Akwa Ibom North-East) described the budget as people-centred and an indication that the President means well for the country.

He also said the National Assembly would look at the assumptions in it and ensure that its implementation is in line with its passage.

In his remarks, Hon. Zakari Mohammed (Kwara APC) emphasised the need to assist the executive in realising the innovations in the budget.

“For instance, they upped the capital component of the budget. In recent times, we have not had that; this is important to development.

“The only thing is that Mr. President must strive to ensure early release of funds and full implementation of the budget,” he said.

But in its reaction to the budget estimates, the opposition Peoples Democratic Party (PDP) described it as a “big fraud and executive conspiracy tailored towards mortgaging the future of the nation”.

The party queried Buhari’s decision to borrow N2 trillion, the largest in the history of the nation, describing it as the height of recklessness and deceit from a government that thrives on propaganda.

The PDP, in a statement issued yesterday its National Publicity Secretary, Chief OlisaMetuh, slammed the federal government for trying to use its bogus welfare programme and phantom capital projects as a cover and conduit to syphon funds to satisfy partisan interests, particularly to settle huge campaign debts.

“It is obvious that this budget is an extension of the campaign promises of the APC government, presented as a manifesto filled with bogus promises whose implementation will be inconclusive, thereby allowing the APC to once again deny their promises.

“There has never been any known economy in the world where government deliberately mortgages the future of its nation by borrowing excessively to finance partisan interests while hiding under bogus welfare programmes.

“This is more so important, as the APC in reeling out its bogus campaign promises never informed Nigerians that they would mortgage their future through excessive borrowing.

“We have it on good authority that this is the first in a series of APC borrowings which would leave the future generation of Nigerians under the burden of huge debts after four years,” Metuh stated.

The PDP said the budget clearly showed that after seven months in power, Buhari and his party, the APC, were yet to differentiate between governance and campaign propaganda.

“By all standards, the 2016 budget, the first major economic policy outing of this government, is completely unrealistic and duplicitously embellished with impractical predications, a development that confirms fears by economy watchers and investors that this administration is obviously ill-equipped for governance.

“We are indeed shocked that President Buhari and his Minister of Information have come up with two different reasons for the current fuel crisis in the country.

“While we appreciate the president’s apology, we think it is high time he called this minister to order as his excessive propaganda and blame game are ridiculing this administration and the image of the nation.

“Furthermore, it is instructive to note the official endorsement of Mr. President on the devaluation of the naira as against his campaign promise of firming up the value of our currency even to the much vaunted one naira to one dollar.

“Does it mean that Mr. President lied his way to power, or that he did not understand the complexities of governance when he was making his false promises to Nigerians?

“In future, there is need to regulate campaign promises so that we will not end up with a government that promises to climb Mount Everest with bare hands and end up mortgaging our future with orchestrated borrowings.

“Finally, we want to request Mr. President to once again involve experienced and well-tested hands in the management of the economy and budgeting processes.

“This economy is not for Mr. President, neither is it for the APC. The progress of the economy is for all Nigerians and as such, due care should taken to save ourselves from unrealistic and deceptive programmes,” he said.

The ruling APC, however, hailed the budget, describing it as a “Budget of Change” meant to tackle the needs of Nigerians.

National chairman of the party, Chief John Odigie-Oyegun, in a statement assured the public that many of the promises made by the party during the 2015 Presidential Campaigns were contained in the proposed budget.

Odigie-Oyegun said that the present administration’s pro-people policies would be implemented “full blast” in the coming 2016 fiscal year.

He said: “In fulfillment of APC’s election promises to the Nigerian electorate, the party welcomes the proposed social welfare programmes contained in the proposed 2016 national budget submitted to the National Assembly.

“President Buhari has proposed N500 billion to pay unemployed Nigerian graduates (post-NYSC grant) and feed school children, amongst other social welfare programmes in 2016.

“A phased social welfare programme created to cater for a larger population of the poorest and most vulnerable Nigerians upon the evidence of children’s enrolment in school and evidence of immunisation has also been proposed to the National Assembly.

“President Buhari has also promised that 500,000 new teachers would be recruited.

“Compared to the last 16 years of locust, Nigerians are getting a much better deal from the seven-month old APC-led administration. On the strength of these proposals, the future holds more dividends of democracy for Nigerians.

“It is reassuring that the federal government has recovered huge sums from looters of our commonwealth, which will be injected into the 2016 national budget.”

The APC chairman called for speedy passage of the budget, stressing: “As the National Assembly considers the proposed 2016 budget, the APC calls on members of the Senate and House of Representatives to rise above political, regional and ethnic sentiments and pass the proposed budget which is pro-people and in the overall best interest on Nigeria.”

He hailed the very cordial working relationship between the National Assembly and the executive arm of government, especially with the president.

Odigie-Oyegun said in presenting the proposed budget in person, Buhari demonstrated his commitment to Nigeria’s constitutional democracy and the dictates of the Rule of Law and also highlighted the importance of building a smooth working relationship with the National Assembly, noting that this was the first in three years a Nigerian President had personally presented a budget before the legislature.

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