2014 budget implantation hangs in the balance with the coming elections, late passage of the budget and the new possibilities exposed by the rebasing exercise. Assistant Editor Nduka Chiejina looks at the challenges
After months of indecisiveness, the National Assembly finally passed the 2014 budget with a slight increase to the figure projected by the executive arm of government.
The directive by the leadership of the All Progressives Congress (APC) to its legislators in the National Assembly to block the Appropriation Bill among other bills, threatened the early passage of the 2014 budget, but by April 14, both chambers of the National Assembly had passed N4.695 trillion budget as against the N4.642 trillion presented by the executive ready for the President’s accent.
Details of the additional N53 billion in the budget was not immediately made public by the legislators.
At the presentation of the 2014 budget to the National Assembly, the Coordinating Minister for the Economy and Minister of Finance Dr. Ngozi Okonjo-Iweala had stated the budget was formulated to create more jobs, provide more infrastructure and engender inclusive growth for the whole economy through a reduction in the cost of governance.
The baseline assumptions for the budget were predicated on the Benchmark Oil Price of $77.5pb; Budgeted Oil Production of 2.3883mbpd; Average Exchange Rate of N160/$, same as in 2013 and Real GDP Growth Rate of 6.75 per cent. All these assumptions were retained by the National Assembly.
The revenue projections for 2014 are have been pegged at: Gross Federally Collectible Revenue, N10.88 trillion; Gross Federally Collectible Oil and Gas Revenue, N7.16 trillion; Total deductions, including cost of crude oil production, subsidy payments, and domestic gas development is N2.15 trillion, same as in 2013; Subsidy payments were maintained at the 2013 level of N971.1 billion; Gross Federally Collectible Non-Oil Revenue, N3.29 trillion and Federal Government budget revenue of N3.73 trillion.
The expenditure projections for 2014 is also predicated on an aggregate expenditure (Net of SURE-P) of N4.642 trillion, with aggregate expenditure (Inclusive of SURE-P) put at N4.910 trillion. Statutory Transfers is put at N399.7 billion; INEC’s expenditure is to increase from the N32 billion provisioned in 2013 to N45 billion in 2014. “This is to enable the Commission intensify preparations towards the 2014 elections.”
National Assembly’s allocation remained at the 2013 level of N150 billion, while the provision for debt service increased to N712 billion from the 2013 level of N591.8 billion. Recurrent (non-debt) spending is projected at N2.43 trillion down from N2.80 trillion in 2013 while Personnel cost increased slightly from the 2013 amendment Budget provision of N1.718 trillion to N1.723 trillion for 2014.
Capital Expenditure for 2014 is projected at N1.100 trillion with the share of capital in total expenditure put at 27.29 per cent down from 31.9 per cent in 2013 which is said to reflect the increased allocation to pension as well as high wage bills.
The share of recurrent in total spending for 2014 is 72.71 per cent and the provision for SURE-P is budgeted at N268.37 billion.
In 2014, the fiscal balance is projected at N911.96 billion for Fiscal Deficit with a share of GDP of 1.90, while new borrowing requirement is expected to be N571 billion, a decrease from N577 billion in 2013.
According to President Goodluck Jonathan, in 2014, the economy needs “to grow even faster than 7 per cent per annum and we need growth in sectors such as agriculture, housing, and services that create the most jobs. Our growth must bring shared prosperity. An economy whose growth leaves wealth in the hands of a few cannot achieve its full potential.”
The major focus of the 2014 fiscal year projection will be the continuation “of prudent economic management in order to build on recent economic growth to support job creation and more infrastructure.”
But because “we are connected to a global economy that remains weak, we need to be prudent and proactive to avoid risks and dangers while creating more jobs and building more infrastructure” the government said for 2014.
Priorities for 2014 are: Power: with a continued focused implementation of Power Roadmap to consolidate the transformation of the power sector. Increased investments in transmission to ensure power generated is properly evacuated and distributed. Strengthening of regulation of the sector, and closely monitoring electricity delivery to increase this beyond 18 hours per day. To complete the privatisation of the NIPP projects, accelerate work on gas pipeline infrastructure and also continue to invest in hydro-electric power and clean energy as they monitor the effects of climate change on the economy.
On roads, government plans in 2014 to make considerable progress and the completion of some major projects including: the East-West road; dualisation of the Abuja-Abaji-Lokoja road; rehabilitation of the Ayingba-Otukpo road and the dualisation of the Kano-Maiduguri road. It also plans to increase the pace of work on important roads such as: the Lagos-Ibadan expressway; the Enugu-Port Harcourt expressway; the second Niger Bridge, and the Loko-Oweto Bridge.
In aviation, 2014 plans to see the continuation of investment in upgrading air navigational and security systems to maintain safety in the skies. The completion of work on the remodeling of 11 airport terminals across the country, and the acceleration of construction work on the five new airport terminals and 13 perishable air cargo terminals across the country.
In agriculture, government
plans in 2014 to sustain its on
going agricultural transformation, with further investments in the sector through the provision of input subsidies to 5 million farmers nationwide using the e-wallet system. Ali it will target the self-employment initiative under the Youth Employment in Agriculture Programme (YEAP), called the Nagropreneur programme to develop over 750,000 youth commercial farmers by 2015. Establish new agro-industrial clusters to complement the staple crop processing zones being developed across the country.
In 2014, in partnership with the private sector, the Fund for Agricultural Finance in Nigeria (FAFIN), a private equity fund to invest in agribusinesses across the country will be launched.
To strengthen the 17 million registered Small and Medium Enterprises (SMEs) which employ over 32 million Nigerians and improve their job creation capacity in 2014, government says “there will be a stronger focus on implementing the Nigeria Enterprise Development Programme (NEDEP) to address the needs of small businesses. This will include helping SMEs with access to affordable finance, business development services, and youth training.”
To reinvigorate the housing and construction sector, the Nigeria Mortgage Refinance Company (NMRC) has been launched in January 2014. NMRC is expected to increase liquidity in the housing sector, provide a secondary market for mortgages, and thereby increase the number of people able to purchase or build homes at an affordable price in the country. The programme will begin in 14 pilot states where the State Governors have agreed to provide fast-track land titles, foreclosure arrangements, and serviced plots. NMRC will help create over 200,000 mortgages over the next five years at affordable interest rates.
To provide for those at the lower end of the economic ladder, there will be an expansion of mass housing schemes through a re-structured Federal Mortgage Bank and other institutions to provide rent-to-own and lease-to-own options.
“This will help ensure more hardworking Nigerian families will be able to realize their dream of owning a home.”
To support the film and creative arts industry, 2014 will witness accelerated implementation of the Project Advancing Creativity and Technology (PACT) for programme for Nollywood with focus on tackling intellectual property and distribution challenges faced in the industry. The PACT is a ?3 billion grant programme for Nollywood set up in 2013. N1 billion of this Fund has gone to support capacity building and film production in the industry.
In the 2014 Budget, government says “there will be continued implementation of the Saving One Million Lives initiative to strengthen primary health care services.
This will involve scaled up interventions in reproductive, maternal, newborn and child health, nutrition, routine immunisation, HIV/AIDS, malaria elimination, tuberculosis, neglected tropical diseases, and non-communicable diseases.”
There will also be stronger focus on implementation of the provision of universal health coverage, focused implementation of new initiatives such as the President’s comprehensive response plan for HIV/AIDS as President Goodluck Jonathan will Co-Chair the fourth replenishment of the Global Fund to fight AIDS, Tuberculosis and Malaria along with UN Secretary General, Ban Ki-moon and other selected world leaders.
For education in 2014, there
will be focus on revitalising
tertiary institutions by increasing investments in infrastructure to upgrade hostels, laboratories, classrooms, and halls. Working with State Governments, the Federal Government plans to tackle the problem of the large numbers of out-of-school children in this country through investment in technical and vocational education to promote skills development for youth across the country.
Government has repeatedly admitted that lack of access to affordable medium to long term credit is one of the greatest problems facing Nigerian industrialists and entrepreneurs. To address this problem, it said “a new wholesale development finance institution will be established by end-2014 to provide medium-to long-term financing for Nigerian businesses.” To this end, government is working with partners such as the World Bank, the Africa Development Bank, the BNDES Bank in Brazil, and KfW in Germany, to realize this project, while the Bank of Agriculture and Bank of Industry will be re-structured as specialized institutions to retail financing from this new wholesale development bank.
In 2014, plans are afoot to reduce cost of governance and stem the tide of corruption and leakages. To curb fraud in the administration of the pension system, a Pensions Transition Arrangement Department (PTAD) under a new Director-General was set up I 2013. In 2014, this department will now ensure pensioners still under the old scheme receive their pensions and gratuities, and are not subjected to fraud. From 2014, all training for personnel of Ministries Departments and Agencies (MDAs) and parastatals must now take place in Nigeria. Foreign training programs will only be approved in exceptional cases, and will be based on guidelines to be developed by the Head of Service and the Director-General of the Budget Office.
Foreign travel by government personnel in all MDAs will be further curtailed. The strategy to curb leakages increasingly relies on introducing the right technologies such as biometrics and digitizing government payments. In 2014, the deployment of the three electronic platforms – the Treasury Single Account (TSA), the Government Integrated Financial Management Information System (GIFMIS) and the Integrated Payroll and Personnel Information System (IPPIS) – which are all geared towards improving efficiency and transparency in the public finances will be completed.
Through these reforms, N126 billion in leaked funds have already been saved. After the presentation of the budget to the National Assembly and eventual release of the details of the budget, Citizens Wealth Platform (CWP) a non-government and faith based organisation called on the National Assembly to eliminate all “inappropriate, unclear and frivolous expenditure from the 2014 budget, a move that would see to the reduction of about N295.32 billion from the N4.64 trillion budget proposed by the Federal Government.
Convener of the CWP, Mr Eze Onyekpere, also called on the National Assembly to ensure proper alignment of the expenditure proposals with the tag of the budget as contained in the Presidents’ address.
“The 2014 federal budget is tagged a budget of job creation and inclusive growth. We seek to find a link between the proposals for expenditure, the policies and governmental actions and the tag of job creation and inclusive growth.”
He noted that in the past Ni
geria has had budgets of
consolidation, growth, hope and so on but nothing changed after the implementation of such budgets. “We are still searching and Nigeria wants to see the link. Poverty is deepening, inequality is the order of the day, unemployment is growing and spreading for the majority of the populace in the country,” he stated.
The CWP noted that N220.32 billion could be saved if the inappropriate, unclear and frivolous expenditures were expunged from the Line Items of Ministries, Departments and Agencies (MDAs) of government, including the Presidency.
“Why is virtually every MDA asking for money for uniforms, welfare etc? Why would MDAs continue playing with words like “rehabilitation”, “maintenance”, and “repairs” and using them as different expenditure heads to get money out of the Treasury?”
The group also queried the provision of N1.5 billion for the purchase of a new Aircraft for the Presidential Fleet when there are already 10 planes within the fleet.
“Who needs a new presidential aircraft in the midst of popular despair? If the money is not stolen, who changes furniture, fittings, computers and software every year in his personal house from his hard earned money?” Onyekpere queried.
He also commented on the capital budget which at 23.7 per cent of the budget is very low. “I think it is wrong for the federal government to operate on a 74 per cent recurrent expenditure, but I think the minister of finance has explained that it was the wage increase that shot up the personnel bill. However, we are thinking that it is not just salary increases that are responsible for the overshot recurrent. Rather it is the perks of office for political office holders. Let us make a disaggregation of how much goes to the major civil servants and how much goes to political office holders. We have made an FOI request to madam minister and we are hoping to get a response and if we can’t get a response we go to court. Mind you even what you are calling capital expenditure, part of it is for the rehabilitation and repairs, money for the National Assembly to build a new building, cars, and all kinds of things that are more or less administrative expenses.”
“The core developmental capital like the money used to build roads, hospital, is not more 50 per cent of the capital fund. We are saying that developmental capita should be increased and not the money for computers and software and so on,” he stated.
With the 2015 elections very much around the corner, the National Assembly by delaying so much before passing the 2014 budget may have helped in what may result to the poor implementation of the 2014 budget. As the months and days to the elections draw nearer attention will shift away from the execution of the budget to the antics of politicians as they maneuver to retain or assume new political positions. Time that would have been spent to execute the budget will now be spent campaigning and it will well into 2015 before normalcy will return to budget implantation.
Coupled with this, is the expected huge spending to fund campaigns and very little questions are being asked as to where the funding for the campaigns and the always attendant inflation that accompanies election years will come from. The only mention of election funds in the 2014 budget is the fund earmarked for the Independent National Electoral Commission (INEC), there is the unspoken yet widely believed assumption that those in government today will fund their campaigns from budgetary allocations to MDAs.
Also the rebasing of the country’s GDP was a spur of the moment event, it had been in the works for two to three years but no specific mention was made of government’s plan to key into the opportunities that the result of the rebasing exercise will throw up in 2014 and beyond. If the federal government genuinely plans to take advantage of the opportunities the result of the rebasing exercise has thrown up, then there is the possibility that there will supplementary budget proposals that will be pushed to the National Assembly along with other expenses that will surface as the elections approach thus increasing the budget deficit well and truly beyond what is currently projected.
