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Tag: budget

  • Waiting for the Budget of Recovery and Growth

    Waiting for the Budget of Recovery and Growth

    Barring the unforeseen, efforts to pass the N7.298 trillion 2017 Budget will peak with the scheduled resumption of the National Assembly this week. But the level of implementation and performance of the N6.07 trillion 2016 Budget, which was targeted at raising revenue from non-oil sectors, including taxes, and increasing capital spending, has come to the front burner. NDUKA CHIEJINA writes on the shortcomings of the previous appropriation  and the expectations of this year’s.  

    Last year, the implementation of the budget ran into stormy waters from the outset with the continued decline in oil revenue. The fall was a carryover from previous years.

    The N6.6 trillion appropriations dubbed: “Budget of Change” by the President Muhammadu Buhari administration remains a milestone in the annals of budget making. It was the first time the Federal Government would be allocating 30 per cent of the budget to capital expenditure. It was also the first in modern day Nigeria, where the National Assembly would reduce the proposal submitted by the executive as against the usual ‘ritual’ of increasing it.

    According to the Budget Office of the Federation (BoF), tracking annual budget entails “monitoring and evaluation of the process of implementing the approved revenue and expenditure; conduct of field visits to ministries/agencies and periodic evaluation of the performance of the capital and recurrent budget.

    A communications’ officer in the Office of the Accountant-General of the Federation (AGF), Ifeanyi Okereke, noted:  “To ensure the ‘Budget of Change’ delivers on its set goals and impact positively on the lives of Nigerians, the President must ensure that things are done differently now through a deliberate mechanism and plan to track implementation of the 2016 budget, using modern monitoring and evaluation system.”

    Budget tracking, he explained, “enables the government and its stakeholders to examine the flow of public funds from the point of disbursement to the point of utilisation, as it helps to identify funds breakdown as well as cases of mismanagement and corruption within the budget implementation chain.”

    Armed with the Monitoring and Evaluation (M&E) framework for tracking the implementation of last year’s budget, the Minister of State for Budget & National Planning, Mrs. Zainab Ahmed, said tracking the budget and its implementation will be anchored nationally by the ministry of Budget & National Planning with the Department of Planning Research and Statistics in the Ministries, Departments and Agencies (MDA’s).

    The government, Okereke said, “should go beyond official pronouncement to enthrone a culture of monitoring and evaluation in the MDAs. It must develop realistic, thorough, but simple result-based strategies to trap and track fiscal spending in the 2016 budget plan.

    “More importantly, efforts must now be geared towards restructuring the MDAs to establish M&E units. Presently, capacity for carrying out result-based monitoring and evaluation in the MDAs are lacking.

    “If government implements the 2016 Budget, by ensuring that there is a systematic tracking of the funds to the actual projects, the budget will indeed signal the birth of a New Nigeria.”

     

    Key budget components Revenue

    Using the PricewaterhouseCoopers (PwC) analysis of the budget, the government planned to reduce over-reliance on oil revenue and reduce the country’s exposure to oil price volatility. Non-oil revenue like Corporate Income Tax (CIT), Value Added Tax (VAT), Customs & Excise Duties, federation levies and FGN independent revenue were estimated at N2.96 trillion.

    Expected earnings from the non-oil sectors account for about 77 per cent of budgeted revenue of N3.86 trillion for 2016. To shore up the nation’s financial base, changes were made to the leadership of the revenue generating agencies. These included appointment of Mr. Tunde Fowler as the Executive Chairman of the Federal Inland Revenue Service (FIRS) and Hamid Ali, a retired Colonel as the Comptroller-General of the Nigerian Customs Service (NSC).

    The government re-emphasised the need to focus on increasing tax collection. The gross receipts from corporate tax and VAT were expected to rise to N1.8 trillion and N1.4 trillion compared to N1.4 trillion and N1.3 trillion respectively in the previous year’s budget (i.e. increase of 22 per cent for CIT and eight per cent for VAT).

    Independent revenue and remittance of operating surpluses from MDA’s was projected to improve significantly with the full implementation of the Treasury Single Account (TSA) system.

     

    Recurrent Expenditure (non-debt)

    Spending was planned to increase last year (compared to 2015) by about 35 per cent to an aggregate expenditure of N6.08 trillion. Non-debt recurrent expenditure for 2016, representing about 39 per cent of the aggregate expenditure was projected to drop by nine per cent to N2.3 trillion. It excluded a N300 billion vote for Social Intervention Programme (SIP).

    In order to reduce the recurrent expenditure, the government pledged to focus on initiatives such as the Government Integrated Financial Management Information System (GIFMIS) and Integrated Payroll and Personnel Information System (IPPIS).

    The top recurrent expenditures heads were N369.6 billion for Education; Defence (N294.5 billion); Police (N283.1 billion); Health (N221.7 billion) for and Interior (N145.3 billion).

     

    Debt service and capital expenditure

    Since the government relied on borrowing to fund last year’s budget, it projected to increase its debt service expenditure. The debt service cost was expected to rise by 42.8 per cent (N1.36 trillion), accounting for about 23 per cent of the budget. The total debt profile would become 14 per cent of the Gross Domestic Product (GDP).

    The capital expenditure was proposed to increase by about 216 per cent to N1.8 trillion. The challenge of previous administrations was the implementation of the capital expenditure budget.

     

    Statutory transfers

    There was a decrease in statutory transfers from N375 billion in 2015 to N351 billion in 2016. Based on the Medium Term Expenditure Framework (MTEF), the aggregate amount was expected to increase in subsequent years.

     

     Priority sectors

    Agriculture

    In last year’s budget speech, President Buhari spoke of a plan by his administration to subsidise funding for the agricultural sector to encourage participation in the sector and increase job creation. As part of the plans to boosting activities in the sector, the administration also projected the attainment of self-sufficiency in rice production and wheat.

    The overall objective was to make agriculture one of the drivers of the economy. To achieve the feat, other challenges, including infrastructure, fiscal and investment policies, were to be giving priority. 

    Solid minerals

    The government also proposed to boost investment in the mining sector, where 34 minerals had been identified across the country. However, only 13 of the minerals are being mined, processed and marketed. These are: coal, kaolin, barite, limestone, dolomite, feldspar, glass sand, gemstones, gold, iron ore, lead-zinc, tin and its associated minerals and recently gypsum.

    Some of the initiatives of the Federal Government that are targeted at boosting the solid minerals sector include: the revival of the Ajaokuta and Aladja Steel Companies through policies and proper funding/ownership arrangements; gold exploitation through policies and adequate funding to increase output.

    In the budget under review, plans were made to provide subsidised funding to the solid minerals sector.

     

    Tax changes

    There was no proposal to change tax rates or impose new taxes in 2016. The budget speech was silent on the government’s proposals to introduce a National Security Tax (NST) and the proposed increase in Tertiary Education Tax (TET).

     

    Custom duties

    Levies and duties on the value of imports were projected to reduce last year compared to 2015. However, there is expected to be an increase in custom collection from N862 billion in 2016 to N921 billion next year. This is highly dependent on monetary policies of the Central Bank of Nigeria (CBN) and security at the borders to check smuggling.

     

    Corporate taxes

    The projection for corporate taxes is quite optimistic. Corporate tax collection is expected to grow from N1.87 trillion in 2016 to N2.23 trillion in 2018. This is as a result of heightened effort by the FIRS towards tax collection. Some of the initiatives include collaboration with financial institutions on tax collection and partnering with the Corporate Affairs Commission (CAC) in identifying non-compliant taxpayers.

     

    VAT

    The budget makes no mention of an increase in the VAT rate from five per cent other than the fact that the rate was meant to increase to 10 per cent by mid-2015 which was not implemented. However, VAT collection is expected to increase due to more enforcement of compliance.

     

    Luxury tax

    There was no mention of luxury tax in the 2016 budget speech. But based on the MTEF paper for 2016-2018, the surcharge on luxury items was expected to generate about N15 billion in 2016.

     

    Taxes for smaller companies

    The unemployment situation was also priority. There was a plan to reduce tax rate for smaller businesses. It was not clear what taxes would be reduced and what constitutes “smaller companies”. It was, however, noteworthy that a lower CIT rate of 20 per cent (rather than 30 per cent) is currently applicable to small companies that meet certain conditions.

     

    Further insights on the MTEF 2016-2018

    The MTEF is the roadmap for the implementation of the various plans and social development programme. It provides a high-level strategic policy direction of the government over the next three years.  A social welfare package of about N500 billion was proposed for 2016 in the MTEF. The package is aimed at three areas of school feeding programme initiatives, conditional cash transfer to the most vulnerable and post National Youth Service Corps (NYSC) grant to promote entrepreneurship.

    The government must be deliberate with implementation of the budget and take periodic stock of how well programmes are being implemented. The value of each programme to the economy and social wellbeing of citizens must be measured. Any programme that does not add value beyond its associated cost should be discontinued or reviewed very quickly as the huge borrowing has to be justified by clear results.

     

    Diversification of the economy

    The MTEF reiterates the emphasis on diversification of the economy. The main areas of focus are agriculture and solid minerals. The Buhari administration needs clear policies and regulatory framework for investors to thrive in the identified sectors. Ultimately, these sectors should be able to earn significant foreign exchange to replace the shortfall from crude oil earnings. This will have a positive impact on the exchange rate and the economy as a whole.

     

    Zero-based budgeting system

    The MTEF is a zero-based budgeting system. If implemented properly, it will encourage the attainment of a more prudent public fund management. It should help to reduce inefficiency and wastage, especially in the recurrent expenditure and free up more funding for infrastructural development.

     

    Increase of VAT

    In the MTEF paper, the VAT rate was projected to increase by mid-2015 to 10 per cent but it was not implemented. The document did not suggest that VAT will be increased in 2016 as the projected 20 per cent increase was projected to come from improved compliance. It is also not clear whether five per cent will be maintained over the three-year period (2016-2018), especially in view of the full implementation of the Common External Tariff (CET) for ECOWAS projected for 2019.

     

    Infrastructure development and power

    The MTEF highlights some effort on increasing access to energy supply and improving transportation infrastructure. In order to achieve this, the Federal Government would setup an infrastructure development fund.

    One of the crucial extracts from the document is that the government will encourage off-grid power. Though there is no detail information on the off-grid power, it suggests that the Independent Power Projects (IPP) will be encouraged while government focuses more on ensuring adequate investment in transmission infrastructure and regulation. This will impact on the regulation of tariffs and the ability of investors to earn commercial returns across the power value chain.

    Explaining the gray areas of this year’s budget estimates, the Director-General of the Budget Office, Mr. Ben Akabueze, told reporters that “from 2016, funding of capital projects will be based on availability of funds.”

    He disclosed that changes have been made in the way budgets will henceforth be monitored and evaluated, beginning from last year. Confirming that the disbursements in first and second quarters for the 2016 budget implementation had been made public, Akabueze said the figures for the third quarter would be made public after the Federal Executive Council (FEC) approval of the report used as a baseline for the new approach to monitoring and evaluation.

    Experts have agreed that releases do not translate to implementation. According to them, what determines the success of budget implementation is the procurement process.

    In the breakdown of the first and second quarters releases for last year’s budget implementation and evaluation, the Ministry of Power, Works & Housing got the largest allocation with N170,425,193,949. A total of 40.03 per cent of the budget has so far been released and cash backed.

    The curtain is expected to drop on the implementation of the 2016 Budget next month.

  • Fed Govt records late passage of budget in six years, says FRC

    Fed Govt records late passage of budget in six years, says FRC

    Capture

    The consistent delay in the passage of budget by the National Assembly is slowing down growth, the Fiscal Responsibility Commission (FRC) has said.
    The agency’s report indicates a pattern of five months between the budget presentation by the President and its passage by the lawmakers in the last six years.
    It said the lateness “messes up budget tracking and contributes to poor implementation of capital budgets.”
    It also claimed that the delay in managing the Appropriation Bill had been stifling national development
    The commission stated this in its 2015 Annual Report and Audited Accounts, obtained by The Nation last night.
    The FRC recommended the adoption of a “strict budget timetable to be incorporated in the Fiscal Responsibility Act (FRA).”
    The commission suggested a January to December fiscal year to enable successive budgets to have meaningful impact on the nation’s development.
    The report said in part: “It will be observed that there have been perennial delays in the presentation of the budget to the NASS. There has been an average of five (5) months between the time of presentation to the National Assembly and assent by the President.
    “Though the Fiscal Responsibility Act, 2007 does not specify a time-limit for the submission and passage of the annual budget into law, it stands to reason that the budget instrument should be ready for execution from the beginning of the fiscal year.
    “The case for years where a new fiscal year’s budget is being awaited months into the fiscal year owing to the late passage of the budget messes up budget tracking and contributes to poor implementation of capital budgets thereby stifling national development.”
    The report added: “There is therefore a need for a strict budget timetable to be incorporated in the FRA. This way, relevant agencies will be committed to specific tasks, timelines and deadlines which if enforced will go a long way towards solving the perennial problem of late preparation and passage of annual budget well as the uncertainty in delimiting the budget cycle.
    “In the prevailing circumstances, it is pertinent to reiterate the Commission’s earlier recommendation that the Nigerian budget preparation should begin in July and be signed into law as the Appropriation Act in December.”
    On why budget implementation has failed over the years, the FRC attributed it to lack of Annual Cash Plan and Disbursement Schedule.
    It said the development had led to “arbitrariness in the execution of the budget as continuously witnessed over the years.”
    The report said: “Section 25 requires that an annual cash plan is prepared in advance by the Accountant-General of the Federation and shows projected monthly cash flows for the financial year. The plan is to be revised periodically to reflect actual cash flows.
    “Section 26 on the other hand requires that a Disbursement Schedule shall be prepared by the Finance Minister within 30 days of the Appropriation Act and must be derived from the Annual Cash Plan.”
    “The import of sections 25 & 26 underscore the need to ensure efficient and effective management of revenue and expenditure across all MDAs towards the achievement of budget targets.”
    “In the course of implementing the 2015 budget, the Office of the Accountant General of the Federation prepared and submitted a combined statement of annual cash plan and disbursement schedule. While this was an improvement over the previous year, compliance with FRA 2007 was still not observed. Section 25 and 26 requires the preparation submission of two separate statements.
    “The annual cash plan is to be prepared in advance of the year or at the time the appropriation bill is being presented to the National Assembly. The disbursement schedule on the other hand is expected to be prepared within one month of the budget being signed into law.”
    “It is pertinent to state here that the implication of operation the Appropriation Acts without a Cash Plan and Disbursement schedule in the manner prescribed by FRA 2007 invariably results in arbitrariness in the execution of the budget as continuously witnessed over the years.”
    The FRC also alleged that the Budget Office (BOF) has been violating Section 30(1) & (2) of FRA 2007.
    It claimed that BOF has not been submitting Quarterly Budget Implementation Reports to the Fiscal Responsibility Commission and the joint finance Committee of the National Assembly.
    The FRC report said: “Section 30(1) & (2) of FRA 2007 makes it mandatory for the preparation and submission of Quarterly Budget Implementation Reports to the Fiscal Responsibility Commission and the joint finance Committee of the National Assembly not later than 30 days after the end of each quarter.
    “Similarly, Section 50 requires a Consolidated Budget Execution Report to be prepared for the entire budget year not later than six months after the end of the fiscal year.
    “These reports are also required to be published in the print and electronic media and on the website of the Ministry of Budget and National Planning for ease of access by the public.”
    “In spite of several requests and reminders for the preparation and submission of BIRs, the reports were still being submitted behind schedule thereby limiting their use as effective tools in budget implementation.

  • Niger Assembly debates 2017 budget

    The Niger State House of Assembly has begun deliberations on the government’s 2017 budget proposal.

    The lawmakers passed a vote of confidence in Governor Abubakar Sani Bello for the performance of the 2016 budget, which was rated 68 per cent, and positive performances of his administration.

    Speaker Ahmed Marafa said the 2016 budget was successful despite the economic challenges in the country, adding that Governor Bello should be lauded for his prudence and accountability.

    He said the vote of confidence passed in the governor was done after consultation with his colleagues.

    Abdullahi Adamu Mammagi (Gbako constituency) praised the executive for ensuring an even distribution of basic socio-economic amenities and repositioning agencies charged with generating revenue, especially the Board of Internal Revenue Service.

    Deputy Speaker Hussaini Ibrahim lauded the government’s effort in transforming the education sector, especially with the establishment of teacher training colleges.

  • Budget not padded, says DG

    Budget not padded, says DG

    The 2017 Federal Government budget is not padded and not filled with frivolous and unclear expenditures, Budget Office Director-General Ben Akabueze, said yesterday.

    He spoke with reporters and members of Civil Society Organisations (CSOs) in Abuja on some of the grey areas in the 2017 budget. He also explained the budget process.

    Regarding the N2 billion housing project that whipped up the padding controversy, the DG said the money had been traced to the Ministry of Housing and not the Ministry of Finance.

    He said: “When they asked the Minister of Works about N2 billion provision for regional housing scheme, he answered that it related to the Ministry of Finance, which is inaccurate.

    “Some have alleged that padding is back in the 2017 budget. I can say without equivocation that there is no padding in the 2017 budget proposal. The process of preparing the budget required Ministries, Departments and Agencies to upload their budgets online by their accredited officers, who were issued access codes to ensure audit trail of all entries.”

    In preparing the budget, Akabueze explained: “ Chief Executives or Chief Accounting Officers of all MDAs were required to certify their final budgets. The budget presented to the National Assembly by Mr President was exactly what the MDAs certified.”

    On the use of different price tags for same items during the preparation of the budget, the Budget Office boss said: “Going forward, the Budget Office would work with the Bureau of Public Procurement to ensure timely review of price lists. The BPP is updating its price list, which would be structured in the budget preparation application to make it impossible for different agencies to use different prices for same items in the budget. Regardless of what price any MDA uses in its budget, ultimately the BPP determines applicable price for each procurement.”

    Akabueze  pointed out that prices for similar construction projects vary because “it is possible for different rates to apply, depending on the physical terrain and security situation.”

    When asked to explain the inclusion of frivolous items, such as welfare packages, security votes, cleaning expenses, electricity and other utility costs Akabueze said these items were included by MDAs using what he called “their best judgment”.

    According to him, “in the area of welfare package, such provisions are to cater for items, such as support for funeral of deceased staff, seasonal gifts and incentives to workers, among others. Given their nature (welfare packages), it is not possible to accurately project the, and so MDAs use their best judgement. However, if you divide the amount by the number of employees in each MDA, the resultant amount cannot be termed excessive.”

  • NASS and the 2017 Budget process

    The vetting of the 2017 budget by the National Assembly entered a crucial stage last week with a public hearing conducted by the joint committee on appropriation of the Senate and House of Representatives. The positive appraisal of the National Assembly’s handling of the 2017 budget so far is arguably a direct attribute of reset thinking by its leadership. One thing is clear: Unlike previous episodes of budget consideration, the process this time has witnessed smooth sail.

    Right from the day of presentation of the appropriation bill by President Muhammadu Buhari on December 14, 2016, the budget has remained scandal free. There have been no stories of the budget developing wings and disappearing into thin air; no issues of ‘padding’ or ‘stuffing’ or ‘insertion’  by unauthorized means; ministers and lawmakers have not been found engaged in hot exchange of words over who did what. The spirit and eagerness to get things done and done differently for the good of the country has been palpable. Standing committees of the National Assembly have given ministries, departments and agencies ample opportunity to defend their proposals.

    The fact that the 2017 budget is cruising home seamlessly is soothing to the heart of all and sundry.  The National Assembly under the leadership of its chairman, Dr. Abubakar Bukola Saraki, has amply demonstrated its commitment to a paradigm shift in attitudes and mind-set by rising above the din of past omissions and commissions to do things differently.

    Courageous innovations were articulated and introduced to smoothen rough edges of the sometimes amorphous budget process. For instance, to avoid the 2016 experience, the National Assembly constituted and inaugurated the public sector budget reform committee comprising senators, members of the House of Representatives, members of the executive arm of government, the academia and civil society organizations. Headed by the former Senate Leader, Mohammed Ali Ndume, the report of the committee and the committee’s recommendations, have in no small measure, contributed greatly to this year’s seamless budget defence in the growing understanding between the executive and the legislature.

    One of the major recommendations of the committee was the opening up of the budget process to members of the public. That may have been informed by the pressure for open and inclusive budget process by Nigerians. The implementation of the recommendation to open up the budget process may have given rise to the hugely successful national public scrutiny of the budget last Monday through Wednesday.

    The idea behind the public hearing was to give Nigerians the opportunity to scrutinise the document and air their opinions about the line items. The three-day event has been adjudged successful and rewarding by observers. Issues about the budget and how to make it better to serve and improve the lot of ordinary Nigerians most especially during a time of economic recession were critically interrogated.

    Another innovation in the handling of the 2017 budget by the National Assembly was that critical standing committees of the Senate and House of Representatives held  joint sessions to give MDAs an unencumbered opportunity to defend their budget proposals. The new arrangement did not only save time and cost on the part of the National Assembly and the executive, it made for greater collaboration between the stakeholders. Above all, the arrangement would also facilitate the early passage of the Appropriation Bill. This is because the two chambers would have nothing to harmonize or reconcile. It also presents early signals that will translate to more collaborative and beneficial working relationship between the Executive and the legislature.

    Chairman, Senate Committee on Appropriation, Senator Mohammed Danjuma Goje, has already assured Nigerians that the National Assembly is working to produce an implementable 2017 budget. Goje also alluded to the success of the national public hearing for the 2017 budget, saying that a total of 44 stakeholders made submissions at the hearing. He added that the 2017 special budget hearing was the first of its kind in the history of parliamentary/legislative practice in the National Assembly.

    The level of excitement and enthusiasm shown by stakeholders, especially Civil Society Organisations, he said, was quite unprecedented and encouraging. The pension, health, education and agricultural sectors, Goje said, came up and were given serious emphasis as the areas the country should pay urgent attention to. The challenge in the areas of pension payment, administration and general matters of non-performance, he added, was so clear and must be accorded top and effective priority.

    What may be described as the clincher of the novel exercise was the point Goje said was repeatedly made that “the National Assembly must reassert itself as the possessor of the power of appropriation in order to produce the budget of the people at all times.” He further said that “all proceedings we took have been properly documented and will be presented and considered by the joint committee to enable the National Assembly produce an implementable budget for Nigeria and Nigerians.”

    While declaring the public hearing open, Saraki did not lose sight of the observations of some stakeholders. “As most of you may have observed, while government has made efforts to ensure that provisions in the budget proposal align with the arching goal of pulling the economy out of recession and laying the foundations for diversified growth, certain provisions are clearly off the path. The budget must address the critical issues setting back our national growth and development,” Saraki said. Apart from assisting to pull the economy out of recession, Saraki was equally particularly interested in seeing the budget help in the creation of jobs and promotion of the non-oil sector.

    For the Senate President, “the 2017 capital budget proposal is intended to support activities that will help to speed up the diversification of the economy and the promotion of the non-oil sector, as well as create jobs for our youth. Accordingly, it is expected that “Made-in-Nigeria” (that is, domestic production of food, materials and other commodities) will be encouraged. In addition, 2017 capital budget proposal is intended to engender private sector partnership in infrastructure as well as other critical sectors of the economy such as agriculture, manufacturing and services.” Indications are that the 2017 budget will perform better. If the budget is passed in March as promised, chances are that implementation of the budget will begin immediately.

    The success of the public hearing especially flowing from the quality of interventions made by members of the public and other critical stakeholders has placed the legislative actions on the 2017 budget far above its 2016 counterpart. It must be said that the handling of the 2017 budget has taken a higher ground against the 2016 budget, which was first reported ‘missing,’ padded’ and later said to have been withdrawn. These absurdities are completely absent this time around. It may be argued that the sheer controversies that buffeted the 2016 budget may have affected the overall implementation and performance of the fiscal document as well as other economic variables notwithstanding.

    Overall, Nigerians have not only thumbs up for the National Assembly and its leadership, they have called for such open processes and citizens’ participation to henceforth be a regular feature when national budget is being considered. Such open house budget hearing, it was also noted, should always be held months before the annual budget presentation to a joint session of the National Assembly by the executive. This it is reasoned, would make room for some of the cerebral interventions,  from such array of experts and ordinary Nigerians as witnessed during the just concluded public hearing to be incorporated by the executive during the collation of sectoral allocation for the capital budget and to the various MDAs.

    It would make for a true budget document that would be in tandem with the wishes and aspirations of Nigerians, reduce waste, promote transparency, accountability and make for a more implementable budget. There is also a consensus among analysts that the open budget consideration process pioneered by the 8th National Assembly will be one of the glaring legacies of the current leadership if transparency and openness is thus institutionalized in the budgeting process of the country. That is the way to go!

     

    • Onogu is Chief Press Secretary to the Senate President.

  • N8b budget for climate change

    The Clerk of the House of Representatives Committee on Climate Change, Wali Baba Shehu, has revealed that the National Assembly made provision of N8 billion in the 2017 Appropriation Bill for the country to tackle issues on climate change.

    Sheu disclosed this at the Climate Change Knowledge Immersion workshop series, which held in Abuja last week. It was organised by the Federal Ministry of the Environment’s Department for Climate Change and the World Bank for members of the National Assembly.

    “The sum of N8 billion has been dedicated as a new budget line for issues on climate change in the 2017 budget, which will cut across all the MDAs that directly engage in issues of climate change. This is a committed action taken by the legislative arm of government to support Nigeria’s action towards achieving its set goals of reducing carbon emissions by 25 per cent by the year 2030,” Shehu said.

    It was gathered that this is the first time the National Assembly will be dedicating a lump sum to issues of climate change in the budget across the diverse sections of MDAs that work on climate change issues.

    The Director, Department of Climate Change, Ministry of Environment, Dr Peter Tarfa, expressed delight and commended the lawmakers for coming up with the budgetary plans to assist in implementing the country’s plans of action on climate change.

    “This will immensely enhance the capacity of Nigeria to draw from the diverse climate change funds or green funds that are available in the international community, but required a stringent counterpart commitment. It will also enable the much desired collaboration amongst all the MDAs as against working in silos thereby limiting our ability to work collectively,” Tarfa said.

     

    A Director with the Energy Commission of Nigeria, Dr John Epkeyong, however enjoined the lawmakers to tie the appropriation to set targets.

    “I want to appeal to the National Assembly to make sure that whichever department or agency that will be receiving funds from this budget must ensure that their expenditure is based a set target of achieving carbon emissions in any way,” he said.

  • APC governors meeting on budget fails to hold

    APC governors meeting on budget fails to hold

    A planned meeting of elected governors of the All Progressives Congress (APC) on the platform of the Progressives Governors Forum (PGF) to discuss the 2017 budget with members of the party’s National Working Committee (NWC) and its representatives in the National Assembly failed to hold yesterday.
    Reason: Poor planning, leading to the absence of almost all the invitees.
    Only three governors and one deputy governor were present at the Shehu Musa Yar’adua Centre, Abuja, the venue of the meeting.
    House Leader Femi Gbajabiamila led a few members of the House of Representatives.
    Kogi State Governor Yahaya Bello and Plateau State Deputy Governor Sonni Tyoden arrived at the venue early for the meeting and stayed for over one hour without the organisers.
    They later stormed out of the venue in anger.
    PGF Chairman and Imo State Governor Owelle Rochas Okorocha, who arrived at the venue of the meeting at about 11.20am, twenty minutes after the departure of his counterpart from Kogi State, however, announced the postponement of the meeting.
    He blamed communication breakdown for the near absence of almost all the governors and other invited guest.
    Okorocha blamed scheduled national engagement by the Acting President, the Senate President and many of the governors, who left Abuja on Friday after the National Economic Council meeting as responsible for the poor attendance.
    Sources at the PGF secretariat said poor planning was responsible for the failure of the event, which was supposed to see the governors, members of the National Assembly and Federal Government representatives brainstorming over the 2017 budget, which is geared toward bringing the country out of economic woods.
    Announcing the postponement of the meeting to a later date, Okorocha told reporters: “We wanted the Acting President to be here in person. This
    programme coincide with other programmes because there are lot of questions that might come up that require national answers and most of the legislators; the Senate President and Speaker are also engage in another programmes.
    “Only last Friday, most governors left back to their states to come back on Monday but it was not convenient. The dispatched messages couldn’t get to them, some had come and some did not get the message. So, we agreed we should shift it to next week.
    “The budgetary system vis-a-vis capital projects in the face of this economic recession we have, we try to rob minds together with the legislative arm even with our own state legislature to see how we can come up with a proper budgetary system that all can key in because most of the time when the Federal Government make their budget, states make their budget and local governments make their budget, it is at variance with each other. But if we can unite and have a common understanding about the budgetary system, it will help for faster development.”
    Gbajabiamila said: “Meetings are postponed every day because of several issues – political, social and other reasons. But it’s a normal thing.
    “What is worth doing, is worth doing well. There are people we wanted to be present, but for one reason or the other, they could not be here. But the meeting will hold at a more opportune and convenient time.”
    Gbajabiamila added: “One of the most important thing that is being considered right now is the budget and we wanted to make sure as the budget of the party in government which is APC, reflects the wishes and aspirations of the people”

  • Reducing EFCC’s budget by 8.5 % will hamper operations – Magu

    Reducing EFCC’s budget by 8.5 % will hamper operations – Magu

    The Acting Chairman, Economic and Financial Crimes Commission (EFCC), Mr Ibrahim Magu, on Monday urged the Senate to increase budgetary allocation to the commission to able it function effectively.

    Magu made the plea in Abuja while defending the commission’s 2017 budget before members of Senate Committee on Anti-Corruption and Financial Crimes.

    He pointed out that the commission’s 2017 proposal had been reduced by the Budget Office from N18.8 billion in 2016 to N17 billion, representing 8.5 per cent slash.

    He said that if the 2017 allocation was not increased, operations of the commission would be hampered.

    Magu said that the 2017 capital expenditure was N7.1 billion, overhead, N3 billion while personnel cost was N7 billion.

    He urged the committee to increase in the personnel cost from N7 billion to N9.7 billion to accommodate the proposed recruitment of 750 cadets in 2017 and the 530 already recruited in 2016.

    He also called for urgent completion of the commission’s head office in Abuja, saying that its present office arrangement was impeding effective operations.

    In his remarks, Chairman of the committee, Sen. Chukwuka Utazi, commended the EFCC for its efforts in the fight against corruption.

    However, he urged officials of the commission to put in their best to save Nigeria from destructive tendencies of corruption.

    Utazi advised the commission to interface with the National Assembly and have a good communication relationship.

    He queried the general presentation of the commission’s budget and cautioned it against running to the presidency always to seek for extra funds or intervention.

    He maintained that 2016 budget performance was not properly computed as the percentage of performance was not indicated. (NAN)

  • ‘Borrowing to service budget shouldn’t cause a stir’

    The Director-General of Debt Management Office, Dr. Abraham Nwankwo, believes that Nigeria’s successful outing at the Eurobond market should be reassurig enough that Nigeria is determined to come out of recession, and that borrowing to servive the budget should not cause a stir. He spoke with a select group of Editors in Abuja.  Deputy Editor, Nation’s Capital, YOMI ODUNUGA, was there.

    How would you describe Nigeria’s performance at the Eurobond market?
    I would say it was a success. We successfully transacted on the $1 billion Eurobond issuance on the 9th of February. It was over-subscribed. The level of subscription is nearly 800 per cent and we got it at a favourable price relative to our expectations and general predictions before we went to the market. We obtained that at a coupon of 7.875 per cent per annum which is very favourable considering that the bond is for a tenure of 15 years.
    The last time we went to the market in 2013 which was our second outing, that $1 billion outing was obtained for 10 years. This time, we decided it was important to have a longer tenure and the analyst felt it was a wrong time for us to be ambitious to look for a longer tenure, given that the global economy is not as bright as it should be.
    We also have our local challenges, particularly the fact that we are in recession. Nigeria should always move forward in spite of all challenges. We believe that Nigerians are resilient. That’s why in spite of advice from analysts, we insisted we will go to the market this time and opt for a longer tenure.
    The Nigerian team was well received by the international market. Our presentation to the international market revealed what our challenges are and the various measures the government has taken to solve the challenges. Investors were impressed with various government policies and this made the international community to want to invest in Nigeria for a long time.
    Let me emphasise that the success of the Eurobond goes beyond the raising of $1 billion. The success is more important to us because it is a source of pride to secure such bond at this difficult time in the global economy. So it means that, at this point, we need the confidence of Nigerians to develop ourselves and take advantages of opportunities nature gave to us and the human resources.
    In the shortest possible time, we should be relieving our people out of the present poverty. That is why the proceeds of the Euro Bond and other sources will focus on infrastructure so that we can generate goods and massive employment. With these infrastructure, the economy can be made more competitive such that most of what we import can be produced locally, and reduce pressure on foreign exchange demands. In addition, we will be able to export and generate foreign exchange from other sources. The euro bond success is a story of Nigeria’s commitment to a better future despite all temporary challenges.
    What impact will this have on foreign investment and how will it impact the ordinary man?
    Once more, Nigeria has demonstrated that it is ready for business and the international community has announced, unequivocally, its readiness to continue doing business with Nigeria. Having said that, it is important to look at the next action rather than what has been done. That is why we started this gathering on the FGN Savings Bond.
    Before we can escape recession, we have to bring changes and these changes have to be brought rapidly. Having concluded the Eurobond, coming soon is the FGN Savings Bond. The DMO has gotten the mandate of the Minister of Finance to introduce the FGN Savings Bond. As you know, since 2002, we have been issuing the FGN bonds, but these bonds are mainly for institutional investors or high networth individuals. These are the bonds issued every month mainly to raise money to fund the budget as appropriated by the National Assembly. However, we thought it is important to introduce a product to allow ordinary Nigerians to participate in the markets.
    There are Nigerians who have smaller amounts of money and want to contribute part of the funds to develop the country while they are expected to earn interest from such service. Therefore, It is very sensible for us to develop an appropriate product that will enable all Nigerians, not only the very rich but the moderately rich and averagely rich and any other Nigerian with as low as N5000 to invest in a government bond, earn interest from it, while helping to contribute to a pool fund that will be used to provide infrastructure for rapid development. In that case, you are helping the population to develop the culture of savings.
    As you know, the higher the culture of savings, the better the chances of the country developing. It is from savings, whether from individuals, companies or households that you would be able to gather resources that you can now use to invest for growth and development. And so, the DMO will soon introduce the FGN savings bond to deepen savings culture and diversify funding sources for the government. More importantly, to establish a benchmark for other issuers.
    We want to be able to introduce this savings product for the ordinary person so that within the economy, some financial institutions can also introduce their own products to attract savings from the ordinary people. In this way, the economy will be able to develop both from the public and private sector perspectives. That is why for this bond, we are thinking of as low as N5000 and a maximum of N50 million. That shows it will not compete with the FGN bond which you know pension funds are investing in it, big companies are investing and other firms are putting in their money in millions or billions. This will be a maximum of N50 million and minimum of N5,000. This means any of us can invest with pride that you purchase the FGN Savings Bond and the money you contributed helped the country to develop roads, railway and power. These products will have a tenure of between two and three years.
    When most people want to save now in the existing financial institutions, most time they are able to save for only one year, but we are looking at an elongated tenure as alternative.
    On this product, interest will be paid twice a year. The interest rate will be fixed but competitive and this will be announced by the DMO on the first working day of every month. Once this is announced, subscriptions, i.e investment opportunity will be announced for five full days. Nigerians are free to invest for five days and this will be repeated every month once we start. Every month, Nigerians will have the opportunity to invest in a product that gives them good returns but more importantly, contributing to fund national development.
    What would be the mode of subscription for the FGN Savings Bond?
    You can subscribe through accredited stock brokers, people who are already licensed and operating at the Nigerian Stock Exchange. The good story is that the brokers are more than 100 which means it will be easy for any Nigerian to identify his broker from any part of the country. It will commence before the end of the first quarter of 2017. So what I am doing is to give you prior notice and you can inform Nigerians about it. As you know, this is part of financial inclusiveness. This is not exclusive to those who are very rich. It is for all and that is what FGN Savings Bond will do.
    In due course within the first quarter, we will brief you about when this product will take off. By the time we finish with the Federal Savings bond, we will also brief you on another product. As you know, this is the regime of change, so from DMO’s point of view, we will continue with innovations that will push Nigerians forward in the right direction. The support that DMO is giving to the Nigerian economy is not conditional. It has nothing to do with staff welfare but commitment to show that it was during our generation that we revived Nigeria’s economy.
    Will the FGN Savings Bond always be a specific amount?
    The FGN Savings Bond will be issued as a way of raising money for normal appropriation. Assuming every year, based on budgetary process, there is a specific amount which government has decided to borrow from the domestic market. If you look at the 2017 Appropriation Bill, you will see that there is an amount to be borrowed from an external source and another amount to be borrowed from the domestic source. So this FGN Savings Bond will be issued as part of whatever has been approved for domestic borrowing for each year. So it is not a specific amount that has been earmarked as the Eurobond.
    It is part of whatever has been approved for borrowing from the domestic source every year. It will not need any special approval but whatever has been approved in the budget to be borrowed from domestic sources. What it means is that instead of using only Federal Government bonds, we have a third instrument which can be used to borrow from the domestic sources for the purpose of funding what has already been appropriated in the budget.
    Do you have any contingency plan for a continuously weak naira, especially when the Eurobond is in dollars?
    The amount to be borrowed is any amount that has been approved by the National Assembly. As you know, if you go into the external borrowing programme, there are various amounts to be borrowed from external sources in a particular year. So, if you look at 2016 budget, you will see that there is a $1 billion Eurobond to be borrowed. Other sources of borrowing include the African Development Bank (AfDB). In the budget, there was also an item to be borrowed from the World Bank. So, this $1 billion is part of the total external borrowing that was in the 2016 budget. So this $1 billion Euro bond is for the purpose of funding the 2016 budget. It is part and parcel of the various amounts approved for borrowing in the external sources in 2016 budget. So you can only borrow what is approved. You don’t borrow outside what is approved by the national assembly.
    With the recession, there are fears that Nigeria may not meet the payment schedule with dwindling fortunes of the naira against the dollar. What’s your take on that?
    On repayment, that takes me to an old issue and that is, everything Nigeria is doing currently, with regards to the economy, is with a view that in the next five years, we would have turned around this economy in a positive direction. That is why we talk of an economic recovery and growth plan. The whole idea is that, in the next five years. Nigeria would have really changed.
    So you will not be bothered about a change in the next seven years. Nigeria’s economy will be very strong and we will not be bothered about exporting just one product. Nigeria will be exporting about seven products, which include agro-allied and manufactured products and solid materials. In addition, in seven years, thanks to efforts the government and Nigerians are making, most of the goods Nigeria currently imports will no longer be imported. Rather, we would be into massive exports.
    That is all we are working towards. With this, Nigerian economy will be very strong, our reserves will be buoyant and the currency will be very strong as well.  That means we would be in a position that we would be exporting more than we import. Thus, we are comfortable to service our debt as at when due because we will be generating a lot of foreign exchange from various sources that are balanced, but not depending on a product that will give a shock again. By the next seven years, Nigeria should be free from external shock resulting from the collapse of oil. By then, we should have been wise enough to ensure that we do not import what we can produce locally.
    Are you not concerned about maturity of the bonds with regards to payment?
    Let me say we should not accommodate fear, whether in our personal life or in the economy. That is why we went to the market. We do not fear. Secondly, whether we opt for this $1 billion Eurobond or not, we have to service our debts as at when due. We do service our debts as at when due and we have never been in default. .
    Also, this $1 billion Eurobond is to fund the 2016 capital budget. There is nothing ambiguous about it. When you study the budget, the provision for debt servicing is right there. It is not new, it is just another service for expenditure. There is nothing special about it, it is just another item of expenditure and if you go to the budget, you will see 1000 heads and sub-heads of items of expenditure. Debt service is just one of them. The way government meets other expenditure obligations is the way government meets debt service obligations.
    There is nothing sacrosanct about it. Rather, borrowing is one of the means to resource the funding of all the expenditures. It should not be mystified. There is no special issue about debt servicing. In any case, when you borrow money from someone, you are free to owe him for one day and pay interest for one day and give back the money, then you stop paying interests. If you decide that after one day that you want to use the same money to solve another problem the next day, because each day you are holding the money, you are more or less borrowing it afresh. If you hold it for 30 years, it means you are using the money for 30 years. So you have to decide how long you want to use the resource.
    Financial experts have questioned the choice of Eurobond as there are cheaper sources of borrowing in the market. What is so special about Eurobond that Nigeria opted for it?
    Why Eurobond! You source bonds from a basket of sources. There are concessional sources, bilateral sources, capital market sources and each has its peculiarity and its applications. They all have limits. So when you look at your total needs, you have an idea the maximum you can get from these sources from a particular point in time. You make sure you maximise what you can gain from the cheap sources and you move on to other sources. Invariably, no one source can satisfy your needs. So Nigeria looks at all these possible options and thinks about what is there, where optimal combination from all the sources can be used to solve these problem as it goes along.

  • Council seeks input to budget

    The Ejigbo LocalCouncil Development Area (LCDA) Sole Administrator, Ibrahim Adigun has urged the people of the area to bring forward their needs to form part of the new budget the council is preparing.

    He made the appeal at the Stakeholders’ Forum on the budget tagged: ’Budget of sustainable development’.

    He said the forum was aimed at getting input from the residents to enable them benefit from the dividends of democracy.

    The council’s Budget Officer, Ismail Ogunbambi, explained that the budget known as Medium Term Expenditure framework.

    Adigun urged the people to pay their rates promptly to boost the council’s internally generated revenue so that it could do more work.

    ‘’I will like to implore all of us on our civic duty which is prompt payment of rates to the local government, because for us, to deliver on the dividend of democracy as promised, we need to help the government so that we can equally deliver on our promises. We implore the community not to be hostile to our tax/rates collectors,” he said.

    All Progressives Congress (APC) chieftain in Ejigbo Mr Michael Adegoke urged Adigun to exploit other means of generating funds.

    Among others, he suggested, that the Nigerian National Petroleum Corporation (NNPC) Depot in the area should be taxed.