The Senate Wednesday commenced the debate of the general principles of the 2016 budget on a high note.
While some Senators commended the spirit and content of the budget, others described the fiscal document as unimplementable and asked that it should be reworked.
The debate followed sharp party lines with most All Progressives Party (APC) Senators who spoke insisting that the budget is an honest move to fix the economy of the country while their Peoples Democratic Party (PDP) counterparts expressed skepticism about the workability of the fiscal policy.
Some of the lawmakers cautioned the government to be mindful of excess borrowing to finance the budget as the measure might signal a wrong impression of economic affluence when the economy is actually undergoing recession.
At a stage during the debate, there was shouting match on the floor of the Senate but the Senate President, Abubakar Bukola Saraki, managed the situation to avoid out right rancor.
Senate Leader, Senator Mohammed Ali Ndume, led the debate by outlining the objective assumptions of the budget.
Ndume noted that the budget entitled “budget of change” is unique in so many ways.
The preparation of the budget, he said, was based on Zero Based Budgeting (ZBB) system which required all expenses on projects and programmes to be fully justified by MDAs.
The Senate Leader who said that the budget is aimed at promoting inclusive growth including the poor and vulnerable noted that it would however be challenged by the decline in oil prices and slowdown in the global economy.
Ndume said that the budget was designed to ensure that the country’s economy survived by stimulating economic activities, making it more competitive by focusing on infrastructural development as well as to create a number of jobs.
He added that budget focuses on broadening the tax base and improving the effectiveness of revenue collection as well as diversifying the economy and moving it away from dependence on oil.
He said that the 2016 budget of N6.08 trillion is a “framework that will consolidate and add impetus to the change agenda of this administration and will promote economic growth, job creation, poverty reduction and service delivery to all Nigerians.
“Let me start by saying that indeed we have to fund part of this budget by borrowing because in the previous administration a huge chunk of our common patrimony our resources have been stolen.”
Senator Ahmed Lawan (Yobe North) in his contribution noted that the challenge of the economy is not the current price of oil in the world market.
Lawan said that the challenge of the economy “is and has always been corruption, corruption. 55 privileged Nigerians in the last 16 years stole 1.34 trillion.”
He added, “This is the 17th budget I am debating in the National Assembly and with the exception of 2005 Appropriation, there was never an implementation of more than 40%. Nigerians was shortchanged for 16 years.
“The proposal before us is the first in the last 17 years that an allocation of 30% of the appropriation is given for capital expenditure and for the first time in a genuine, sincere, honest and transparent manner the executive arm of government has deem it necessary to give ordinary Nigerians something, some succour, some hope and genuine one for that matter that we have N500 billion allocated to the school feeding and social and the safety nets generally.
“Mr. President 2015 budget when we debated it here the proposal was N500 billion for the entire capital budget and we said it and it came to pass that they were not going to implement even half of that.
“In fact at that time I mentioned that Nigerians with over 179.9 million will have only about N200 billion in a budget of 4.9trillion.
“Today, we have a budget that provides 30% in the first instance and so many other social safety nets that will be for disadvantage Nigerians, Nigerians that are most vulnerable that have little or no hope. This is again the first budget presented to the assembly in the last 17 years in which revenue from oil is not predominant and is not overwhelming.”
Senator Enyinnaya Abaribe (Abia South) faulted the budget and urged the government to withdraw it so as to go back to the drawing board.
He said, “I am going to quote copiously from the Senate Leader. He said this budget is unique and titled `Budget of Change’.
“This budget is indeed unique, the first budget that has ever been sent out to the public of Nigeria and after the budget presentation, the finance minister has never come to explain the details of the budget as it is normally done.
“It is a budget of change, I agree but it is a change in the wrong direction. I say it is a change in the wrong direction because it says that it is based on zero budgeting requiring all expenses to be fully justified.
“A budget that increases spending up to 30% based solely on borrowing, in what way is it justified? That is the question we want to ask the people who brought this budget of change.
“We ask a question: this budget has moved the 2015 budget from N4.45 trillion to N6.08 trillion and we felt that moving it on zero based budgeting should actually show how it is done.
“Of course we get nothing; all we get is that we are going to borrow.
“A budget that moves domestic spending within Aso Villa from N580 million to N1.7 billion cannot be a budget of change.
“We were told that in the revised budget there was an adjustment due to error, we agree but what has happened is that the money up to N7 billion were moved from buying vehicles to being spread in offices.
“It also increases the spending that is due to renovations within the Villa; they are going to renovate the Villa with N3.9 billion.
“What else do you want to renovate there that Nigerians will see in the Year 2016.
“We know what is going on in the global economy; this budget is predicated on an oil benchmark of $38 per barrel and I can now say that with oil being $28 today, this budget is dead on arrival.
“The job of the opposition is to help the government to get its priorities right so I want to please urge this government to withdraw this budget and go back to the drawing board.”
Chairman, Senate Committee on Finance, Senator John Owan Enoh, (Cross River Central) took a critical view of the budget insisting that the budget has quite some fine points no doubt.
Enoh said that the debate should dwell on some of the matters that will concern everyone.
He said, “The budget seeks to stimulate the economy for example through economic diversification, import substitution, export expansion and promotion. This is good.
“There’s already an injection of some kind of new leadership in various revenue generating agencies. There is also the fine point about zero budgeting, which attempts to optimise the impact of public expenditure in aligning resources to government programmes.
“The Ministry of Finance has been quite foremost in efficiency management. It has also indicated the fact that the implementation of Integrated Personnel Information System is going to be extended to all MDAs.
“In spite of how many years we have implemented IPIS, it’s sad to say that less than 50 percent of MDAs have been covered. And the innovation by the Ministry of Finance is that they are going to use the BVN to extend IPIS.
“Having gone through the real details of the budget, but I think that the expenditure item for IPIS needs to be under control if the BVN is going to be used for that purpose.
“There is also the emphasis on having to ensure microeconomic stability by attempting to make sure that the real GDP growth rate for 2016 is about 4.37 percent.
“I think that for a country that the third quarter of 2015, the real GDP growth rate was less than 3 percent, it’s perhaps too optimistic that we can achieve that kind of growth rate, especially given the international situation with the economy the world over.
“Now going into the real statistics, this budget is based on assumptions. There are a few assumptions that we must look at for.
“For the first time in about 17 years, the National Assembly may now have to take a decision about the downward review of the oil price benchmark.
“I’m not too sure when this budget is going to be passed but I think we need to be careful and look at what the market price of oil is going to be at the time that this budget is going to be passed.
“The second element has to do with the Exchange Rate figure, which this budget has pegged at N197.
“If you compare that to the parallel market in spite of the implication that it may have in the purchasing power of the Naira, we need to be a little bit more realistic and practical in terms of what the real Exchange Rate should be.”
Enoh expressed concern that the budget has a deficit figure higher than the capital, saying:
“What it means is that some component of what we are going to borrow, we are going to use for recurrent items and we need to be very careful on this basis.
“I think that although the deficit to GDP is about 2.16 percent, which is about 14 percent of our GDP, and we think that in terms of international comparison, we are still doing well.
“But we need to also remember that when the IMF chief executive came to Nigeria, she was quite graphic in what she demonstrated; that a situation in Nigeria in which for every one Naira, about 37kobo is devoted to servicing debt. We need to be a little bit more careful about it.
“That means there’s pressure on what we earn in terms of what we use to service our debt.
“When you talk about other expenditure items, I believe there is also too much optimism. We are talking about the fact that we expect to raise about 1.45trillion non-oil proceeds. If you look at what we did and how we performed in 2015, you find out that the difference is so huge. No matter how much we want to spend capital expenditure, if we don’t realise the revenues that are being projected here, it comes to nothing. And we also need to look at the absorptive capacities of the MDAs.”
He noted that “the budget contains some kind of challenge to NNPC to come up with new funding models for joint venture cash calls. Joint venture cash calls for 2016 budget is about N1.09trillion. If such funding models are discovered, what it means is that as much money as that is going to be available for more expenditure.
“If you look at the figures for capital expenditure, there is a 30% increase no doubt, there’s 233% year on year growth in terms of our capital. But if you look at the recurrent, it’s just an improvement of about 9 percent.
“I think that what we have succeeded in doing in this budget is to add up the figures without doing much in efficiency management.
“The hope is that as we go further, the 2017 and future budgets will do much better than what this budget tends to indicate.
“Overall, if you are looking at what this budget intends to achieve in terms of economic diversification, we need to be very guided and mindful of what we think is going to come in terms of revenue because without realising the revenue that is being projected, there is nothing much that this government can do in terms of additional capital expenditure that it intends to achieve.”
Senator Barau Jibrin (Kano North), said there was no doubt that the budget would engender massive spending on critical infrastructure which would stimulate the economy.
Jibrin noted that it was equally commendable the budget went a long way to address the issue of the social sector especially education and health.
He said that the challenge remained falling oiling price.
He said, “Today oil is about $28pb. We need to take a second look at the situation and rearrange the budget in line with oil price reality. Ether we do it or we give it to the Executive to do it.”
Also speaking, Senator Babajide Omoworare, described the budget as beautiful.
The Osun East lawmaker lamented that the country is where it is today because “we did not make hay while the sun is shining, we did not diversify our economy.”
Omoworare said that the country had an era there was so much corruption and impunity asking “how come for 16 years we did not fix our refineries.”
He said that the economy cannot grow “when we don’t export anything but imports everything even tooth pick.”
He insisted that the country should take steps to diversify and fix critical sectors including the education sector.
Senator Gbenga Ashafa in his contribution said that he thought that with the visit of the Central Bank of Nigeria Governor, the debate of the budget would be sober and aimed at how to move the economy forward.
The Lagos East Senator urged his colleagues to see the budget as really a budget of change.
He asked the Senate to assist President Muhammadu Buhari to ensure that the spirit and content of the budget was realized.
He also sought to know how the 500,000 teachers to be recruited will be paid whether the payment would involve state governments already finding it difficult to pay salaries.
Senator Adeola Solomon Olamilekan ( Lagos West) said that the budget is futuristic and spelt out economic indexes that will support its implementation.
Olamilekan noted that for the first time the country has a budget that it’s realization is not really based on oil benchmark.
He said that the implementation should be painstakingly followed in the interest of the country.
Deputy Senate President, Ike Ekweremadu, said that the challenge is that over the years, the country saw prosperity but now grappling with downward trend.
He said, “I am not an economist but I know that if my income is N100,000 and suddenly I start earning N30,000 and I tell my children that we will now be spending N120,000, they will start wondering where I will get the money.
“The problem we have is that over the years we have seen prosperity and we have adjusted to it and now we are seeing a downward trend in our revenue, we don’t seem to be addressing this issue.
“We have always increased the budget of this country from between 10 and 20 per cent.
“I just want to appeal that for the first time we should be able to reduce the budget by the same 20 to 30 per cent.
“That is in order for us to be realistic otherwise it will not be implementable.
“I am aware that during the great recession in America they had to inflate the economy by doing more projects. We are in recession whether we like it or not.
“They did not go to borrow money, people had to make sacrifices so I appeal that instead of financing in deficit through borrowing and mortgaging the future, we need to look inwards and raise the money.
“I believe that as we look at the spending side, we have to look at the revenue side; we have not been creative enough to raise money to run this country.
“In many countries, they have the communication tax law which ensures that everybody that makes a call or sends a message pays tax to government.
“But in Nigerian, from bus stops to schools to hospitals to the markets, Nigerians are on the phone every minute of the day and nobody is paying tax on it.
“If we pay tax on it we do not need to go and get any loan from anywhere, we will have enough money to finance this budget.
“In the banks we have transactions like withdrawal and payment of money in excess of the threshold, you pay some money.
“I discovered that the money belongs to the bank, it should be for the government.
“I do not believe we should ban any good from coming into this country, we should rather increase the tariff by 300 per cent so that government can make money.
“We need to begin to reduce the cost of running government so that we can be able to afford the government which we deserve.
“I also believe that looking at the budget; we need to concentrate more on ongoing projects rather than starting new projects.
“If you look at some sectors, they have about N5 billion for designs alone, these designs means new projects. We need to concentrate on the important existing projects.
“My consolation is that this parliament has the final say on this budget so I will like to appeal to my colleagues to look at this budget critically, I will be really worried if we are able to pass the budget the way it is.”
On allocation for roads he said, “I am also worried about the spread, the equity in some of the figures. I hope our colleagues will do the right thing.
“Look at the Kano-Maiduguri Expressway what you have is N10 billion, the Enugu-Port Harcourt N10 billion, Enugu- Onitsha N3 billion but Lagos – Ibadan has N55 billion.
“I think that our committee needs to look at it. I do not have any problem with that road but I think there should be equity in the distribution of the figures.
“It may never be enough but we need know that a man who is not justly treated can never be interested in peace. So I think if we want peace in this country we have to be fair to all concerned.
“This country belongs to all of us, we have to look at the key sectors that can create jobs in this country, we have to focus on diversifying our economy.”
Senator Suleiman Adokwe (Nasarawa South) in his contribution said, “I recall with a lot of sense of responsibility that when I served in the Committee for Downstream Petroleum, nobody could ever know how much barrels of oil were exported in this country, nobody could establish the true collection of the Federal Inland Revenue Service and so many other sources of revenue.
“As we speak today 2015 total other sources of revenue from oil fell by nearly 40 percent, which means that the real business that this government has now is to establish the true level of our revenue before going to borrow.
“Because if you begin by borrowing so heavily, you will give a false sense of economic well-being and people will continue with business as usual.
“It is not a very sound economic policy to begin to borrow almost 50% of what you need to fund the budget.
“What normally other jurisdictions do is to debate between whether to tax or not to tax so that we generate employment depending on the way you look at it.
“Industrialists prefer tax holidays so that they can use the profit to employ more, while welfarists believe that if you tax more, you will pay more people and more people will go to work.
“And more production will be achieved. But we are not doing any of these two, we are simply going to borrow and give more.
“The worse aspect of it is that you are borrowing to do what? If you just borrow to provide welfare, it does not provide economic growth in any way; people will just eat and go to sleep.
“But if you are borrowing to invest in productive resources that will generate more income, then you know that you are borrowing for a good purpose.
“This matter of borrowing to fund the budget must be looked at very critically; otherwise we will be digging more into economic problems than we bargained for.”
Senator Peter Nwaoboshi said that certain pages of the budget were missing wondering “what they want to put in the missing pages.”
Nwaoboshi also questioned the reduction of the budget for the Presidential Amnesty Programme from over N40 billion in the 2015 budget to N20 billion in the 2016 budget.
He wondered why N35 billion would be provided for exploration of oil in the Chad basin while N20 billion would be earmarked to keep the peace in the Niger Delta area.
He also said that the N500 billion earmarked for social services was not in the budget.
