President
Muhammadu Buhari Wednesday Presented Budget Proposal for 2017 to the National
Assembly.
1.
It is my pleasure to present the 2017 Budget Proposals to this distinguished
Joint Assembly: the Budget of Recovery and Growth.
2.
We propose that the implementation of the Budget will be based on our Economic
Recovery and Growth Strategy. The Plan, which builds on our 2016 Budget,
provides a clear road map of policy actions and steps designed to bring the
economy out of recession and to a path of steady growth and prosperity.
3.
We continue to face the most challenging economic situation in the history of
our Nation. Nearly every home and nearly every business in Nigeria is affected
one way or the other.
4.
Yet I remain convinced that this is also a time of great
opportunity. We have reached a stage when the creativity, talents and
resilience of the Nigerian people is being rewarded. Those courageous and
patriotic men and women who believed in Nigeria are now seeing the benefits
gradually come to fruition. I am talking about the farmers who today are
experiencing bumper harvests, the manufacturers who substituted imported goods
for local materials and the car assembly companies who today are expanding to
meet higher demand.
5.
Distinguished members of National Assembly, for the record: For many
years we depended on oil for foreign exchange revenues. In the days of high oil
prices, we did not save. We squandered.
6.
We wasted our large foreign exchange reserves to import nearly
everything we consume. Our food, Our clothing, Our manufacturing inputs, Our fuel
and much more. In the past 18 months when we experienced low oil prices, we saw
our foreign exchange earnings cut by about 60%, our reserves eroded and our
consumption declined as we could not import to meet our needs.
7.
By importing nearly everything, we provide jobs for young men and women
in the countries that produce what we import, while our own young people wander
around jobless. By preferring imported goods, we ensure steady jobs for the
nationals of other countries, while our own farmers, manufacturers, engineers,
and marketers, remain jobless.
8.
I will stand my ground and maintain my position that under my
watch, that old Nigeria is slowly but surely disappearing and a new era is
rising in which we grow what we eat and consume what we make.
We
will CHANGE our habits and we will CHANGE Nigeria.
9.
By this simple principle, we will increasingly grow and process our own
food, we will manufacture what we can and refine our own petroleum products. We
will buy ‘Made in Nigeria’ goods. We will encourage garment manufacturing and
Nigerian designers, tailors and fashion retailers. We will patronize local
entrepreneurs. We will promote the manufacturing powerhouses in Aba, Calabar,
Kaduna, Kano, Lagos, Nnewi, Onitsha, and Ota. From light manufacturing to
cement production and petrochemicals, our objective is to make Nigeria a new
manufacturing hub.
10.
Today, the demand of the urban consumer has presented an opportunity for the
rural producer. Across the country, our farmers, traders and transporters are
seeing a shift in their fortunes. Nigerians who preferred imported products are
now consuming made in Nigeria products. From Argungu in Kebbi to Abakalaki in
Ebonyi, rice farmers and millers are seeing their products move. We must
replicate such success in other staples like wheat, sugar, soya, tomato and
dairy products. Already, the Ministry of Agriculture and Rural Development, the
Central Bank of Nigeria, the Organised Private Sector and a handful of Nigerian
commercial banks, have embarked on an ambitious private sector-led N600 billion
program to push us towards self-sufficiency in three years for these products.
I hereby make a special appeal to all State Governors to make available land to
potential farmers for the purpose of this program.
11.
To achieve self-sufficiency in food and other products, a lot of work needs to
be done across the various value chains. For agriculture, inputs must be
available and affordable. In the past, basic inputs, like the NPK fertilizer,
were imported although key ingredients like urea and limestone are readily
available locally. Our local blending plants have been abandoned. Jobs lost and
families destroyed. I am pleased to announce today that on 2nd December 2016,
Morocco and Nigeria signed an ambitious collaboration agreement to revive the
abandoned Nigerian fertilizer blending plants. The agreement focuses on
optimizing local materials while only importing items that are not available
locally. This program has already commenced and we expect that in the first
quarter of 2017, it will create thousands of jobs and save Nigeria US$200
million of foreign exchange and over N60 billion in subsidy.
12.
We must take advantage of current opportunities to export processed
agricultural products and manufactured goods. Let it not be lost on anyone that
the true drivers of our economic future will be the farmers, small and medium
sized manufacturers, agro-allied businesses, dressmakers, entertainers and
technology start-ups. They are the engine of our imminent economic recovery.
And their needs underpin the Economic Recovery and Growth Plan.
13.
Let me, Mr. Senate President, Right Hon. Speaker, here acknowledge the concerns
expressed by the National Assembly and, in particular, acknowledge your very
helpful Resolutions on the State of the Economy, which were sent to me for my
consideration. The Resolutions contained many useful suggestions, many of which
are in line with my thinking and have already been reflected in our Plan. Let
me emphasise that close cooperation between the Executive and the Legislature
is vital to the success of our recovery and growth plans.
14.
Permit me to briefly outline a few important features of the Plan. The
underlying philosophy of our Economic Recovery and Growth Plan is optimizing
the use of local content and empowering local businesses. The role of
Government must be to facilitate, enable and support the economic activities of
the Nigerian businesses as I earlier mentioned. Fiscal, monetary and trade
policies will be fully aligned and underpinned by the use of policy instruments
to promote import substitution. Government will however at all times ensure the
protection of public interest.
15.
First we clearly understand the paradox that to diversify from oil we need oil
revenues. You may recall that oil itself was exploited by investment from
agricultural surpluses. We will now use oil revenues to revive our agriculture
and industries. Though we cannot control the price of crude oil, we are
determined to get our production back to at least 2.2 million barrels per day.
Consistent with the views which have also been expressed by the National
Assembly, we will continue our engagement with the communities in the Niger
Delta to ensure that there is minimum disruption to oil production. The
National Assembly, State and Local Governments, Traditional Rulers, Civil
Society Organisations and Oil Companies must also do their part in this
engagement. We must all come together to ensure peace reigns in the Niger
Delta.
16.
In addition, we will continue our ongoing reforms to enhance the efficiency of
the management of our oil and gas resources. To this effect, from January 2017,
the Federal Government will no longer make provision for Joint Venture
cash-calls. Going forward, all Joint Venture operations shall be subjected to a
new funding mechanism, which will allow for Cost Recovery. This new funding
arrangement is expected to boost exploration and production activities, with
resultant net positive impact on government revenues which can be allocated to
infrastructure, agriculture, solid minerals and manufacturing sectors.
17.
I earlier mentioned our ambitions for policy harmonisation. But we all know
that one of the peculiar problems of our environment is execution. This
phenomenon affects both government carrying out its own functions and the
innumerable bureaucratic hurdles in doing business. To this end, I will be
issuing some Executive Orders to ensure the facilitation and speeding up of government
procurements and approvals. Facilitation of business and commerce must be the
major objective of government agencies. Government must not be the bottle neck.
Additionally, these Executive Orders will widen the scope of compliance with
the Fiscal Responsibility Act by Federal Government owned entities and promote
support for local content in Ministries, Department and Agencies.
18.
The Executive will soon place before the National Assembly proposals for
legislation to reduce statutorily mandated minimum times for administrative
processes in order to speed up business transactions. In addition, I have
established the Presidential Enabling Business Council, chaired by the Vice
President with a mandate to make doing business in Nigeria easier and more
attractive. Getting approvals for business and procurements will be simplified
and made faster.
19.
In 2017, we will focus on the rapid development of infrastructure,
especially rail, roads and power. Efforts to fast-track the modernization of
our railway system is a priority in the 2017 Budget. In 2016, we made a lot of
progress getting the necessary studies updated and financing arrangements
completed. We also addressed some of the legacy contractor liabilities
inherited to enable us to move forward on a clean slate. Many of these tasks
are not visible but are very necessary for sustainability of projects.
Nigerians will soon begin to see the tangible benefits in 2017.
20.
We also have an ambitious programme for growing our digital platforms in order
to modernise the Nigerian economy, support innovation and improve productivity
and competitiveness. We will do this through increased spending on critical
information technology infrastructure and also by promoting policies that
facilitate investments in this vital sector.
21.
During 2016, we conducted a critical assessment of the power sector value
chain, which is experiencing major funding issues. Although Government, through
the CBN and other Development Finance Institutions has intervened, it is clear
that more capital is needed. We must also resolve the problems of liquidity in
the sector. On its part, Government has made provisions in its 2017 Budget to
clear its outstanding electricity bills. This we hope, will provide the much
needed liquidity injection to support the investors.
22.
In the delivery of critical infrastructure, we have developed specific models
to partner with private capital, which recognize the constraints of limited
public finances and incorporate learnings from the past. These tailor-made
public private partnerships are being customized, in collaboration with some
global players, to suit various sectors, and we trust that, the benefits of
this new approach will come to fruition in 2017.
23.
Fellow Nigerians, although a lot of problems experienced by this Administration
were not created by us, we are determined to deal with them. One of such issues
that the Federal Government is committed to dealing with frontally, is the
issue of its indebtedness to contractors and other third parties. We are at an
advanced stage of collating and verifying these obligations, some of which go
back ten years, which we estimate at about N2 trillion. We will continue to
negotiate a realistic and viable payment plan to ensure legitimate claims are
settled.
2016 Budget Performance
24. In 2016, the budget was prepared on
the principles of zero based budgeting to ensure our resources were prudently
managed and utilized solely for the public good. This method was a clear
departure from the previous incremental budgeting method. We have adopted the
same principles in the 2017 Budget.
25.
Distinguished members of the National Assembly may recall that the 2016
Budget was predicated on a benchmark oil price of US$38 per barrel, oil production
of 2.2 million barrels per day and an exchange rate of N197 to the US dollar.
26.
On the basis of these assumptions, aggregate revenue was projected at N3.86 trillion
while the expenditure outlay was estimated at N6.06 trillion. The deficit of
N2.2 trillion, which was about 2.14% of GDP was expected to be mainly financed
through borrowing.
27.
The implementation of the 2016 Budget was hampered by the combination of
relatively low oil prices in the first quarter of 2016, and disruptions in
crude oil production which led to significant shortfalls in projected revenue.
This contributed to the economic slow-down that negatively affected revenue
collections by the Federal Inland Revenue Service and the Nigerian Customs
Service.
28.
As at 30 September 2016, aggregate revenue inflow was N2.17 trillion or 25%
less than pro rated projections. Similarly, N3.58 trillion had been spent by
the same date on both recurrent and capital expenditure. This is equivalent to 79%
of the pro rated full year expenditure estimate of N4.54 trillion as at the end
of September 2016.
29.
In spite of these challenges, we met both our debt service obligations and
personnel costs. Similarly, overhead costs have been largely covered.
30.
Although capital expenditure suffered as a result of project formulation delays
and revenue shortfalls, in the five months since the 2016 Budget was passed,
the amount of N753.6 billion has been released for capital expenditure as at
the end of October 2016. It is important to note that this is one of the
highest capital releases recorded in the nation’s recent history. In fact, it
exceeds the aggregate capital expenditure budget for 2015.
31.
Consequently, work has resumed on a number of stalled infrastructure projects
such as the construction of new terminals at the country’s four major airports;
numerous major road projects; key power transmission projects; and the
completion of the Kaduna – Abuja railway to mention a few.
32.
We remain resolute in our commitment to the security of life and
property nationwide. The courageous efforts and sacrifices of our heroes in the
armed forces and para military units are clear for all to see. The gradual
return to normality in the North East is a good example of the results. Our
resolve to support them is unwavering. Our spending
in the 2016 fiscal year focused on ensuring these gallant men and women are
properly equipped and supported. We will continue to prioritise defence
spending till all our enemies, within and outside, are subdued.
33.
Stabilisation of sub-national government finances remains a key objective in
our plans to stimulate the economy. In June 2016, a conditional Budget Support
Programme was introduced, which offered State Governments N566 billion to
address their funding shortfalls. To participate, State Governments were
required to subscribe to certain fiscal reforms centered around transparency,
accountability and efficiency. For example, States as part of this program were
required to publish audited accounts and introduce biometric payroll systems
with the goal of eliminating ghost workers.
34.
Our efforts on cost containment have continued throughout the
year. We have restricted travel costs, reduced board members’ sitting
allowances, converted forfeited properties to Government offices to save on
rent and eliminated thousands of Ghost workers. These, and many other cost
reduction measures will lead to savings of close to N180 billion per annum to
be applied to critical areas including health, security and education.
2017
Budget Priorities
35.
Let me now turn to 2017 Budget. Government’s priorities in 2017 will be a
continuation of our 2016 plans but adjusted to reflect new additions made in
the Economic Recovery and Growth Plan. In order to restore growth, a key
objective of the Federal Government will be to bring about stability and
greater coherence between monetary, fiscal and trade policies while
guaranteeing security for all.
36.
The effort to diversify the economy and create jobs will continue with emphasis
on agriculture, manufacturing, solid minerals and services. Mid- and
Down-stream oil and gas sectors, are also key priority areas. We will
prioritise investments in human capital development especially in education and
health, as well as wider social inclusion through job creation, public works
and social investments.
37.
Our plans also recognise
that success in building a dynamic, competitive economy depends on construction
of high quality national infrastructure and an improved business environment
leveraging locally available resources. To achieve this, we will continue our
goal of improving governance by enhancing public service delivery as well as
securing life and property.
The
2017 Budget: Assumptions, Revenue Projections and Fiscal Deficit
38.
Distinguished members of the National Assembly, the 2017 Budget is based on a
benchmark crude oil price of US$42.5 per barrel; an oil production estimate of
2.2 million barrels per day; and an average exchange rate of N305 to the US
dollar.
39.
Based on these assumptions, aggregate revenue available to fund the federal
budget is N4.94 trillion. This is 28% higher than 2016 full year projections.
Oil is projected to contribute N1.985 trillion of this amount.
40.
Non-oil revenues, largely comprising Companies Income Tax, Value Added Tax,
Customs and Excise duties, and Federation Account levies are estimated to
contribute N1.373 trillion. We have set a more realistic projection of N807.57
billion for Independent Revenues, while we have projected receipts of N565.1
billion from various Recoveries. Other revenue sources, including mining,
amount to N210.9 billion.
41.
With regard to expenditure, we have proposed a budget size of N7.298 trillion
which is a nominal 20.4% increase over 2016 estimates. 30.7% of this
expenditure will be capital in line with our determination to reflate and pull
the economy out of recession as quickly as possible.
42.
This fiscal plan will result in a deficit of N2.36 trillion for 2017 which is
about 2.18% of GDP. The deficit will be financed mainly by borrowing
which is projected to be about N2.32 trillion. Our intention is to source
N1.067 trillion or about 46% of this borrowing from external sources while,
N1.254 trillion will be borrowed from the domestic market.
Expenditure
Estimates
43.
The proposed aggregate expenditure of N7.298 trillion will comprise:
i.
Statutory transfers of N419.02
billion;
ii.
Debt service of N1.66 trillion;
iii.
Sinking fund of N177.46 billion to
retire certain maturing bonds;
iv.
Non-debt recurrent expenditure of
N2.98 trillion; and
v. Capital
expenditure of N2.24 trillion (including capital in Statutory Transfers).
Statutory
Transfers
44.
We have increased the budgetary allocation to the Judiciary from N70 billion to
N100 billion. This increase in funding is further meant to enhance the
independence of the judiciary and enable them to perform their functions
effectively.
Recurrent
Expenditure
45.
A significant portion of recurrent expenditure has been provisioned for the
payment of salaries and overheads in institutions that provide critical public
services. The budgeted amounts for these items are:
· N482.37 billion for the Ministry of
Interior;
· N398.01 billion for Ministry of
Education;
· N325.87 billion for Ministry of
Defence; and
· N252.87 billion for Ministry of
Health.
46.
We have maintained personnel costs at about N1.8 trillion. It is important that
we complete the work that we have started of ensuring the elimination of all
ghost workers from the payroll. Accordingly, adequate provision has been made
in the 2017 Budget to ensure all personnel that are not enrolled on the
Integrated Personnel Payroll Information System platform are captured.
47.
We have tasked the Efficiency Unit of the Federal Ministry of Finance to cut
certain overhead costs by 20%. We must eliminate all non-essential costs so as
to free resources to fund our capital expenditure.
Capital
Expenditure
48.
The size of the 2017 capital budget of N2.24 trillion (inclusive of capital in
Statutory Transfers),
or 30.7% of the total budget, reflects our determination to spur economic
growth. These capital provisions are targeted at priority sectors and projects.
49.
Specifically, we have maintained substantially higher allocations for
infrastructural projects which will have a multiplier effect on productivity,
employment and also promote private sector investments into the country.
50.
Key capital spending provisions in the Budget include the following:
•
Power, Works and Housing:
N529 billion;
•
Transportation:
N262 billion;
•
Special Intervention Programmes:
N150 billion.
•
Defence:
N140 billion;
•
Water Resources:
N85 billion;
•
Industry, Trade and
Investment: N81 billion;
•
Interior:
N63 billion;
•
Education
N50 billion
•
Universal Basic Education
Commission: N92 billion
•
Health:
N51 billion
•
Federal Capital Territory:
N37 billion;
•
Niger Delta
Ministry:
N33
billion; and
•
Niger Delta Development Commission:
N61 billion;
51. N100 billion has been provided in the
Special Intervention programme as seed money into the N1 trillion Family
Homes Fund that will underpin a new social housing programme. This substantial
expenditure is expected to stimulate construction activity throughout the
country.
52. Efforts to fast-track the modernization of our
railway system will receive further boost through the allocation of N213.14
billion as counterpart funding for the Lagos-Kano, Calabar-Lagos,
Ajaokuta-Itakpe-Warri railway, and Kaduna-Abuja railway projects. As I
mentioned earlier, in 2016, we invested a lot of time ensuring the paper work
is done properly while negotiating the best deal for Nigeria. I must admit this
took longer than expected but I am optimistic that these projects will commence
in 2017 for all to see.
53. Given the emphasis placed on
industrialization and supporting SMEs, a sum of N50 billion has been set
aside as Federal Government’s contribution for the expansion of existing, as
well as the development of new, Export Processing and Special Economic Zones.
These will be developed in partnership with the private sector as we continue
our efforts to promote and protect Nigerian businesses. Furthermore, as the
benefits of agriculture and mining are starting to become visible, I have
instructed that the Export Expansion Grant be revived in the form of tax credits
to companies. This will further enhance the development of some agriculture and
mining sector thereby bringing in more investments and creating more
jobs. The sum of N20 billion has been voted for the revival of this
program.
54. Our small- and medium-scale businesses
continue to face difficulties in accessing longer term and more affordable
credit. To address this situation, a sum of N15 billion has been provided
for the recapitalization of the Bank of Industry and the Bank of Agriculture.
In addition, the Development Bank of Nigeria will soon start operations with
US$1.3 billion focused exclusively on Small and Medium-Sized Enterprises.
55. Agriculture remains at the heart of
our efforts to diversify the economy and the proposed allocation to the sector
this year is at a historic high of N92 billion. This sum will complement the
existing efforts by the Federal Ministry of Agriculture and CBN to boost
agricultural productivity through increased intervention funding at single
digit interest rate under the Anchor Borrowers Programme, commercial
agricultural credit scheme and The Nigeria Incentive-Based Risk-Sharing System for
Agricultural Lending. Accordingly,
our agricultural policy will focus on the integrated development of the
agricultural sector by facilitating access to inputs, improving market access,
providing equipment and storage as well as supporting the development of
commodity exchanges.
56. Government realizes that achieving its
goals with regard to job creation, also requires improving the skills of our
labour force, especially young people. We have accordingly made provision,
including working with the private sector and State Governments, to establish
and operate model technical and vocational education institutes.
57. We propose with regard to healthcare
to expand coverage through support to primary healthcare centres and expanding
the National Health Insurance Scheme.
58. The 2017 Budget estimates retains the
allocation of N500 billion to the Special Intervention programme consisting of
the Home-grown School Feeding Programme, Government Economic Empowerment
programme, N-Power Job Creation Programme to provide loans for traders and
artisans, Conditional Cash Transfers to the poorest families and the new Family
Homes Fund (social housing scheme). The N-Power Programme has recently taken
off with the employment of 200,000 graduates across the country, while the
School Feeding Programme has commenced in a few States, where the verification
of caterers has been completed
59. As we pursue economic recovery, we
must remain mindful of issues of sustainable and inclusive growth and
development. The significant vote for the Federal Ministry of Water Resources
reflects the importance attached to integrated water resource management. In
this regard, many river-basin projects have been prioritized for completion in
2017. Similarly, the increased vote of N9.52 billion for the Federal Ministry
of Environment (an increase of 92% over the 2016 allocation) underscores the greater
attention to matters of the environment, including climate change and
leveraging private sector funding for the clean-up of the Niger Delta.
60. Provision has also been made in these
estimates for activities that will foster a safe and conducive atmosphere for
the pursuit of economic and social activities. In this regard, the allocation
for the Presidential Amnesty Programme has been increased to N65 billion in the
2017 Budget. Furthermore, N45 billion in funding has been provisioned for the rehabilitation
of the North East to complement the funds domiciled at the Presidential
Committee on the North East Initiative as well as commitments received from the
multinational donors.
Conclusion
61. Mr. Senate President, Mr. Speaker, distinguished and
honourable members of the National Assembly, I cannot end without commending
the National Assembly for its support in steering our economy on a path of sustained and inclusive growth.
This generation has an opportunity to move our country from an unsustainable
growth model – one that is largely dependent on oil earnings and imports, to an
economy that focuses on using local labour and local raw materials. We cannot
afford to let this opportunity slip by. We must all put our differences aside
and work together to make this country succeed. The people that voted us into
these esteemed positions are looking to us to make a difference. To change the
course of this nation. I have no doubt in my mind that by working together, we
will put Nigeria back on the path that its founding fathers envisaged.
62. This Budget, therefore, represents a
major step in delivering on our desired goals through a strong partnership
across the arms of government and between the public and private sectors to
create inclusive growth. Implementation will move to centre-stage as we proceed
with the process of re-balancing our economy, exiting recession and insulating
it from future external and domestic shocks.
63. I thank you all for your patience and
patriotism.
No comments:
Post a Comment