Being the concluding part of 2018 Budget Speech tagged Budget of Consolidation, delivered at the joint session of the National Assembly, Abuja, by President Muhammadu Buhari on Tuesday, 7TH of November 2017
The agricultural sector played a crucial role in Nigeria’s exit from recession. Today, it remains the largest employer of labour and holds significant potential to realise our vision of repositioning Nigeria as a food secured nation.
We will consolidate on existing policies and develop new ones to ensure the numerous value chain challenges in the agricultural sector are addressed. As I mentioned earlier, several investors have deployed significant capital in the production and processing of rice, sugar, maize, soya, cassava, yams, tomato, oil palm, rubber and poultry, to mention a few. We are also seeing increased investment in the agro-inputs manufacturing sector such as fertilisers.
We are determined to protect these investments and encourage more. Food Security is an important aspect of this Administration’s National Security agenda. Any person involved in smuggling of food items is a threat to our National Security and will therefore be dealt with accordingly. A Committee chaired by the Vice President is working on this matter. A key part of their work will be the reactivation of the Badagry Agreement signed between Nigeria and the Republic of Benin in 2003. This agreement, which was abandoned by previous Administrations, established a mutually beneficial framework for the two neighbours and allies to partner in tackling smuggling and other cross border crimes. I would like to assure investors in the agricultural value chain that the menace of smuggling will be handled decisively.
To further support investors and State Governments, we will accelerate the establishment of at least 6 Staple Crop Processing Zones, in the first phase. This initiative will develop infrastructure for the production, processing and storage of strategic commodities. The focus is on backward integration for grains, horticulture, livestock, fisheries and sugar; as well as exportable commodities such as cocoa, cassava and oil palms.
Health sector developments
During 2017, the country had a number of disease outbreaks such as Meningitis, Yellow Fever, Monkey Pox and Lassa Fever. I would like to commend the Federal and State Ministries of Health for their selfless service and timely responses to contain these outbreaks. I would also like to thank the World Health Organisation, the Global Fund and UNICEF, for their continued support during these trying times. This collaboration was a key factor in the low mortality rates experienced. To further improve our response to such outbreaks, we are working to upgrade our Integrated Disease Surveillance and Response System. This will further enhance the efficiency of our diagnostic and clinical management processes.
In this respect, I urge this Distinguished House to expedite the passage of the Bill for the Nigeria Centre for Disease Control to enable us consolidate on the successes recorded to date.
Implementing the social investment programme
I am pleased to inform you that we have recorded tremendous success in the implementation of the Federal Government’s Social Investment Program. Specifically,
- Over 4.5 million Primary 1 to Primary 3 pupils in public schools are being fed under the School Feeding programme;
- Over 200,000 unemployed graduates have been employed under the N-Power Scheme in education, health and agricultural sectors;
- Over 250,000 enterprises have benefitted from the sum of 12.5 billion Naira, which has been disbursed to entrepreneurs to expand their businesses; and
- Over 110,000 households are currently benefitting from the Conditional Cash Transfer programme across the country.
Performance of the 2017 Budget
The 2017 Budget of Recovery and Growth was based on a benchmark oil price of US$44.5 per barrel, oil production of 2.2 million barrels per day, and a Naira-to-US Dollar Exchange Rate of 305. Based on these assumptions, total revenue of 5.084 trillion Naira was projected to fund aggregate expenditure of 7.441 trillion Naira. A projected fiscal deficit of 2.356 trillion Naira was to be financed mainly by domestic and external borrowing.
On revenue performance, collections were 14 percent below target as of September 2017, mainly due to the shortfall in non-oil revenues.
A key revenue shortfall was from Independent Revenues; only 155.14 billion Naira was remitted by September 2017 as against the projected pro-rated sum of N605..87 billion Naira. This represents a 74 percent shortfall, which is very disappointing.
- This recurring issue of under-remittance of operating surpluses by State Owned Entities is absolutely unacceptable. You will all recall that in September 2017, the Joint Admissions and Matriculation Board (JAMB) announced that they were ready to remit 7.8 billion Naira back to the Government. The shocking discovery was that in the last decades, JAMB only remitted an aggregate of 51 million Naira. This clearly illustrates the abuses that occur in State Owned Entities as well as their potential for increased Independent Revenues, if only people would do the right thing. We all need to play our role to ensure the right thing is done. I would also like to remind Nigerians that the Whistle Blower lines are still open.
Accordingly, I have directed the Economic Management Team (EMT) to review the fiscal profiles of these agencies, to ensure strict compliance with the applicable Executive Orders and Financial Regulations. There may be a need to consider a review of the Fiscal Responsibility Act and the Executive will be approaching the National Assembly on this issue in due course.
On the expenditure side, a total of 450 billion Naira of the capital vote had been released as at the end of October 2017. With your support for our funding plan, our target is to release up to 50% of the capital vote for MDAs by the year’s end. We have prioritised payments of our counterpart obligations on our concessionary loans, as well as funding of critical infrastructure and other projects with socio-economic benefits. Furthermore, MDAs have made provisions to carry over to the 2018 Budget, capital projects that are not likely to be fully funded by year-end 2017, to ensure project continuity.
Regrettably, the late passage of the 2017 Budget has significantly constrained budget implementation. As you are aware, the 1999 Constitution authorized necessary Federal Government expenditures prior to the 12th of June, 2017 when the 2017 Appropriation Act was signed into law. This year, we have worked very hard to achieve an earlier submission of the Medium-term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP), and the 2018 Appropriation Bill. Our efforts were to avail the National Assembly with sufficient time to perform its important duty of passing the Appropriation Bill into law, hopefully by the 1st of January, 2018. It is in this spirit that I solicit the cooperation of the Legislature in our efforts to return to a more predictable budget cycle that runs from January to December.
Priorities For the 2018 Budget of Consolidation
The 2018 Budget Proposals are for a Budget of Consolidation. Our principal objective will be to reinforce and build on our recent accomplishments. Specifically, we will sustain the reflationary policies of our past two budgets. In this regard, the key parameters and assumptions for the 2018 Budget are as set out in the 2018-2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP). These include:
- Benchmark oil price benchmark of US$45 per barrel;
- Oil production estimate of 2.3 million barrels per day, including condensates;
- Exchange rate of N305/US$ for 2018;
- Real GDP growth of 3.5 percent; and
- Inflation Rate of 12.4 percent.
Federally-Collectible Revenue Estimates
Based on the above fiscal assumptions and parameters, total federally-collectible revenue is estimated at 11.983 trillion Naira in 2018. Thus, the three tiers of Government shall receive about 12 percent more revenues in 2018 than the 2017 estimate. Of the amount, the sum of 6.387 trillion Naira is expected to be realised from oil and gas sources. Total receipts from the non-oil sector are projected at 5.597 trillion Naira.
Federal Government Revenue Estimates
The Federal Government’s estimated total revenue is 6.607 trillion Naira in 2018, which is about 30 percent more than the 2017 target. As we pursue our goal of revenue diversification, non-oil revenues will become a larger share of total revenues. In 2018, we project oil revenues of 2.442 trillion Naira, and non-oil as well as other revenues of 4.165 trillion Naira.
Non-oil and other revenue sources of 4.165 trillion Naira, include several items including: Share of Companies Income Tax (CIT) of 794.7 billion Naira, share of Value Added Tax (VAT) of 207.9 billion Naira, Customs & Excise Receipts of 324.9 billion Naira, FGN Independently Generated Revenues (IGR) of 847.9 billion Naira, FGN’s Share of Tax Amnesty Income of 87.8 billion Naira, and various recoveries of 512.4 billion Naira, 710 billion Naira as proceeds from the restructuring of government’s equity in Joint Ventures and other sundry incomes of 678.4 billion Naira.
Proposed expenditure for 2018
A total expenditure of 8.612 trillion Naira is proposed for 2018. This is a nominal increase of 16 percent above the 2017 Budget estimate. In keeping with our policy, 30.8 percent (or 2.652 trillion Naira) of aggregate expenditure (inclusive of capital in Statutory Transfers) has been allocated to the capital budget.
We expect our fiscal operations to result in a deficit of 2.005 trillion Naira or 1.77 percent of GDP. This reduction is in line with our plans under the ERGP to progressively reduce deficit and borrowings.
We plan to finance the deficit partly by new borrowings estimated at 1.699 trillion Naira. Fifty percent of this borrowing will be sourced externally, whilst the balance will be sourced domestically. The balance of the deficit of 306 billion Naira is to be financed from proceeds of privatisation of some non-oil assets by the Bureau of Public Enterprises (BPE).
The proposed 8.612 trillion Naira of 2018 Aggregate Expenditure comprises:
- Recurrent Costs of N3.494 trillion;
- Debt Service of N2.014 trillion;
- Statutory Transfers of about N456 billion;
- Sinking Fund of N220 billion (to retire maturing bond to Local Contractors);
- Capital Expenditure of N2.428 trillion (excluding the capital component of Statutory Transfers).
456.46 billion Naira was provided in the 2018 Budget for Statutory Transfers. The 5 percent increase over last year’s provision is mainly due to increases in transfer to Niger Delta Development Commission (NDDC) and the Universal Basic Education Commission (UBEC), which are related directly to the size of oil revenue.
We are closely monitoring our debt service to revenue ratio. We shall address this ratio through our non-oil revenue-generation drive and restructuring of the existing debt portfolio. Presently, domestic debt accounts for about 79 percent of the total debt. Our medium-term strategy is to reduce the proportion of our domestic debt to 60% by the end of 2019 and increase external debt to 40 percent. It is noteworthy that rebalancing our debt portfolio will enhance private sector access to domestic credit. In addition, annual debt service costs will reduce as external debts are serviced at lower rates and repaid over a longer period than domestic debt.
A substantial part of the recurrent cost proposal for 2018 is for the payment of salaries and overheads in key Ministries providing critical public services such as:
- N510.87 billion for Interior;
- N435.01 billion for Education;
- N422.43 billion for Defence; and
- N269.34 billion for Health.
The allocation to these Ministries represents significant increases over votes in previous budgets.
Personnel costs are projected to rise by 12 percent in 2018. Although we have made substantial savings by registering MDAs on the Integrated Personnel Payroll Information System (IPPIS) platform, the increase is mainly due to provision for staff promotion arrears, and recruitments by the Military, Police Force and para-military agencies. Furthermore, I have directed agencies not to embark on any fresh recruitment unless they have obtained all the requisite approvals. Any breach of this directive will be severely sanctioned.
Overhead costs are projected to rise by 26 billion Naira in 2018, a modest increase of about 12 percent reflecting inflationary adjustments. MDAs are required to adhere to government regulations regarding cost control.
To consolidate on the momentum of the 2017 Budget implementation, many ongoing capital projects have been provided for in the 2018 Budget. This is in line with our commitment to appropriately fund ongoing capital projects to completion. By allocating 30.8 percent of the 2018 Budget to capital expenditure, the Federal Government is also demonstrating its strong commitment to investing in critical infrastructure capable of spurring growth and creating jobs in the Nigerian economy.
Key capital spending allocations in the 2018 Budget include:
- Power, Works and Housing: N555.88 billion;
- Transportation: N263.10 billion;
- Special Intervention Programmes: N150.00 billion;
- Defence: N145.00 billion;
- Agriculture and Rural Development N118.98 billion;
- Water Resources: N95.11 billion;
- Industry, Trade and Investment: N82.92 billion;
- Interior: N63.26 billion;
- Education N61.73 billion;
- Universal Basic Education Commission: N109.06 billion;
- Health: N71.11 billion;
- Federal Capital Territory: N40.30 billion;
- Zonal Intervention Projects N100.00 billion;
- North East Intervention Fund N45.00 billion;
- Niger Delta Ministry: N53.89 billion; and
- Niger Delta Development Commission: N71.20 billion.
As I had previously indicated, we aim to consolidate on our achievements in 2017. We shall meet our counterpart funding obligations. We shall complete all ongoing projects. And we shall carry forward all strategic projects that were budgeted for but which we were unable to kick start due to liquidity challenges, late passage of the budget, prolonged contractual negotiations, and other matters.
Specifically, I would like to bring your attention to the following key projects and programmes that we are determined to implement in 2018:
- N9.8 billion for the Mambilla hydro power project, including N8.5 billion as counterpart funding;
- N12 billion counterpart funding for earmarked transmission lines and substations;
- N35.41 billion for the National Housing Programme;
- N10.00 billion for the 2nd Niger Bridge; and
- About N300 billion for the construction and rehabilitation of the strategic roads mentioned earlier.
Consolidating on the Social Intervention Programme
This Administration remains committed to pursuing a gender-sensitive, pro-poor and inclusive growth. We are keenly interested in catering for the most vulnerable. Accordingly, we have retained the 500 billion Naira allocation to the Social Intervention Programme. Under the programme, 100 billion Naira has been set aside for the Social Housing Programme.
Government will also continue to implement the Conditional Cash Transfer (CCT) programme, as well as the National Home-Grown School Feeding programme in 2018. These initiatives are already creating jobs and economic opportunity for local farmers and cooks, providing funding to artisans, traders and youths, as well as supporting small businesses with business education and mentoring.
Regional spending priorities for peace, security and development
To maintain peace and security in the Niger Delta for economic and social activities to thrive, the provision of 65 billion Naira for the Presidential Amnesty Programme has been retained in the 2018 Budget. In addition, the capital provision for the Ministry of Niger Delta has been increased to 53.89 billion Naira from the 34.20 billion Naira provided in 2017. This is to further support the development in the region. We will complete all critical projects, including the East-West Road, which has a provision of about 17.32 billion Naira in 2018.
Across the nation, and particularly in the North East region, our commitment to the security of life and property remains absolute. We will ensure that our gallant men and women in arms are properly equipped and well-motivated. The result of our efforts is evident in the gradual return to normalcy in the North East. It is in this spirit that I recently assented to the North-East Development Commission Bill that was passed by this Distinguished House. We expect that this development will consolidate on our ongoing efforts to combat insurgency, reintegrate Internally Displaced Persons and rebuild communities in the North East Region, which have been adversely affected by the insurgency.
Similar attention is being given to efforts to reduce violent crime across the country. The Nigerian Army was recently deployed to combat the growing scourges of cattle rustling and banditry that have plagued our communities in Kaduna, Niger, Kebbi, Katsina and Zamfara States. We will also continue to arrest the incidence of Armed Robbery, Kidnapping and other Violent Crimes across our nation.
We have also increased our focus on cyber-crimes and the abuse of technology through hate speech and other divisive material that is being propagated on social media. Whilst we uphold the Constitutional rights of our people to freedom of expression and association, where the purported exercise of these rights infringes on the liberties of other citizens or threatens to undermine our National Security, we will take firm and decisive action.
In this regard, I reiterate my call for Nigerians to exercise restraint, tolerance and mutual respect in airing any grievances and frustrations. Whilst the ongoing national discourse on various political issues is healthy and welcome, we must not forget the lessons of our past. I trust that the vast majority of our people would rather tread the path of peace and prosperity, as we continue to uphold and cherish our Unity in Diversity.
Distinguished and Honourable Members of the National Assembly, you will recall that in my 2017 Budget Speech, I promised a new era for Nigeria and an end to the old ways of overdependence on oil revenues. The statistics and initiatives I mentioned clearly show that this new era has come and the old Nigeria is surely disappearing. We must, therefore, all work together to protect and sustain this CHANGE to create a new Nigeria:
- A Nigeria that feeds itself;
- A Nigeria that optimally utilizes its resources;
- A Nigeria with a diversified, sustainable and inclusive economy.
Mr. Senate President, Mr. Speaker, Distinguished and Honourable Members of the National Assembly, this speech would be incomplete without commending the immense, patriotic and collaborative support of the National Assembly in the effort to move our great nation forward. I wish to assure you of the strong commitment of the Executive branch to deepen the relationship with the Legislature.
Nigeria is currently emerging from a very difficult economic period. If we all cooperate, and support one another, we can consolidate on our exit from the recession and firmly position Nigeria for economic prosperity. All the projects presented within this Budget have been carefully selected and subjected to extensive consultations and stakeholder engagements. As a Government, we are determined to bring succour to our people, improve their lives, and deliver on our promises to them. 2018 is a crucial year as we strive to ensure that we consolidate our successes and institutionalize the policies and practices that drove this turnaround.
I appeal to you to swiftly consider and pass the 2018 Appropriation Bill. It is therefore with great pleasure and a deep sense of responsibility, that I lay before this Distinguished Joint Session of the National Assembly, the 2018 Budget Proposals of the Federal Government of Nigeria.
I thank you most sincerely for your attention.
May God bless the Federal Republic of Nigeria.