PROTOCOLS
I am honoured and privileged to present the 2016 Budget proposal. This is my
first address before this joint session of the National Assembly. I have come
here today, not only to address members of the National Assembly but also to
speak directly to the men and women who placed us here.
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| President Buhari |
I know the state of our economy is a source of concern for many.
This has been further worsened by the unbridled corruption and security
challenges we have faced in the last few years.
From those who have lost their jobs, to those young people who
have never had a job, to the people in the Northeast whose families and
businesses were destroyed by insurgents, this has been a difficult period in
our nation’s history, lessons that we must not forget or ignore as we plan for
the future.
By June 2014, oil prices averaged 112 dollars per barrel. But as
at today, the price is under 39 dollars per barrel. This huge decline is having
a painful effect on our economy.
Consumption has declined at all levels. In both the private and
public sectors, employers have struggled to meet their salary and other
employee related obligations. The small business owners and traders have been
particularly hard hit by this state of affairs.
Fellow Nigerians, the confidence of many might be shaken.
However, I stand before you today promising that we will secure our country,
rebuild our economy and make the Federal Republic of Nigeria stronger than it
has ever been.
The answers to our problems are not beyond us. They exist on our
farmlands; our corporations; in the universities in the hearts and minds of our
entrepreneurs; through the gallantry of our Armed Forces; and the resolute
spirit of Nigerians, especially the youth, who have refused to give up despite
all the obstacles confronting them.
This budget proposal, the first by our government, seeks to
stimulate the economy, making it more competitive by focusing on
infrastructural development; delivering inclusive growth and prioritising the
welfare of Nigerians.
We believe that this budget, while helping industry, commerce
and investment to pick up, will as a matter of urgency, address the immediate
problems of youth unemployment and the terrible living conditions of the
extremely poor and vulnerable Nigerians.
In the medium to longer term, we remain committed to economic
diversification through import substitution and export promotion. This will
build resilience in our economy. It will guarantee that the problems we have
today, will not confront our children and their children. This shall be our
legacy for generations to come.
2015: A Year of Global and Domestic Challenges
Today, it is widely acknowledged that the global economy has
slowed down. This is particularly the case with emerging markets such as
Nigeria. However, despite the weak emerging market growth rates, our domestic
security challenges, declining oil prices, and the attendant difficulties in
providing foreign exchange to meet market demands, the Nigerian economy grew by
2.84 per cent in the third quarter of 2015.
We have, and will continue to implement strategies that will
maintain macroeconomic stability and manage the oil price shocks we are
experiencing.
Upon the inauguration of this administration on 29th May 2015,
we engaged key stakeholders from various sectors of our economy and interfaced
with the heads of Ministries, Departments and Agencies (MDAs) in order to
understand the true state of our nation. What we found prompted us to take
certain strategic decisions.
On the economy, we injected new leadership at the helm of our
revenue generating agencies including the Federal Inland Revenue Service
(FIRS), Nigerian National Petroleum Corporation (NNPC), Nigerian Communications
Commission (NCC), and the Nigerian Customs Service (NCS). We implemented the
Treasury Single Account (TSA) which, so far, has provided greater visibility of
government revenues and cash flows. We intervened to support states to navigate
their fiscal challenges by restructuring their commercial bank loans and by
providing facilities to enable them to pay salary arrears.
We have demonstrated a strong will to fight corruption. I am
sure you will agree that the sheer scale of corruption and impunity of the past
explains in part, the economic challenges we now face. On these initiatives,
and the many more to come, we shall not be deterred. We will pursue the
recovery of everything that belongs to the people of Nigeria. No matter where
it is hidden. No matter how long it will take.
2015 Budget Performance
Distinguished and honourable members of the National Assembly, I
now present a review of the 2015 Budget. That Budget was based on a benchmark
oil price of 53 dollars per barrel, oil production of 2.28 million barrels per
day and an exchange rate of N190 to the dollar.
The projected revenue was N3.45 trillion, with an outlay of
N4.49 trillion, implying a deficit of N1.04 trillion. Due largely to
under-provisioning by the previous administration for fuel subsidy and the
costs required to support the military operations in the Northeast, the
government had to obtain National Assembly’s approval for a supplementary
budget of N575.5 billion. I take this opportunity to thank all members of the
National Assembly for the prompt passage of that bill.
2016: Budget Assumptions
After reviewing the trends in the global oil industry, we have
set a benchmark price of 38 dollars per barrel and a production estimate of 2.2
million barrels per day for 2016. We have focused on non-oil revenues by broadening
our tax base and improving the effectiveness of our revenue collecting
agencies.
Also, with the full implementation of the Treasury Single
Account, we expect significant improvements in the collection and remittance of
independent revenues. To further support the drive for increased remittances,
we will ensure that all MDAs present their budgets in advance, and remit their
operating surpluses as required by section 22 of the Fiscal Responsibility Act.
We are determined to ensure that our resources are managed
prudently and utilised solely for the public good. To set the proper tone, one
of our early decisions was the adoption of a zero based budgeting approach,
which ensures that resources are aligned with government’s priorities and
allocated efficiently. This budgeting method, a clear departure from previous
budgeting activities, will optimise the impact of public expenditure.
In addition to the proper linkage of budgeting to strategic
planning, we are enhancing the utilisation of the Government Integrated
Financial Management Information Systems (GIFMIS) to improve financial
management. The recently established Efficiency Unit is working across MDAs to
identify and eliminate wasteful spending, duplication and other inefficiencies.
We engaged costing experts to scrutinise the 2016 budget proposals. They have
already identified certain cost areas that can be centralised for economies to
be made.
We have directed the extension of the Integrated Personnel
Payroll Information System (IPPIS) to all MDAs to reap its full benefits. We
will also strengthen the controls over our personnel and pension costs with the
imminent introduction of the Continuous Audit Process (CAP). These initiatives
will ensure personnel costs are reduced. Our commitment to a lean and cost
effective government remains a priority, and the initiatives we are introducing
will signal a fundamental change in how government spends public revenue.
2016: Laying the Foundation for Sustainable Growth
The 2016 budget, as outlined, is designed to ensure that we
revive our economy, deliver inclusive growth to Nigerians and create a
significant number of jobs.
We aim to ensure macroeconomic stability by achieving a real GDP
growth rate of 4.37 per cent and managing inflation. To achieve this, we will
ensure the aligning of fiscal, monetary, trade and industrial policies.
As we focus on inclusive growth, we are conscious of the current
rate of unemployment and underemployment. This is a challenge we are determined
to meet; and this budget is the platform for putting more Nigerians to work.
I can assure you that this administration will have a job
creation focus in every aspect of the execution of this budget. Nigeria’s job
creation drive will be private sector led. We will encourage this by a
reduction in tax rates for smaller businesses as well as subsidised funding for
priority sectors such as agriculture and solid minerals.
As an emergency measure, to address the chronic shortage of
teachers in public schools across the country, we also will partner with state
and local governments to recruit, train and deploy 500,000 unemployed graduates
and NCE holders. These graduate teachers will be deployed to primary schools,
thereby, enhancing the provision of basic education especially in our rural
areas.
We also intend to partner with state and local governments to
provide financial training and loans to market women, traders and artisans,
through their cooperative societies. We believe that this segment of our
society is not only critical to our plan for growing small businesses, but it
is also an important platform to create jobs and provide opportunities for
entrepreneurs.
Furthermore, through the Office of the Vice-President, we are
working with various development partners to design an implementable and
transparent conditional cash transfer programme for the poorest and most
vulnerable. This programme will be implemented in phases.
Already, the compilation of registers of the poorest persons is
ongoing. In the coming weeks, we will present the full programme, which will
include our home-grown public primary school feeding and free education for
science, technology and education students in our tertiary institutions.
Indeed, this will mark a historic milestone for us as a nation.
The 2016 Budget
Distinguished members of the National Assembly, I now present,
the 2016 Budget proposals of the Federal Government. Based on the assumptions I
presented earlier, we have proposed a budget of N6.08 trillion with a revenue
projection of N3.86 trillion resulting in a deficit of N2.22 trillion.
The deficit, which is equivalent to 2.16 per cent of Nigeria’s
GDP, will take our overall debt profile to 14 per cent of our GDP. This remains
well within acceptable fiscal limits. Our deficit will be financed by a
combination of domestic borrowing of N984 billion and foreign borrowing of N900
billion totaling N1.84 trillion. Over the medium term, we expect to increase
revenues and reduce overheads, to bring the fiscal deficit down to 1.3 per cent
of GDP by 2018.
In 2016, oil related revenues are expected to contribute N820
billion. Non-oil revenues, comprising Company Income Tax (CIT), Value Added Tax
(VAT), Customs and Excise duties, and Federation Account levies, will
contribute N1.45 trillion. Finally, by enforcing strict compliance with the
Fiscal Responsibility Act, 2007 and public expenditure reforms in all MDAs, we
have projected up to N1.51 trillion from independent revenues.
Although we are working to diversify our economy, we will not
lose sight of the need to restructure the oil and gas sector which has been
marred by corruption and plagued with inefficiencies. Accordingly, I have
directed the Petroleum Products Pricing Regulatory Agency (PPPRA) to adjust its
pricing template to reflect competitive and market driven components. We
believe this can lower input costs and attain efficiency savings that will
enable PPPRA to keep the selling price for all marketers of petrol at N87 per
liter for now.
The current fuel scarcity with long queues at petrol stations
all over the country causing social dislocation is very unfortunate. Government
profoundly apologises to Nigerians for this prolonged hardship and misery. It
is as a result of market speculators and resistance to change by some
stakeholders. Government is working very hard to end these shortages and bring
fuel to the pumps all over the country.
I have also directed the NNPC to explore alternate funding models
that will enable us to honour our obligations in Joint Ventures (JVs) and deep
offshore fields. We are confident that these measures can be achieved and will
lower the burden that the traditional cash calls have imposed on our budget and
cash flows as well as contribute towards shoring up our national reserves.
To deliver our development objectives, we have increased the
capital expenditure portion of the budget from N557 billion in the 2015 budget
to N1.8 trillion, in the 2016 budget.
Distinguished and honourable members of the National Assembly,
for the first time in many years, capital expenditure will represent 30 per
cent of our total budget. In future years we intend to raise the percentage
allocation for capital expenditure.
This is a fulfillment of our promise to align expenditure to our
long-term objectives, and a sign of government’s commitment to sustainable
development.
This increased capital expenditure commits significant resources
to critical sectors such as Works, Power and Housing – N433.4 billion;
Transport – N202.0 billion; Special Intervention Programmes – N200.0 billion;
Defence – N134.6 billion; and Interior – N53.1 billion. These investments in
infrastructure and security are meant to support our reforms in the
Agriculture, Solid Minerals and other core job creating sectors of our economy.
We will invest to safeguard lives and property.
We will invest in equipping our farmers with the right tools,
technology and techniques.
We will invest in empowering and enabling our miners to operate
in a safe, secure and humane environment.
We will invest in training our youths, through the revival of
our technical and vocational institutions to ensure they are competent enough
to seize the opportunities that will arise from this economic revival.
Indeed, the future looks bright. And I ask that we all work
together to make this vision a reality. The 223 per cent year on year growth in
capital expenditure demonstrates our desire to make Nigeria more competitive,
and start the journey to deliver sustainable development in our country.
In fulfillment of our promise to run a lean government, we have
proposed a 9 per cent reduction in non-debt recurrent expenditure from N2.59
trillion in the 2015 Budget to N2.35 trillion in 2016. Furthermore, we have
budgeted N300 billion for Special Intervention Programmes, which takes the
total amount for non-debt recurrent expenditure to N2.65 trillion.
As I mentioned earlier, the Efficiency Unit set up by this
Administration together with effective implementation of GIFMIS and IPPIS will
drive a reduction of overheads by at least 7 per cent, personnel costs by 8 per
cent and other service wide votes by 19 per cent. Distinguished and honourable
members, this budget will be executed to provide optimum value by ensuring
every naira spent by this government, counts.
We will devote a significant portion of our recurrent
expenditure to institutions that provide critical government services. We will
spend N369.6 billion in Education; N294.5 billion in Defence; N221.7 billion in
Health and N145.3 billion in the Ministry of Interior. This will ensure our
teachers, armed forces personnel, doctors, nurses, police men, fire fighters,
prison service officers and many more critical service providers are paid
competitively and on time.
Distinguished and honourable members of the National Assembly,
our 2016 borrowings will be principally directed to fund our capital projects.
Furthermore, the sum of N113 billion will be set aside for a Sinking Fund
towards the retirement of maturing loans; while N1.36 trillion has been provided
for foreign and domestic debt service. This calls for prudent management on our
part, both of the debt portfolio and the deployment of our hard earned foreign
exchange earnings.
I am aware of the problems many Nigerians currently have in
accessing foreign exchange for their various purposes – from our traders and
business operators who rely on imported inputs; to manufacturers needing to
import sophisticated equipment and spare parts; to our airlines operators who
need foreign exchange to meet their international regulatory obligations; to
the financial services sector and capital markets who are key actors in the
global arena.
These are clearly due to the current inadequacies in the supply
of foreign exchange to Nigerians who need it. I am however assured by the
Governor of Central Bank that the bank is currently fine-tuning its foreign
exchange management to introduce some flexibility and encourage additional
inflow of foreign currency to help ease the pressure.
We are carefully assessing our exchange rate regime keeping in
mind our willingness to attract foreign investors but at the same time,
managing and controlling inflation to level that will not harm the average
Nigerians. Nigeria is open for business. But the interest of all Nigerians must
be protected. Indeed, tough decisions will have to be made. But this does not
necessarily mean increasing the level of pain already being experienced by most
Nigerians.
So to the investors, business owners and industrialists, we are
aware of your pains. To the farmers, traders and entrepreneurs, we also hear
you. The status quo cannot continue. The rent seeking will stop. The artificial
current demand will end. Our monetary, fiscal and social development policies
are aligned.
Conclusion
Mr. Senate President, Mr. Speaker, distinguished members of the
National Assembly, in spite of the global economic uncertainties; we must
remain steadfast in our commitment to steer this country back to greatness.
The Nigerian economy needs to move away from dependency on oil.
Our growth must be inclusive. Nigerians must be part of the growth story. As a
government, we shall deliver security, jobs and infrastructure. This is the
right of all Nigerians.
I know many people will say “I have heard this before”. Indeed,
trust in government, due to the abuse and negligence of the past, is at an
all-time low. This means we must go back to basics. Our actions will speak for
us. My team of dedicated, committed and patriotic Nigerians is well aware of
the task ahead and I can assure you that we are taking on the challenge.
We will not betray the trust reposed in us.
We will welcome and be responsive to your feedback and
criticisms.
We are here to serve. And indeed, Nigerians will get the service
they have longed for and which they rightly deserve.
We as a government cannot do it alone. We will require the
support of all civil servants, the organised labour, industry groups, the press
and of course, our religious and traditional institutions. This is a call for
all of us to stand and serve our country.
This budget represents a major step in delivering a new
opportunity for Nigeria. It demonstrates our confident optimism that despite
the challenging times, we have the will, resourcefulness and commitment to
deliver prosperity to our people. And by the Grace of Almighty God and the
sheer will and determination
of the Nigerian people, we will come out stronger and more united than ever.
Thank you and God bless the Federal Republic of Nigeria.
