Minister for Budget and National Planning, Sen. Udoma Udo Udoma says Federal Government will fund the 2018 budget using key reform initiatives contained in the Economic Recovery and Growth Plan (ERGP).

He said this on Tuesday in Abuja while presenting an overview of the 2018 budget proposal.

The budget, tagged “Budget of Consolidation’’, which  was presented to the joint session of the National Assembly by President Muhammadu Buhari on Nov. 7 is expected to reinforce and build on recent accomplishments of the government.

Its key parameters include a crude oil benchmark price of 45 dollar per barrel, oil production estimate of 2.3 million barrels per day and exchange rate of N305 per dollar.

The budget also has projected oil revenue of N2.442 trillion and non-oil projection of N4.165 trillion.

It has a capital expenditure projection of N2.428 trillion, recurrent expenditure of N3.494 trillion, N2.014 trillion for debt servicing and fiscal deficit of N2.005 trillion.

Udoma said Federal Government would deploy new technology to improve revenue collection, enhance tighter performance management framework for State Owned Enterprises (SOEs) and stronger enforcement action against tax defaulters.

He added that the 2018 revenue projections reflects new funding mechanism for Joint Venture (JV) operations, allowing for cost recovery in lieu of previous cash call arrangements.

He noted that “there will be restructuring of government’s equity in JV oil assets, reduction in equity holding with proceeds to be reinvested in other assets.

“This will improve efficiencies in the operations of the JVs and position them for better revenue performance in future, increase in excise duty rates on alcohol and tobacco.

“Tax administration improvement initiatives to positively affect collection efficiencies across various tax categories such as tax amnesty programme.’’

Udoma said additional oil-related revenue including: royalty recovery, new/marginal field licences, early licencing renewals and review of the fiscal regime for oil Production Sharing Contracts (PSCs), would also be employed.

He explained that oil revenue would account for 37 per cent of the estimated revenue, while independent revenue was put at 12.8 per cent, JV equity restricting, 10.7 per cent, Company Income Tax (CIT), 12 per cent and Value Added Tax (VAT), 3.1 per cent.

“Customs is expected to account for 4.9 per cent, recoveries, 7.8 per cent, tax amnesty 1.3 per cent, signature bonus 1.7 per cent, grants and donor funding 3 per cent and other unnamed sources to account for 5.5 per cent of the revenue."

He said just like earlier budgets by the administration, it would ensure that funds were geared toward financing various capital projects

He cited some projects the Federal Government would embark on across several sectors of transport, power, health, education, works, housing, water resources agriculture and rural development, mines and steel development and special intervention programmes among others.

The minister said though the Federal Government had earmarked N2.42 trillion for capital projects, it would attract private sector involvement in the implementation of the projects, especially roads.

“What we need to construct roads is in trillions and we do not have that money now that is why we are involving Public Private Partnerships (PPP).

“Let us say what we have in the budget to use for roads, though would not be enough, would be Federal Government’s contribution towards construction of roads, while other support would come from the private sector.’’

Source: PulseNG

“Lend me your ears, that I may bury my words in them, but more importantly your heart, that I may inscribe my thoughts on its walls, that we may safely transform our nation and put the departed to rest. For their sake, do not turn on the deaf ears as I play from this drum of observation and intellect. For the sake of the fallen, do not pretend to be blind as I extend these vices to your frontlet, for their sake mind my words and tend to my advice, then together we shall take a handful of the sands of fulfillment and pour on their caskets as we bid them adios and watch them in sane peace."

“Though my heart is heavy but I have not come in its heaviness because emotions are known to ultimately becloud judgment and that is what I have come to do today; to judge our national malady, to appraise the educational insanity and to give resounding rounds of applause to the mediocrity of the Nigeria students (Of whom I am one). I have come to try to take you down the lane called memory, as we flip through the pages of history, trying to revisit the relics of time and learn the lessons that history teaches.”

The quotes above is from an article I wrote for the backpage column of The Guardian newspaper, as published on July 23, 2013.

At the time, six students actively involved in the politics of the National Association of Nigerian Students (NANS) were involved in an autocrash, which — as you may expect — led to the death of all six. I argued that “saying ‘rest in peace’ like every other person would not necessarily make them rest in peace, but acting against the vices that put them six feet beneath our feet would be the best feat to make them find the peace”.

I thought — and still think — that NANS was one student body with massively misplaced priority. My argument was that the Nigerian state was not investing enough in anything that would last long enough to transform the country positively. Education and infrastructural investments were abysmal at the time, and the students were not concerned. What was priority to the students at the time was the politics of 2015, which was in the offing. We “complained about the man trying to cut our toes, while applauding the one with a loaded rifle facing our fore-head”.

I believe one of the top three problems with education in Nigeria is funding.

As always, I was reluctant to write; I thought my writing would not change the way NANS was being run, neither will it change the power dynamics around budgeting and funding education in Nigeria. I said it was “drums to the deaf”. I was right about that. But who would believe that a government would come in Nigeria and allocate less than 10 percent to education after the Goodluck Jonathan administration?

“From 2006 to 2010, less than N300 billion was recurrently allocated to education, with much more going to unsafe security, yet we have our hands akimbo,” I wrote.

“In 2011, N1.592 trillion (about 35 percent) was allocated to security, while education was ailing at less than 10 percent as though we live in a war ridden nation. 2012 was no different with 8.4 percent N394.58 billion of 4.697 trillion). The final deception came in 2013, when education was said to have got the highest allocation, with just N426.5 billion which amounted to 11.489 per cent of the national budget, all of these in a nation that is expected to give at least 26 per cent to the sacred sector (According to UNESCO).”

Fast forward to 2017, the government led by Muhammadu Buhari actually changed the dynamics around budgeting, raising capital expenditure to 30 percent. Buhari began investing, actively in essential infrastructure, such as roads, rail lines, power, and some social security. For the first time in the history of our nation, over N1.5 trillion is being expended on capital projects across the country.

Like I wrote last week, the 2018 budget got it right on many fronts, but education is one front where the budget is getting it wrong. The same government that put on us on track with respect to tangible infrastructure has also set us back by over a decade — with respect to education. The last time allocation for education went as low as 7.04 percent was in 2004 — 13 years ago! In naira terms, the allocation may have increased, but in relative terms, with inflation put in right perspectives, the allocations have dropped drastically since it crossed the 10 percent mark in 2006.

Current allocations put Nigeria around the bottom rung for education funding across the world. As of 2013, the global average according to the World Bank was 14.13 percent — we have been below the average for at least 17 years, with no deliberate plans for breaking out.

A UN economic model designed for sustainable development as far back as 1945, prescribes that developing countries must put 26 percent of its budgetary allocation or five percent of GDP into education to get the much needed national and economic development. At a time when the world is shifting and education is getting all the more dynamic, nations are spending even more, but Nigeria is spending less.

From eight percent in 2016, we moved to 7.4 percent in 2017 and now 7.04 percent for 2018 — the trend is disturbing. Go ahead, build more roads and houses, erect better bridges, fix power too, but remember, that the child you failed to train today will sell the houses you built, pull down your better bridges, and bring power generation to nothing via vandalism.

If this trend continues, I would no longer ask why Nigeria has the highest number of out of school children in the world; I would seize to question the rationale behind having teeming youths as members of Boko Haram; I would kill my curiosity concerning the uprising in the Niger Delta or southeast Nigeria — for now, I know why.

Like my 2013 article, this also, may be drums to the deaf, but I’ll beat the drums anyway; Nigeria, you can do better.

After what has seemed like a year teetering on the edge of uncertainty, President Buhari has beaten an undisclosed illness that kept him out of the country for 100 days and delivered not one but two budgets to the Nigerian senate.

But this new budget, like much of Buhari’s stint as a democratic president has been fraught with controversy. The presidency had to be harangued repeatedly by Bukola Saraki and the Nigerian senate to present the budget, and when it was finally presented, several press organizations were simply not allowed to attend the presentation.

There is also the little matter of 2017 budget which is still only 15% implemented, one month to the end of the year. We have been assured however, that the 2017 budget will be implemented somehow before January 2018, so the fiscal cycle can return to a January-December schedule.

In light of the year we have had, it would be bad luck to dwell on the specifics of this new budget, but it has to be done if we are going to avoid the fallacies that has marred the implementation of the 2016 budget.  This year’s expenditure estimates capped last year’s estimates by a trillion naira, ambitious when you factor in that as a nation we have only exited a debilitating economic depression on paper, triggered by a restive Niger Deltan militancy, insurgencies in the North and a decade of audacious embezzlement across all arms of government. The estimated influx of revenue that has followed the rising crude oil rates and a lull in militancy is yet to be felt by the average Nigerian, and a budget that is already making grand projections based on a theoretical event seems optimistic, even for a government given to broad gestures as ours.

But scrutinizing the budget and its allocations to economic sectors with reference to major events in Nigeria, two allocations immediately stand out; the budgetary allocations to health care and education. A few weeks ago, an estimated 1200 Nigerian doctors wrote the most recent Professional and Linguistics Board test (PLAB), a test that allows doctors not trained with the UK – EU work in the UK’s medical ecosystem. There are less than 20 medical colleges in Nigeria and thanks to corruption, nepotism and a punishing medical schedule between 50 – 70 medical students graduate each year. The PLAB test is written several times a year, and if each cycle about 40% of the students who write the test pass, it would mean 800 doctors, eleven classes of graduate doctors if they were all from one university became eligible to leave Nigeria and practice. In a country where the estimates suggests we have a ratio one doctor to 10,00o patients,  even one doctor leaving the country to practice elsewhere is a loss we cannot allow.

The president’s budgetary allocations do not seem to appreciate just dire our circumstances are. The 2018 budgetary allocation for the health sector is 71 billion dollars, only 6 billion more than the budgetary allocation for the payment of amnesty allowances to Boko Haram and Niger Deltan militants. A state of the art MRI machine costs about $1.2 million, which when converted to Naira is about N427 million. Ten state of the art MRI machines, which at this point would barely even adequately serve 5% of our population’s healthcare needs would consume nearly 10% of 2018’s budgetary allocations. This means we can forget intensive research of any kind, or even proper facilities, the kind of career advancement opportunities that would traditionally incentivize doctors to stay in Nigeria.

What solutions do we have then? Reforming our medical colleges to ensure the process of training doctors is less restrictive? Hiring more training consultants is out of the question, seeing as they are the ones writing the PLAB tests and relocating their families. How about building more medical colleges across the country to trigger an influx of eager students? Well, the allocation for education in the 2018 budget is N61 billion, N3 billion less than the budgetary allocation for Amnesty payments, N85 billion less than the budgetary allocation for ‘special interventions’. What could be more worthy of an intervention than an educational system that is practically non-existent.

The Kaduna state government recently had to fire 21,000 primary and secondary school teachers because they couldn’t pass a basic four test. This is in spite of a N160 billion allocation for a universal basic education scheme that has been active since the early 2000’s. If the test implemented in Kaduna state was replicated nationwide, we’d probably see several hundred multiples of the numbers recorded in Kaduna. This means, every doctor we produce in Nigeria is not simply a product of our educational system, but evidence that someone managed to beat the system rather than succumb to its mediocrity.

The biggest allocations in the 2018 budget asides N3 trillion to recurring costs, was a lump sum of N2 trillion to debt management. That was closely followed by N500 billion to infrastructure and N263 billion to Transportation. On the surface it seems unrelated but in reality, this is all interconnected. Our debt is often accrued to finance infrastructural and transportation projects.  Infrastructural and transportation projects that we often have to hire foreign nationals to plan, build and implement because we simply do not have locally trained professionals with the same level of skill and experience to keep these projects in-house. We do not have locally trained professionals because we do not have schools with adequately trained teachers, or even contemporary equipment and training materials to ensure that our trained professionals are on par with their global contemporaries. The expenses these foreign nationals accrue are serviced by borrowing, the interest of which becomes our National debt, which we spend the bulk of our budgets servicing. A simple matter of priorities has spiralled into a bog into which we sink deeper every year.

Of what value is our insistence in investing in infrastructure if we do not have the human capital to build or maintain these projects. How long will we continue to look outwards, while the professionals we do manage to train here, hop on the next available flight to anywhere but here. At what point will we prioritize human capital above the illusion of progress?

Source: YNaija

President Muhammadu Buhari on Tuesday presented an appropriation bill of N8.612 trillion for 2018.

The President, while presenting the document before the joint session of the National Assembly in Abuja, said the budget was meant to consolidate the achievements of previous budgets.

He said the 2018 budget was also to deliver on Nigeria’s economic recovery growth.

The News Agency of Nigeria (NAN) reports that the proposed budget had a 16 per cent increase compared to the 2017 appropriation of N7.298 trillion.

Buhari said that 30.8per cent of the budget proposal had been dedicated to capital expenditure, while N3.494 trillion of the proposal had been set aside for recurrent expenditure.

According to him, N2.014trillion of the budget has been set aside for debt servicing.

He further stated that the 2018 appropriation was under pin by an oil bench mark of 45 dollars per barrel, oil production level of 2.3 million barrel per day and exchange rate of N305 to the dollar.

Read the full speech here

The President said the size of the 2018 budget was a reflection of his administration’s determination to consolidate and sustain the nation’s economic growth.

While reviewing the performance of his administration, Buhari noted that N1.2 trillion had so far been expended on execution of capital projects through 2016 budget.

He said the Federal Government had also invested 500 million dollars in the nation’s Sovereign Wealth Fund (SWF) as part of deliberate measures to support government’s diversification drives.

The President announced that the nation’s external reserve presently stood at 34 billion dollars as of Sept. 2017, while the country recorded trade surplus of N56.5 billion as of second quarter of 2017.

On food security, the President said that a committee headed by Vice-President Yemi Osinbajo had been inaugurated to check smuggling of food items across the country’s border towns.

He warned that food smugglers would be dealt with accordingly by the government.

Source: The Nation

The Federal Government is considering selling some of its stakes in oil joint ventures to raise about $3 billion (about N1 trillion) in order to reduce the deficit for 2018 budget, Daily Trust has learnt.

The proposed 2018 budget of N8.6trillion has about N3.3trillion deficit, according to the details of the 2018-2020 Medium Term Expenditure Framework (MTEF) and the Fiscal Strategy Paper (FSP) seen by Daily Trust.

The asset sales proposal is contained in the FG’s Economic Recovery and Growth Plan, released by the Ministry of Budget and National Planning.

It said that the government’s stakes in other oil and non-oil assets would be significantly reduced.

The debate on the sale of oil assets to fund the budget started in 2016 when eminent Nigerians such as the former governor of Central Bank of Nigeria (CBN) and now Emir of Kano, Muhammadu Sanusi II, the President of Dangote Group Alhaji Aliko Dangote, and the present governor of the CBN, Godwin Emefiele urged the government to consider disposing some stakes in the joint venture agreement or the oil refineries to raise fund for development.

The government jettisoned the suggestion due to the pressure from activists and some lawmakers. However, sources said the government is now considering the idea as the feasible option to reduce its financial burden.

The sources said the government for now has ruled out selling the refineries but has opted to reduce its stake in JVs with international oil companies.

Nigerian government through the Nigerian National Petroleum Corporation (NNPC) operates seven joint venture partnerships with Shell (55:45 per cent) and 60:40 per cent with Mobil, Chevron, Total, Agip, Elf and Panocean.

Unpaid cash call arrears as a challenge

Experts envisage loophole in the proposed sales of the JVs stakes due to the unpaid arrears of the cash call agreement. Records show that unpaid arrears of $6.8bn in cash calls from 2010 to 2015 are hanging on the neck of Nigerian government.

Last year, the federal government proposed a new regime for funding the joint venture partnerships in the upstream sector with a new structure beginning this year.

Under the new proposal, the government will no longer fund its 60% contribution in the JV projects, potentially paving the way for an inflow of $15 billion fresh investments to the sector.

An insider in the oil industry who pleaded for anonymity said the selling of stakes and restructuring the cash call agreement is like two projects at the same time.  

The source said the process will require longer period of time due to the complexity on the unpaid arrears, adding: “I am not sure they can conclude that within the 2018 budget cycle.”

An oil and gas expert, Dauda Garuba is of the opinion that selling the country’s upstream oil assets to fund the budget would amount to a short term solution for a long term problem.

“If it is for the budget we are selling our stake, I don’t think we are taking a good decision. But if it is in the context of the ongoing reforms in the oil and gas sector, then we begin to consider it as an option,” Garuba said. 

NNPC spokesman Mr. Ndu Ughamadu was not immediately available to comment.

Source: Daily trust

The Chairman of House of Representatives committee on Legislative Budget and Research, Mr. Timothy Golu, has ruled out the possibility of passing the 2018 budget into law before the end of the year, even as he disagreed with the executive arm that paucity of funds caused the poor implementation of 2017 estimate.

Also, commenting on the brewing crisis, a principal officer in the Red Chamber observed that the ground was already being prepared for another round of budget crisis between the National Assembly and the executive arm of government.

According to him, the late submission of MTEF to the National Assembly as well as refusal to comply with relevant laws guiding budget preparations had always been the causes of challenges dogging Nigeria’s budgeting process.

The senator recalled how in 2016, the Senate returned the MTEF to the executive arm of government due to lack of supporting documentation and details.

Golu, who spoke to The Guardian in Abuja, explained that the December 31-target cannot be realised due to the poor implementation of the 2017 budget, regretting that while the government said they have released funds, most of the Ministries, Departments and Agencies (MDAs) said they have not seen cash.

While contending that there is no way the MDAs would start implementation of any budget without money, the lawmaker, who represents Pankshin / Kanke / Kanan federal constituency of Plateau State, blamed the executive for the problem associated with the 2017 budget implementation.

He said: “Lack of money is not the main problem, government is slow in taking decision, it is slow in coordinating the agencies, it is slow in coordinating it’s policies. The government is just slowing down most of these things.

“I believe that if the government can accelerate action, if there can be proper coordination between the ministry of finance and the budget office and then the MDAs, these things could be sorted out.”

The lawmaker decried the situation whereby everybody in the executive is saying different things, stressing that they are not on the same page as far as budget data is concerned.

“So that is part of the problem; I don’t see us passing this budget before the end of the year, because we need to do a good job. They have not submitted it, yet they are talking about passage.

“We are yet to start work on MTEF-FSP; the relevant committees are about to work on the MTEF-FSP now, which should precede the submission of the main budget, so it means that we would be handling the budget together with the MTEF-FSP, which to us is not the problem, because we can do it.

“But to have enough time for the various committees to do their work, it would be difficult to pass this budget before December 31, because if we rush now and do an untidy job, Nigerians would not be happy. So we need enough time to handle the items, one by one, because the national assembly more than ever before is putting an eagle eye on every item,” he remarked.

Further, the legislator disclosed that the House of Representatives is doing what is referred to in port parlance as destination inspection of the budget items, stressing that since it is a law, “if we don’t do it well, the implementation would be bad and it would affect all of us.”

He disclosed that the leadership of the National Assembly has resolved to sit down and analyze in details, every item so that by the time it becomes law, you know that it would be implementable.

“That in itself is a problem, because there should be clear implementation of the 2017 budget to give way for the coming budget, because if the previous budget is not implemented then there would be no clearance for the new budget to take off. So, if they want to harmonize or roll over some things, I just don’t know how they are going to do it. “

On the level of implementation of the 2017 budget, Golu stated: “We have not heard anything about the 2017 budget yet. There is nothing happening. We have not heard about the implementation up until now, even 10 percent implementation has not been done and they are planning to bring 2018 budget.”

Some critical minds in the National Assembly believe that the approval given by FEC, which suggested that the executive had concluded action on the 2018 budget proposal and ready to present same to the Legislature amounted to turning the law upside down, which they say could kick start serious problems for the 2018 budget.

Picking holes on the procedure, a member of Senate Committee on Appropriation drew attention to section 18 of the Fiscal Responsibility Act, which clearly provides that the President ought to await the consideration and approval of the draft MTEF by the National Assembly before using same as basis for preparing the Budget proposal.

He said: “These are the issues we have always raised; why do we always behave as if we are ignorant of the laws guiding budget preparation? Look, it is sad that despite the presence of competent lawyers in cabinet, the executive is acting as if the law does not matter.

“Apart from the Vice President, you have the Attorney-General of the Federation there. Better still, the minister in charge of Budget is not only a lawyer, he was with us here as a member of Senate. Is it impossible to get the document on MTEF submitted by the end of August as required by law? They ignored that aspect of the Fiscal Responsibility Act and submitted MTEF in October.”

The lawmaker added: “Now, to do a thorough job before getting the MTEF approved, it takes a minimum of six weeks. That is why the law asked that the draft of the MTEF be submitted to the National Assembly at least four months to the end of the year, so that before the end of October of every year, the MTEF would have been considered, approved and sent back to the President.”

He argued that in the eyes of the law, “it is the approved MTEF sent to the President that he will use to cause the national budget to be prepared and later sent back to the legislature as Budget proposal.”

“At the moment, the National Assembly has not even started considering the MTEF draft because of its late submission and FEC has announced that it has approved the Budget proposal. What a mess! Is the National Assembly supposed to play the rubber stamp role and close its eyes to these irregularities? We wait and watch how the whole thing will play out,” he explained.

Late submission of MTEF to the National Assembly had in the recent past produced serious problems for the early passage and implementation of the budget.

Other lawmakers who expressed their minds to The Guardian on the issue expressed regrets that no lesson has been learnt from the budget crisis that had always been a source of quarrel between the executive and legislative arms of government particularly since the inception of President Muhammadu Buhari’s administration.

Specifically, the Fiscal Responsibility Act stated in section 18: “Notwithstanding anything to the contrary contained in this Act or any other law, the Medium-Term Expenditure Framework shall be the basis for the preparation of the estimates of revenue and expenditure required to be prepared and laid before the National Assembly under section 81(1) of the Constitution.

“The sectoral and compositional distribution of the estimates of expenditure referred to in subsection (1) of this section shall be consistent with the medium term developmental priorities set out in the Medium Term expenditure Framework.”

Source: GuardianNG

The Federal Executive Council today approved the 2018  budget proposal.

The Minister of Budget and National Planning, Udoma Udoma, disclosed this while addressing State House correspondents after the cabinet meeting chaired by President Muhammadu Buhari.

The minister said the executive would liaise with the legislature to agree on a date the president would present the document to the National Assembly.

Udoma refused to give the details of the draft budget approved.

He said the executive had fulfilled its promise of getting the budget proposal ready in October.

The Council also approved a 14-kilometre 330KVA electricity transmission line at a cost of N796.6million.

This was according to the Minister of Power, Works and Housing, Mr Babatunde Fashola, who briefed State House Correspondents on the outcomes of the FEC meeting which held on Thursday in Abuja.

Although power form parts of discussion at the meeting, the Council deliberated majorly on the 2018 budget.

Culled from Daily Trust and ChannelsTV

The federal government plans to finance the N3.52 trillion deficit in the 2018 budget with revenue from crude oil sales and non-oil sources.

According to the medium term expenditure framework (MTEF) and fiscal strategy paper (FSP), 43.2 percent of funds are projected to come from oil revenue, while 56.8 percent is to be earned from non-oil sources.

Data from the MTEF and FSP show that planned expenditure for 2018 is pegged at N8.6 trillion as against an estimated revenue of N5.65 trillion, resulting in a shortfall of approximately N3.52 trillion.

According to the document, the FG’s decision to shore up the deficit with oil revenue is benchmarked against rising crude oil prices.

Oil benchmark for 2018 is estimated at $53 per barrel, up from the $44. 5 per barrel in the 2017 budget, with prices averaging about $49. 9.

“Crude oil prices rose by 8% in the first quarter of 2017, averaging almost $53 per barrel,” the report read.

“Prices are projected to range from $50 to $60 per barrel in 2018 as the market regains balance, with shale production limiting larger price gains.

“The price of Nigeria’s Bonny Light crude oil price rebounded from an average of $44.08 in the international oil market in 2016 to about $51.5 in the first half of 2017.”

However, the market price declined by $4.21 from $54.98 in January 2017 to $50.77 in May, the document said.

As part of an overarching strategy to lower debt service burden and free up more fiscal space for the private sector, the document also said plans are in place to maintain deficits “within sustainable limits,” with debt financing restructured in favour of foreign financing.

Source: thecable.ng