Budget: Stakeholders list priorities, seek implementation, funding
With the signing into law of the 2016 budget by President Muhammadu Buhari last weekend, stakeholders have listed areas of priorities, seeking commitment to implementation of the plans, as well as financing of the projects.
The N6.06 trillion budget, which forms part of efforts to stimulate the economy that has been battered by the fall in crude oil prices and depleted its earnings significantly, however, is based on assumptions that seemed to remain challenged.
Already, N350 billion would be spent on capital projects, while N200 billion allocated to road construction shows significant vote, when compared with N18 billion earmarked for that purpose in the 2015 budget, representing 1011 per cent increase.
Although the deficit budgeting is expected to continue in the next two or three fiscal years and the details of the current one yet to be unveiled, there are palpable signs to hope on, especially as the earlier fears of N3 trillion deficit level was moderated to N2.2 trillion.
Meanwhile, the Federal Government has restated its resolve to fully implement the 2016 budget, despite the late signing of the fiscal document.
The Minister of Budget and National Planning, Senator Udo Udoma, through his media aide, Akpandem James, said although the late approval might constrain full implementation, “nevertheless, the Federal Government intends to still try its best to achieve 100 per cent implementation.”
Specifically, beside the challenge of price uncertainty in the international arena, the achievement of the projected 2.2 million barrels per day (mbpd) has been beset by the resurging militancy in the Niger Delta, raising concerns among economic watchers over the outcome of the fiscal plan and feasibility of the expected revenues.
Besides, the consumer spending of the citizenry has been assessed to be at low level to support business activities that will in turn open up opportunities for revenue stream to the Federal Government.
For Afrinvest Securities Limited, expectations are high on the budget to turn around the country’s sliding economic profile, especially as the April 2016 Purchasing Manager’s Index (PMI) and the first quarter’s Capital Importation data revealed a very disappointing numbers.
The Head of Investment Research at Afrinvest, Ayodeji Eboh, said that the assent to 2016 budget, which delay was one of the factors dragging investor confidence and business activities, is cheery news to the investment community.
He expressed the hope that with rapid implementation of the capital component of the budget, it could generate enough impulse to effectively lift aggregate demand or consumption spending in the medium term.
“Yet, the current economic constraints can also be contextually situated as a supply-side challenge, which could mute the real impact of the budget on the economy if structural reforms to boost foreign exchange supply, petroleum resources and availability of foreign/domestic investment capital are not implemented,” he said.
A public affairs analyst and Executive Director of Abuja-based OJA Development Consult, Jide Ojo, also said it is heartwarming that the protracted controversies on 2016 budget, which journey began on December 22, 2015, has finally been put to rest.
While also commending the President for ordering the release of N350 billion to reflate the economy, he said there was need to reiterate that implementation of financial estimates has been the most challenging phase of budgets in the country.
According to him, it is now essential that government does all things possible to ensure the prompt release of these capital votes, which are meant to tackle the infrastructural deficits like roads, railway, housing, power, among others, having lost one-third of the financial year to controversies.
“Government must now earnestly work round getting the needed fund to cushion the more than N2 trillion deficit. It is unfortunate that militants under the aegis of Niger Delta Avengers have commenced hostilities against Chevron and NNPC by blowing off some of the pipelines of these two corporations,” he said.
An economist, who pleaded anonymity, said the government should focus immediately on the planned partnership with states and councils to recruit about 500,000 unemployed graduates and those from colleges of education, due to its multiplier benefits.
To him, these graduates will be engaged, thereby reducing the number of the unemployed, as well as add to the aggregate demand of the economy, which would result to the overall good.
The President of the Association of Small Business Owners of Nigeria, Dr. Femi Egbesola, lauded the signing of the budget, saying that the investment community now can see the direction of the government to make their investment decisions, adding that the exchange rate pressure may also lessen.
For the expectations of the small businesses, he said government should immediately commence the social welfare programmes outlined in the budget, especially as it relates to training of youths and undergraduates.
Egbesola also said that implementation of programmes like “movable collateral”, as promised by the government should be effected to allow small business owners the opportunity to use their movable items to secure loans for business, even as he solicited for power sector projects’ implementations, which he alluded to as one of the challenges of business development and growth in the country.
For the Lead Director of Centre for Social Justice, Eze Onyekpere, the lesson from the 2016 budget processes should not be lost on the 2017 budget preparation, calling for early presentation and approval.
“The post 2016 budget assent challenge is how to expeditiously mobilise resources to ensure that the N1.8 trillion capital budget begins to deliver on infrastructure and services to the Nigerian people. The social component of it is also expected to address critical challenges.
“This is no longer the time for expression of intent on what would be done, rather it is now the time to begin to do the things that has already been approved in the budget. The promises and focus of the budget and the ideas must be converted into a coherent policy framework for the remaining period of the administration so that Nigerians can see a road map with timely deliverables and milestones.
“It is also expected that funding the deficit will comply with the provisions of the Fiscal Responsibility Act, which allows borrowing only for capital expenditure or human capital development at an interest rate not exceeding three per cent per annum,” he said.
Also, the Managing Director of Cowry Asset Management Limited, Johnson Chukwu, who said the signing of the budget was commendable as a way to end the lingering arguments over the document’s contents, also noted that the record N6 trillion mark budget shows that the country is aspiring high.
He however, pointed out that the belated signing and faltering economic fundamentals have predisposed the budget performance to two major challenges- loss of four months of dry season needed for construction and poor credit rating in the international community.
He said: “The more than N1.5 trillion capital expenditure, which implementation is expected to kick off soon has barely seven months to be executed, out of which five months is the uptick of rainy season. It is obvious that 100 per cent is not assured and this would moderate the overall impact to the economy.
“With our downgraded credit rating, borrowing in the international arena would be difficult and the recent increase in benchmark interest rate to 12 per cent, has also increased cost of borrowing locally for government.
“Again, the resumption of hostilities in the Niger Delta, is more of serious threat to the realisation of the projected N3.8 trillion revenue, as the assumption 2.2 million barrels per day is no longer feasible, when the current 1.7mbpd production is disrupted.”