‘It’s N62.72b of N6.06tr budget to pursue diversification’
Defence capital spending up by about N100b, education N11b
Despite so much talk about the diversification of the economy by the Federal Government, little in real terms has been undertaken by the allocation of resources to sectors like agriculture, solid minerals and the Small and Medium Scale Enterprises (SMEs).
There had been the expectation that the provision for the diversification of the economy would be sufficient enough to insulate it from the vagaries of oil price fluctuation at the international market and quantity shocks back home as a result of shut-ins and spillage or oil theft flowing from vandalism of oil installations in the Niger Delta.
But the provision for diversification has taken a mere N62.72 billion out of the N6.06 trillion Federal Government 2016 fiscal spending plan unveiled by the Minister of Budget and National Planning, Sen. Udoma Udo Udoma on Thursday in Abuja.The diversification votes can be found in agriculture – N46.17 billion ; solid minerals -N7.33 billion and power -N9.22 billion.
This year’s agriculture capital spend of N46.17 billion allocation is against higher expectation by most Nigerians, though it is so much higher than the N8.790 billion it had in the last year’s allocation but does not in any way compare with the almost N100 billion increase in the capital vote allocation to the Defence Ministry, from N36.70 billion last year to N130.86 billion in the current plan.
In the same vein, not so much is allocated to the education sector which is equally key in the delivery of skills, innovation and technology that can accentuate diversification as the sector’s capital vote was raised by just N11.9 billion from N23.52 billion last year toN35.43 billion now.
Again, the solid mineral sector which is the gateway to diversification, with potential yet to be fully tapped, got a disappointing N7.33 billion as capital vote.
At the budget breakdown, Udoma equally declared that this year’s budget would for the first time be non-oil dependent as a prelude to abandoning oil minerals proceeds as basis for revenue projection for the financing of future fiscal plans in the country, pointing out that taxes proceeds as well as the private sector through Public Private Partnership (PPP ) would be the defining financing for the budget .
Udoma said: “The 2015 Consolidated Budget (main and supplementary) was premised on certain key parameters including a benchmark oil price of $53pb, oil production of 2.2782mbpd and exchange rate of N190/$. The projected revenue for 2015 Budget was N3,452.35 trillion but was later revised downward to N2,855.80 trillion. This was due partly to failure to achieve projected oil production levels arising from pipeline vandalism and oil theft. Actual revenue performance was N2,745.68 trillion. With respect to expenditure outlay, a total sum of N5,067.89 trillion was budgeted resulting in a deficit of N2,212.10 trillion or 2.31% of GDP, which was within the limit of 3% of GDP stipulated by the Fiscal Responsibility Act 2007. Of the Aggregate budget, the sum of N4,767.37 trillion, or 94% was spent by end December 2015
“The recurrent expenditure element of the 2015 Budget, including budgetary provision for debt service was virtually fully released. With respect to capital expenditure (including SURE-P), a provision of N558.03 billion was made in 2015 budget. Of this amount, 73% was utilised by MDAs during the period.
“As you are all aware, Nigeria has a major infrastructure challenge. We have poor and dilapidated roads, epileptic power supply, a virtually moribund railway system, airports needing refurbishments, etc. Unfortunately, the 2015 Budget did not make sufficient provision for us to begin to tackle these deficiencies. For example, the allocation for road construction was only about N18 billion in the 2015 budget.
“The 2016 Budget of Change has been designed to actively pursue macroeconomic policies and growth strategies that will reflate the economy by investing in key infrastructure and social development. It was developed using the Zero Based Budgeting (ZBB) system. This is a method of budgeting which requires Ministries Departments and Agencies(MDAs) to carry out fresh evaluation of all projects/programmes based on the priorities of government.”
The budget is anchored on six pillars. The six pillars are: Economic reforms; infrastructure ; social development ; governance and security; environment, as well as states/regional development.
The budget was also guided by the 2016 – 2018 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper. The primary goal of the budget is to reflate and reposition the economy for change.
The key objectives are: ensuring a stable macroeconomic environment for real sector development; investments in critical infrastructure, science, technology and innovations that will enhance productivity and lower costs of doing business; creating a significant number of jobs to reduce unemployment and underemployment especially among the youth; protecting the poor and vulnerable by special social intervention programmes; and building an economy that is less vulnerable to oil price shocks by vigorously pursuing economic diversification.
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