N289bn recovered fund captured in 2017 Budget

About N288.6bn is in next year’s budget, according to Budget Office Director-General Ben Akabueze, will come from recovered funds from looters of Nigeria’s treasury.

Akabueze revealed this while fielding questions during the public presentation of the 2017 budget at the old Banquet Hall of the State House, Abuja.

He said: “A total of N288.6bn. This includes N97.6bn, which is equivalent of $220 expected from the Swiss, part of what is called Abacha loot recovery.

Then it also includes N72bn that has already been received in recent cases of loot recovery.

“And a balance of N90bn, other expected recoveries that are at an advanced and reasonable stage that we feel comfortable and confident that they would come through in 2017 and so they have been reflected in the budget.”

Budget and National Planning Minister Udoma Udo Udoma also allayed fears over the non-approval of the Medium Term Expenditure Framework (MTEF) by the National Assembly.

According to Udoma, the National Assembly already has both the MTEF and the 2017 budget proposal and would work on them at its own pace.

Stressing that the government was determined to pull Nigeria out of recession, he said: “We are determined to bring succour to our people. The only way is by taking strong actions to change the current trajectory of the Nigerian economy.

“To get out of the recession and bring the country back on the path of growth, government must find the resources to spend on infrastructure, and to spend to reflate the economy.”

Minister of State for Budget and National Planning Zainab Ahmed also admitted that the Social Intervention Scheme, otherwise called N-Power jobs, piloted by the Federal Government had not performed well.

The programme, she said, encountered teething problems but the issues would be solved in the 2017 budget to meet the scheme’s objective.

Giving a background to the budget proposal earlier, Udoma said: “Global economic activities remained sluggish in 2016. In particular, global GDP growth rate is projected at 3.1% for 2016 from 3.2% in 2015. Due to:

(i)Lower-than-expected economic activity in the U.S, (ii) Uncertain economic, political and institutional implications of BREXIT (iii) Slowdown in China’s growth.
“(iv) Weak demand in advanced economies and its spill-over effects (v) Geopolitical tensions in several countries.”

In spite of the developments, he said that the outlook remained bright as global GDP growth rate is expected to rise to 3.4% in 2017.

The challenges in the domestic environment in 2016 included Crude oil production shut-ins resulting from vandalism of oil facilities, insurgency in parts of the Northeast, fuel shortages and increase in electricity tariffs, kerosene and PMS prices in the first half of the year and Foreign Exchange (FX) scarcity.

The factors, Udoma said, have constrained fiscal operations, real sector activities, and the external accounts.

Other challenges in the domestic economy include Contraction in growth (-2.24% in Q3), high unemployment rate (13.9% as at Q3), higher inflation rate (18.5% as at November 2016), pressures on foreign reserves ($25.04 billion as at 14th December), and slowdown in corporate sector, resulting in lower credit quality and rising non-performing loans.
Speaking on the Nigerian Economic Recovery and Growth Plan (NERGP), the minister said that a Medium Term Economic Recovery and Growth Plan (ERGP 2017 – 2020) was being finalised, which addresses the current economic challenges and is aimed at restoring growth.

“The plan builds on the existing Strategic Implementation Plan (SIP), and contains strategic objectives and enablers required to revive the economy.  The strategic objectives of the NERGP are: (i) Pulling the economy out of recession; (ii)Investing in our people (iii) Laying the foundation of diversified, inclusive and sustainable growth.”

On the approach to the Budget, he said: “The 2017 Budget is designed to expand partnership between public and private sectors, including development capital to leverage and catalyse resources for growth.

“Other key objectives of the 2017 Budget include: (i) focusing on critical on-going infrastructure projects such as roads, railways, power, ICT, etc., that have quick positive effects on the economy; (ii) utilising Special Economic Zones and Industrial Parks as vehicles to accelerate domestic economic activity for innovation and wealth creation; (iii) contributing to food security and creating platform for agro-business in agriculture supply chains through the Agriculture Green Alternative Plan; (iv) establishing a Social Housing Fund to deepen the mortgage system and expand its availability across all states of the Federation; (v) encouraging and stimulating the growth of small and medium scale industries for innovation, job creation, productivity and wealth creation; and (vi) providing social safety nets for poor and vulnerable Nigerians.”

The key assumptions and macro-framework for the 2017 Budget are: (i)Oil production – 2.2mbpd, (ii)Benchmark oil price – US$42.5/b, (iii)Exchange rate – N305/US$, (iv)Inflation rate- 15.74%, (v)GDP Growth Rate- 2.5%, (vi)Nominal Consumptio (N’trillion)- 87.95, (vii)Nominal GDP (N’trillion)-107.96
According to him, the Key Budgetary Reform Initiatives to improve the revenue base of the country include: (i) Subjecting the JV operations to a new funding mechanism, which will allow for Cost Recovery, (ii) Sustaining the use of TSA to monitor the financial activities of over 900 MDAs from a single platform; (iii) Broadening the tax base, improve effectiveness of revenue collecting agencies, improve tax compliance etc;
(iv) Reducing leakages by tacking trade mis-invoicing and introducing the single window to drive Customs efficiencies; (v) Improving the performance of independent revenue of government by ensuring that all MDAs (particularly revenue generating MDAs) present their budget in advance, and remit their operating surpluses as required by the FRA; (vi) Extension of the Integrated Personnel Payroll Information System (IPPIS) to all MDAs.
Giving an overview of the Revenue framework, Udoma said: “Based on the key assumptions and budgetary reform initiatives, the 2017 Budget envisages a total revenue of N4.94 trillion, exceeding FY 2016 projection by 28%. The Projected revenue receipt from oil is N1.985 trillion and Non-oil is N1.373 trillion.  The contribution of oil revenue is 40.2% compared to 19% in FY 2016 driven mainly by JVC cost reduction, higher price, exchange rate and additional oil related revenues.”

The largest recurrent allocations, according to him, are i. Ministry of Interior – N482.37bn; ii. Ministry of Education – N398.01 bn; iii. Ministry of Defence – N325.87 bn; iv. Ministry of Health – N252.86 bn.
“These four MDAs collectively take up about N1.46 trillion (about 70% of the combined provision for personnel and overhead). They have the largest share because of the size of their personnel. Some of the agencies and parastatals under these MDAs are yet to be captured on the Integrated Personnel Payroll Information System (IPPIS) platform.

“The sum of N2 billion has been provided in the 2017 Budget for the capturing to ensure all personnel that are not enrolled on the platform are captured.
Udoma said the Administration had allocated at least 30% of the Budget to Capital expenditure against 16% allocation in 2015.
“In dollar terms, the 2017 budget proposal (at $23.80bn) is lower than 2016 estimates ($30.76bn)… we have grown the size of the Budget from 4.7% in 2015 to 5.9% in 2016 and to 6.7% in 2017. Compared with South Africa (20.7%) and Ghana (19.2%) as at 2015, this is very low.  The ratio of capital spending in total increased from 16% in 2015 to 30% in 2016 and 30.7% in 2017.
“The increase in infrastructure spending is expected to enhance revenue generation opportunities and over time significantly reduce deficit,” Udoma said.