Nigeria’s Economic Recession, The 2017 Budget As The Magic Wand

Following our works in ensuring transparency, accountability and citizen engagement in governmental spending, I represented Connected Development (CODE) in the public presentation and breakdown of the 2017 budget. This was held on the 19th of December, 2016 at the Conference Hall of the State House, Abuja. The invitation was from the Honourable Minister of Budget and National Planning, Sen. Udoma Udo Udoma. The event was a postscript of the 2017 budget presentation to the National Assembly by President Muhammadu Buhari.

In the event, in which relevant governmental/non-governmental stakeholders were in attendance, Sen. Udoma took about 90 minutes to breakdown/present the lustrated ”Budget of Recovery and Growth.” He stated, “the budget reflects the government’s commitment to restore the economy on the path of sustainable and inclusive growth.” He started with a brief analysis of the performance of the 2016 budget. Highlights from the analysis showed that as at the Q3 of 2016, oil production was at 1.81 mbpd as against the predicted 2.2mbpd on the 2016 budget. The exchange rate was at N305/US$ as against the predicted N197/USD. In addition, GDP growth rate which was predicted at 4.3% was at -2.24%. Inflation which was predicted at 9.81% was at 17.85%. And ultimately, the government has only realized 75% of the 2016 budget revenue. A take home from his analysis is that poor performance of the 2016 budget, hugely contributed to the country’s economic recession and worsening macro-economic indicators.

In the breakdown of the 2017 budget, the Minister commented, ”the budget was designed to expand partnership between public and private sectors, including development capital to leverage and springboard resources for growth.” In sum, the budget intends to focus on infrastructural expansion, establishment of Special Economic Zones (SEZ), expansion of agriculture, encouraging the growth of small & medium industries, and providing a social safety net for poor Nigerians. The N7.298 trillion budget has key assumptions such as: oil production at 2.2mbpd, benchmark oil price at US$42.5/b, exchange rate at N305/US$, GDP Growth Rate at 2.5%. The 2017 budget envisages a total revenue of N4.94 trillion, exceeding that of 2016 by 28%. The projected revenue realisation from oil was N1.985 trillion and Non-oil, N1.373 trillion.

The capital expenditure was at N2.24 trillion (30.7%) with ”Ministries” such as Power, Works & Housing, Transportation, Special Intervention Programmes, Defence, Water Resources etc. taking N529 billion, N262 billion, N150 billion, N140 billion, N85 billion respectively.

While there in several initiatives on the 2017 budget, such as the recapitalization of the Banks of Industry and Agriculture by N15 billion, N50 billion for the establishment of SEZs and the benchmark oil price at US$42.5/b (if OPEC keeps on its esplanade of cutting down oil production), there are several key concerns that quickly comes to mind:

1). The problem has always been implementation crisis as well as lack of transparency, accountability and citizen engagement in governmental spending. We call for increased transparency and accountability in the budget’s implementation.

2). Participatory budgetary process in the preparation of the 2017 budget was very poorly implemented especially with respect to involving CSOs and leaders of local communities.

3). The performance of the 2016 budget still remains poor, most of its capital items are still at the contracting stage.

4). No. 3 leads to a key concern about how the government intends to manage the whole kerfuffle of the 2016 spill-over in 2017, with the weak coordination chain we are seeing now.

5). Planning the 2017 Fiscal Year on N305/US$ is quite unrealistic with several FOREX rates out there. The Central Bank should find a way to address the worsening FOREX crisis and harmonize the rates.

6). The 2.2mbpd oil production estimate might not be realized, following the continuing oil pipeline vandalisation in the Niger Delta which the government has not found a sustainable means to address.

7). The N2.2 trillion budgeted capital expenditure is still so nanoscopic to what is needed to stimulate the economy. The government must find a way of reversing the trend of having recurrent expenditure taking over almost 80% of the budget of several sectors.

8). While the government is preaching financial prudence, it’s quite paradoxical that several overhead items of the State House have increments on the average of 250% from their 2016 appropriations.

9). #FollowTheMoney team of CODE urgently await a part release of the performance of the 2016 budget performance, while we continue tracking the implementation of its capital items in rural communities.