2018 BUDGET SPEECH: BUDGET OF CONSOLIDATION
Delivered by:
His Excellency, President Muhammadu Buhari
President, Federal Republic of Nigeria
At the Joint Session of the National Assembly, Abuja
Tuesday, 7TH of November 2017
PROTOCOLS
1. I
am here to present 2018 Budget Proposals.
Before presenting the Budget,
let me thank all of you Distinguished and Honourable Members of the
National Assembly, and indeed all Nigerians, for your support and
prayers for my full recovery while I was on medical vacation.
2. I
am very pleased to address this Joint Session of the National Assembly,
on the revenue and expenditure estimates, and related matters, of the
Federal Government of Nigeria for the 2018 fiscal year.
3. The
2018 Budget will consolidate on the achievements of previous budgets
and deliver on Nigeria’s Economic Recovery and Growth Plan (ERGP) 2018 –
2020.
OVERVIEW OF ECONOMIC DEVELOPMENTS IN 2017
4. 2017,
so far, has been a year of uncertainty on many fronts across the world.
Whether it is Brexit, the crisis in the Korean Peninsular, or indeed,
the political uncertainty in key oil producing nations of the Middle
East and South America, we can all agree that these developments have in
one way or another impacted Nigeria’s economic fortunes.
5. By
all accounts, 2018 is expected to be a year of better outcomes. The
tepid economic recovery is expected to pick up pace and the global
political terrain is expected to stabilize. The International Monetary
Fund (IMF) is anticipating global GDP growth of 3.7 percent in 2018.
Emerging markets and developing economies are expected to lead with GDP
growth of 4.9 percent, while advanced economies are projected to grow at
a slower rate of 2 percent.
6. Nigeria’s
journey out of the recent recession was a revealing one. We heard many
opinions from within and outside Nigeria on how best to address our
economic woes. We listened carefully and studied these proposals
diligently. Our belief has always been that the quickest and easiest
solution may not necessarily be the best solution for a nation as
diverse as ours. We took our time to create a balanced and equitable
response, keeping in mind that only tailored Nigerian solutions can fix
Nigeria’s unique problems.
7. And
from the recovery that we are seeing today, it is clear that we made
the right decisions. Distinguished and Honourable Members of the
National Assembly, I am now asking you to continue to support our
economic policies in order to consolidate and sustain on the success
achieved so far. We simply cannot go back.
8. In
the non-oil sector, crop production has been one of the main
contributors to non-oil growth, which rose to 0.45 percent in the second
quarter of this year. This was primarily driven by our ongoing
financial, capacity building and infrastructure development programs.
9. The
Ministry of Agriculture and Rural Development, working with development
partners and the private sector, have embarked on numerous capacity
building projects. We have also completed over 33,000 Hectares of
Irrigation Projects that have increased water availability in key food
producing states. We shall continue to intensify our interventions
through the Anchor Borrowers’ Programme and the Presidential Fertilizer
Initiative to ensure that this momentum is sustained. We have also made
provisions in the 2018 Budget to complete ongoing Irrigation Projects at
Ada, in Enugu State; Lower Anambra, in Anambra State; and Gari, in
Jigawa State. In 2017, many factories and projects in the food and
agricultural sectors were commissioned in Kebbi, Nasarawa, Kaduna,
Anambra, Edo, Jigawa, Rivers, Niger, Ogun and Ebonyi States, to mention a
few. This is a clear statement that our economic diversification and
inclusive growth ambitions are coming to fruition.
10. Significant
progress has also been made in the Solid Minerals development sector.
In Ondo State, for instance, work is ongoing to fully exploit the
bitumen resources to meet the 600,000 MTs of asphalt imported per annum
for roads and other construction projects. To consolidate on these
efforts, we have also established a 30 billion Naira Solid Minerals
Development Fund to support other minerals exploration activities across
the country.
11. In
the oil and gas sector, the relatively higher crude oil prices
supported our economic recovery. Our mutually beneficial engagement with
oil producing communities in the Niger Delta contributed immensely to
the recovery in oil production experienced in recent months. We would
like to thank the leadership and communities in the Niger-Delta for
their continued support and to also reiterate our assurances that this
Administration will continue to honour our commitments to them. We
cannot afford to go back to those dark days of insecurity and vandalism.
We all want a country that is safe, stable and secure for our families
and communities. This means we must all come together to address any
grievances through dialogue and peaceful engagement. Threats,
intimidation or violence are never the answer.
12. We
are working hard on the Ogoni Clean-up Project. During the year, we
engaged 8 international and local companies proposing different
technologies for the mandate. To enable us select the best and most
suitable technology for the remediation work, we asked each company to
conduct Demonstration Clean-up Exercises in the 4 Local Government Areas
of Ogoni Land. These Demonstrations were recently concluded and the
results are being studied by the Governing Council of the Ogoni Clean-up
Project. Although the Project will be funded by the International Oil
Companies, we have made provisions in the 2018 Budget for the costs of
oversight and governance, to ensure effective implementation.
13. On
the international front, I would like to thank our friends and partners
in the Joint OPEC / Non-OPEC Ministerial Monitoring Committee (JMMC)
who graciously granted Nigeria an exemption from the output cuts imposed
on OPEC Member Countries in January 2017. This exemption, which was
extended in September 2017, significantly helped during our most
challenging time. We shall continue our positive engagement with other
oil producing nations to ensure that the momentum generated is
sustained.
14. Permit
me, Mr. Senate President and Right Honourable Speaker, to state that
despite the downturn in oil prices and our challenging economic
circumstances, this Administration was able to invest an unprecedented
sum of over 1.2 trillion Naira in capital projects through the 2016
Budget. This is the highest ever in the history of this country. This is
a clear demonstration of our commitment to consolidate on our economic
diversification reforms and lay a stronger foundation for future growth
and development.
15. Our
Sovereign Wealth Fund, which was established in 2011 with US$1 billion,
did not receive additional investment for 4 years when oil prices were
as high as US$120 per barrel. However, despite record low oil prices,
this Administration was able to invest an additional US$500 million into
the Fund. This further demonstrates that in our struggle to have a
stable and secure nation today, we have not, and will not, lose sight of
the need to lay a solid foundation for the future prosperity of
successive generations.
16. We
have asked the Sovereign Wealth Fund to look inward and invest locally.
Some of the successes we are seeing today in the agricultural sector
are driven by this new investment approach by the Nigeria Sovereign
Investment Authority (NSIA). The NSIA also has a very strong pipeline of
local investments that will support our inclusive and diversified
economic growth plan.
17. Stability
has been restored to the foreign exchange market due to the
interventions by the Central Bank of Nigeria to improve access to
liquidity, discourage currency speculation and increase net foreign
exchange inflows. As at the 30th of October, 2017, our
external reserves had increased to US$34bn. This stability has supported
our efforts to provide the enabling environment and interventions
needed to empower Micro, Small and Medium-Sized enterprises, investors,
manufacturers and exporters, to sustain and in some cases, grow their
operations. Indeed, by the second quarter of 2017, exports significantly
outpaced imports, resulting in a trade surplus of 506.5 billion Naira.
Ease of Doing Business Reforms
18. One
of the targets we set for gauging our progress in creating an enabling
environment for business was to achieve a positive movement in the World
Ease of Doing Business Index. You would recall Nigeria experienced a
decade-long decline in this ranking. In 2008, Nigeria was ranked 120th. By 2015, our situation had deteriorated to 169th
of the 189 countries surveyed. Our very simple, logical and
user-friendly reforms are reversing this trend. A recently released
World Bank business ranking report announced that Nigeria had moved 24
places to 145th position in 2017. I am delighted that we have
met and even surpassed our target of moving at least 20 paces up this
global ranking. The same World Bank report also stated that Nigeria is
among the top 10 reforming countries in the world.
19. To
ensure these reforms are institutionalized, Executive Order Number #1
on the Promotion of Transparency and Efficiency in the Business
Environment was issued in May 2017. The Order contained measures that
ease the process of business registration, approval of permits, granting
visas and streamlining port operations. We are committed to continuing
and accelerating the Ease of Doing Business reforms, which are critical
to attracting new investments, growing the economy and creating jobs for
our people.
Improved Tax Administration
20. Although
the economy is diversified with non-oil Sector accounting for over 90
percent of total Nominal GDP, the Government’s revenues are not as
diversified yet. Our Tax-to-GDP ratio of about 6% is one of the lowest
in the world.
This situation is not consistent with our goal of having a
diversified, sustainable and inclusive economy. Accordingly, we are
stepping up efforts to ensure all taxable Nigerians comply with the
legal requirement to declare income from all sources and remit taxes due
to the appropriate authorities.
21. Already, we have introduced the Voluntary Assets and Income Declaration Scheme (VAIDS) on the 1st
of July, 2017. The Scheme provides non-compliant taxpayers with a
nine-month window to regularise their tax status relating to historical
periods. In return, overdue interest and penalties will be forgiven. In
addition, no investigations or criminal charges will be brought against
participating taxpayers. We expect that this Scheme will widen the tax
net for both the Federal and State Governments. I am therefore, asking
all Nigerians to seize this opportunity and do right thing. Let us not
shy away from our duty to build a better Nigeria.
Optimising Efficiency in Expenditure
22. In
2016 this Administration adopted a policy of allocating at least 30
percent of our annual budget to capital expenditure. This was entrenched
in the ERGP to unlock further growth in the
economy. This tradition was maintained in the 2017 Budget and has been
reflected in the proposal for 2018, in which 30.8 percent of total
expenditure has been set aside for the capital vote.
23. To
support these efforts, you would recall that an Efficiency Unit was set
up under the Federal Ministry of Finance to reduce wastage, plug
leakages and foster greater fiscal transparency. We have intensified the
implementation of the Integrated Payroll and Personnel Information
System (IPPIS) across government MDAs to automate personnel records and
salaries’ payment process, with the goal of eliminating ghost workers. 461
Federal MDAs have been captured on the system, so far. Our target is to
enroll all MDAs. I have directed the military and other security
agencies to ensure total compliance without further delay.
Increased Investment in Infrastructure
24.
Mr. Senate President, and the Right Honourable Speaker, we shall
continue to develop our infrastructure across the country. Although a
lot of progress has been made, the huge contractor liabilities we
inherited have adversely impacted our infrastructure development
timetable. Indeed, contractors were owed trillions of Naira when this
Administration came into office. In some areas, we have made payments so
projects may be completed; while in others, we are reconciling the
liabilities to identify and settle legitimate claims. As a responsible
and accountable Administration, we decided that clearing this backlog
was an important priority.
25.
For instance, at the outset of this Administration in 2015, the Abuja
Metro-Rail Project, which began in 2007 was only 50% completed, after 8
years. Today, in just 18 months, we have pushed the project to 98%
completion. This was achieved as the Nigerian Government was diligently
able to meet its counterpart funding obligations for the Chinese loans.
26.
We have also continued work on key strategic Roads. Over 766 kilometres
of roads were constructed or rehabilitated across the country in 2017.
For instance, work is at various stages of completion on these strategic
roads with immense socio-economic benefits:
a. Rehabilitation of Ilorin-Jebba-Mokwa-Birnin- Gwari-Kaduna Road;
b. Dualization of Oyo-Ogbomosho-Ilorin Road;
c. Rehabilitation of Gombe-Numan-Yola Road;
d. Dualization of Kano-Maiduguri Road;
e. Rehabilitation of Sokoto-Tambuwal-Jega Road and Kotangora-Makera Road that transverse Sokoto, Kebbi and Niger States;
f. Rehabilitation and Reconstruction of Enugu-Port-Harcourt Road;
g. Rehabilitation of Enugu-Onitsha Dual Carriageway Road;
h. Rehabilitation of Aleshi-Ugep Road and the Iyamoyun-Ugep Section in Cross River State;
i. Rehabilitation, Reconstruction and Expansion of Lagos-Ibadan Dual Carriageway Road;
j. Construction of Loko-Oweto Bridge over River Benue in Nasarawa and Benue States; and
k. Construction Gokanni Bridge along Tegina-Mokwa-Jebba Road in Niger State.
27. Under
the Federal Roads Development Programme, we recently completed a Data
Collection Exercise on the 7,000km Federal Road Network which was funded
by the World Bank.
This information is enabling us to make informed
decisions regarding the planning, budgeting and management of the
Federal Road Network. Going forward, we will be working based on facts
rather than subjectivity.
28.
Furthermore, we have also invested a lot of time and effort in
identifying alternative means of funding new projects. For example, the
recent 100 billion Naira Sukuk Financing will cater specifically for the
development of 25 roads across the country. We also developed different
structures that empower private investors to contribute to the
development of roads of significant national importance. Already, we are
seeing results. For example:
a. The
Bonny-Bodo Road is being jointly funded by the Federal Government and
Nigeria LNG Limited. This project was conceived decades ago but it was
abandoned. This Administration restarted the project and when completed,
it will enable road transportation access for key communities in the
Niger- Delta region; and
b. The Apapa Wharf-Toll Gate Road in Lagos State is also being constructed by private sector investors in exchange for tax credits.
29.
Distinguished Members of the National Assembly, our Power Sector
Reforms still remain a work in progress. Although we have increased
generation capacity significantly, we still have challenges with the
Transmission and Distribution Networks. That said, I am pleased to
announce that since 2015, the Transmission Company of Nigeria (TCN) and
Niger-Delta Power Holding Company (NDPHC) have added 1,950 MVA of
330-132kV transformer capacity at 10 Transmission stations, as well as
2,930 MVA of 132-33kV transformer capacity to 42 substations nationwide.
With these additions, the Transmission Network today can handle up to
7,000 Mega Watts (MW).
30.
The key bottleneck now is the Distribution Network where the
substations cannot take more than 5,000 MW. This is constraining power
delivery to consumers. We are working with the privatized Distribution
Companies to see how to overcome this challenge. Nigerians should be
rest assured that this Administration is doing all it can to alleviate
the embarrassing power situation in this country.
31.
Furthermore, to sustain the continued expansion of generation capacity
and enhance evacuation, we approved a Payment Assurance Guarantee Scheme
which enabled the Nigerian Bulk Electricity Trader (NBET) to raise 701
billion Naira. This assures the Generation Companies of up to 80%
payment on their invoices. This intervention has brought confidence back
into the sector and we expect additional investment to flow through,
particularly in the gas production sector.
32.
Distinguished Members of the National Assembly, this Administration is
committed to the development of Green Alternative Energy Sources. To
date, we have signed Power Purchase Agreements (PPA) with 14 solar
companies. We also approved:
a. The completion of the 10 MW Wind Farm in Katsina State, a project that was abandoned since 2012; and
b. The concession of 6 small hydro-electric power plants with a total capacity of 50 MW.
33.
To enable the successful take-off of these, and future Green Projects, I
am pleased to inform this Distinguished Assembly that the Federal
Government will be launching the first African Sovereign Green Bond in
December 2017. The bond will be used to finance renewable energy
projects. We are very excited about this development as it will go a
long way in solving many of our energy challenges, especially in the
hinterland.
34.
On Rail, we recently received 2 additional locomotives and 10 standard
gauge coaches for the Abuja-Kaduna Rail Line. These will be deployed for
the new non-stop express service between the two cities that will only
take one hour and fifteen minutes. This new service will complement the
existing service currently in place. We plan to commission this by
December 2017.
35.
We have also kick-started the abandoned Itakpe-Ajaokuta-Warri Rail
Line. This project has been on for over 17 years. We had to take some
drastic measures but I am pleased to announce that work is ongoing and
we expect to commission this service by September 2018. This service
will start with 7 standard gauge coaches.
36. The
situation at the Apapa port complex is a top priority for this
Administration. The delays due to congestion and their adverse impact on
business operations and costs is a key concern to our Government. As I
mentioned earlier, we are partnering with the private sector to fix the
road. We shall do the right thing considering. We will not cut corners.
37.
In addition to the road, we have also commenced the extension of the
Lagos-Ibadan Standard Gauge Rail Line to connect Apapa and Tin Can Port
Complexes. This project will significantly ease the congestion at the
ports and enhance both export and import operations. This project shall
be completed by December 2018. Already, working with the private sector,
we have repaired the Apapa Port Narrow Gauge Line which is currently
being used to evacuate goods from the port, thereby easing congestion.
38. As
we all know, sometimes doing the right thing takes time and requires
sacrifices. I am therefore appealing to all stakeholders to work with us
in ensuring we deliver a solution that we will all be proud of.
39.
Certainly, the infrastructure requirement to reposition Nigeria for the
future is huge and our resources are limited. Government, therefore,
will pursue private partnerships to maximise available capital and
developmental impact. In the next fiscal year, we will also establish 7
tertiary health institutions across the country through partnership with
our Sovereign Wealth Fund and other private sector investors.
Agricultural Development
40.
The agricultural sector played a crucial role in Nigeria’s exit from
recession. Today, it remains the largest employer of labour and holds
significant potential to realise our vision of repositioning Nigeria as a
food secured nation.
41.
We will consolidate on existing policies and develop new ones to ensure
the numerous value chain challenges in the agricultural sector are
addressed.
As I mentioned earlier, several investors have deployed
significant capital in the production and processing of rice, sugar,
maize, soya, cassava, yams, tomato, oil palm, rubber and poultry, to
mention a few. We are also seeing increased investment in the
agro-inputs manufacturing sector such as fertilisers.
42.
We are determined to protect these investments and encourage more. Food
Security is an important aspect of this Administration’s National
Security agenda. Any person involved in smuggling of food items is a
threat to our National Security and will therefore be dealt with
accordingly. A Committee chaired by the Vice President is working on
this matter. A key part of their work will be the reactivation of the
Badagry Agreement signed between Nigeria and the Republic of Benin in
2003. This agreement, which was abandoned by previous Administrations,
established a mutually beneficial framework for the two neighbours and
allies to partner in tackling smuggling and other cross border crimes. I
would like to assure investors in the agricultural value chain that the
menace of smuggling will be handled decisively.
43.
To further support investors and State Governments, we will accelerate
the establishment of at least 6 Staple Crop Processing Zones, in the
first phase. This initiative will develop infrastructure for the
production, processing and storage of strategic commodities. The focus
is on backward integration for grains, horticulture, livestock,
fisheries and sugar; as well as exportable commodities such as cocoa,
cassava and oil palms.
Health Sector Developments
44.
During 2017, the country had a number of disease outbreaks such as
Meningitis, Yellow Fever, Monkey Pox and Lassa Fever. I would like to
commend the Federal and State Ministries of Health for their selfless
service and timely responses to contain these outbreaks. I would also
like to thank the World Health Organisation, the Global Fund and UNICEF,
for their continued support during these trying times. This
collaboration was a key factor in the low mortality rates experienced.
To further improve our response to such outbreaks, we are working to
upgrade our Integrated Disease Surveillance and Response System. This
will further enhance the efficiency of our diagnostic and clinical
management processes.
45.
In this respect, I urge this Distinguished House to expedite the
passage of the Bill for the Nigeria Centre for Disease Control to enable
us consolidate on the successes recorded to date.
Implementing the Social Investment Program
46.
I am pleased to inform you that we have recorded tremendous success in
the implementation of the Federal Government’s Social Investment
Program. Specifically,
a. Over 4.5 million Primary 1 to Primary 3 pupils in public schools are being fed under the School Feeding programme;
b. Over 200,000 unemployed graduates have been employed under the N-Power Scheme in education, health and agricultural sectors;
c. Over
250,000 enterprises have benefitted from the sum of 12.5 billion Naira,
which has been disbursed to entrepreneurs to expand their businesses;
and
d. Over 110,000 households are currently benefitting from the Conditional Cash Transfer programme across the country.
PERFORMANCE OF THE 2017 BUDGET
47. The
2017 Budget of Recovery and Growth was based on a benchmark oil price
of US$44.5 per barrel, oil production of 2.2 million barrels per day,
and a Naira-to-US Dollar Exchange Rate of 305. Based on these
assumptions, total revenue of 5.084 trillion Naira was projected to fund aggregate expenditure of 7.441 trillion Naira. A projected fiscal deficit of 2.356 trillion Naira was to be financed mainly by domestic and external borrowing.
48. On revenue performance, collections were 14 percent below target as of September 2017, mainly due to the shortfall in non-oil revenues.
49. A key revenue shortfall was from Independent Revenues; only 155.14 billion Naira was remitted by September 2017 as against the projected pro-rated sum of 605.87 billion Naira. This represents a 74 percent shortfall, which is very disappointing.
50. This
recurring issue of under-remittance of operating surpluses by State
Owned Entities is absolutely unacceptable. You will all recall that in
September 2017, the Joint Admissions and Matriculation Board
(JAMB) announced that they were ready to remit 7.8 billion Naira back
to the Government. The shocking discovery was that in the last decades,
JAMB only remitted an aggregate of 51 million Naira. This clearly
illustrates the abuses that occur in State Owned Entities as well as
their potential for increased Independent Revenues, if only people would
do the right thing. We all need to play our role to ensure the right
thing is done. I would also like to remind Nigerians that the Whistle
Blower lines are still open.
51. Accordingly,
I have directed the Economic Management Team (EMT) to review the fiscal
profiles of these agencies, to ensure strict compliance with the
applicable Executive Orders and Financial Regulations. There may be a
need to consider a review of the Fiscal Responsibility Act and the
Executive will be approaching the National Assembly on this issue in due
course.
52. On the expenditure side, a total of 450 billion Naira of the capital vote had been released as
at the end of October 2017. With your support for our funding plan, our
target is to release up to 50% of the capital vote for MDAs by the
year’s end. We have prioritised payments of our counterpart obligations
on our concessionary loans, as well as funding of critical
infrastructure and other projects with socio-economic benefits.
Furthermore, MDAs have made provisions to carry over to the 2018 Budget,
capital projects that are not likely to be fully funded by year-end
2017, to ensure project continuity.
53. Regrettably,
the late passage of the 2017 Budget has significantly constrained
budget implementation. As you are aware, the 1999 Constitution
authorized necessary Federal Government expenditures prior to the 12th
of June, 2017 when the 2017 Appropriation Act was signed into law. This
year, we have worked very hard to achieve an earlier submission of the
Medium-term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP),
and the 2018 Appropriation Bill. Our efforts were to avail the National
Assembly with sufficient time to perform its important duty of passing
the Appropriation Bill into law, hopefully by the 1st of
January, 2018. It is in this spirit that I solicit the cooperation of
the Legislature in our efforts to return to a more predictable budget
cycle that runs from January to December.
PRIORITIES FOR THE 2018 BUDGET OF CONSOLIDATION
54. The 2018 Budget Proposals are for a Budget of Consolidation.
Our principal objective will be to reinforce and build on our recent
accomplishments. Specifically, we will sustain the reflationary policies
of our past two budgets. In this regard, the key parameters and
assumptions for the 2018 Budget are as set out in the 2018-2020 Medium
Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP). These
include:
a. Benchmark oil price benchmark of US$45 per barrel;
b. Oil production estimate of 2.3 million barrels per day, including condensates;
c. Exchange rate of N305/US$ for 2018;
d. Real GDP growth of 3.5 percent; and
e. Inflation Rate of 12.4 percent.
Federally-Collectible Revenue Estimates
55. Based
on the above fiscal assumptions and parameters, total
federally-collectible revenue is estimated at 11.983 trillion Naira in
2018. Thus, the three tiers of Government shall receive about 12 percent
more revenues in 2018 than the 2017 estimate. Of the amount, the sum of
6.387 trillion Naira is expected to be realised from oil and gas
sources. Total receipts from the non-oil sector are projected at 5.597
trillion Naira.
Federal Government Revenue Estimates
56. The Federal Government’s estimated total revenue is 6.607 trillion Naira in 2018, which is about 30
percent more than the 2017 target. As we pursue our goal of revenue
diversification, non-oil revenues will become a larger share of total
revenues. In 2018, we project oil revenues of 2.442 trillion Naira, and non-oil as well as other revenues of 4.165 trillion Naira.
57. Non-oil and other revenue sources of 4.165
trillion Naira, include several items including: Share of Companies
Income Tax (CIT) of 794.7 billion Naira, share of Value Added Tax (VAT)
of 207.9 billion Naira, Customs & Excise Receipts of 324.9 billion
Naira, FGN Independently Generated Revenues (IGR) of 847.9 billion Naira, FGN’s Share of Tax Amnesty Income of 87.8 billion Naira, and various recoveries of 512.4
billion Naira, 710 billion Naira as proceeds from the restructuring of
government’s equity in Joint Ventures and other sundry incomes of 678.4
billion Naira.
Proposed Expenditure for 2018
58. A total expenditure of 8.612 trillion Naira is proposed for 2018. This is a nominal increase of 16 percent above the 2017 Budget estimate. In keeping with our policy, 30.8 percent (or 2.652
trillion Naira) of aggregate expenditure (inclusive of capital in
Statutory Transfers) has been allocated to the capital budget.
59. We expect our fiscal operations to result in a deficit of 2.005
trillion Naira or 1.77 percent of GDP. This reduction is in line with
our plans under the ERGP to progressively reduce deficit and borrowings.
60. We plan to finance the deficit partly by new borrowings estimated at 1.699
trillion Naira. Fifty percent of this borrowing will be sourced
externally, whilst the balance will be sourced domestically. The balance
of the deficit of 306 billion Naira is to be financed from proceeds of
privatisation of some non-oil assets by the Bureau of Public Enterprises (BPE).
61. The proposed 8.612 trillion Naira of 2018 Aggregate Expenditure comprises:
a. Recurrent Costs of N3.494 trillion;
b. Debt Service of N2.014 trillion;
c. Statutory Transfers of about N456 billion;
d. Sinking Fund of N220 billion (to retire maturing bond to Local Contractors);
e. Capital Expenditure of N2.428 trillion (excluding the capital component of Statutory Transfers).
62. 456.46
billion Naira was provided in the 2018 Budget for Statutory Transfers.
The 5 percent increase over last year’s provision is mainly due to
increases in transfer to Niger Delta Development Commission (NDDC) and
the Universal Basic Education Commission (UBEC), which are related
directly to the size of oil revenue.
Debt Restructuring
63. We
are closely monitoring our debt service to revenue ratio. We shall
address this ratio through our non-oil revenue-generation drive and
restructuring of the existing debt portfolio. Presently, domestic debt
accounts for about 79 percent of the total debt. Our medium-term
strategy is to reduce the proportion of our domestic debt to 60% by the
end of 2019 and increase external debt to 40 percent. It is noteworthy
that rebalancing our debt portfolio will enhance private sector access
to domestic credit. In addition, annual debt service costs will reduce
as external debts are serviced at lower rates and repaid over a longer
period than domestic debt.
Recurrent Expenditure
64. A
substantial part of the recurrent cost proposal for 2018 is for the
payment of salaries and overheads in key Ministries providing critical
public services such as:
a. N510.87 billion for Interior;
b. N435.01 billion for Education;
c. N422.43 billion for Defence; and
d. N269.34 billion for Health.
The allocation to these Ministries represent significant increases over votes in previous budgets.
Personnel Costs
65. Personnel costs is projected to rise by 12 percent in 2018. Although we have made substantial savings by registering MDAs on the Integrated Personnel Payroll Information System (IPPIS) platform,
the increase is mainly due to provision for staff promotion arrears,
and recruitments by the Military, Police Force and para-military
agencies. Furthermore, I have directed
agencies are not to embark on any fresh recruitment unless they have
obtained all the requisite approvals. Any breach of this directive will
be severely sanctioned.
Overhead Costs
66. Overhead
costs is projected to rise by 26 billion Naira in 2018, a modest
increase of about 12 percent reflecting inflationary adjustments. MDAs
are required to adhere to government regulations regarding cost control.
Capital Expenditure
67. To
consolidate on the momentum of the 2017 Budget’s implementation, many
ongoing capital projects have been provided for in the 2018 Budget.
This
is in line with our commitment to appropriately fund ongoing capital
projects to completion. By allocating 30.8
percent of the 2018 Budget to capital expenditure, the Federal
Government is also demonstrating its strong commitment to investing in
critical infrastructure capable of spurring growth and creating jobs in
the Nigerian economy.
a. Power, Works and Housing: N555.88 billion;
b. Transportation: N263.10 billion;
c. Special Intervention Programmes: N150.00 billion;
d. Defence: N145.00 billion;
e. Agriculture and Rural Development N118.98 billion;
f. Water Resources: N95.11 billion;
g. Industry, Trade and Investment: N82.92 billion;
h. Interior: N63.26 billion;
i. Education N61.73 billion;
j. Universal Basic Education Commission: N109.06 billion;
k. Health: N71.11 billion;
l. Federal Capital Territory: N40.30 billion;
m. Zonal Intervention Projects N100.00 billion;
n. North East Intervention Fund N45.00 billion;
o. Niger Delta Ministry: N53.89 billion; and
p. Niger Delta Development Commission: N71.20 billion.
69. As
I had previously indicated, we aim to consolidate on our achievements
in 2017. We shall meet our counterpart funding obligations. We shall
complete all ongoing projects. And we shall carry forward all strategic
projects that were budgeted for but which we were unable to kick start
due to liquidity challenges, late passage of the budget, prolonged
contractual negotiations, and other matters.
70. Specifically,
I would like to bring your attention to the following key projects and
programmes that we are determined to implement in 2018:
a. N9.8 billion for the Mambilla hydro power project, including N8.5 billion as counterpart funding;
b. N12 billion counterpart funding for earmarked transmission lines and substations;
c. N35.41 billion for the National Housing Programme;
d. N10.00 billion for the 2nd Niger Bridge; and
e. About N300 billion for the construction and rehabilitation of the strategic roads mentioned earlier.
Consolidating on the Social Intervention Programme
71. This
Administration remains committed to pursuing a gender-sensitive,
pro-poor and inclusive growth. We are keenly interested in catering for
the most vulnerable. Accordingly, we have retained the 500 billion Naira allocation to the Social Intervention Programme. Under the programme, 100 billion Naira has been set aside for the Social Housing Programme.
72. Government
will also continue to implement the Conditional Cash Transfer (CCT)
programme, as well as the National Home-Grown School Feeding programme
in 2018. These initiatives are already creating jobs and economic
opportunity for local farmers and cooks, providing funding to artisans,
traders and youths, as well as supporting small businesses with business
education and mentoring.
Regional Spending Priorities for Peace, Security and Development
73. To
maintain peace and security in the Niger Delta for economic and social
activities to thrive, the provision of 65 billion Naira for the
Presidential Amnesty Programme has been retained in the 2018 Budget. In
addition, the capital provision for the Ministry of Niger Delta has been
increased to 53.89 billion Naira from the 34.20 billion Naira provided
in 2017. This is to further support the development in the region. We
will complete all critical projects, including the East-West Road, which
has a provision of about 17.32 billion Naira in 2018.
74. Across
the nation, and particularly in the North East region, our commitment
to the security of life and property remains absolute. We will ensure
that our gallant men and women in arms are properly equipped and
well-motivated. The result of our efforts is evident in the gradual
return to normalcy in the North East. It is in this spirit that I
recently assented to the North-East Development Commission Bill that was
passed by this Distinguished House. We expect that this development
will consolidate on our ongoing efforts to combat insurgency,
reintegrate Internally Displaced Persons and rebuild communities in the
North East Region, which have been adversely affected by the insurgency.
75. Similar
attention is being given to efforts to reduce violent crime across the
country.
The Nigerian Army was recently deployed to combat the growing
scourges of cattle rustling and banditry that have plagued our
communities in Kaduna, Niger, Kebbi, Katsina and Zamfara States. We will
also continue to arrest the incidence of Armed Robbery, Kidnapping and
other Violent Crimes across our nation.
76. We
have also increased our focus on cyber-crimes and the abuse of
technology through hate speech and other divisive material that is being
propagated on social media. Whilst we uphold the Constitutional rights
of our people to freedom of expression and association, where the
purported exercise of these rights infringes on the liberties of other
citizens or threatens to undermine our National Security, we will take
firm and decisive action.
77. In
this regard, I reiterate my call for Nigerians to exercise restraint,
tolerance and mutual respect in airing any grievances and frustrations.
Whilst the ongoing national discourse on various political issues is
healthy and welcome, we must not forget the lessons of our past. I trust
that the vast majority of our people would rather tread the path of
peace and prosperity, as we continue to uphold and cherish our Unity in
Diversity.
CONCLUSION
78. Distinguished
and Honourable Members of the National Assembly, you will recall that
in my 2017 Budget Speech, I promised a new era for Nigeria and an end to
the old ways of overdependence on oil revenues. The statistics and
initiatives I mentioned clearly show that this new era has come and the
old Nigeria is surely disappearing. We must, therefore, all work
together to protect and sustain this CHANGE to create a new Nigeria:
a. A Nigeria that feeds itself;
b. A Nigeria that optimally utilizes its resources;
c. A Nigeria with a diversified, sustainable and inclusive economy.
79. Mr.
Senate President, Mr. Speaker, Distinguished and Honourable Members of
the National Assembly, this speech would be incomplete without
commending the immense, patriotic and collaborative support of the
National Assembly in the effort to move our great nation forward. I wish
to assure you of the strong commitment of the Executive branch to
deepen the relationship with the Legislature.
80. Nigeria
is currently emerging from a very difficult economic period. If we all
cooperate, and support one another, we can consolidate on our exit from
the recession and firmly position Nigeria for economic prosperity. All
the projects presented within this Budget have been carefully selected
and subjected to extensive consultations and stakeholder engagements. As
a Government, we are determined to bring succour to our people, improve
their lives, and deliver on our promises to them. 2018 is a crucial
year as we strive to ensure that we consolidate our successes and
institutionalize the policies and practices that drove this turnaround.
81. I appeal to you to swiftly consider and pass the 2018 Appropriation Bill.
82. It
is therefore with great pleasure and a deep sense of responsibility,
that I lay before this Distinguished Joint Session of the National
Assembly, the 2018 Budget Proposals of the Federal Government of
Nigeria.
83. I thank you most sincerely for your attention.
84. May God bless the Federal Republic of Nigeria.
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