I am honoured and privileged to present the 2016 Budget proposal. This
is my first address before this joint session of the National Assembly. I
have come here today, not only to address members of the National
Assembly, but also to speak directly to the men and women who placed us
here.
2. I know the state of our economy is a
source of concern for many. This has been further worsened by the
unbridled corruption and security challenges we have faced in the last
few years. From those who have lost their jobs, to those young people
who have never had a job, to the people in the North East whose families
and businesses were destroyed by insurgents, this has been a difficult
period in our nation’s history, lessons that we must not forget or
ignore, as we plan for the future.
3. By June
2014, oil prices averaged $112 per barrel. But as at today, the price is
under $39 per barrel. This huge decline is having a painful effect on
our economy. Consumption has declined at all levels. In both the private
and public sectors, employers have struggled to meet their salary and
other employee related obligations. The small business owners and
traders have been particularly hard hit by this state of affairs.
4. Fellow Nigerians, the confidence of many might be shaken.
However, I stand before you today promising that we will secure our
country, rebuild our economy, and make the Federal Republic of Nigeria
stronger than it has ever been.
5. The answers to
our problems are not beyond us. They exist on our farmlands; our
corporations; in the universities in the hearts and minds of our
entrepreneurs; through the gallantry of our Armed Forces; and the
resolute spirit of Nigerians, especially the youth, who have refused to
give up despite all the obstacles confronting them.
6. This
Budget proposal, the first by our Government, seeks to stimulate the
economy, making it more competitive by focusing on infrastructural
development; delivering inclusive growth; and prioritizing the welfare
of Nigerians. We believe that this budget, while helping industry,
commerce and investment to pick up, will as a matter of urgency, address
the immediate problems of youth unemployment and the terrible living
conditions of the extremely poor and vulnerable Nigerians.
7. In the medium to longer term, we remain committed to economic
diversification through import substitution and export promotion. This
will build resilience in our economy. It will guarantee that the
problems we have today, will not confront our children and their
children. This shall be our legacy for generations to come.
2015: A Year of Global and Domestic Challenges
8. Today, it is widely acknowledged that the global economy has
slowed down. This is particularly the case with emerging markets such as
Nigeria. However, despite the weak emerging market growth rates, our
domestic security challenges, declining oil prices, and the attendant
difficulties in providing foreign exchange to meet market demands, the
Nigerian economy grew by 2.84% in the third quarter of 2015.
9. We have, and will continue to implement strategies that will
maintain macroeconomic stability and manage the oil price shocks we are
experiencing.
10. Upon the inauguration of this
administration on 29th May 2015, we engaged key stakeholders from
various sectors of our economy and interfaced with the heads of
Ministries, Departments and Agencies (MDAs) in order to understand the
true state of our nation. What we found prompted us to take certain
strategic decisions.
11. On the economy, we injected new
leadership at the helm of our revenue generating agencies including the
Federal Inland Revenue Service (FIRS), Nigerian National Petroleum
Corporation (NNPC), Nigerian Communications Commission (NCC), and the
Nigerian Customs Service (NCS). We implemented the Treasury Single
Account (TSA) which, so far, has provided greater visibility of
Government revenues and cash flows. We intervened to support States to
navigate their fiscal challenges by restructuring their commercial bank
loans and by providing facilities to enable them to pay salary arrears.
12. We have demonstrated a strong will to fight corruption. I am
sure you will agree that the sheer scale of corruption and impunity of
the past explains in part, the economic challenges we now face. On these
initiatives, and the many more to come, we shall not be deterred. We
will pursue the recovery of everything that belongs to the people of
Nigeria. No matter where it is hidden. No matter how long it will take.
2015 Budget Performance
13. Distinguished and honourable members of the National Assembly, I
now present a review of the 2015 Budget. That Budget was based on a
benchmark oil price of $53 per barrel, oil production of 2.28 million
barrels per day and an exchange rate of N190 to the US$.
14. The projected revenue was N3.45 trillion, with an outlay of
N4.49 trillion, implying a deficit of N1.04 trillion. Due largely to
under-provisioning by the previous administration for fuel subsidy and
the costs required to support the military operations in the North East,
the Government had to obtain National Assembly’s approval for a
supplementary budget of N575.5 billion. I take this opportunity to thank
all members of the National Assembly for the prompt passage of that
Bill.
2016: Budget Assumptions
15. After
reviewing the trends in the global oil industry, we have set a benchmark
price of $38 per barrel and a production estimate of 2.2 million
barrels per day for 2016. We have focused on non-oil revenues by
broadening our tax base and improving the effectiveness of our revenue
collecting agencies.
16. Also, with the full
implementation of the Treasury Single Account, we expect significant
improvements in the collection and remittance of independent revenues.
To further support the drive for increased remittances, we will ensure
that all MDAs present their budgets in advance, and remit their
operating surpluses as required by section 22 of the Fiscal
Responsibility Act.
17. We are determined to ensure
that our resources are managed prudently and utilized solely for the
public good. To set the proper tone, one of our early decisions was the
adoption of a zero based budgeting approach, which ensures that
resources are aligned with Government’s priorities and allocated
efficiently. This budgeting method, a clear departure from previous
budgeting activities, will optimize the impact of public expenditure.
18. In addition to the proper linkage of budgeting to strategic
planning, we are enhancing the utilization of the Government Integrated
Financial Management Information Systems (GIFMIS) to improve financial
management. The recently established Efficiency Unit is working across
MDAs to identify and eliminate wasteful spending, duplication and other
inefficiencies. We engaged costing experts to scrutinize the 2016 budget
proposals. They have already identified certain cost areas that can be
centralized for economies to be made.
19.
We have directed the extension of the Integrated Personnel Payroll
Information System (IPPIS) to all MDAs to reap its full benefits. We
will also strengthen the controls over our personnel and pension costs
with the imminent introduction of the Continuous Audit Process (CAP).
These initiatives will ensure personnel costs are reduced. Our
commitment to a lean and cost effective government remains a priority,
and the initiatives we are introducing will signal a fundamental change
in how Government spends public revenue.
2016: Laying the Foundation for Sustainable Growth
20. The 2016 budget, as outlined, is designed to ensure that we
revive our economy, deliver inclusive growth to Nigerians and create a
significant number of jobs.
21. We aim to ensure
macroeconomic stability by achieving a real GDP growth rate of 4.37% and
managing inflation. To achieve this, we will ensure the aligning of
fiscal, monetary, trade and industrial policies.
22.
As we focus on inclusive growth, we are conscious of the current rate of
unemployment and underemployment. This is a challenge we are determined
to meet; and this budget is the platform for putting more Nigerians to
work. I can assure you that this administration will have a job creation
focus in every aspect of the execution of this budget. Nigeria’s job
creation drive will be private sector led. We will encourage this by a
reduction in tax rates for smaller businesses as well as subsidized
funding for priority sectors such as agriculture and solid minerals.
23. As an emergency measure, to address the chronic shortage of
teachers in public schools across the country, we also will partner with
State and Local Governments to recruit, train and deploy 500,000
unemployed graduates and NCE holders. These graduate teachers will be
deployed to primary schools, thereby, enhancing the provision of basic
education especially in our rural areas.
24. We also
intend to partner with State and Local Governments to provide financial
training and loans to market women, traders and artisans, through their
cooperative societies. We believe that this segment of our society is
not only critical to our plan for growing small businesses, but it is
also an important platform to create jobs and provide opportunities for
entrepreneurs.
25. Furthermore, through the office
of the Vice President, we are working with various development partners
to design an implementable and transparent conditional cash transfer
program for the poorest and most vulnerable. This program will be
implemented in phases. Already, the compilation of registers of the
poorest persons is ongoing. In the coming weeks, we will present the
full programme, which will include our home-grown public primary school
feeding and free education for science, technology and education
students in our tertiary institutions. Indeed, this will mark a historic
milestone for us as a nation.
The 2016 Budget
26.
Distinguished members of the National Assembly, I now present, the 2016
Budget proposals of the Federal Government. Based on the assumptions I
presented earlier, we have proposed a budget of N6.08 trillion with a
revenue projection of N3.86 trillion resulting in a deficit of N2.22
trillion.
27. The deficit, which is equivalent to
2.16% of Nigeria’s GDP, will take our overall debt profile to 14% of our
GDP. This remains well within acceptable fiscal limits. Our deficit
will be financed by a combination of domestic borrowing of N984 billion,
and foreign borrowing of N900 billion totaling N1.84 trillion. Over the
medium term, we expect to increase revenues and reduce overheads, to
bring the fiscal deficit down to 1.3% of GDP by 2018.
28. In 2016, oil related revenues are expected to contribute N820
billion. Non-oil revenues, comprising Company Income Tax (CIT), Value
Added Tax (VAT), Customs and Excise duties, and Federation Account
levies, will contribute N1.45 trillion. Finally, by enforcing strict
compliance with the Fiscal Responsibility Act, 2007 and public
expenditure reforms in all MDAs, we have projected up to N1.51 trillion
from independent revenues.
29. Although we
are working to diversify our economy, we will not lose sight of the
need to restructure the oil and gas sector which has been marred by
corruption and plagued with inefficiencies. Accordingly, I have directed
the Petroleum Products Pricing Regulatory Agency (PPPRA) to adjust its
pricing template to reflect competitive and market driven components. We
believe this can lower input costs and attain efficiency savings that
will enable PPPRA to keep the selling price for all marketers of petrol
at N87 per liter for now.
30. The current fuel
scarcity with long queues at petrol stations all over the country
causing social dislocation is very unfortunate. Government profoundly
apologizes to Nigerians for this prolonged hardship and misery. It is as
a result of market speculators and resistance to change by some
stakeholders. Government is working very hard to end these shortages and
bring fuel to the pumps all over the country.
31.
I have also directed the NNPC to explore alternate funding models that
will enable us to honour our obligations in Joint Ventures (JVs) and
deep offshore fields. We are confident that these measures can be
achieved and will lower the burden that the traditional cash calls have
imposed on our budget and cash flows as well as contribute towards
shoring up our national reserves.
32.
To deliver our development objectives, we have increased the
capital expenditure portion of the budget from N557 billion in the 2015
budget to N1.8 trillion, in the 2016 budget. Distinguished and
honourable members of the National Assembly, for the first time in many
years, capital expenditure will represent 30% of our total budget. In
future years we intend to raise the percentage allocation for capital
expenditure.
33. This is a fulfillment of
our promise to align expenditure to our long-term objectives, and a sign
of government’s commitment to sustainable development. This increased
capital expenditure commits significant resources to critical sectors
such as Works, Power and Housing – N433.4 billion; Transport – N202.0
billion; Special Intervention Programs – N200.0 billion; Defence –
N134.6 billion; and Interior – N53.1 billion. These investments in
infrastructure and security are meant to support our reforms in the
Agriculture, Solid Minerals and other core job creating sectors of our
economy.
34. We will invest to safeguard lives and property.
35. We will invest in equipping our farmers with the right tools, technology and techniques.
36. We will invest in empowering and enabling our miners to operate in a safe, secure and humane environment.
37. We will invest in training our youths, through the revival of
our technical and vocational institutions, to ensure they are competent
enough to seize the opportunities that will arise from this economic
revival.
38. Indeed, the future looks bright. And I
ask that we all work together to make this vision a reality. The 223%
year on year growth in capital expenditure demonstrates our desire to
make Nigeria more competitive, and start the journey to deliver
sustainable development in our country.
39. In fulfillment of
our promise to run a lean government, we have proposed a 9% reduction
in non-debt recurrent expenditure, from N2.59 trillion in the 2015
Budget to N2.35 trillion in 2016. Furthermore, we have budgeted N300
billion for Special Intervention Programs, which takes the total amount
for non-debt recurrent expenditure to N2.65 trillion.
39. As I mentioned earlier, the Efficiency Unit set up by this
Administration together with effective implementation of GIFMIS and
IPPIS will drive a reduction of overheads by at least 7%, personnel
costs by 8% and other service wide votes by 19%. Distinguished and
honourable members, this budget will be executed to provide optimum
value by ensuring every naira spent by this Government, counts.
40. We will devote a significant portion of our recurrent
expenditure to institutions that provide critical government services.
We will spend N369.6 billion in Education; N294.5 billion in Defence;
N221.7 billion in Health and N145.3 billion in the Ministry of Interior.
This will ensure our teachers, armed forces personnel, doctors,
nurses, police men, fire fighters, prison service officers and many more
critical service providers are paid competitively and on time.
41. Distinguished and honourable members of the National Assembly,
our 2016 borrowings will be principally directed to fund our capital
projects. Furthermore, the sum of N113 billion will be set aside for a
Sinking Fund towards the retirement of maturing loans; while N1.36
trillion has been provided for foreign and domestic debt service. This
calls for prudent management on our part, both of the debt portfolio and
the deployment of our hard earned foreign exchange earnings.
42. I am aware of the problems many Nigerians currently have in
accessing foreign exchange for their various purposes – from our traders
and business operators who rely on imported inputs; to manufacturers
needing to import sophisticated equipment and spare parts; to our
airlines operators who need foreign exchange to meet their international
regulatory obligations; to the financial services sector and capital
markets who are key actors in the global arena.
43.
These are clearly due to the current inadequacies in the supply of
foreign exchange to Nigerians who need it. I am however assured by the
Governor of Central Bank that the Bank is currently fine-tuning its
foreign exchange management to introduce some flexibility and encourage
additional inflow of foreign currency to help ease the pressure.
44. We are carefully assessing our exchange rate regime keeping in
mind our willingness to attract foreign investors but at the same time,
managing and controlling inflation to level that will not harm the
average Nigerians. Nigeria is open for business. But the interest of all
Nigerians must be protected. Indeed, tough decisions will have to be
made. But this does not necessarily mean increasing the level of pain
already being experienced by most Nigerians.
45. So
to the investors, business owners and industrialists, we are aware of
your pains. To the farmers, traders and entrepreneurs, we also hear you.
The status quo cannot continue. The rent seeking will stop. The
artificial current demand will end. Our monetary, fiscal and social
development policies are aligned.
Conclusion
46. Mr. Senate President, Mr. Speaker, distinguished members of the
National Assembly, in spite of the global economic uncertainties; we
must remain steadfast in our commitment to steer this country back to
greatness.
47. The Nigerian economy needs to move
away from dependency on oil. Our growth must be inclusive. Nigerians
must be part of the growth story. As a Government, we shall deliver
security, jobs and infrastructure. This is the right of all Nigerians.
48. I know many people will say “I have heard this before”. Indeed,
trust in Government, due to the abuse and negligence of the past, is at
an all-time low. This means we must go back to basics. Our actions will
speak for us. My team of dedicated, committed and patriotic Nigerians
is well aware of the task ahead and I can assure you that we are taking
on the challenge.
49. We will not betray the trust reposed in us.
50. We will welcome and be responsive to your feedback and criticisms.
51. We are here to serve. And indeed, Nigerians will get the service they have longed for and which they rightly deserve.
52. We as a Government cannot do it alone. We will require the
support of all civil servants, the organized labour, industry groups,
the press and of course, our religious and traditional institutions.
This is a call for all of us to stand and serve our country.
53. This Budget represents a major step in delivering a new
opportunity for Nigeria. It demonstrates our confident optimism that
despite the challenging times, we have the will, resourcefulness and
commitment to deliver prosperity to our people. And by the Grace of
Almighty God and the sheer will and determination of the Nigerian
people, we will come out stronger and more united than ever.
54. Thank you and God bless the Federal Republic of Nigeria
