Figures obtained from the Medium Term Expenditure Framework, MTEF have shown that there is a plan to distribute among the three tiers of government, N5.7 trillion for the 2016 fiscal year, reports LINUS OOTA.
The federal government has earmarked N500 billion for the implementation of its social security scheme for unemployed young graduates under the 2016-2017 Medium Term Expenditure Framework, MTEF and Fiscal Policy Strategy, FPS submitted to the National Assembly late last year.
The N500 billion projection comprises the amount to be spent on the government’s school feeding initiative as well as conditional cash transfers of N5, 000 to “the most vulnerable persons in the society”.
According to the MTEF, the scheme, which will commence in collaboration with state governments, will start as a pilot, following which the federal government will later seek the support of donor agencies.
“The federal government will collaborate with state governments to institute well-structured social welfare intervention programmes such as school feeding programme initiatives, conditional cash transfers to the most vulnerable and post-NYSC grant.
“N500 billion has been provisioned in the 2016 budget as social investment for these programmes.
“These interventions will start as a pilot scheme and work towards securing the support of donor agencies and our development partners in order to minimise potential risks,” the document stated.
The federal government also explained that in the future, a broader social welfare scheme would be created to cater for the larger population, which it said, would include the poorest and most vulnerable Nigerians “upon evidence of children’s enrolment in school and evidence of immunisation”.
The framework, according to the MTEF covers the period 2016 to 2017 and was sent to the National Assembly by President Muhammadu Buhari late last year for approval.
A breakdown of the N5.7 trillion shows that the sum of N4.3 trillion is being planned to be shared under statutory sources from the Federation Account, while the balance of N1.4 trillion is to be shared from the Value Added Tax (VAT) pool account.
From the N4.3 trillion, the fiscal strategy paper revealed that the federal government would get the sum of N2.2 trillion, representing 52.68 per cent; the 36 states of the federation, N1.14 trillion or 26.72 per cent of the total; while the 774 local government councils are to get N886.5 billion or 20.6 per cent.
For the VAT revenue of N1.4 trillion, the document states that the federal government is expected to get the sum of N212.4 billion or 15 per cent; the states, N708 billion or 50 per cent; while the local governments are to get the balance of N495.6 billion or 35 per cent.
The document also states that out of the N2.2 trillion allocated to the federal government from the federation account, the sum of N43 billion, representing one per cent, will go to the Federal Capital Territory; ecological and derivation, N43 billion; statutory stabilisation, N21.5 billion or 0.5 per cent; and development of natural resources, N72.3 billion or 1.68 per cent.
The persistent drop in the price of crude oil in the international market has impacted negatively on the nation’s revenue as the country recorded a shortfall of N1.27 trillion in gross federally collectible revenue in the first nine months of 2015.
Figures obtained from the Federal Ministry of Finance showed that the country earned a total sum of N3.35 trillion between January and September last year from oil and non-oil sources.
Based on the revenue framework, which was approved in the budget for the 2015 fiscal period, the federal government had projected to earn a monthly revenue of N513.69 billion from oil and non-oil sources.
When the N513.69bn is multiplied over a nine-month period, the Federal Government had expected to earn a total sum of N4.62 trillion as revenue.
However, owing to production shut-in occasioned by crude oil theft and pipeline vandalism, the country was only able to realise N3.35 trillion out of the projected figure, thus leaving a shortfall of N1.27 trillion for the nine-month period.
While the federal government had projected a monthly revenue of N513.69 billion, findings showed that the revenue generating agencies were unable to meet up with target in the first nine months of 2015.
The highest amount generated as revenue in the period was in June when the sum of N485.95 billion was earned from both mineral and non-mineral sources.
The N485.95 billion recorded in June represents a shortfall of N27.74 billion when compared with the budgeted revenue of N513.69 billion.
Further analysis showed that the actual receipt from mineral and non-mineral sources was N416.04 billion in January last year.
This represents a shortfall of N97.65 billion when compared with the targeted amount of N513.69 billion for the month of February, the sum of N401.46 billion was generated, indicating a decline of N112.23 billion compared to the budgeted amount of N513.69 billion
In the months of March, April and May 2015, the sums of N315.04 billion, N282.06 billion and N324.96 billion were received as gross federally collected revenue, indicating shortfall of N198.65 billion, N231.63 billion and N188.73 billion, respectively.
For July, August, and September, the amounts earned were N433.58 billion, N369.14bn and N321.99bn from both oil and non-oil sources, indicating a shortfall of N80.11 billion, N144.55 billion and N191.7 billion, respectively.
Some financial experts, who spoke to our correspondent on the issue of declining revenue, said there was a need for the government to urgently begin a readjustment of its fiscal position in a way that would enable it to generate more revenue from taxes.
The Director-General, Institute of Fiscal Studies of Nigeria, Mr. Godwin Ighedosa, said, “We have so much relied on oil revenue in the last 45 years and with the decline in oil revenue, the time has come now for us to review our fiscal position.
“We need a short-term fiscal adjustment, particularly in our budgeting system, by switching from a zero-based budgeting system to a performance-based budgeting system.
“There is a need for reform of the country’s tax administration system to enable the Federal Government to raise more revenue from Capital Gains Tax. Our tax to Gross Domestic Product ratio is one of the lowest in the world and we need to address that.”
Also, the Chief Executive Officer, Safmur Investments Limited, Mr. Rislanudeen Muhammad, said the fall in revenue was making the economy to become more fragile.
He said that while the economy was growing weaker by the day owing to vulnerabilities in the oil market, its external partners were beginning to have doubts about the potential in the economy.
Muhammad, a former Managing Director of Unity Bank Plc said, “We have done things wrong in the past because we should have saved a lot of money through the Excess Crude Account.
“That arrangement in the constitution that stipulates that any money generated must be shared is a major problem for Nigeria. We are not earning as much as we were earning. What the economy needs now is single digit interest rate and a little devaluation to allow for stability, support the GDP growth rate, employment and avoid recession.”