The National Assembly, (Senate and House of Representatives) recently passed into law the 2016 budget of N6.06 trillion. The amount is N17 billion less than the N6.07 trillion presented to them last year by President Muhammadu Buhari.
That the budget was eventually passed into law is a thing of gratitude, given the avalanche of issues that trailed the budget from the day it was presented. First was that of fake copy in circulation with allegation that the original version was smuggled out of the chambers Second, was another allegation of budget padding by Ministries, Departments and Agencies, MDAs, of government. These things were not denied by the presidency as some top civil servants including the then Director-General of the Budget Office were sanctioned for negligence of duty.
On Tuesday, December 22, 2015, Buhari presented before a Joint Session of the National Assembly, a total budget estimate of N6, 077,680,000,000. Of the total sum presented by Buhari, N351,270,000,000 is for statutory transfers, N1, 475,320,000,000 is for Debt Service, N2,648,600,000,000 is for recurrent(non-debt), while N1,845,540,000,000, inclusive of N157,150,000,000 Capital expenditure in Statutory Transfers and N86,000,000,000 as interest on Capitalised Loans, is for contribution to the Development Fund for Capital Expenditure for the year ending 31st day of December, 2016.
Highlight of the N6.06trillion budget include: N2.6trn for recurrent expenditure, N1.5trn for capital expenditure, N2.2trillion fiscal deficit, $38 per barrel oil price bench mark, 2.2million barrels of oil production per day, exchange rate of N197 to a US dollar and deficit GDP of 2.14 per cent and N500billion Intervention fund. Also N351bn is voted for statutory transfers and N1.4trn for debt service. The N17 billion reduction in the aggregate expenditure of the budget was taken from overhead votes component of the N2.65 trillion recurrent expenditure of the budget which was reduced to N2.646 trillion.
Passing the budget into law is not the major problem associated with our national budgets. One problem we have in our budgeting system, especially with the ministries, departments and agencies, is that they focus more on what they will spend, forgetting how to generate the money. In spite of the present situation, the budget is still realisable. Our focus in this country is always on what we are going to spend and not what we are to contribute. As it were, no ministry, agency or even state has business development department which, to me, means that they are not in business but are expecting what will come from the centre. There are lots of problems associated with this year’s budget. The 2015 budget was around N4 trillion but this year, it jumped to over N6 trillion. The question is: what are you using the money for? Is it capital projects or expenditure? The truth is that nobody can trust the figures in the budget and this became evident during the defence in the national assembly.
Also, we were told that zero-based budgeting was used for the preparation of the budget but it was not perfectly done. When looked at critically, you will know that zero-based budgeting was not employed in preparing the budget. They just had the intention and if it was used, they never got it right. However, zero-based budgeting is an arduous process because it demands a lot of time as you have to justify every item you put into it. You equally need to re-orientate the people that will prepare the budget, but how many of the officials in the budget office have ever practiced zero-based budgeting? The lack of the experts who would prepare it was the reason they ran into crisis and having made the whole world know that they were using zero-based budgeting, they could not go back again. In a different environment, this budget can still work with the benchmark of $38, even with the intention of borrowing, but the question is: what are you going to do with this borrowed money? Deficit budget has its advantages and disadvantages. If the borrowed money is judiciously spent and applied to capital and profitable projects, it will work and help the economy.
When you borrow and you are able to do some capital projects and provide infrastructure that have direct impact on the people, it would enable your Gross Domestic Product to grow and if that happens over some time, the economy would be turned around. That is why it is important that when you borrow, the money must be judiciously used. When you borrow to finance your budget, in an ideal situation, those who are going to apply this fund would be careful and every penny they spend would be for the productive sector. If you borrow to finance a business, there is the likelihood that one would be prudent. Even the people that are working for you would know that the money you are using was borrowed and they must have sympathy for you, unlike when you are spending your own money. But in our own system, those who are going to execute projects are going to divert the funds into their pockets.
Nigeria’s economy is very buoyant and that is the reason many investors are trooping into the country. Besides, population drives business and Nigeria is the most populous country in Africa. Two things affect us mostly: our revenue generation drive is very poor and there is corruption.
Even MDAs that should be generating money are relying solely on government for financial survival and that is why there is trouble. So, to government officials and those implementing the budget focus is not on revenue generation but on how everybody is going to take a substantial share from the allocation. The issue of tax generation for cash payment is another issue. Ideally, in other countries, tax to GDP is about 18 percent. But in Nigeria, our tax to GDP is about six percent. So, individuals and others should embrace taxes if we are going to be serious about revenue generation. Then, let us go to the area of corruption. Revenue generation and corruption should go together. Once an agency is generating money, there should be a another agency monitoring where the money generated goes.
The government’s focus should be on financing of education because by so doing, you are financing the future. Infrastructure should also be focused on because that is the real development as it would help the economy. For instance, if the road is good, you hardly have cause to repair your car, but if the road is bad, it will affect your spending and your businesses. When you borrow, the money should be channeled to the right areas, especially where money can come back, not where it will just be squandered. We need probity and patriotism to build a healthy Nigeria.

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