President of the Federal Republic of Nigeria, Muhammadu Buhari, Tuesday October 8, 2019 made true his promise to submit his 2020 Appropriation Bills to the joint session of the country’s National Assembly as he presented what he described as “Budget of Sustaining Growth and Job Creation.
The President points to Dino Melaye during the joint session of the National Assembly for the presentation of the 2020 Budget.
From the President’s speech highlighting some of the key capital spending allocations in the coming year, Works and Housing and Education (both ministry and Universal Basic Education Commission) put together get the biggest sum at N262 billion and N160 billion respectively. Coming next to them is Power with N127 billion.
According to the presidential address, Transportation gets executive consideration for N123 billion while Defence and Zonal Intervention Projects come next with plan to spend N100 billion each followed by Agriculture and Rural Development’s N83 billion; Water Resources: N82 billion; Niger Delta Development Commission: N81 billion; Health: N46 billion; Industry, Trade and Investment: N40 billion; North East Development Commission: N38 billion; Interior: N35 billion; Social Investment Programmes: N30 billion; Federal Capital Territory: N28 billion; and Niger Delta Affairs Ministry: N24 billion.
Before going into the details of the budget, President Buhari, known for never hiding anything from Nigerians and who was accompanied to the National Assembly Complex by members of cabinet including Senator God’swill Akpabio, Mr. Festus Keyamo (SAN), Senator Hadi Sirika, started by asking the legislators to “pardon my voice. As you can hear, I have a cold as a result of working hard to meet your deadline!”
President Buhari greeted by his ministers, from right, Festus Keyamo (SAN), God’swill Akpabio, and Hadi Sirika, on his arrival at the National Assembly for the presentation of his 2020 Budget on Tuesday October 8, 2019.
He said, “I am delighted to present the 2020 Federal Budget Proposals to this Joint Session of the National Assembly, being my first budget presentation to this 9th National Assembly.
“Before presenting the Budget, let me thank all of you Distinguished and Honourable Members of the National Assembly, for your avowed commitment to cooperate with the Executive to accelerate the pace of our socio-economic development and enhance the welfare of our people.
“I will also once again thank all Nigerians, who have demonstrated confidence in our ability to deliver on our socio-economic development agenda, by re-electing this Administration with a mandate to Continue the Change. We remain resolutely committed to the actualization of our vision of a bright and prosperous future for all Nigerians.
“During this address, I will present highlights of our budget proposals for the next fiscal year. The Honourable Minister of Finance, Budget and National Planning will provide full details of these proposals, subsequently,” the Nigerian Leader said.
The President in a tete-a-tete with Senate President Ahmed Lawan and Speaker of the House of Representatives Femi Gbajabiamila during the presentation of 2020 Budget on Tuesday October 8, 2019.
On the overview of economic development in 2019, he said the economic environment remains very challenging, globally. He said the International Monetary Fund expects global economic recovery to slow down from 3.6 percent in 2018 to 3.5 percent in 2020, which he said reflects uncertainties arising from security and trade tensions with attendant implications on commodity price volatility.
Nearer to home, however, President Buhari told his nation’s National Assembly, “Sub-Saharan Africa is projected to continue to grow from 3.1 percent in 2018 to 3.6 percent in 2020. This is driven by investor confidence, oil production recovery in key exporting countries, sustained strong agricultural production as well as public investment in non-dependent economies.”
He then moved on enthusing that Nigerian economy thus far has recorded nine consecutive quarters of GDP growth with annual growth increase from 0.82 percent in 2017 to 1.93 percent in 2018 and 2.02 percent in the first half of 2019.
“The continuous recovery reflects our economy’s resilience and gives credence to the effectiveness of our economic policies thus far,” President Buhari said.
He continued: “We also succeeded in significantly reducing inflation from a peak of 18.72 percent in January 2017, to 11.02 percent by August 2019. This was achieved through effective fiscal and monetary policy coordination, exchange rate stability and sensible management of our foreign exchange.
“We have sustained accretion to our external reserves, which have risen from US$23 billion in October 2016 to about US$42.5 billion by August 2019. The increase is largely due to favourable prices of crude oil in the international market, minimal disruption of crude oil production given the stable security situation in the Niger Delta region and our import substitution drive, especially in key commodities.
“The foreign exchange market has also remained stable due to the effective implementation of the Central Bank’s interventions to restore liquidity, improve access and discourage currency speculation. Special windows were created that enabled small businesses, investors and importers in priority economic sectors to have timely access to foreign exchange.
“Furthermore, as a sign of increased investor confidence in our economy, there were remarkable inflows of foreign capital in the second quarter of 2019. The total value of capital imported into Nigeria increased from US$12 billion in the first half year of 2018 to US$14 billion for the same period in 2019.”
The President talking on performance of the 2019 budget said: “Distinguished and Honourable Members of the National Assembly, you will recall that the 2019 ‘Budget of Continuity’ was based on a benchmark oil price of US$60 per barrel, oil production of 2.3 mbpd, and an exchange rate of N305 to the United States Dollar. Based on these parameters, we projected a deficit of N1.918 trillion or 1.37 percent of Gross Domestic Product.
“As at June 2019, Federal Government’s actual aggregate revenue (excluding Government-Owned Enterprises) was N2.04 trillion. This revenue performance is only 58 percent of the 2019 Budget’s target due to the underperformance of both oil and non-oil revenue sources. Specifically, oil revenues were below target by 49 percent as at June 2019. This reflects the lower-than-projected oil production, deductions for cost under-recovery on supply of premium motor spirit (PMS), as well as higher expenditures on pipeline security/maintenance and Frontier exploration.
“Daily oil production averaged 1.86 mbpd as at June 2019, as against the estimated 2.3 mbpd that was assumed. This shortfall was partly offset as the market price of Bonny Light crude oil averaged US$67.20 per barrel which was higher than the benchmark price of US$60.
“Additionally, revenue projections from restructuring of Joint Venture Oil and Gas assets and enactment of new fiscal terms for Production Sharing Contracts did not materialize, as the enabling legislation for these reforms is yet to be passed into law.
“The performance of non-oil taxes and independent revenues such as internally generated revenues were N614.57 billion and N217.84 billion, respectively.
“Receipts from Value Added Tax were below expectations due to lower levels of activities in certain economic sectors, in the aftermath of national elections. Corporate taxes were affected by the seasonality of collections, which tend to peak in the second half of the calendar year.
“On the expenditure side, 2019 Budget implementation was also hindered by the combination of delay in its approval and the underperformance of revenue collections. As such, only recurrent expenditure items have been implemented substantially. Of the prorated expenditure of N4.46 trillion budgeted, N3.39 trillion had been spent by June 30, 2019.
“In compliance with the provisions of the 2018 Appropriation Act, we implemented the 2018 capital budget till June 2019. Capital releases under the 2019 Budget commenced in the third quarter. As at 30th September 2019, a total of about N294.63 billion had been released for capital projects. I have directed the Ministry of Finance, Budget and National Planning to release an additional N600 billion of the 2019 capital budget by the end of the year.
“Despite the delay in capital releases, a deficit of N1.35 trillion was recorded at end of June 2019. This represents 70 percent of the budgeted deficit for the full year.
“Despite these anomalies, I am happy to report that we met our debt service obligations, we are current on staff salaries and overhead costs have also been largely covered.”
The Nigerian President, Muhammadu Buhari, then gave his priorities in 2020 budget to include the four cardinal areas of “a. Fiscal consolidation, to strengthen our macroeconomic environment; b. Investing in critical infrastructure, human capital development and enabling institutions, especially in key job creating sectors; c. Incentivising private sector investment essential to complement the Government’s development plans, policies and programmes; and, d. Enhancing our social investment programs to further deepen their impact on those marginalised and most vulnerable Nigerians.”
