Delivered By:
His Excellency, Muhammadu Buhari
President, Federal Republic of Nigeria
To
A Joint Session of the National Assembly (on December 22, 2016)
PROTOCOLS
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.
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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.
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.
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.
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.
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.
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
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.
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We
have, and will continue to implement strategies that will maintain
macroeconomic stability and manage the oil price shocks we are
experiencing.
Upon the inauguration of this administration on
29thMay 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.
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.
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
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
$53 per barrel, oil production of 2.28 million barrels per day and an
exchange rate of N190 to the US$.
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
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.
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.
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.
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.
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
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.
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.
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.
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.
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.
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
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.
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.
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 theFiscal Responsibility
Act, 2007 and public expenditure reforms in all MDAs, we have projected
up to N1.51 trillion from independent revenues.
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.
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.
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.
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.
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.
We will invest to safeguard lives and property.
We will invest in equipping our farmers with the right tools, technology and techniques.
We will invest in empowering and enabling our miners to operate in a safe, secure and humane environment.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
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.
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.
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.
We will not betray the trust reposed in us.
We will welcome and be responsive to your feedback and criticisms.
We are here to serve. And indeed, Nigerians will get the service they have longed for and which they rightly deserve.
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.
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.
Thank you and God bless the Federal Republic of Nigeria.
