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| Buhari |
SPEECH OF H.E. PRESIDENT MUHAMMADU
BUHARI ON THE 2017 BUDGET OF RECOVERY AND GROWTH AT JOINT SESSION OF THE
NATIONAL ASSEMBLY 14TH DECEMBER 2016
Protocols
1. It is my pleasure to present the
2017 Budget Proposals to this distinguished Joint Assembly: the Budget of
Recovery and Growth.
2. We propose that the
implementation of the Budget will be based on our Economic Recovery and Growth
Strategy. The Plan, which builds on our 2016 Budget, provides a clear road map
of policy actions and steps designed to bring the economy out of recession and
to a path of steady growth and prosperity.
3. We continue to face the most
challenging economic situation in the history of our Nation. Nearly every home
and nearly every business in Nigeria is affected one way or the other.
4. Yet I remain convinced that this
is also a time of great opportunity.We have reached a stage when the
creativity, talents and resilience of the Nigerian people is being rewarded.
Those courageous and patriotic men and women who believed in Nigeria are now
seeing the benefits gradually come to fruition. I am talking about the farmers
who today are experiencing bumper harvests, the manufacturers who substituted
imported goods for local materials and the car assembly companies who today are
expanding to meet higher demand.
5. Distinguished members of National
Assembly, for the record:For many years we depended on oil for foreign exchange
revenues. In the days of high oil prices,we did not save.We squandered.
6. We wasted our large foreign
exchange reserves to import nearly everything we consume. Our food, Our
clothing, Our manufacturing inputs, Our fuel and much more.In the past 18
months when we experienced low oil prices, we saw our foreign exchange earnings
cut by about 60%, our reserves eroded and our consumption declined as we could
not import to meet our needs.
7. By importing nearly everything,
we provide jobs for young men and women in the countries that produce what we
import, while our own young people wander around jobless. By preferring
imported goods, we ensure steady jobs for the nationals of other countries,
while our own farmers, manufacturers, engineers, and marketers, remain jobless.
8. I will stand my ground and
maintain my position that under my watch, that old Nigeria is slowly but surely
disappearing and a new era is rising in which we grow what we eat and consume
what we make.
We will CHANGE our habits and we
will CHANGE Nigeria.
9. By this simple principle, we will
increasingly grow and process our own food, we will manufacture what we can and
refine our own petroleum products. We will buy ‘Made in Nigeria’ goods. We will
encourage garment manufacturing and Nigerian designers, tailors and fashion
retailers. We will patronize local entrepreneurs. We will promote the
manufacturing powerhouses in Aba, Calabar, Kaduna, Kano, Lagos, Nnewi, Onitsha,
and Ota. From light manufacturing to cement production and petrochemicals, our
objective is to make Nigeria a new manufacturing hub.
10. Today, the demand of the urban
consumer has presented an opportunity for the rural producer. Across the
country, our farmers, traders and transporters are seeing a shift in their
fortunes. Nigerians who preferred imported products are now consuming made in
Nigeria products. From Argungu in Kebbi to Abakalaki in Ebonyi, rice farmers
and millers are seeing their products move. We must replicate such success in
other staples like wheat, sugar, soya, tomato and dairy products. Already, the
Ministry of Agriculture and Rural Development, the Central Bank of Nigeria, the
Organised Private Sector and a handful of Nigerian commercial banks, have
embarked on an ambitious private sector-led N600 billion program to push us
towards self-sufficiency in three years for these products. I hereby make a
special appeal to all State Governors to make available land to potential
farmers for the purpose of this program.
11. To achieve self-sufficiency in
food and other products, a lot of work needs to be done across the various
value chains. For agriculture, inputs must be available and affordable. In the
past, basic inputs, like the NPK fertilizer,were imported although key
ingredients like urea and limestone are readily available locally. Our local
blending plants have been abandoned. Jobs lost and families destroyed. I am
pleased to announce today that on 2nd December 2016, Morocco and Nigeria signed
an ambitious collaboration agreement to revive the abandoned Nigerian fertilizer
blending plants. The agreement focuses on optimizing local materials while only
importing items that are not available locally. This program has already
commenced and we expect that in the first quarter of 2017, it will create
thousands of jobs and save Nigeria US$200 million of foreign exchange and over
N60 billion in subsidy.
12. We must take advantage of
current opportunities to export processed agricultural products and
manufactured goods. Let it not be lost on anyone that the true drivers of our
economic future will be the farmers, small and medium sized manufacturers,
agro-allied businesses, dressmakers, entertainers and technology start-ups.
They are the engine of our imminent economic recovery. And their needs underpin
the Economic Recovery and Growth Plan.
13. Let me, Mr. Senate President,
Right Hon. Speaker, here acknowledge the concerns expressed by the National
Assembly and, in particular, acknowledge your very helpful Resolutions on the
State of the Economy, which were sent to me for my consideration. The
Resolutions contained many useful suggestions, many of which are in line with
my thinking and have already been reflected in our Plan. Let me emphasise that
close cooperation between the Executive and the Legislature is vital to the
success of our recovery and growth plans.
14. Permit me to briefly outline a
few important features of the Plan. The underlying philosophy of our Economic
Recovery and Growth Plan is optimizing the use of local content and empowering
local businesses. The role of Government must be to facilitate, enable and
support the economic activities of the Nigerian businesses as I earlier
mentioned. Fiscal, monetary and trade policies will be fully aligned and
underpinned by the use of policy instruments to promote import substitution.
Government will however at all times ensure the protection of public interest.
15. First we clearly understand the
paradox that to diversify from oil we need oil revenues. You may recall that
oil itself was exploited by investment from agricultural surpluses. We will now
use oil revenues to revive our agriculture and industries. Though we cannot
control the price of crude oil, we are determined to get our production back to
at least 2.2 million barrels per day. Consistent with the views which have also
been expressed by the National Assembly, we will continue our engagement with
the communities in the Niger Delta to ensure that there is minimum disruption
to oil production. The National Assembly, State and Local Governments,
Traditional Rulers, Civil Society Organisations and Oil Companies must also do
their part in this engagement. We must all come together to ensure peace reigns
in the Niger Delta.
16. In addition, we will continue
our ongoing reforms to enhance the efficiency of the management of our oil and
gas resources. To this effect, from January 2017, the Federal Government will
no longer make provision for Joint Venture cash-calls. Going forward, all Joint
Venture operations shall be subjected to a new funding mechanism, which will allow
for Cost Recovery. This new funding arrangement is expected to boost
exploration and production activities, with resultant net positive impact on
government revenues which can be allocated to infrastructure, agriculture,
solid minerals and manufacturing sectors.
17. I earlier mentioned our
ambitions for policy harmonisation. But we all know that one of the peculiar
problems of our environment is execution. This phenomenon affects both
government carrying out its own functions and the innumerable bureaucratic
hurdles in doing business. To this end, I will be issuing some Executive Orders
to ensure the facilitation and speeding up of government procurements and
approvals. Facilitation of business and commerce must be the major objective of
government agencies. Government must not be the bottle neck. Additionally,
these Executive Orders will widen the scope of compliance with the Fiscal
Responsibility Act by Federal Government owned entities and promote support for
local content in Ministries, Department and Agencies.
18. The Executive will soon place
before the National Assembly proposals for legislation to reduce statutorily
mandated minimum times for administrative processes in order to speed up
business transactions. In addition, I have established the Presidential
Enabling Business Council, chaired by the Vice President with a mandate to make
doing business in Nigeria easier and more attractive. Getting approvals for
business and procurements will be simplified and made faster.
19. In 2017, we will focus on the
rapid development of infrastructure, especially rail, roads and power. Efforts
to fast-track the modernization of our railway system is a priority in the 2017
Budget. In 2016, we made a lot of progress getting the necessary studies
updated and financing arrangements completed. We also addressed some of the
legacy contractor liabilities inherited to enable us to move forward on a clean
slate. Many of these tasks are not visible but are very necessary for
sustainability of projects. Nigerians will soon begin to see the tangible
benefits in 2017.
20. We also have an ambitious
programme for growing our digital platforms in order to modernise the Nigerian
economy, support innovation and improve productivity and competitiveness. We
will do this through increased spending on critical information technology
infrastructure and also by promoting policies that facilitate investments in
this vital sector.
21. During 2016, we conducted a
critical assessment of the power sector value chain, which is experiencing
major funding issues. Although Government, through the CBN and other
Development Finance Institutions has intervened, it is clear that more capital
is needed. We must also resolve the problems of liquidity in the sector. On its
part, Government has made provisions in its 2017 Budget to clear its
outstanding electricity bills. This we hope, will provide the much needed
liquidity injection to support the investors.
22. In the delivery of critical
infrastructure, we have developed specific models to partner with private
capital, which recognize the constraints of limited public finances and
incorporate learnings from the past. These tailor-made public private
partnerships are being customized, in collaboration with some global players,
to suit various sectors, and we trust that, the benefits of this new approach
will come to fruition in 2017.
23. Fellow Nigerians, although a lot
of problems experienced by this Administration were not created by us, we are
determined to deal with them. One of such issues that the Federal Government is
committed to dealing with frontally, is the issue of its indebtedness to
contractors and other third parties. We are at an advanced stage of collating
and verifying these obligations, some of which go back ten years, which we
estimate at about N2 trillion. We will continue to negotiate a realistic and
viable payment plan to ensure legitimate claims are settled.
2016 Budget Performance
24. In 2016, the budget was prepared
on the principles of zero based budgeting to ensure our resources were
prudently managed and utilized solely for the public good. This method was a
clear departure from the previous incremental budgeting method. We have adopted
the same principles in the 2017 Budget.
25. Distinguished members of the
National Assembly may recall that the 2016 Budget was predicated on a benchmark
oil price of US$38 per barrel, oil production of 2.2 million barrels per day
and an exchange rate of N197 to the US dollar.
26. On the basis of these
assumptions, aggregate revenue was projected at N3.86 trillion while the
expenditure outlay was estimated at N6.06 trillion. The deficit of N2.2
trillion, which was about 2.14% of GDP was expected to be mainly financed
through borrowing.
27. The implementation of the 2016
Budget was hampered by the combination of relatively low oil prices in the
first quarter of 2016, and disruptions in crude oil production which led to
significant shortfalls in projected revenue. This contributed to the economic
slow-down that negatively affected revenue collections by the Federal Inland
Revenue Service and the Nigerian Customs Service.
28. As at 30 September 2016,
aggregate revenue inflow was N2.17 trillion or 25% less than prorated
projections. Similarly, N3.58 trillion had been spent by the same date on both
recurrent and capital expenditure. This is equivalent to 79% of the pro rated full
year expenditure estimate of N4.54 trillion as at the end of September 2016.
29. In spite of these challenges, we
met both our debt service obligations and personnel costs. Similarly, overhead
costs have been largely covered.
30. Although capital expenditure
suffered as a result of project formulation delays and revenue shortfalls, in
the five months since the 2016 Budget was passed, the amount of N753.6 billion
has been released for capital expenditure as at the end of October 2016. It is
important to note that this is one of the highest capital releases recorded in
the nation’s recent history. In fact, it exceeds the aggregate capital
expenditure budget for 2015.
31.Consequently, work has resumed on
a number of stalled infrastructure projects such as the construction of new
terminals at the country’s four major airports; numerous major road projects;
key power transmission projects; and the completion of the Kaduna – Abuja
railway to mention a few.
32. We remain resolute in our
commitment to the security of life and property nationwide. The courageous
efforts and sacrifices of our heroes in the armed forces and para military
unitsare clear for all to see. The gradual return to normality in the North
East is a good example of the results. Our resolve to support them is
unwavering. Our spending in the 2016 fiscal year focused on ensuring these
gallant men and women are properly equipped and supported. We will continue to
prioritise defence spending till all our enemies, within and outside, are subdued.
33. Stabilisation of sub-national
government finances remains a key objective in our plans to stimulate the
economy. In June 2016,a conditional Budget Support Programme was introduced,
which offered State Governments N566 billion to address their funding
shortfalls. To participate, State Governments were required to subscribe to
certain fiscal reforms centered around transparency, accountability and
efficiency. For example, States as part of this program were required to
publish audited accounts and introduce biometric payroll systems with the goal
of eliminating ghost workers.
34. Our efforts on cost containment
have continued throughout the year. We have restricted travel costs,reduced
board members’ sitting allowances, converted forfeited properties to Government
offices to save on rent and eliminated thousands of Ghost workers. These, and
many other cost reduction measures will lead to savings of close to N180
billion per annum to be applied to critical areas including health, security
and education.
2017 Budget Priorities
35. Let me now turn to 2017
Budget.Government’s priorities in 2017 will be a continuation of our 2016 plans
but adjusted to reflect new additions made in the Economic Recovery and Growth
Plan. In order to restore growth, a key objective of the Federal Government
will be to bring about stability and greater coherence between monetary, fiscal
and trade policies while guaranteeing security for all.
36. The effort to diversify the
economy and create jobs will continue with emphasis on agriculture,
manufacturing, solid minerals and services. Mid- and Down-stream oil and gas
sectors,are also key priority areas. We will prioritise investments in human capital
development especially in education and health, as well as wider social
inclusion through job creation, public works and social investments.
37. Our plans also recognise that
success in building a dynamic, competitive economy depends on construction of
high quality national infrastructure and an improved business environment
leveraging locally available resources. To achieve this, we will continue our
goal of improving governance by enhancing public service delivery as well as
securing life and property.
The 2017 Budget: Assumptions,
Revenue Projections and Fiscal Deficit
38. Distinguished members of the
National Assembly, the 2017 Budget is based on a benchmark crude oil price of
US$42.5 per barrel; an oil production estimate of 2.2 million barrels per day;
and an average exchange rate of N305 to the US dollar.
39. Based on these assumptions,
aggregate revenue available to fund the federal budget is N4.94 trillion. This
is 28% higher than 2016 full year projections. Oil is projected to contribute
N1.985 trillion of this amount.
40. Non-oil revenues, largely
comprising Companies Income Tax, Value Added Tax, Customs and Excise duties,
and Federation Account levies are estimated to contribute N1.373 trillion. We
have set a more realistic projection of N807.57 billion for Independent
Revenues, while we have projected receipts of N565.1 billion from various
Recoveries. Other revenue sources, including mining, amount to N210.9 billion.
41. With regard to expenditure, we
have proposed a budget size of N7.298 trillion which is a nominal 20.4%
increase over 2016 estimates. 30.7% of this expenditure will be capital in line
with our determination to reflate and pull the economy out of recession as
quickly as possible.
42. This fiscal plan will result in a
deficit of N2.36 trillion for 2017 which is about 2.18% of GDP. The deficit
will be financed mainly by borrowing which is projected to be about N2.32
trillion. Our intention is to source N1.067 trillion or about 46% of this
borrowing from external sources while, N1.254 trillion will be borrowed from
the domestic market.
Expenditure Estimates
43. The proposed aggregate
expenditure of N7.298 trillion will comprise:
i. Statutory transfers of N419.02
billion;
ii. Debt service of N1.66 trillion;
iii. Sinking fund of N177.46 billion
to retire certain maturing bonds;
iv. Non-debt recurrent expenditure
of N2.98 trillion; and
v. Capital expenditure of N2.24
trillion (including capital in Statutory Transfers).
Statutory Transfers
44. We have increased the budgetary allocation
to the Judiciary from N70 billion to N100 billion. This increase in funding is
further meant to enhance the independence of the judiciary and enable them to
perform their functions effectively.
Recurrent Expenditure
45. A significant portion of
recurrent expenditure has been provisioned for the payment of salaries and
overheads in institutions that provide critical public services. The budgeted
amounts for these items are:
· N482.37 billion for the Ministry
of Interior;
· N398.01 billion for Ministry of
Education;
· N325.87 billion for Ministry of
Defence; and
· N252.87 billion for Ministry of
Health.
46. We have maintained personnel
costs at about N1.8 trillion.It is important that we complete the work that we
have started of ensuring the elimination of all ghost workers from the payroll.
Accordingly, adequate provision has been made in the 2017 Budget to ensure all
personnel that are not enrolled on the Integrated Personnel Payroll Information
System platform are captured.
47. We have tasked the Efficiency
Unit of the Federal Ministry of Finance to cut certain overhead costs by 20%.
We must eliminate all non-essential costs so as to free resources to fund our
capital expenditure.
Capital Expenditure
48. The size of the 2017 capital
budget of N2.24 trillion (inclusive of capital in Statutory Transfers), or
30.7% of the total budget, reflects our determination to spur economic growth.
These capital provisions are targeted at priority sectors and projects.
49. Specifically, we have maintained
substantially higher allocations for infrastructural projects which will have a
multiplier effect on productivity, employment and also promote private sector
investments into the country.
50. Key capital spending provisions
in the Budget include the following:
• Power, Works and Housing:
N529billion;
• Transportation: N262 billion;
• Special Intervention Programmes:
N150 billion.
• Defence: N140 billion;
• Water Resources: N85 billion;
• Industry, Trade and Investment:
N81 billion;
• Interior: N63 billion;
• Education N50 billion
• Universal Basic Education
Commission: N92 billion
• Health: N51 billion
• Federal Capital Territory: N37
billion;
• Niger Delta Ministry: N33 billion;
and
• Niger Delta Development
Commission: N61 billion;
51. N100 billion has been provided
in the Special Intervention programme as seed money into the N1 trillion Family
Homes Fund that will underpin a new social housing programme. This substantial
expenditure is expected to stimulate construction activity throughout the
country.
52. Efforts to fast-track the
modernization of our railway system will receive further boost through the
allocation of N213.14 billion as counterpart funding for the Lagos-Kano,
Calabar-Lagos,Ajaokuta-Itakpe-Warri railway, and Kaduna-Abuja railway projects.
As I mentioned earlier, in 2016, we invested a lot of time ensuring the paper
work is done properly while negotiating the best deal for Nigeria. I must admit
this took longer than expected but I am optimistic that these projects will
commence in 2017 for all to see.
53. Given the emphasis placed on
industrialization and supporting SMEs, a sum of N50 billion has been set aside
as Federal Government’s contribution for the expansion of existing, as well as
the development of new, Export Processing and Special Economic Zones. These
will be developed in partnership with the private sector as we continue our
efforts to promote and protect Nigerian businesses. Furthermore, as the
benefits of agriculture and mining are starting to become visible, I have
instructed that the Export Expansion Grant be revived in the form of tax
credits to companies. This will further enhance the development of some
agriculture and mining sector thereby bringing in more investments and creating
more jobs. The sum of N20 billion has been voted for the revival of this
program.
54. Our small- and medium-scale
businesses continue to face difficulties in accessing longer term and more
affordable credit. To address this situation, a sum of N15 billion has been
provided for the recapitalization of the Bank of Industry and the Bank of
Agriculture. In addition, the Development Bank of Nigeria will soon start
operations with US$1.3 billion focused exclusively on Small and Medium-Sized
Enterprises.
55. Agriculture remains at the heart
of our efforts to diversify the economy and the proposed allocation to the
sector this year is at a historic high of N92 billion. This sum will complement
the existing efforts by the Federal Ministry of Agriculture and CBN to boost
agricultural productivity through increased intervention funding at single
digit interest rate under the Anchor Borrowers Programme, commercial
agricultural credit scheme and The Nigeria Incentive-Based Risk-Sharing System
for Agricultural Lending.Accordingly, our agricultural policy will focus on the
integrated development of the agricultural sector by facilitating access to
inputs, improving market access, providing equipment and storage as well as
supporting the development of commodity exchanges.
56. Government realizes that achieving
its goals with regard to job creation, also requires improving the skills of
our labour force, especially young people. We have accordingly made provision,
including working with the private sector and State Governments, to establish
and operate model technical and vocational education institutes.
57. We propose with regard to
healthcare to expand coverage through support to primary healthcare centres and
expanding the National Health Insurance Scheme.
58. The 2017 Budget estimates
retains the allocation of N500 billion to the Special Intervention programme
consisting of the Home-grown School Feeding Programme, Government Economic
Empowerment programme, N-Power Job Creation Programme to provide loans for
traders and artisans, Conditional Cash Transfers to the poorest families and
the new Family Homes Fund (social housing scheme). The N-Power Programme has
recently taken off with the employment of 200,000 graduates across the country,
while the School Feeding Programme has commenced in a few States, where the
verification of caterers has been completed.
59. As we pursue economic recovery,
we must remain mindful of issues of sustainable and inclusive growth and
development. The significant vote for the Federal Ministry of Water Resources
reflects the importance attached to integrated water resource management. In
this regard, many river-basin projects have been prioritized for completion in
2017. Similarly, the increased vote of N9.52 billion for the Federal Ministry
of Environment (an increase of 92% over the 2016 allocation) underscores the
greater attention to matters of the environment, including climate change and
leveraging private sector funding for the clean-up of the Niger Delta.
60. Provision has also been made in
these estimates for activities that will foster a safe and conducive atmosphere
for the pursuit of economic and social activities. In this regard, the
allocation for the Presidential Amnesty Programme has been increased to N65
billion in the 2017 Budget. Furthermore, N45 billion in funding has been
provisioned for the rehabilitation of the North East to complement the funds
domiciled at the Presidential Committee on the North East Initiative as well as
commitments received from the multinational donors.
Conclusion
61. Mr. Senate President, Mr.
Speaker, distinguished and honourable members of the National Assembly, I
cannot end without commending the National Assembly for its support insteering
our economy on a path of sustained and inclusive growth. This generation has an
opportunity to move our country from an unsustainable growth model – one that
is largely dependent on oil earnings and imports, to an economy that focuses on
using local labour and local raw materials. We cannot afford to let this
opportunity slip by. We must all put our differences aside and work together to
make this country succeed. The people that voted us into these esteemed
positions are looking to us to make a difference. To change the course of this
nation. I have no doubt in my mind that by working together, we will put
Nigeria back on the path that its founding fathers envisaged.
62. This Budget, therefore,
represents a major step in delivering on our desired goals through a strong
partnership across the arms of government and between the public and private sectors
to create inclusive growth. Implementation will move to centre-stage as we
proceed with the process of re-balancing our economy, exiting recession and
insulating it from future external and domestic shocks.
63. I thank you all for your
patience and patriotism.
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