Economy

National Assembly Raises 2018 Budget by N508bn

Published

6 years ago

May 16, 2018

Samed Olukoya

National Assembly Raises 2018 Budget by N508bn

The National Assembly has raised the 2018 budget by over N508bn, bringing it to N9.12tn.

The original estimates presented to the legislature on November 7, 2017 by President Muhammadu Buhari totalled N8.612tn.

The new budget size was contained in the report of the joint Senate and House of Representatives Committee on Appropriation laid before lawmakers in Abuja on Tuesday.

The crude oil benchmark price of the budget was also increased from $45 to $50.5.

The benchmark alteration confirmed on May 1, 2018 that lawmakers had proposed to increase the benchmark because of the steady rise in the global price of crude.

From about $50 per barrel in November 2017 when Buhari laid the budget estimates, lawmakers noted that the crude oil price had jumped to around $80.

At the House of Representatives, the Chairman, Committee on Appropriation, Mr. Mustapha Bala-Dawaki, presented the report to the House session, which was presided over by the Deputy Speaker, Mr. Yussuff Lasun, on Tuesday.

Lasun announced that the budget would be passed today (Wednesday).

He asked members to pick copies of the report as early as 8 am and read it, preparatory to the consideration and passage of the budget.

“Get your copies as from 8 am so that by afternoon, we will begin to pass the budget. This announcement is very important, because we will adjourn the House on Thursday to go for the APC congresses”, the deputy speaker informed his colleagues.

There are other changes to the original document as contained in the National Assembly report, different from Buhari’s proposals.

In the President’s estimates, the recurrent expenditure was captured as N3.494tn. But in the new report, it was raised to N3.516tn.

Similarly, the development fund for capital expenditure was raised to N2.869tn from the N2.652tn proposed by the President on November 7.

The provision for statutory transfers also rose to N530.421bn from N456bn.

Debt servicing provision rose to N2.203tn from N2.014tn. The new figure includes the N190bn for the “Sinking Fund.”

However, the naira/dollar exchange rate was retained at N305 to $1.

The daily crude oil production was also retained at 2.2 million barrels.

Also, the Senate on Tuesday received the report on the 2018 Appropriation Bill from the Committee on Appropriations and might pass the budget today (Wednesday).

The Chairman of the committee, Senator Danjuma Goje, laid the report before the Senate at the plenary on Tuesday.

The Chairman of the Senate Committee on Media and Public Affairs, Senator Aliyu Sabi-Abdullahi, had on different occasions said the budget would be passed after the report was presented.

‘We’ll pass remaining parts of PIB in July’

Meanwhile, the ad hoc committee of the House on the Petroleum Industry Bill started a public hearing on the three remaining parts of the PIB on Tuesday.

The committee, which, is chaired by the Chief Whip of the House, Mr. Alhassan Ado-Doguwa, presented the three bills.

They are the Petroleum Industry Fiscal Bill, 2018; Petroleum Producing Host and Impacted Communities Bill, 2018; and Petroleum Industry Administration Bill, 2018.

The National Assembly has already passed the Petroleum Industry Governance Bill, 2017, now awaiting the assent of Buhari.

The Speaker of the House, Mr. Yakubu Dogara, who opened Monday’s hearing, disclosed that by July, the three bills would have been passed.

“We are ready to pass these bills before proceeding on our annual recess. The commitment is there to make a break from the delays of the past years,” Dogara assured the session.

On his part, Ado-Doguwa gave reasons why the current 8th Assembly opted to split the PIB into four parts.

He explained that in the past, the PIB suffered setbacks because all the issues were rolled into one bill.

Ado-Doguwa recalled that some of the issues generated controversies and resulted in the entire bill being rejected.

He stated that this time round, the issues were separated in the four bills so that they would be adequately addressed on their merits.

He added, “You are aware that the PIGB has since been passed by this legislature. These remaining three bills are already on course and we are looking forward to passing them as well.

“In this way, we will have separate bills, each addressing a particular oil industry issue in order to avoid the pitfalls of the past.”

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu; and the Group Managing Director, Nigerian National Petroleum Corporation, Dr. Maikanti Baru, were absent at the hearing on Monday.

Commenting on their absence, Dogara said it showed the seeming lack of interest of the executive arm of government in having the PIB in place.

“I can see that the minister and the NNPC boss are not represented here. That is not a problem. On our part, we have resolved that before we break for our annual recess, we will pass these bills”, the speaker said.

FG has capacity to implement N9.1tn budget – Experts

Finance and economic experts said that the N9.1tn budget size was implementable.

Those who spoke to one of our correspondents in separate telephone interviews were the Registrar, Institute of Finance and Control of Nigeria, Mr. Godwin Eohoi; a former Director-General, Abuja Chamber of Commerce and Industry, Mr. Chijioke Ekechukwu; and a developmental economist Odilim Enwagbara

Eohoi said in view of the fact that oil prices had been on the upward trend in recent times coupled with the aggressive tax revenue drive of the Federal Government, implementing a budget of that size would not be too difficult.

He stated, “It will be possible to finance the budget of N9.1tn because looking at the oil price, it was at $50 to a barrel when the budget was presented, but now it’s selling for above $70 per barrel. So, it is still within acceptable limit for the lawmakers to raise the benchmark to $50 per barrel.

“There are other windows available for the government to generate more revenue considering the aggressive drive to raise tax revenue from six per cent of the GDP to 15 per cent. So, I think the budget is implementable by the government.”

Enwagbara said at N9.1tn, the Federal Government’s budget was still low compared to the country’s GDP size.

He noted that for the budget to make any significant impact, it must be raised to about 10 per cent of the GDP.

He stated, “Nigeria’s budget is for consumption and what they did is to increase the capital portion of the budget. But I believe we should also raise the budget benchmark price from the $50 proposed by the lawmakers to $80 per barrel to enable us to deploy more revenue to fund the budget.

“The budget should be increased further to about 10 per cent of our GDP because we have one of the lowest budgets in the world. When South Africa is budgeting about $200bn, Nigeria has about $28bn budget for the year, this is very low for us as a country.”

Ekechukwu, on his part, stated, “The increase in the budget figures by the National Assembly can be absorbed by the expected revenue from oil and other sectors.

“This revenue expectation does not obliterate the deficit end of the budget, which will still be funded by debts. Much as the debt profile of Nigeria is rising every day, the debt to the GDP ratio is still not above any tolerable benchmark.

“As far as the increase is not arising from indiscriminate and arbitrary increase for selfish gains, the budget will be implementable.”

An economic expert and Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said the expected increase in revenue on the back of rising oil prices should either be used to reduce government borrowing or be channelled entirely to capital projects rather than increasing recurrent expenditure, debt servicing and statutory transfers.

He stated, “If the government is projecting an increase in revenue, that increase in revenue should have been used to bring down the amount that it is going to borrow in the fiscal year, and subsequently bring down the debt service costs. That way, the government would have had a more prudent fiscal budget.

“What will be the motivation for increasing the statutory transfers? It simply means that more money is going to the National Assembly, because part of the statutory transfers goes to the National Assembly, the judiciary and some agencies of government that are self-accounting. I think ordinarily, everybody in the National Assembly should be focused on having a more prudent financial position for the Federal Government.”

Up Next

Govt Targets 1,200MW From Nuclear Power Plant by 2020

Don't Miss

FG Begins Repair of Lagos-Abeokuta Road

Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Comments

Economy

Seme Border Sees 90% Decline in Trade Activity Due to CFA Fluctuations

Published

24 hours ago

May 2, 2024

Samed Olukoya

The Seme Border, a vital trade link between Nigeria and its neighboring countries, has reported a 90% decline in trade activity due to the volatile fluctuations in the CFA franc against the Nigerian naira.

Licensed customs agents operating at the border have voiced concerns over the adverse impact of currency instability on cross-border trade.

In a conversation with the media in Lagos, Mr. Godon Ogonnanya, the Special Adviser to the President of the National Association of Government Approved Freight Forwarders, Seme Chapter, shed light on the drastic reduction in trade activities at the border post.

Ogonnanya explained the pivotal role of the CFA franc in facilitating trade transactions, saying the border’s bustling activities were closely tied to the relative strength of the CFA against the naira.

According to Ogonnanya, trade activities thrived at the Seme Border when the CFA franc was weaker compared to the naira.

However, the fluctuating nature of the CFA exchange rate has led to uncertainty and instability in trade transactions, causing a significant downturn in business operations at the border.

“The CFA rate is the reason activities are low here. In those days when the CFA was a little bit down, activities were much there but now that the rate has gone up, it is affecting the business,” Ogonnanya explained.

The unpredictability of the CFA exchange rate has added complexity to trade operations, with importers facing challenges in budgeting and planning due to sudden shifts in currency values.

Ogonnanya highlighted the cascading effects of currency fluctuations, wherein importers incur additional costs as the value of the CFA rises against the naira during the clearance process.

Despite the significant drop in trade activity, Ogonnanya expressed optimism that the situation would gradually improve at the border.

He attributed his optimism to the recent policy interventions by the Central Bank of Nigeria, which have led to the stabilization of the naira and restored confidence among traders.

In addition to currency-related challenges, customs agents cited discrepancies in clearance procedures between Cotonou Port and the Seme Border as a contributing factor to the decline in trade.

Importers face additional costs and complexities in clearing goods at both locations, discouraging trade activities and leading to a substantial decrease in business volume.

The decline in trade activity at the Seme Border underscores the urgent need for policy measures to address currency volatility and streamline trade processes.

As stakeholders navigate these challenges, there is a collective call for collaborative efforts between government agencies and industry players to revive cross-border trade and foster economic growth in the region.

Economy

CBN Worries as Nigeria’s Economic Activities Decline

Published

2 days ago

May 1, 2024

Samed Olukoya

The Central Bank of Nigeria (CBN) has expressed deep worries over the ongoing decline in economic activities within the nation.

The disclosure came from the CBN’s Deputy Governor of Corporate Services, Bala Moh’d Bello, who highlighted the grim economic landscape in his personal statement following the recent Monetary Policy Committee (MPC) meeting.

According to Bello, the country’s Composite Purchasing Managers’ Index (PMI) plummeted sharply to 39.2 index points in February 2024 from 48.5 index points recorded in the previous month. This substantial drop underscores the challenging economic environment Nigeria currently faces.

The persistent contraction in economic activity, which has endured for eight consecutive months, has been primarily attributed to various factors including exchange rate pressures, soaring inflation, security challenges, and other significant headwinds.

Bello emphasized the urgent need for well-calibrated policy decisions aimed at ensuring price stability to prevent further stifling of economic activities and avoid derailing output performance. Despite sustained increases in the monetary policy rate, inflationary pressures continue to mount, posing a significant challenge.

Inflation rates surged to 31.70 per cent in February 2024 from 29.90 per cent in the previous month, with both food and core inflation witnessing a notable uptick.

Bello attributed this alarming rise in inflation to elevated production costs, lingering security challenges, and ongoing exchange rate pressures.

The situation further escalated in March, with inflation soaring to an alarming 33.22 per cent, prompting urgent calls for coordinated efforts to address the burgeoning crisis.

The adverse effects of high inflation on citizens’ purchasing power, investment decisions, and overall output performance cannot be overstated.

While acknowledging the commendable efforts of the Federal Government in tackling food insecurity through initiatives such as releasing grains from strategic reserves, distributing seeds and fertilizers, and supporting dry season farming, Bello stressed the need for decisive action to curb the soaring inflation rate.

It’s worth noting that the MPC had recently raised the country’s interest rate to 24.75 per cent in March, reflecting the urgency and seriousness with which the CBN is approaching the economic challenges facing Nigeria.

As the nation grapples with a multitude of economic woes, including inflationary pressures, exchange rate volatility, and security concerns, the CBN’s vigilance and proactive measures become increasingly crucial in navigating these turbulent times and steering the economy towards stability and growth.

Economy

Sub-Saharan Africa to Double Nickel, Triple Cobalt, and Tenfold Lithium by 2050, says IMF

Published

2 days ago

May 1, 2024

Samed Olukoya

In a recent report by the International Monetary Fund (IMF), Sub-Saharan Africa emerges as a pivotal player in the global market for critical minerals.

The IMF forecasts a significant uptick in the production of essential minerals like nickel, cobalt, and lithium in the region by the year 2050.

According to the report titled ‘Harnessing Sub-Saharan Africa’s Critical Mineral Wealth,’ Sub-Saharan Africa stands to double its nickel production, triple its cobalt output, and witness a tenfold increase in lithium extraction over the next three decades.

This surge is attributed to the global transition towards clean energy, which is driving the demand for these minerals used in electric vehicles, solar panels, and other renewable energy technologies.

The IMF projects that the revenues generated from the extraction of key minerals, including copper, nickel, cobalt, and lithium, could exceed $16 trillion over the next 25 years.

Sub-Saharan Africa is expected to capture over 10 percent of these revenues, potentially leading to a GDP increase of 12 percent or more by 2050.

The report underscores the transformative potential of this mineral wealth, emphasizing that if managed effectively, it could catalyze economic growth and development across the region.

With Sub-Saharan Africa holding about 30 percent of the world’s proven critical mineral reserves, the IMF highlights the opportunity for the region to become a major player in the global supply chain for these essential resources.

Key countries in Sub-Saharan Africa are already significant contributors to global mineral production. For instance, the Democratic Republic of Congo (DRC) accounts for over 70 percent of global cobalt output and approximately half of the world’s proven reserves.

Other countries like South Africa, Gabon, Ghana, Zimbabwe, and Mali also possess significant reserves of critical minerals.

However, the report also raises concerns about the need for local processing of these minerals to capture more value and create higher-skilled jobs within the region.

While raw mineral exports contribute to revenue, processing these minerals locally could significantly increase their value and contribute to sustainable development.

The IMF calls for policymakers to focus on developing local processing industries to maximize the economic benefits of the region’s mineral wealth.

By diversifying economies and moving up the value chain, countries can reduce their vulnerability to commodity price fluctuations and enhance their resilience to external shocks.

The report concludes by advocating for regional collaboration and integration to create a more attractive market for investment in mineral processing industries.

By working together across borders, Sub-Saharan African countries can unlock the full potential of their critical mineral wealth and pave the way for sustainable economic growth and development.