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.”

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Economy

Nigeria to Raise VAT to 10% Amid Revenue Crisis, Says Fiscal Policy Chairman

Published

4 days ago

September 3, 2024

Samed Olukoya

Taiwo Oyedele, Chairman Presidential Fiscal Policy and Tax Reforms Committee, has said the committee working on increasing the Valued Added Tax (VAT) from the current 7.5% to 10%.

Oyedele announced this during an interview on Channels TV’s Politics Today.

According to Oyedele, the tax law the committee drafted would be submitted to the National Assembly for approval.

He also said his committee was working to consolidate multiple taxes in Nigeria to ensure tax reduction.

He said, “We have significant issues in our tax revenue. We have issues of revenue generally which means tax and non-tax. You can describe the whole fiscal system in a state that is in crisis.

“When my committee was set up, we had three broad mandates. The first one was to look at governance: our finances as a country, borrowing, coordination within the federal government and across sub-national.

“The second one was revenue transformation. The revenue profile of the country is abysmally low. If you dedicate our whole revenue to fixing roads it will be insufficient. The third is on government assets.

“The law we are proposing to the National Assembly has the rate of 7.5% moving to 10% from 2025. We don’t know how soon they will be able to pass the law. Then subsequent increases are also indicated in terms of the year they will kick in.

“While we are doing that, we have a corresponding reduction in personal income tax. Anybody that is earning about N1.5 million a month or less, they will see their personal income tax come down. Companies will have income tax rate come down by 30% over the next two years to 25%. That is a significant reduction.

“Other taxes they pay are quite many: IT levy, education tax, etc. All these we are consolidating into a single one. They will pay 4% initially. That will go down to 2& in the next few years.”

Economy

Nigerian Economy Surges 3.19% in Q2 2024, Service Sector Leads Growth

Published

2 weeks ago

August 27, 2024

Samed Olukoya

The Nigerian economy grew in the second quarter of 2024 by 3.19% year-on-year, according to data released by the National Bureau of Statistics (NBS) on Monday.

This is an improvement from the 2.98% growth recorded in the first quarter of 2024 and the 2.51% achieved during the same period in 2023.

The growth was driven predominantly by the service sector, which saw a 3.79% growth during the quarter and contributed 58.76% to Nigeria’s aggregate GDP.

The service sector, which includes industries such as telecommunications, banking, and hospitality, has become a significant driver of economic activity in Africa’s largest economy as it diversifies away from its traditional reliance on oil and agriculture.

In addition to the strength of the service sector, the industry sector also posted a positive performance, growing by 3.53% during the quarter.

This is a notable recovery from the -1.94% decline recorded in the same period in 2023.

The industry sector includes manufacturing, construction, and utilities, which have benefitted from increased investments and improvements in energy supply.

The agriculture sector, a longstanding pillar of the Nigerian economy, experienced a modest growth of 1.41%, slightly lower than the 1.50% recorded in the second quarter of 2023.

Despite the slower growth, agriculture remains vital to Nigeria’s economy, providing employment to millions of Nigerians and contributing to food security.

The overall 3.19% growth in GDP highlights the resilience of the Nigerian economy despite ongoing challenges such as inflation, currency depreciation, and insecurity.

Analysts had predicted a modest growth rate of around 3.16% for the second quarter, closely aligning with the actual performance.

The Financial Derivatives Company (FDC) also forecasted Nigeria’s annual average GDP growth to reach approximately 3.07% in 2024, which is consistent with the International Monetary Fund’s (IMF) revised projections.

The Q2 GDP performance supports these forecasts, providing cautious optimism for the remainder of the year.

While the growth of the Nigerian economy is a positive development, challenges remain. Inflation, particularly in food prices, continues to strain household incomes, and the naira’s depreciation has increased the cost of imports.

Also, infrastructure deficits and insecurity in various regions of the country pose obstacles to sustained economic expansion.

Despite these challenges, the continued growth in the service and industry sectors demonstrates Nigeria’s capacity to adapt and evolve in an increasingly diversified economy. If these sectors maintain their current trajectory, they could help mitigate some of the pressures facing the economy and improve living standards for Nigerians.

The government’s focus on economic reforms, including efforts to attract foreign investment, improve infrastructure, and enhance security, will be crucial in sustaining and building on the positive GDP growth in the coming quarters.

Economic diversification remains a key goal, and the strong performance of the service sector is a promising sign that Nigeria is moving in the right direction.

With cautious optimism, experts are hopeful that Nigeria can leverage its expanding sectors to achieve sustained economic growth and create more opportunities for its growing population.

Economy

WTO’s Okonjo-Iweala Points to Declining Nigerian GDP Growth as Major Concern

Published

2 weeks ago

August 26, 2024

Samed Olukoya

Ngozi Okonjo-Iweala, Director General of the World Trade Organization (WTO), has raised concerns about the country’s declining GDP growth.

Speaking at the annual General Conference of the Nigerian Bar Association (NBA) on Sunday, Okonjo-Iweala highlighted a troubling trend that has marked the Nigerian economy since 2014.

Addressing an audience of legal professionals, policymakers, and economists, Okonjo-Iweala painted a grim picture of Nigeria’s economic performance, noting that the nation’s GDP growth rate has significantly deteriorated over the past decade.

She observed that between 2000 and 2014, Nigeria enjoyed a relatively robust average GDP growth rate of 3.8%, which notably outpaced the population growth rate of 2.6% annually.

This period was characterized by substantial economic advancements and improvements in living standards for many Nigerians.

However, the post-2014 era has been marked by economic stagnation and decline. According to Okonjo-Iweala, Nigeria’s GDP growth rate has turned negative, recording a troubling average decline of 0.9%.

This reversal, she argues, reflects the government’s failure to sustain the positive economic momentum achieved by previous administrations.

“The contrast between the two decades is striking,” Okonjo-Iweala said. “While the early 2000s brought significant economic progress, the subsequent years have seen a marked decline in GDP growth, which has directly impacted the average Nigerian’s quality of life.”

The WTO Director General attributed this decline to a combination of factors, including inconsistent economic policies, lack of effective reform implementation, and broader macroeconomic challenges.

She said despite various reform attempts and temporary economic improvements, Nigeria has struggled to build on and consolidate these gains.

“The inability to sustain economic growth has had severe repercussions,” Okonjo-Iweala continued. “Many Nigerians are facing diminished job prospects and reduced well-being, as the benefits of earlier growth have not been maintained or built upon.”

In her address, Okonjo-Iweala urged for urgent and comprehensive economic reforms to address these challenges.

She called on Nigerian policymakers to focus on strategies that promote sustainable growth, enhance economic stability, and improve the overall quality of life for the populace.

The call for action comes at a time when Nigeria is grappling with various economic pressures, including inflation, currency depreciation, and unemployment.

Okonjo-Iweala’s remarks underscore the need for renewed efforts to stabilize the economy and implement policies that can drive long-term growth and development.