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• FG to raise $N90b from sales of power firms
• Debts rising because we borrowed our way out of two recessions, says Buhari
• Experts frown on non-compliance with full implementation, reliance on crude oil to fund budget
• Point ways to reduce borrowing
• APC urges speedy passage
• Lawan cautions Buhari to reduce borrowing, explore other sources of funding
President Muhammadu Buhari, yesterday, before a joint session of the National Assembly, unveiled a record N16.39 trillion ‘‘Budget of Economic Growth and Sustainability’’ for 2022, with a projected 25 per cent year-on-year rise in government spending as the economy struggles with the impact of the pandemic.
The President further put the total federally distributable revenue at N12.72 trillion, while total revenue available to fund the budget is estimated at N10.13 trillion, which includes grants and aid of N63.38 billion, as well as revenues of 63 Government-Owned Enterprises (GOE).
He also projected oil revenue at N3.16 trillion, non-oil taxes at N2.13 trillion and FGN independent revenues to be N1.82 trillion.
He expressed the plan to finance the N6.26 trillion deficit mainly by new borrowings totaling N5.01 trillion, N90.73 billion from Privatisation Proceeds and N1.16 trillion drawdowns on loans secured for specific development projects.
The budget for Africa’s top oil exporter was based on a conservative oil price benchmark of $57 per barrel; daily oil production estimate of 1.88 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day).
According to IMF data, Nigeria has among the lowest revenues globally, with government revenue between 2015 and 2019 at 7.9 per cent of GDP, compared with a Sub-Saharan African average of 12.7 per cent and a global average of 29.8 per cent.
Speaking before a joint sitting of the Senate and the House of Representatives, President Buhari said: “Some have expressed concern over our resort to borrowing to finance our fiscal gaps. They are right to be concerned. However, we believe that the debt level of the Federal Government is still within sustainable limits.”
This is in continuation of the unbundling and privatisation of the power sector to establish a competitive and efficient market to attract investment, increase revenue and provide a reliable and cost-efficient power supply.
The NIPP, which was established under the administration of President Olusegun Obasanjo, is the government vehicle that owns several power generation plants in the country. The government, however, did not reveal which of the power assets would be sold.
Several years after the unbundling and the eventual sale of the power firms, citizens and businesses still do not have a reliable power supply. While the country has an installed capacity of 12,522MW, it is barely able to generate around 4,000MW, which is insufficient for the population of over 200 million.
Although there has been a lot of criticisms over Nigeria’s mounting debt, the President said the country is in so much debt due to borrowing to survive two recessions. He explained that part of what necessitated the borrowings was the economic recession that hit the country, adding that the nation does not have a debt sustainability problem, but a revenue challenge.
He further explained that his government has endeavoured to use the loans to finance critical development projects and programmes aimed at improving Nigeria’s economic environment and ensuring effective delivery of public services to our people.
For President Buhari, the loans acquired have been and will continue to be focused on: Completion of major road and rail projects, effective implementation of power sector projects, provision of potable water, construction of irrigation infrastructure and dams across the country and critical health projects such as the strengthening of national emergency medical services and ambulance system, procurement of vaccines, polio eradication and upgrading Primary Health Care Centres across the six geopolitical zones.
Speaking on the issue, the Director, Institute of Fiscal Studies, Godwin Ighedosa, said: ‘’It is sad that subsequent governments have always refused to follow appropriation laws while implementing the budgets. Monies are not supposed to be diverted from one ministry to another but to be used for what purpose they are meant for in the various MDAs.”
He called on the government to diversify the economy into ICT areas, transportation and embark on a Public-Private Partnership (PPP) model to fund developmental projects.
An economist, Tope Fasua, faulted the lack of innovation in government and taking the easy way out of economic underdevelopment by relying heavily on crude oil sales and borrowing to fund annual budgets.
Fasua said Nigeria is still trapped under the yoke of heavy borrowings. “The budget has not gone out of the vicious circle of crude oil being the main source of revenue for this country. We are still talking about crude oil, how many barrels we can sell and how many barrels we can produce.
“The way we are going now, the fear is that will we may never get out of the budget deficit circle. Nigeria is the second-lowest country in terms of per capita budget, meaning the federal budget is divided by the population, will amount to little. We are not better than Congo.”
He, however, commended the Federal Government for presenting the budget early to the National Assembly.
He said that the government is spending too much-giving people what to eat rather than helping them to fend for themselves by providing enabling environment and the needed infrastructure for the people to use their personal initiatives.
Adi said the near socialist posture of the government, which is the reason for what he called, the handouts it is giving to the people in the form of social intervention, is a huge burden on public finance.
“Let government revive that drive they had in 2018 when they set up the Infrastructure Concession Regulatory Commission (ICRC), which is about identifying and packaging bankable projects.
“If they can do that, I can assure you that more than 70 per cent of what we have as capital expenditure of the government, will go to the market to provide and the government will not need to borrow this heavy.”
He said for the economy to move forward, the government must fix the security problems to create the environment for increased real sector activities, review the foreign exchange policy regime to reduce distortions, eliminate arbitrage opportunities, minimise uncertainties, reduce exchange rate volatility and mitigate investment risks and align CBN financing of deficit strictly to the provisions of the CBN Act.
Newly appointed Chairman, Financial Reporting Council (FRC), Dr. Sam Nzekwe, said while he is not against borrowing, the money must be channeled to infrastructure that will make the country more productive. He said with the dwindling revenue from crude oil, this is the time for the country to do away with petrol subsidy, which he said has been a big drain on the national purse.
On his part, Prof. Muhammad Mainoma, immediate past president of, Association of National Accountants of Nigeria (ANAN), said the only way for the government to reduce borrowing to fund the budget is for it to make the productive sector working.
According to him, “if the borrowing is meant to increase the production capacity, it makes a lot of sense because in the long run, the yield will be more than what we are paying as interest.”
The security forces have been struggling to contain Islamist insurgencies in the Northeast, a spate of mass abductions and deadly bandit attacks in the Northwest, conflicts between farmers and herders in many areas and a general surge in crime.
MEANWHILE, the ruling All Progressives Congress (APC) has enjoined the National Assembly to speedily pass the 2022 budget presented by President Buhari. APC in a statement by its caretaker secretary, John Akpanudoedehe, explained that the call was aimed at meeting the January-December budget cycle.
The party maintained that the proposed budget is designed to accelerate the government’s ongoing efforts to diversify the economy through more support for Micro, Small and Medium Enterprises (MSMEs), continued investment in vital infrastructure, strengthening security, enabling a vibrant, educated and healthy populace, reducing poverty through targeted social investments and ultimately ensuring good governance.
THE President of the Senate, Ahmad Lawan, has, however, cautioned the Federal Government to reduce its penchant for borrowing by exploring other funding sources. Lawan gave the advice in his speech at the budget presentation yesterday.
He congratulated the National Assembly and the Executive for the passage of the Petroleum Industry Bill (PIB) and assent to enact the Petroleum Industry Act (PIA) 2021.
“The ninth National Assembly broke the jinx of the non-passage of the PIB over the years and Your Excellency, you have achieved the feat of assenting to the Bill. Let me also commend you for starting to implement the PIA immediately, with nominations of qualified Nigerians to serve on the Petroleum Down and Midstream Regulatory Authority and Petroleum Upstream Regulatory Commission.
Continuing he said the members of the ninth National Assembly have kept to their promise of passing the yearly Appropriation Bill before the end of the year to ensure that it is signed into law before the beginning of the new year.
According to Lawan, the Nigerian economy and indeed citizens are benefitting from the early passage and assent to the 2020 and 2021 Appropriation Bills.
SOME of the critical ongoing infrastructural projects, according to the President are in the power, roads, rail, agriculture, health and education sectors.
“We have made progress on the railway projects connecting different parts of the country. I am glad to report that the Lagos-Ibadan Line is now completed and operational. The Abuja-Kaduna Line is running efficiently. The Itakpe-Ajaokuta rail Line was finally completed and commissioned over 30 years after its initiation.”
The president said progress is also being made on several power generation, transmission, and distribution projects, as well as off-grid solutions, all aimed towards achieving the national goal of optimising power supply by 2025.
“I am again happy to report that we continue to make visible progress in our strategic road construction projects like the Lagos-Ibadan expressway, Apapa-Oworonsoki expressway, Abuja-Kano expressway, East-West Road and the second Niger bridge. We hope to commission most of these projects before the end of our tenure in 2023.”
