Unfinished Business in 2012 Budget

09 Dec 2012

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National Assembly

In this analysis, Ndubuisi Francis x-rays the 2012 Budget and the attendant controversy trailing its implementation

The level of implementation of the 2012 Budget has continued to elicit informed discussion less than a month to the end of the year.
The National Assembly, particularly, the House of Representatives— has been in the vanguard of the campaign for a religious implementation  of the 2012 Budget.

As at July, level of implementation of the budget became a subject of intense controversy and had pitted the executive arm of government against the National Assembly, particularly, the House of Representatives.

Perhaps, to underscore the premium it places on the implementation of the budget, the lower chamber took a rather curious stance with a threat to impeach President Goodluck Jonathan if implementation did not record an appreciable level in September when the lawmakers would have resumed from recess.

Different figures were also bandied between the executive and the two chambers of the National Assembly as to  what was in deed the actual percentage performance of the budget. However,  a dispassionate appraisal of the budget would have made all this dissipation of energy and time absolutely unnecessary.

A flashback would establish that the 2012 Budget effectively became implementable in April after the passage of the Appropriation Act towards the end of March. Therefore, while not holding brief for any arm of government, it would be expecting a near impossible task—in deed a utopian order that the budget should be at 70 or 80 per cent implementation by July.

As at July 2012 (three months after the budget became effective), a total of about N404 billion was released to the ministries, departments and agencies (MDAs), which the Ministry of Finance said,  was 56 per cent implementation— an improvement over 39.2 per cent in May. The lower chamber would have none of this, insisting that performance was at 34 per cent

The lower chamber of  would not take this as it faulted the claim by the executive that the level of implementation of the 2012 Budget had risen to 56 per cent as at June 20, insisting that on the contrary, implementation then stood at 34 per cent.
But the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala insisted that with a total capital budget for 2012 standing at N1.3 trillion, and releases as  at July standing at N404 billion, a cash-backed portion of the capital budget being N324 billion, 56 per cent had been utilised

“Nigerians should be reassured that the 2012 Budget is being managed in a way that protects and enhances the best interests of the country,” she said, adding that transparency and prudence remained the key priorities of the federal government in the management of the 2012 budget.

As at  September, a total release of  N710.4 billion, out of which N535.2 billion was cash-backed, and N320.9 billion of the amount utilised by the MDAs— representing  58 per cent of the cash-backed funds.
In the fourth quarter (a few weeks ago), another N300 billion was released to the MDAs, bringing the capital releases to N1.01 trillion, which represents 75 per cent of the total capital budget of N1.3 trillion.
It is in deed not so much the figures but what the MDAs have achieved this year.
While not discountenancing the fact that there have been grey areas in the budget implementation by some MDAs, the unassailable fact that improvements have been recorded in various sectors of the economy, including power, agriculture, job creation, transportation, and ports reforms, among others.

In the 2012 Budget, the government outlined some projects and programmes that were to be implemented in key sectors of the economy in order to improve the livelihood of Nigerians.

It is an understatement that power supply in many parts of the country has improved to a consistent level of 15 hours per day even as rehabilitation of existing power infrastructure has yielded up to 1000 megawatts of additional electricity.

NIPP projects are being fast tracked, which will lead to an additional 1055 megawatts by end 2012. The prospects for progress in power supply have increased significantly with the imminent conclusion of the privatisation programme.

In his 2013 Budget presentation to the National Assemby on October 10, 2012, President Jonathan had also alluded to the Power Sector Reform, which has remained on course.

“Our efforts have begun to pay off as we have improved power supply to various parts of the country. Our gas-to-power and other initiatives are making this possible, but I acknowledge the fact that we still have a long way to go.

“As you may be aware, the ongoing privatisation of the generation and distribution companies has reached an advanced stage. In some cases, Preferred Bidders have already emerged.  When completed, the programme will bring into the sector significant private investment, along with the requisite power output,” he said.

In line with the Power Sector Roadmap, a number of goals in the power sector reform programme have been vigorously pursued, and these include the completion of new units at thermal power stations, to increase generation, and the rehabilitation of existing power infrastructure.

There is also a very visible facilitation of a power and gas financing package, which includes Government Guarantees, proposed Infrastructure Bonds of about $1 billion, and $150 million of external funding from the African Development Bank to support continued gas supply and the liberalisation of the power sector.

Another area where the implementation of the 2012 budget cannot be glossed over is the agricultural sector where the Federal Government evolved a novel idea of boosting farming input with the provision of a N30 billion facility to farmers in partnership with some commercial banks. The guaranteed facility is at a single digit interest of about 7 per cent.

The government has also instituted key policy reforms to establish staple crop processing zones aimed at attracting the private sector into areas of high production, reducing post-harvest losses, and adding value to locally produced commodities.

A total of $7.8 billion investment commitments to the agricultural sector have also been attracted, and these investments, and the value chain approach being used to transform the sector have the capacity to create 3.5 million additional jobs in the medium term by 2015.
The incentives to support cassava value chains, including zero duty on machinery and equipment to process high quality cassava flour have also yielded immense dividends. Cassava bread is increasingly commercially available with 20 per cent cassava flour content.
A total of one million metric tonnes of dried cassava chips, are also being exported to China this year.

As part of overall efforts to achieve self-sufficiency in rice production, 13 new private sector rice mills with a capacity of about 240,000 metric tonnes, which buy and process local paddy and create employment for Nigerians, have been established this year.
Under various social housing programmes, about 2,000 housing units have been completed, while over 24,000 housing units are at various stages of completion.

This is outside the housing projects being constructed for the Armed Forces and paramilitary services even as the Federal Government entered into partnership agreements with several states for the provision of 6,000 housing units.
Another 600 housing units have already been completed under the direct construction scheme of the Federal Housing Authority, in the states.
Another area the success of the 2012 Budget should be gleaned from is in the ports where the reforms have really made visible impact. The most significant is the clearance time for cargoes in the ports, which has been reduced from 39 days to seven days.
In the transport sector, the railway modernisation programme is progressing, and rail services have bounced back to life like the proverbial phoenix. The Lagos-Kano line as well as the Port Harcourt-Maiduguri line are functional while the Abuja-Kaduna line is now at 46 per cent completion. Similarly, work on the Lagos-Ibadan line is to commence just as the Itakpe-Ajaokuta-Warri line. The government is also fast-tracking the implementation of the mass transit Abuja Light Rail system. Recently, a $500 million loan facility was secured from the China Exim Bank. With a target date of 2015, when completed, it is expected to significantly improve transportation for all residents in the  FCT, especially workers living in the satellite towns.

Similarly, the inland waterways programme is on track to boost commerce in the surrounding communities, and the Onitsha Inland Port commissioned on August 30, 2012, is a pointer.

The aviation sector provides one of the most visible signature tunes of the success of 2012 the Budget, and by extension, the transformation agenda of the incumbent administration. Efforts to transform the sector and make it conform with globally accepted standards has led to the remodelling of 11 airports. The General Aviation Terminal (GAT) of the Murtala Muhammed Airport has already been completed at a cost of N648 million, an amount considered even by critics as feat.  Five brand  new terminals are also billed to be built in Kano, Port Harcourt, Lagos, Abuja and Enugu, and six perishable cargo terminals, early next year.

In line with international best practice, these new terminals will be private sector-managed.The upgrading of airport runways has also reached advanced stages of implementation across virtually all the nation’s 22 airports.

Besides the aviation sector, the just concluded rehabilitation of the Third mainland Bridge in Lagos earlier than projected completion time is another milestone attributable to the religious implementation of the 2012 Budget.

The Federal Executive Council (FEC) has approved N170 billion for the rehabilitation of all the federal roads in the country before the end of the year. With the rains receding, the Ministry of Works  says it would intensify the construction and rehabilitation of major roads in the country.
The prudent management of the budget has also reduced drastically, abuses associated with the petroleum subsidy scheme. N888 billion was provided for subsidy this year, and up to the fourth quarter of the year,  the vote is yet to be exhausted unlike last year where about N2 trillion was paid as subsidy claims.

The YouWin programme, which the government is supporting young entrepreneurs to create  between 80,000-110,000 jobs, has continued to wax stronger. The numerous testimonies from young men and women who have been able to expand their businesses through the programme attest to its success.
The government has also launched the Community Service, Women and Youth Empowerment Programme (CSWYEP) under the SURE-P, which is working in a pilot phase in 14 states, and to be replicated in other states shortly weeks.
The Graduate Internship Programme, in which participating private companies provide one-year internships to 50,000 graduates, paid by the Federal Government, is also a product of the 2012 Budget. So far, 700 firms, and 20,000 young graduates have applied to participate in this scheme.

In September, the fourth quarter release of N300 billion was announced by the Ministry of Finance, which brought total releases at N1.1 trillion, representing 75 per cent of the total capital budget of N1.3 trillion. Of this sum, the ministry had on Monday disclosed that N170 of this was cash backed, contrary to claims that it was not so.

The Ministry of Works was said to have received N44.7 billion of the amount to ensure that key federal highways are put in motorable condition for the festive season and for more permanent work thereafter.
“Considering the fact that the 2012 Budget has been implemented for just eight months, this is, overall, a good performance which we can build on,” Okonjo-Iweala said.

If these figures have not been controverted by the National Assembly and other critics of the budget,  what should be of interest at this point is not the percentage implementation of the budget but empirical evidence that various sectors are impacted positively.
From all indications, the 2012 Budget has not fared badly in terms of implementation in the past eight months.

Tags: Business, Nigeria, Featured, 2012 Budget

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