Economy Suffers as Politics Takes Centre Stage

Muhammadu Buhari

•Non-release of capital vote takes toll on roads, GDP growth
•Advertisers lament low patronage ahead of 2019 elections

Ndubuisi Francis, Chineme Okafor, James Emejo in Abuja and Nume Ekeghe in Lagos

Few days into the last quarter of the year, the federal government is yet to begin the implementation of the 2018 capital budget, a development that is already impacting the economy adversely.

The N9.12 trillion aggregate budget, which was passed by the National Assembly on May 26, and signed into law on June 20, 2018 by President Muhammadu Buhari, has a capital component of N2.8 trillion.
Over three months after presidential assent and about three months to the end of the year, the implementation of the capital budget has remained in abeyance.

THISDAY investigations revealed that failure to implement the capital vote might have nothing to do with
paucity of funds.
Going by the total revenues so far generated by key revenue agencies, including the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS) as at August, there’s no reason why some releases should not have been effected by now.
According to the NCS’ spokesman, Mr. Joseph Attah, total collections as at the end of August stood at about N792.10 billion.

The FIRS’ spokesman, Mr. Wahab Gbadamosi, also told THISDAY that the revenue generating agency had as at August ending raked in about N3.5 trillion.
Critical government ministries and agencies, including the Federal Ministry of Agriculture and Rural Development, a ministry critical for economic transformation and job creation is currently almost crippled by the continued delay in the release of funds, with serious activities presently lacking.

Only recently, the Minister of Agriculture and Rural Development, Chief Audu Ogbeh, openly expressed concern over the delay in the release of funds.
In the same vein, the Presidential Amnesty Programme (PAP), a major interventionist initiative which has helped to mitigate restiveness in the Niger Delta region is also experiencing financial crunch.

The Senate Committee on Niger Delta lamented recently that of the N65 billion budgeted for PAP this year, only N5 billion had been released, which translates to approximately 7.7 per cent of the budgeted sum.
An assessment of government ministries, departments and agencies (MDAs) currently indicate a lull in their activities owing to the fact that funds have not been released to execute planned projects.
Some of the explanations gathered from unofficial quarters, in the absence of reactions by competent authorities, was that there is no money.

But the argument over paucity of funds flies in the face of stark reality.
The total revenue projection for 2018 is N7.17 trillion.
With over N4.792 trillion revenue already realised from the combined revenue generation by two agencies—FIRS and Customs within eight months, there is no plausible explanation for the federal government’s failure to release even the first tranche of the 2018 capital vote, more than three months after the Appropriation Act was assented to by President Buhari.

The 2018 Budget is anchored on a non-oil revenue projection of N4.18 trillion, an indication that with the combined generation of N4.792 trillion by the customs and FIRS, the federal government had overshot the projection before the third quarter of the year.
Similarly, although the 2018 budget is predicated on a benchmark oil price of $51 per barrel, sales have averaged $60 per barrel since the beginning of the year.

Oil revenue projection for the year is N2.99 trillion.
The failure of the government to begin the release of funds for the execution of capital projects for which reason it introduced expansionary fiscal plans since 2016 has fueled insinuations that the Buhari administration is deliberately applying liquidity squeeze as an underhand ploy ahead of the 2019 polls.

According to speculations, since vote–buying has become a major factor in recent electoral calculations, the non-release of capital vote would create more financial challenges for the electorate, making them easy prey for vote-buying by the ruling All Progressives Congress (APC).

While the speculations make the rounds, the failure of the government to come up with official explanations for the non-release of funds to implement capital projects over three months after President Buhari signed the budget, appear to lend credence to the insinuations.
But given that government spending is critical to economic activities among others, the continued delay in the release of funds is already taking its toll on the economy.

Several contractors, especially those handling road projects have reportedly abandoned such critical infrastructure projects across the country, and laid off their workers.
Several efforts to speak with officials of the Ministry of Power, Works and Housing on their reaction to the non-release of capital vote were futile.
Out of the ministry’s N724,688 billion total budgetary allocation for the year, N682,959,550,242 billion is for capital projects.

Some of the ministry’s key road projects are the 2nd Niger Bridge (N9.2 billion), and the reconstruction and rehabilitation of several roads nationwide (about N344 billion).
Investigations revealed that these projects are currently not actively executed by the contractors.
At some of the project sites, skeletal activities are ongoing, a situation that has worsened the conditions of the roads, especially in the southern part of the country.
In August, THISDAY sought the explanation of the Ministry of Finance on the delay in the release of capital projects vote.

No official was willing to provide any explanation, but a top aide of the immediate-past minister, Mrs. Kemi Adeosun, said that the federal government was on the verge of releasing funds for the implementation of the capital component of the N9.12 trillion 2018 budget in the second week of August.

He had explained that besides procurement issues, the major cause of the delay in commencing the release of the capital vote centred around the recurring controversy over the Federation Account Allocation Committee (FAAC) vis-à-vis remittances by the Nigerian National Petroleum Corporation (NNPC) into the Federation Account.

Remittances by the NNPC had ignited a major disagreement among the FAAC members, with the 36 states of the federation represented by their commissioners for finance refusing to share May and June allocations until issues around an acceptable template by the NNPC were resolved.
He promised that with the FAAC controversy laid to rest, the ministry would immediately commence the release of capital vote immediately.

However, more than a month after the assurance, nothing has been released.
Besides the terrible state of the roads across the country, the non-release of the capital budget is believed to have started taking its toll on the economy generally.

Based on the recent GDP figures released by the National Bureau of Statistics (NBS), GDP growth declined from 1.95 per cent in the first quarter of the year to 1.5 per cent in the second quarter.
The usual argument by the government for introducing expansionary budgets since 2016 was that it was desirous of stimulating economic growth through infrastructure spending.

Having emerged from recession in the second quarter of 2017, the economy grew by 2.11 per cent in the fourth quarter of 2017, 1.95 per cent in the first quarter of 2018, and declined to 1.5 per cent in the second quarter.
Analysts believe the recovery in the economy remains weak and fragile and that Nigeria needs to put more bold reforms to ensure that income begins to grow.

For income to grow, they believe that capital spending is a necessity.
Moody’s Investors Services Limited, one of the leading global rating agencies, had recently pointed out that the capital expenditure portion of the fiscal plan is unrealisable.

Although there have been doubts over the ability of the government to implement the N2.8 trillion capital component of the 2018 Budget with election around the corner, nevertheless, many did not expect that implementation would not have commenced at all about three months to the end of the year.
Asked when the release of capital vote would commence, the Director, Information, Ministry of Finance, Hassan Dodo, in a terse text message told THISDAY: “I am not sure of when sir.”

THISDAY inquiry at the Ministry of Budget and National Planning did not yield the desired result.
The newly appointed Minister of Finance, Hajia Zainab Ahmed, it was gathered, had promised to address the non-release of capital vote.
Analysts believe government needs to spend more to stimulate economic activities, particularly against the backdrop of contraction in GDP in the second quarter as well as the need to improve on external merchandise trade which also declined in the same quarter.

Advertisers Lament Low Patronage Ahead of 2019 Elections

Meanwhile, some advertisers in the country have decried the low pace of activities in the sector few months to the 2019 elections.

The operators who spoke with THISDAY, explained that compared with the 2015 elections, whereby about six months to the elections they had started receiving deluge of political advert, the level of patronage presently remains low.
In fact, they disclosed that ahead of the last general election, they experienced what they termed “space war,” in the outdoor advertising segment.

The Independent National Electoral Commission (INEC) had scheduled the 2019 Presidential and National Assembly elections for 16th February, while the Governorship and State Assembly/Federal Capital Territory (FCT) Council elections have been scheduled for March 2, 2019.

But speaking with THISDAY, the Chief Executive Officer/ Founder of X3M Ideas, Mr. Steve Babaeko said: “I think the last elections was much more vibrant than what it is so far especially for outdoor advertising, I have not seen so much activities.

“I don’t know if it is because they have decided to spend less, and I don’t know what is responsible for this decline but in terms of measure or comparison there has been a decline.”
Continuing, he said: Clearly you cannot compare the activities leading to the 2015 elections with what we have now as the 2015 elections was way much more than what we have right now.

“I think it is also because in this dispensation, most of the candidates are still not sure if they would be the flagbearers. So maybe immediately the candidates emerge, there would be much more in terms of outdoor advertising. Most of the candidates haven’t done their primaries and no flag bearers have emerged.”

However, a Director at JCDecaux, a multinational company, Mr. Opeoluwa Filani said it was still early to make comparison between the previous general elections and the 2019 polls.
“Maybe at the end of October when all the primaries have taken place and once it starts getting closer; we would start seeing more outdoor advertising.”

However, the Group Chief Executive Officer, Algorithm Media Limited, Mr. Seni Adetu, who also bemoaned the low patronage, said: “The unfortunate thing is that if we go by historical trends, we should be experiencing that boom already.
“Remember that elections are in February-March. With the 2019 elections only about six months away, we are yet to witness anything, comparable to same period in the run-in to the 2015 elections, when you could hardly find space on billboards, print or radio. “It may still happen, but maybe relatively close to the elections, which tells me that there is an underlying constraint in the economic power of Nigerians and also suggests to me that the high net worth individuals are not spared.”

However, a practitioner who pleaded to remain anonymous said: “One major reason I would attribute it too is the economy. So what aspirants would do is that they would go full blown towards the end of October to November. For now, it is tactical because it is still at a party level.”