Federal Lawmakers Sing Discordant Tunes on 2020 Budget

Federal Lawmakers Sing Discordant Tunes on 2020 Budget
Deji Elumoye, Chuks Okocha and Adedayo Akinwale write that members of the National Assembly hold divergent views on the 2020 Appropriation Bill recently  presented to the legislative arm  by President Muhammadu Buhari
Senators and Honourable members of the House of Representatives took time to dissect the N10.33 trillion budget estimate for the 2020 fiscal year after the recent presentation of the Appropriation Bill to the joint session of the National Assembly by President Muhammadu Buhari. While some applauded the provisions of the budget, others held contrary views and faulted the budget estimate which they termed anti-people.

The debate on the appropriation bill, which continued has since then  had senators making their contributions  on different aspects contained in the budget proposals.

Some of the lawmakers during the debate on the proposals drew the attention of the executive arm of government to certain areas that needed some tweaking to enhance the economy
Leading the lawmakers who punctured the provisions of the budget is the Senate Leader,  Senator Yahaya Abdullahi who noted that capital budget of N2.14 trillion to Gross Domestic Product (GDP) ratio is  rather  too small adding that the injection of this amount is a mere drop in the ocean and Is incapable of stimulating the economy to higher growth, wealth creation and employment generation. He emphasised that the nation’s problem has to do with the fact that for over 40 years, “we have been operating an economy based on an expected revenue from oil. This has Ied to underperformance and most recently, recession. When we realized that we must diversify, we refused to also accept the fact that we have to change our approach to planning, revenue generation, and budgeting.”

Commenting on other economic parameters of the budget proposal,  Senator Abdullahi stated that an economic Growth Rate of 2.93% for a population of nearly 200 million, is only marginally above population growth rate at 2.6%, annually.  He expressed concern that the country’s dependence on crude oil exports does not present a bright scenario for Nigeria’s healthy growth. He averred,  “The projections of increased oil production averaging 2.18 million barreIs/day, in the medium term, are subject to very high risks that have had devastating consequences in recent times. Volatility, both at the international spot market and in the Niger Delta are factors that could make these expectations only tentative.
“The Borrowing Programme, projected at N1.7 trillion, on 60:40 ratio,(domestic:external), could be a good starting point. But there are lots of foreign loan sources with reasonable concessionary terms that government should explore to further whittle down the ratio, say to 30:70, in favour of external sources.
“Relating directly to the above is the case of debt servicing burden. The logic is self-evident that seeking cheap funds abroad will reduce the burden of borrowing to repay huge domestic debts. This could undermine growth by denying the real sector access to cheap domestic loans. As it stands, the cost of domestic borrowing is becoming too high.”
According to him, the continued pursuit of CBN’s restrictive monetary policy in the face of a clear economic necessity to reflate the economy, particularly by ensuring cheap money to power the real sector of the economy, is still baffling. He further said, “I have, on the floor of this chamber, repeatedly called for the realignment of the country’s monetary and fiscal policies to ensure the right structural momentum in the economy.
On the projected N2.46 trillion Capital Expenditure which he described as paltry adding that the pace of funds released to the Ministries, Departments and Agencies (MDAs) in the 2019 budget is contrary to efforts to strengthen the country’s full recovery from the recent recession.
According to him, “The projected high deficit of N2.18 trillion for 2020 is a direct function of the economy-wide revenue shortfalls, as well as the choice and cost of borrowing. Government, particularly the collecting agencies, must improve on their collection capacity. But to do this, there must be robust investments in the real sector so that it could grow to earn taxable revenues.
“Debt service as a percentage of Capital Expenditure is still high, while debt service as a percentage of revenue should be diminishing, only if we dedicate ourselves to raising more revenue by investing in the real sector to grow the economy and boost employment and productivity; broadening the tax base in order to capture more revenue sources; improving our transparency and reduce pilferage by intensifying the drive against corruption; and ensuring that there is security for economic operators, both local and foreign. He, however, submitted that the economy rests on three pillars namely the oil sector 10% of GDP, import dependent and consumption driven non oil sector (oil revenue dependent) and investment and policy driven non-oil sector .
The Senate Leader emphasised that the oil sector is most dominant because despite contributing only about 10% of GDP, it drives over 61% of the economy because it accounts for 80% of government revenue and 95% of foreign exchange.
According  to him, the import dependent and consumption driven non-oil sector accounts for 52% of GDP, relies on the oil sector for foreign exchange and capital inflows to finance import of intermediate/finished goods, imported raw materials and semifinished products and services for manufacturers, real estate, public administration, trade, construction and financial services. He further said, “investment driven non-oil sector accounts for 39% of GDP, does not rely on the oil sector or foreign exchange remittances, for instance, Agriculture, arts, entertainment, administration. support services and some local manufacturing relying almost exclusively on locally sourced talents, labour and raw materials.
“The first and second pillars rely an unpredictable and volatile international oil prices and peace in the Niger Delta. The third pillar (39%) depends on security, ease of doing business, good weather and appropriate policy decisions (anti-corruption, transparency initiatives, infrastructural development initiatives, good investment decisions, etc.)
“Thus the object of our development policy should be to harness resources from the 1st and 2nd pillars for the development of the 3rd pillar by increasing its share of the GDP, and expanding its capacity to employ people by enhancing and expanding the use of local resources (raw materials), talents and labour.
Senator Abdullahi therefore submitted that “due to the volatility of the international oil market, the time to do this is now” and enumerated the procedure to include “restructuring and funding of National security institutions and modernizing and upgrading their human and material assets, massive investment in agriculture and local processing and vertical integration of agriculture and industry, (direct assistance to farmers and integrating them with local manufacturers), value addition investments in oil processing and petrochemical industries, particularly in the Niger Delta and development of infrastructure, railways, highways, ports, inland waterways, power, airports, etc”.
Others, according  to him, include social investment in education, health and poverty eradication; recapitalization of the domestic productive sector through lower interest rates, (deposit banks); access to development finance (MSME, development banks, etc.) repayment of domestic debts; targeted and sustained support for the arts and local entertainment industry; high-tech/ICT soft and hardware start-ups support and investing more in peace-making and peace-building in the Niger Delta region.
On his part, Senate Deputy Minority Leader, Senator Emmanuel Bwacha,  wondered why proper monitoring of the budget implementation had not been in place for several years.
According to him, “the President presents budget every year but we do not take disciplinary measures expected to make the budget effective simply because we like to speak from both sides of our mouths. It has become an annual ritual and we still do it. The President by tradition,  would lay the budget and whatever comes out of it is nobody’s business. I’m saying this because since 1999, budget implementation has not reached 70 per cent. This is very worrisome.
“We are discussing the 2020 budget estimates,  is it fair to say we have a 2019 budget which has not been implemented?  As we speak now,  nothing has been done.  We have the 2019 Appropriation Act and we are discussing the 2020 budget proposal. We refused to address this aspect of our shortcomings.
According to him, no nation moves forward without discussing what happened in the past as some of the projects being implemented now are not even in the 2019 budget while also chastising the National Assembly for not carrying out the required oversight on the budget implementation.
Bwacha posited that,  “As parliament, we do not care to follow up by asking questions for obvious reasons. Oversight functions has also become a ritual. We have to take it seriously as a parliament. We need to diversify our economy because we are operating a mono economy. However,  the budget estimates before us did not reflect this posture.
Bwacha further lamented  that “the allocation to the agriculture sector does not really portray a nation that is prepared to diversify.
“We need to walk the talk if we really want to achieve a significant growth in our economy. This is a worrisome development in our budget system. We do not take budgeting as a serious business. It may be difficult to achieve 100 per cent implementation but we could achieve a significant improvement in our budget implementation.
 Chairman of the Senate committee on Diaspora, Senator Ajibola Basiru, on his part, faulted the projected revenue saying, “the revenue projections and infrastructure show a 70 per cent deficit in the 2019 budget and in  2020, it has already been highlighted that N2.18tn will be the proposed deficit.”
Ajibola further said, “people are looking at allocation to key sectors and the revenue to fund the projects like for instance, when you talk of the N256 billion being allocated to Works Ministry, I have it on good authority that what is even required to take care of the outstanding in the Ministry of Works and Housing is in the excess of N500 billion. Yet many people are hailing the N256 billion allocated for Works, describing it as huge.”
Chairman of the Senate committee on Primary Healthcare  and Communicable Diseases, Senator Chukwuka Utazi, in his reaction, canvassed for tax exemption for all pharmaceutical items while also calling for work to resume on all abandoned federal roads citing the Enugu- 9th Mile-Nsukka and Benue roads one of the federal roads requiring urgent attention.
 Senator Isyifanus Gyang, however submitted that what  Nigerians want is how the budget will transform their lives and improve security across the country.
He also criticised the N100 billion voted  for defence, describing it as inadequate saying with the security challenges facing the nation the vote won’t be sufficient to address the problem.
Commenting on infrastructure deficits and abandoned projects, Gyang expressed hope that the budget would address  the poor road network along the  Akwanga -Jos roads.
While calling for reduction in the  cost of governance and blocking of all leakages in government revenue, he also queried the 2.3 millions barrel estimate of crude oil, saying it  is over ambitious.
 Nigeria, he said, may not meet the projected revenue target, adding that,  “we are spending what we plan to earn as all earnings are going to current expenditure and this imbalance should be addressed.”
Chairman of the Senate committee on Petroleum (Upstream), Senatot Albert Bassey Akpan, on his part,  canvassed for the amendment of the deep and offshore bills to reflect the welfare of the oil communities, while  calling  for a balancing of the allocation to the various sectors.
Former Deputy Governor of Akwa Ibom state, Senator Chris Ekpenyong, in his reaction, submitted that the budget estimate shows wisdom and dexterity of plans by the President.
He advised that the budget should actually create jobs for the teeming unemployed youths adding that “there are many poor people, let the budget work for the people let’s find a definitive role that will aid ease of transportation and create wealth.”
Chairman of the Senate committee on Public Accounts, Senator Mathew Urhoghide, on his part, advised that poor revenue generation which has been the bane of effective implementation of yearly budgetary proposals, must be tackled by blocking all the loopholes if 2020 budget is to succeed.
His position was not different from Bwacha, “We must put our mouth where our money is  meaning that, as parliamentarians, more thorough oversight functions must be carried out on all revenue generating agencies.”
Berating the executive arm of government, Senator Enyinnaya Abaribe (PDP Abia), described the 2020 budget as a ‘Budget of Taxation’,  full of sounds,  signifying nothing.”
Abaribe was visibly irked that the budget was based on many assumptions, including a projection Assumptions of oil selling at  USD57 per barrel.  He reasoned that, “Our projection would be off the mark if the crisis in the Middle East does not continue  The assumptions of 2.3 million barrel a day is off  the mark.  Why increase to 2.3, why not maintain the 2019 position of 1.8 million barrel a day? “This is not a sustainable budget,” he concluded. He queried the rationale behind a budget that has N2.8trillion for deficit and N2.4 for debt servicing.  This, he said is already N5.2 trillion put together  out of a budget of N10.3 trillion.  According to him,  “what will the budget achieve  when half of the budget is already gone to debt related issues.”
In the estimation of Senator Abdullahi Sabi (APC Niger),  the budget plans to address infrastructural deficits in the country. “This budget has addressed how to sustain the micro and small businesses as well as ease of doing business  If properly managed,  it will help address issues of deficits and infrastructural issues.  This budget will address the change and welfare of Nigerians.”
The contentious issue of proposed increase in VAT from 5% to 7.5% was uppermost in the submission of Gabriel Suswam. (PDP Benue). He contended, ” This budget is very ambitious.  The economy has contracted. I am worried about revenues.  I am worried that VAT moved to 7.5 percent. The small business and micro business may not survive.   It cannot achieve the target of 3.9 projected growth.  To raise funds and revenue from VAT will contract the economy.  N2.4 trillion to service debt.  Borrowing on 1.7 trillion and by next year,  this will not be sustainable. The revenue is not realistic.”
Commending the return to old budget cycle of January to December, Barau Jubrin (APC Kano), Chairman Senate Committee on Appropriation held that based on VAT, the revenue projection was achievable and that government has done well.  He said, “This is an attempt to move away from dependency on oil. This will help diversify the economy.  MDAs should be on their toes to actualise the revenue projections of the budget. The benchmark of the oil at 1.8 million  barrel is possible. The budget is conservative  pegging the price of oil at $57.” He commended the President for being realistic on the budget. According to him tthe budget called for prudence in government spending.
Expressing happiness on budget for roads and other infrastructure, Ike Ekweremadu (PDP. Enugu), noted that there must be adjustment of the proposal where necessary..  Ekweremadu, however, advanced strategies for achieving the goals of the budget. He wants the Senate to ensure implementation of the budget. He abhorred a situation where the masses have to bear the unpleasant impact of revenue generation, while advising the government to close leakage in the revenue collection system. He insisted that all MDAs must be held accountable for their actions.  Calling for a better attention on solid minerals, he tasked all stakeholders to counter the work of saboteurs on the PIGB bill.
Countering the mounting dissent against increase in VAT, Adamu Aliero (APC  Kebbi), argued that Nigeria has the lowest VAT rate  in West Africa.  He said this will contribute to the revenue profile of the budget  Aliero said it was a thing of joy that 85 percent of VAT proceeds  will go to states.  This will help fund critical infrastructures. The budget, he said, will not affect the masses negatively.  He commended the President for  increasing the foreign exchange more than what he met on assumption of office.  On the social investments project,  he called for proper management and prudence because the  poverty level was high. Aliero seemed to be alone when he asked that the benchmark be moved to $60 per barrel, without giving reasons for his suggestion.
Lawrence Orujiafor ( APC.Bayelsa) argued that if any meaningful impact is to be achieved attention must be paid to power generation as the small and micro business rely heavily on power generation.

Senator Opeyemi Bamidele (APC Ekiti) commended both the executive and legislative arms of government for ensuring that the 2020 Appropriation Bill was laid before the National Assembly in such a manner that shows it will not be business as usual.

The lawmaker while drawing the attention of the upper chamber to legal concerns expressed by some Nigerians over the conflict likely to arise as a result of a clash in the budget cycle for 2019 and 2020, said the yet-to-be implemented aspects for the 2019 fiscal year will be collapsed into the 2020 budget.

Speaking on the loan component of the budgetary proposal, Senator Bamidele cautioned the Federal Government against securing domestic loans as proposed.

“Mr. President made it clear that the N1.7 trillion out of N2.4 trillion that would be borrowed to finance budget deficit this year will come from domestic loan, while about N700 billion will come from foreign loan.

“If we add this to what has already being borrowed from domestic sources, it means a growing figure.

“My concern is that much as government needs to borrow money from domestic sources, I fear that if care is not taken government might become a major competitor in a way that might stifle the capacity or ability of the private sector to be able to draw the necessary loan facility from the local banks. This is a cause for concern and something government needs to look into,” Bamidele said.

He added that the decision of the Federal Government to increase budgetary allocation for the National Human Rights Commission from N1.5 billion to N2.5 billion is a gesture which finally debunks insinuations that the government of Nigeria had annually starved the commission from having access to funding.

The lawmaker, who called for increased funding for the Judiciary, added that the Federal Government must consider addressing aspects that have to do with remuneration of judges.

Chairman of Senate committee on Ethics, Privileges and Public Petitions, Senator Ayo Akinyelure, in his submission  advised that, “all agencies of government saddled with revenue generation should be thoroughly monitored and quarterly assessed on whether they are meeting revenue target set for them or not.”
Senator Dauda Yaro while canvassing for the reduction of the budget size said since it was not possible to meet the N8.155 trillion targeted total revenue of  the budget, the entire budget size should be reduced. According to him, projecting N8.155 trillion as total targeted revenue and N10.33 trillion as proposed total aggregate expenditure , indicate spending beyond ones earnings which is increasing deficit component of the budget on yearly basis.
Senators Kola Balogun and Ibikunle Amosun also called for serious revenue drive in financing the budget.
Other senators canvassed for aggressive revenue drive while kicking against the proposed Value Added Tax (VAT) increase.
Specifically, Senator Onor  Sandy Ojang, described the proposed VAT increase from 5% to 7.5% as regressive taxation.
According to him, increase in VAT is like a short cut to revenue earnings with attendant consequences of shrinking the economy and increasing the unemployment rate .
However, Senators like Chukwuka Utazi, Kabir Barkiya, Ibikunle Amosun, Ibrahim Shekarau, Abdul-Kwari Sulyman, submitted that the budget proposals wee realistic and achievable.
Some members of the House of Representatives also expressed their views on the proposed budget.
 Hon. Babajide Obanikoro, in his reaction lamented that the amount allocated to health was grossly inadequate, considering the over 180 million population of Nigeria.
On his part, Hon. Dan Asuquo, expressed dismay that details of the budget were not available to enable members make informed debate on the Appropriation Bill.
According  to him, “I am commenting on the speech and the intention of the executive for 2020. I don’t have the details yet. I cannot speak about the budget I don’t have the details. For us, I will advise the leadership of the House, Senate and the Executive that Nigerians want the breakdown  of the budget. I will address the House when the details of the budget comes.”
House Deputy Minority Leader, Hon Toby Okechukwu, noted that it was one of the earliest times that a budget was laid before the National Assembly, adding, “budget since 2015 have always been given names, like ‘Budget of Consolidation’, etc. Unfortunately this time around, there is no nickname for this budget.”
Hon. Yusuf Gagdi, on his part, picked holes in the borrowing plan and debt servicing as proposed in the budget adding that the N160 billion voted for education is insufficient.
He argued that, “The capacity of any government is dependent on it’s own educational system. As the Giant of Africa, education budget should supersede others in Africa.”
Hon. Ken Chikere, emphasised the need to know the population of the country to enable it generate the necessary data and statistics for proper budgeting system.  He also argued that there  is need to ensure proper implementation of the 2020 budget, when it is eventually passed.
Chikere said,  “I plead with the House to see there is proper implementation of the budget. It is our duty now to look at those estimates and come up with a budget. We should be mindful of the implementation of the budget. Lack of implementation is illegal. This country as presently constituted cannot make any progress unless the senate and the house come together.
“We cannot make progress if we don’t know how many we are. We must not be shy in discussing how many we are. We are an unproductive 200 million. I am not one of those who are carried away by the talk of 200 million population.
“I think this budget should be inclusive. Take the case of Rivers State, for instance, there is no  single federal government project there. We have a state that is not included in the projects. Our budget should also look at the issue of unemployment, insecurity and general infrastructure,” he noted.
On his part, Hon. Benjamin Kalu, advised the House to ensure that business climate in Nigeria is attractive and emphasised the need for the government to patronise made in Nigeria goods to grow the economy.
“My problem is the current business environment that we have. It is high time we reformed the economic environment like Rwanda. We need to patronize our own like Innoson Motors”, he said.
QUICK FACTS:
*President Muhammadu Buhari recently presented N10.33 trillion budget estimate for the 2020 fiscal year before the National Assembly
*This is the earliest time an annual budget has been brought before the federal legislature since the return to democracy I’m 1999
*The budget seeks to return to old cycle of budgeting between January and December, each year. Already, this has created a legal problem since the 2019 budget followed a budget year that begins in April
*Since 1999, budget implementation has not reached 70 per cent
*The capital projection is N2.14 trillion, out of N1.7 trillion will be borrowed
*Proposed target revenue for the 2020 budget is N8.155 trillion
*The 2020 budget proposes a N2.18tn  deficit
*The 2020 budget is predicated on revenue from sale of 2.3 millions barrels of crude oil per day, which will be sold at USD57 per barrel and a 7.5% increase in VAT
*Eighty five per cent of VAT proceeds  will go to states to  fund critical infrastructure
*N2.4 trillion of the 2020 budget is reserved for debt servicing

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