How Public Hearing May Shape the 2020 Budget

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Last week’s two-days public hearing on the 2020 Appropriation Bill by the National Assembly could go a long way in helping to expedite passage of the budget, report Deji Elumoye, Chuks Okocha and Adedayo Akinwale

The N10.33 trillion 2020 budget estimate, presented to the National Assembly by President Muhammadu Buhari on Tuesday, October 8, had been subjected to some scrutiny by various committees of both the Senate and the House of Representatives, which took on ministers and heads of agencies on the budget estimates in the last one week for the next fiscal year.

In the mid of the budget defence, the National Assembly joint committee on Appropriation, on Tuesday and Wednesday last week, put together a public hearing for stakeholders to air their views on the federal budget proposal.

Though the public hearing has come and gone, it clearly pointed out the benefits of the return to the January to December Budget cycle. For about 16 years, the nation’s budget had taken the June to May Budget cycle as the norm.

The public hearing, however, afforded Nigerians the opportunity to actually understand the benefits of the return to the globally acclaimed and accepted January to December budget cycle.

Senate President and Chairman of the National Assembly, Dr. Ahmad Lawan, while declaring open the hearing, explained the importance of the return to the normal cycle to participants, when he said the budget cycle of June to May had created problems for planning and for the proper implementation of the nation’s macro-economic framework.

“The macro framework needs to be reasonably predictable, the way it happens in other climes. It is when the framework is predictable that it can positively influence the micro details in the Budget proposal,” he said.

He commended individuals, civil society organisations, non-governmental organisations, the media and the general public for their interests in ensuring that these participatory and mutually rewarding processes of public engagement were smooth.
According to him, “public hearing is about those wishing to be heard. To decide to be heard takes a lot of courage and conviction. In many cases, it is a product of patriotism and a determination to see that the nation progresses.

“Importantly as well, to be heard is a useful element of democracy, especially when it concerns a vital issue like the Budget. The Budget is critical to economic development and it is even more so for a nation like ours, where our economy needs continuous stimulation.”

The Senate president said a proposal was about fiscal targets, resource allocation, public expenditure policy, productivity and efficiency, explaining that, “we also understand that the process is one of passage, mobilisation and execution”.
He stressed that as representatives of the people, “We continuously hold them in high esteem. We do not show this through rhetorics, but through our actions, either as specified by statutes, or as we deem right.
“The overall essence is not just engagement or consultation, but also for the greater good of the people. We promise, as a result, to continuously remain focused”.

Speaker of the House of Representatives, Hon Femi Gbajabiamila, while speaking, further stressed that the purpose of the public hearing was for the stakeholders to have input.

He said what the National Assembly sought to get was the buy-in from all stakeholders, noting that he believed nobody was a fountain of knowledge, even though the National Assembly was given full authority by the constitution to appropriate.
Gbajabiamila noted that the National Assembly was seeking an outcome that would reflect the true federal character of Nigeria, where there would be no lopsidedness, and to ensure that everybody had an input at the end of the public hearing.

Apart from returning to the January to December cycle, many Nigerians may also desire to know how the 2019 budget had fared.
Minister of Finance, National Planning and Budget, Zanab Ahmed, was also at hand to explain the extent the 2019 budget had been implemented, saying as at June, it has achieved a 58 per cent performance.

According to her, as at half-year, federal government’s actual aggregate revenue was N2.04 trillion, which was ‘58 per cent of the prorata target.
Giving further details, she said “Oil Revenue of N900 billion (49% performance); Company Income Tax (CIT) of N349. 11 billion (86% performance); Value-Added Tax (VAT) of N81.36 billion (71% performance); and Customs Collections of N184.10 billion (100.47% performance).

“The overall revenue performance was only 58 per cent of the target in the 2019 Budget largely, because some one-off items such as the N710 billion. From Oil Joint Venture Asset restructuring and N320 billion from revision of the Oil Production Sharing Contract legislation/terms are yet to be actualized.

“Fiscal deductions by NNPC for federally funded projects also exceeded target. Debt service and the implementation of non-debt recurrent expenditure notably payment of workers’ salaries and pensions are on track”.
She explained that capital releases could only commence after the signing of the 2019 Budget on 27th May 2019. As at the 30th of September 2019, she added that a total of about N294, 63 billion had been released for capital projects.
Ahmed explained that spending on capital had been prioritised in favour of critical ongoing infrastructure projects like power and roads.

But despite the optimism expressed by the leadership of the federal legislature over the return of the country’s budget cycle from January to December, a civil society organisation, Policy and Civil Advocacy Centre (PLAC) observed that Nigeria‘s current fiscal position continues to be threatened by its widening fiscal deficit as rightly noted by the Executive’s 2020-2022 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy paper (FSP).

This, it said, has increasingly forced the federal government to access the debt markets to meet its obligations and meant that less expenditure was available for capital projects to improve the living standard of its citizens.
Against this background, it said the federal government must explore alternative means to raise higher revenues to meet its obligations and guarantee the social and economic wellbeing of Nigerians.

PLAC, in its brief at the public hearing, stated that the 2020 budget continues to be a variance between actual collections and projections while a “conservative” benchmark of 2.18 million barrels per day has been adopted as an estimate in the 2020 budget.

PLAC argued that actual crude oil production has averaged 1.92 million bpd over the last three years, adding that this was likely to affect the federal government’s anticipated revenue projection in the 2020 fiscal year.
On her part, Minister of State for Trade and Investment, Mariam Katagum, described the closure of the country’s border as dress rehearsal, which she said the ministry was in full support of.

She explained that there was a lot of the areas the Africa Continental Free Trade Agreement (ACFTA) was seeking to address, adding that, “for us, there are certain steps we need to take. We must use the period of the closure to use the data we are generating to learn lesson but also put in place policies, effective legal framework.”

Chairman of Federal Inland Revenue Service (FIRS), Babatunde Fowler, while contributing, said the country has reached a stage that it has no choice than to enforce the payment of tax on tax defaulters.

He explained that in 2016, the federal government implemented a tax amnesty programme, which saw 5,000 businesses coming through, while they also paid N92 million in 45 days. He stressed that these were businesses or individuals that have income but refused to pay those taxes.

The FIRS boss stressed that government needed to provide infrastructure that was conducive for business, hence, the need to embark on tax amnesty as part of effort to bring people into the tax net.

A participant, Mr. Comrade Martins, submitted that the 2020 budget proposal was ‘disability insensitive’. He explained that there were more than 30 million people living with disability and more than 80% of such people were unemployed, adding that five million children living with disability were out of School.

He therefore lamented that the budget did not address these challenges. For instance, he said, Nigeria spends about N1 billion each year in importing disability-assisted technology, but the 2020 budget, which proposes the sum N44 billion for Education did not capture those needs.

Martins pointed out that the revenue and expenditure budgets were 8.15 trillion and 10.33 trillion naira respectively, arguing that this resulted in N2.18 trillion fiscal deficit. He said in the 2019 appropriation Act, the federal government targeted 2.45trillion naira debt service and 2.18trillion capital expenditure, while barrel of crude oil per day has not been realised.

In summary, he said the proposed 2.18 million barrel of crude oil per day in the 2020 budget proposal was not attainable and would further widen the deficit, which might lead to more borrowings hence more debt servicing.

Martin’s further noted that, “The Minister of Finance has consistently told us that the 2020 budget deficit will strictly be financed by external and internal borrowings. No country, desirous of true development lives by borrowing.”