PRELIMINARY REVIEW OF THE 2017 FEDERAL APPROPRIATION BILL BY CENTRE FOR SOCIAL JUSTICE LIMITED BY GUARANTEE
The Centre for Social Justice (CSJ), a Nigerian knowledge institution welcomes the presentation of the 2017 Federal Budget by President Muhammadu Buhari on the 14th day of December 2016 in accordance with section 81 of the Constitution of the Federal Republic of Nigeria 1999, as amended. The budget expenditure is in the sum of N7.298 trillion which is 20.4% increase over the 2016 figure; retained revenue of N4.94 trillion and a deficit of N2.36 trillion. The key assumptions are the benchmark price of $42.5 per barrel of crude oil; daily production of 2.2 mbpd and an average exchange rate N305 to 1USD.
- Positive Notes
We welcome the following key positive points in the budget speech and the supporting budget policy statement.
- The Ministry of Agriculture and Rural Development, the Central Bank of Nigeria, the Organised Private Sector and a handful of Nigerian commercial banks, have embarked on an ambitious private sector-led N600 billion programme to push Nigeria towards self-sufficiency in three years for rice, wheat, sugar, soya, tomato and dairy products.
- The revival of the Export Expansion Grant and the expansion of existing as well as the development of new Export Processing and Special Economic Zones. However, the allocation for this can be improved upon.
- The recapitalization of the Bank of Industry and the establishment of the Development Bank with $1.3billion to focus exclusively on small and medium sized firms.
- The signing of an Agreement with Morocco to revive abandoned Nigerian fertilizer blending plants.
- The promise to fully align fiscal, monetary and trade policies to promote import substitution.
- That the Federal Government will no longer pay for Joint Venture Cash Calls which will now be subject to a new funding mechanism that will allow for cost recovery.
- Provision to clear outstanding MDA electricity bills.
- Verification and collation of debt obligations to local contractors with a view to realistic and viable payment plan.
- Some Challenges and Concerns
Some key challenges arising from the budget speech and the presentation include:
- Presentation of the budget on December 14, very late in the year and a few days to the start of the legislative Christmas and New Year Break.
- The fact that there is no approved Medium Term Expenditure Framework 2017-2019. Section 18 of the FRA states: “Notwithstanding anything to the contrary contained in this Act or any other law, the Medium-Term Expenditure Framework shall- (1) be the basis for the preparation of the estimates of revenue and expenditure required to be prepared and laid before the National Assembly under section 81 (1) of the Constitution. (2) The sectoral and compositional distribution of the estimates of expenditure referred to in subsection (1) of this section shall be consistent with the medium-term developmental priorities set out in the Medium-Term Expenditure Framework”. Thus, strictly speaking in law, there cannot be an executive budget submitted for legislative approval without the approval of the MTEF. Illegality may have occurred in the preparation and presentation of the budget.
- The proposal to use executive orders to speed government procurement and approvals. This may lead to derogations in due process for public procurements thereby denying the country of the benefits of a well planned procurement process.
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