You are here
Home > HEADLINES > Group Mentions Flaws in Nigeria’s 2019 Budget, Proffers Solutions

Group Mentions Flaws in Nigeria’s 2019 Budget, Proffers Solutions

Group Mentions Flaws in Nigeria’s 2019 Budget, Proffers Solutions

Please follow and like us:

  • 18
  • Share

The Centre for Social Justice (CENSOJ) has listed what it considers to be flaws in the 2019 budget of the Federal Government of Nigeria. It said the flaws are fundamental and capable of threatening the realisation of the key objectives spelt out in the document.

Apart from faulty revenue projections, a review of the 2019 Federal Appropriation Bill and estimates by CENSOJ revealed several “frivolous, inappropriate, unclear and wasteful estimates” by ministries, departments and agencies (MDAs).

Lead Director of CENSOJ, Eze Onyekpere, who presented the two documents in Abuja on Tuesday, called for a comprehensive review of the estimates if the goals of the budget are to be achieved.

He also presented recommendations the government needs to consider to meet the revenue shortfalls in the budget.

Budget outlay

On December 19, 2018, President Muhammadu Buhari presented the 2019 budget to the joint session of the National Assembly.

The objective of the budget was to further reposition the economy, make it inclusive, diversified and ensure sustained growth as well as build a globally competitive economy.

Tagged: “Budget of Continuity”, the President said the total budget outlay included an expenditure of N8.826 trillion, with N6.97 trillion proposed as expected revenue, and a deficit component of about N1.86 trillion.

Mr Onyekpere said a review of the budget showed a gap of over N2.006 trillion between recurrent and capital expenditures, which he considered “high enough to trigger inflation.”

The Central Bank of Nigeria (CBN) governor, Godwin Emefiele, said at the end of the Monetary Policy Committee (MPC) meeting on Tuesday, the apex bank’s estimates anticipate a spike in the inflation rate around the second quarter of the year.

Deficit vs Budget

CENSOJ said the nearly N2 trillion fiscal deficit in the budget would increase the money supply in the economy. It said its major concern was about the source of financing.

But, Mr Onyekpere said financing the deficit with government’s domestic debt instruments, like treasury bills and bonds, would be inadequate to mop up the excess liquidity and curb inflation.

Mr Onyekpere criticised the provision of N2.14 trillion, or 24.29 per cent of the total expenditure outlay, for debt servicing, against about N2.031 trillion, or 23.02 per cent for capital expenditure.

He said the capital budget would rise to about 25.24 per cent when the Sinking Fund for the retirement of maturing bonds is added to the capital component of the statutory transfers.

The CENSOJ boss said that would still be about 5.56 per cent less than the corresponding 30.8 per cent allocation in the 2018 budget.

“With debt servicing outstripping capital expenditure allocation, and in view of the apparent shortfall in revenue as well as the fact that the recently approved National Minimum Wage package is yet to be captured in the budget, it is obvious that while debts would be serviced, capital projects would suffer during the year,” Mr Onyekpere said.

The group expressed worry over the growing disparity between debt servicing and capital expenditure in successive budgets.

In 2014, it said about N941.67 billion was spent on debt servicing, against N585.61 billion on capital; N1.06 trillion on debt service in 2015, against N384.07 billion on capital, and N1.384 trillion on debt service in 2016, against N1.219 trillion on capital.

Similarly, about N1.823 trillion was spent on debt service in 2017, against N1.56 trillion on capital, while about N1.769 trillion was spent on debt service in 2018, compared to about N820 billion only on capital.

In 2019 budget, the over N2.14 trillion allocated for debt service far exceeds total appropriation of N783.27 billion for six strategic MDAs, namely Power, Works & Housing, Education, Health, Defence, Agriculture & Rural Development and Niger Delta Affairs, it noted.

Growing recurrent non-debt budget

On the growing recurrent non-debt expenditure in the budget, CENSOJ said the contradiction with the federal government’s cost-cutting and improved efficiency mantra as well as the elimination of ghost workers from its payroll, is a cause for worry.

In 2015, CENSOJ said the N2.607 trillion spent on recurrent non-debt expenditure rose to N2.645 trillion in 2016, N2.987 trillion in 2017 and N3.512 trillion in 2018, with the expectation of a further rise by 34.17 per cent to N4.038 trillion in 2019.

“The 2019 projection does not take into account the expected increase in personnel expenditure when the National Minimum Wage will finally be approved for the workers. That will raise the final figure to about N5 trillion,” CENSOJ said.


To demonstrate a commitment to eliminate waste and curb inefficiencies in the system, CENSOJ urged the government to revisit the Oronsaye Committee Report on Rationalisation of Federal MDAs to reduce the recurrent non-debt expenditures.

It also asked the government to revisit the monetisation programme for senior public officers to help prune down on government expenditure on its officials.

CENSOJ also frowned at the practice where government agencies receive bulk votes under statutory transfers without bothering to let Nigerians know the details of what such allocations were spent on.

Agencies that receive such allocations include, the National Assembly, National Judicial Council, National Human Rights Commission, Public Complaints Commission, Independent National Electoral Commission, and Niger Delta Development Commission as well as allocations for sustainable development goals.

On Zonal Intervention Projects by the National Assembly, CENSOJ described them as problematic, “as the majority are duplicating those within the competence of the states and local governments”.

Mr Onyekpere said these projects, including primary healthcare centres, local waterworks, and town halls, have been completed, and states and local governments left them to rot because their maintenance was not factored into their priorities when they were conceived.

Flawed benchmarks

CENSOJ described the 2.3 million barrels per day crude oil production and price benchmarks in the budget as unrealistic, unachievable.

Considering that crude oil production in 2018 budget only averaged 1.9 million barrels per day, the group said with OPEC production output cut of about 800,000 barrels per day already in force since January 1, the 2.3 million barrels output target may not be realised, if condensate production is not included in the calculations.

Besides, despite the optimistic projection of the $60 per barrel crude oil benchmark price, CENSOJ said there was no guarantee the oil price would remain above the current level throughout the year.

Oil revenue inflows of N2.988 trillion, the report said, underperformed by 36.02 per cent in 2018 and 33 per cent in 2017.

Also, the group said it was not optimistic of any improvement this year in accruals from independent revenue sources, considering the underperformance by 52.1 per cent in 2018, from N847.9 billion to N624.58 billion in the third quarter of the year, and 63 per cent in 2017.

On the recurring problem of under-remittances of operating surpluses by State-owned entities, CENSOJ said this should be speedily redressed by empowering the Fiscal Responsibility Commission and other revenue collecting agencies to play that role.

Also, Company Income Tax (CIT) underperformed by 33 per cent in 2017, and by 16 per cent in the first three quarters of 2018, while Value Added Tax (VAT) also underperformed by 46 per cent and by 29.73 per cent in the corresponding periods.

Bridging revenue shortfalls

To create new sources to bridge observed revenue shortfalls, CENSOJ urged the president and the National Assembly to consider raising VAT from the current five per cent to about 7.5 per cent, as well as initiate measures to increase collection efficiency.

Regardless, the Chairman of the Federal Inland Revenue Service, Tunde Fowler, has already foreclosed any immediate decision to raise the VAT rate in the country.

The group also asked the federal government to account for over N6 trillion domiciled at the CBN said to have accrued from stamp duties.

Mr Onyekpere said it was not economical for the government to have such an amount of money at the CBN “and still go cap in hand to solicit for loans to support the economy”.

Other recommendations include the need to review the country’s Production Sharing Contract (PSCs) as proposed in various Nigerian Extractive Industries Transparency Initiative reports, to generate additional $1.6 billion revenue to the country every year.

Also, CENSOJ called for the speedy passage and assent to the Petroleum Industry Bill, to allow for the reform of the oil and gas industry, engender confidence in investors and help increase revenue from the sector.

The draft PIB, which should bring a new lease in the regulatory and legal framework in the oil and gas industry, has been pending before the National Assembly for years.

CENSOJ asked the government to consider the reduction in foreign and domestic borrowings and focus on public-private partnerships through prepared projects involving MDAs and the Infrastructure Concession Regulatory Commission with the private sector.

Also, the group urged the government to ensure the return of toll gates at public highways by introducing Road Fund and Road Management Authority Act as well as fuel tax.

To save the country about N1 trillion annually, the group said the government should decide on the permanent removal of fuel subsidy or ‘under-recovery’ in the supply of petroleum products.

Despite the announcement of the removal of fuel subsidy from the fuel pricing template by the Petroleum Products Pricing Regulatory Agency in 2015, the Nigerian National Petroleum Corporation has continued to spend huge resources on cost under-recovery every year.

Facebook Comments

Please follow and like us:

  • 18
  • Share

Leave a Reply