2016 Budget Speech: “The Budget of Change”Delivered By:
His Excellency, Muhammadu Buhari
President, Federal Republic of Nigeria
To
A Joint Session of the National Assembly (on December 22, 2016)
PROTOCOLS
I am honoured and privileged to present the 2016 Budget proposal. This is my first address before this joint session of the National Assembly. I have come here today, not only to address members of the National Assembly, but also to speak directly to the men and women who placed us here.
2. I know the state of our economy is a source of concern for many. This has been further worsened by the unbridled corruption and security challenges we have faced in the last few years. From those who have lost their jobs, to those young people who have never had a job, to the people in the North East whose families and businesses were destroyed by insurgents, this has been a difficult period in our nation’s history, lessons that we must not forget or ignore, as we plan for the future.
3. By June 2014, oil prices averaged $112 per barrel. But as at today, the price is under $39 per barrel. This huge decline is having a painful effect on our economy. Consumption has declined at all levels. In both the private and public sectors, employers have struggled to meet their salary and other employee related obligations. The small business owners and traders have been particularly hard hit by this state of affairs.
4. Fellow Nigerians, the confidence of many might be shaken. However, I stand before you today promising that we will secure our country, rebuild our economy, and make the Federal Republic of Nigeria stronger than it has ever been.
5. The answers to our problems are not beyond us. They exist on our farmlands; our corporations; in the universities in the hearts and minds of our entrepreneurs; through the gallantry of our Armed Forces; and the resolute spirit of Nigerians, especially the youth, who have refused to give up despite all the obstacles confronting them.
6. This Budget proposal, the first by our Government, seeks to stimulate the economy, making it more competitive by focusing on infrastructural development; delivering inclusive growth; and prioritizing the welfare of Nigerians. We believe that this budget, while helping industry, commerce and investment to pick up, will as a matter of urgency, address the immediate problems of youth unemployment and the terrible living conditions of the extremely poor and vulnerable Nigerians.
7. In the medium to longer term, we remain committed to economic diversification through import substitution and export promotion. This will build resilience in our economy. It will guarantee that the problems we have today, will not confront our children and their children. This shall be our legacy for generations to come.
8. Today, it is widely acknowledged that the global economy has slowed down. This is particularly the case with emerging markets such as Nigeria. However, despite the weak emerging market growth rates, our domestic security challenges, declining oil prices, and the attendant difficulties in providing foreign exchange to meet market demands, the Nigerian economy grew by 2.84% in the third quarter of 2015.
9. We have, and will continue to implement strategies that will maintain macroeconomic stability and manage the oil price shocks we are experiencing.
10. Upon the inauguration of this administration on 29th May 2015, we engaged key stakeholders from various sectors of our economy and interfaced with the heads of Ministries, Departments and Agencies (MDAs) in order to understand the true state of our nation. What we found prompted us to take certain strategic decisions.
11. On the economy, we injected new leadership at the helm of our revenue generating agencies including the Federal Inland Revenue Service (FIRS), Nigerian National Petroleum Corporation (NNPC), Nigerian Communications Commission (NCC), and the Nigerian Customs Service (NCS). We implemented the Treasury Single Account (TSA) which, so far, has provided greater visibility of Government revenues and cash flows. We intervened to support States to navigate their fiscal challenges by restructuring their commercial bank loans and by providing facilities to enable them to pay salary arrears.
12. We have demonstrated a strong will to fight corruption. I am sure you will agree that the sheer scale of corruption and impunity of the past explains in part, the economic challenges we now face. On these initiatives, and the many more to come, we shall not be deterred. We will pursue the recovery of everything that belongs to the people of Nigeria. No matter where it is hidden. No matter how long it will take.
13. Distinguished and honourable members of the National Assembly, I now present a review of the 2015 Budget. That Budget was based on a benchmark oil price of $53 per barrel, oil production of 2.28 million barrels per day and an exchange rate of N190 to the US$.
14. The projected revenue was N3.45 trillion, with an outlay of N4.49 trillion, implying a deficit of N1.04 trillion. Due largely to under-provisioning by the previous administration for fuel subsidy and the costs required to support the military operations in the North East, the Government had to obtain National Assembly’s approval for a supplementary budget of N575.5 billion. I take this opportunity to thank all members of the National Assembly for the prompt passage of that Bill.
15. After reviewing the trends in the global oil industry, we have set a benchmark price of $38 per barrel and a production estimate of 2.2 million barrels per day for 2016. We have focused on non-oil revenues by broadening our tax base and improving the effectiveness of our revenue collecting agencies.
16. Also, with the full implementation of the Treasury Single Account, we expect significant improvements in the collection and remittance of independent revenues. To further support the drive for increased remittances, we will ensure that all MDAs present their budgets in advance, and remit their operating surpluses as required by section 22 of the Fiscal Responsibility Act.
17. We are determined to ensure that our resources are managed prudently and utilized solely for the public good. To set the proper tone, one of our early decisions was the adoption of a zero based budgeting approach, which ensures that resources are aligned with Government’s priorities and allocated efficiently. This budgeting method, a clear departure from previous budgeting activities, will optimize the impact of public expenditure.
18. In addition to the proper linkage of budgeting to strategic planning, we are enhancing the utilization of the Government Integrated Financial Management Information Systems (GIFMIS) to improve financial management. The recently established Efficiency Unit is working across MDAs to identify and eliminate wasteful spending, duplication and other inefficiencies. We engaged costing experts to scrutinize the 2016 budget proposals. They have already identified certain cost areas that can be centralized for economies to be made.
19. We have directed the extension of the Integrated Personnel Payroll Information System (IPPIS) to all MDAs to reap its full benefits. We will also strengthen the controls over our personnel and pension costs with the imminent introduction of the Continuous Audit Process (CAP). These initiatives will ensure personnel costs are reduced. Our commitment to a lean and cost effective government remains a priority, and the initiatives we are introducing will signal a fundamental change in how Government spends public revenue.
2016: Laying the Foundation for Sustainable Growth
20. The 2016 budget, as outlined, is designed to ensure that we revive our economy, deliver inclusive growth to Nigerians and create a significant number of jobs.
21. We aim to ensure macroeconomic stability by achieving a real GDP growth rate of 4.37% and managing inflation. To achieve this, we will ensure the aligning of fiscal, monetary, trade and industrial policies.
22. As we focus on inclusive growth, we are conscious of the current rate of unemployment and underemployment. This is a challenge we are determined to meet; and this budget is the platform for putting more Nigerians to work. I can assure you that this administration will have a job creation focus in every aspect of the execution of this budget. Nigeria’s job creation drive will be private sector led. We will encourage this by a reduction in tax rates for smaller businesses as well as subsidized funding for priority sectors such as agriculture and solid minerals.
23. As an emergency measure, to address the chronic shortage of teachers in public schools across the country, we also will partner with State and Local Governments to recruit, train and deploy 500,000 unemployed graduates and NCE holders. These graduate teachers will be deployed to primary schools, thereby, enhancing the provision of basic education especially in our rural areas.
24. We also intend to partner with State and Local Governments to provide financial training and loans to market women, traders and artisans, through their cooperative societies. We believe that this segment of our society is not only critical to our plan for growing small businesses, but it is also an important platform to create jobs and provide opportunities for entrepreneurs.
25. Furthermore, through the office of the Vice President, we are working with various development partners to design an implementable and transparent conditional cash transfer program for the poorest and most vulnerable. This program will be implemented in phases. Already, the compilation of registers of the poorest persons is ongoing. In the coming weeks, we will present the full programme, which will include our home-grown public primary school feeding and free education for science, technology and education students in our tertiary institutions. Indeed, this will mark a historic milestone for us as a nation.
The 2016 Budget
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