Fashola gets Lion Share As President Buhari Proposes N8.612tn Budget For 2018

President Muhammadu Buhari has proposed a budget of N8.612 trillion for the year 2018 with the Ministry of Power, Works, and Housing, supervised by Babatunde Fashola, getting the lion’s share of N555.88 billion

The President gave the breakdown of the 2018 Appropriation Bill, tagged ‘budget of consolidation’, on Tuesday while addressing a joint session of the National Assembly on Tuesday revealing that the proposal is based on an oil benchmark of $45 per barrel, an oil production rate of 2.3 million barrels per day, an exchange rate of 3.5 percent, inflation rate of 12.4 percent and a real GDP growth of 3.5 percent.

According to the President, out of the N8.612 trillion proposed, N3.494 trillion has been earmarked for recurrent expenditure, and N2.428 trillion for capital expenditure but excluding the capital component of statutory transfers.

The President revealed that N2.014 trillion will be used for debt service, N46 billion for statutory transfers and N220 billion as sinking fund to retire maturing bonds and pay local contractors while total capital expenditure, including the capital component of statutory transfer, is N2.652 trillion.

Here are some allocations:

Minister of Power, Works, and Housing – N555.88 billion
Ministry of Transport – N263.1 billion
Social Intervention Programmes – N150 billion
Ministry of Defence – N144 billion
Ministry of Agriculture and Rural Development – N118.98 billion
Ministry of Water Resources – N95.11 billion
Ministry of Industry, Trade and Investment – N82.92 billion
Ministry of Interior – N63.26 billion
Ministry of Education – N61.73 billion
Universal Basis Education Commission – N109.06 billion
Ministry of Health – N71.11 billion
Federal Capitial Territory – N40 billion
Zonal Intervention Project – N100 billion
North-East Intervention Programme – N45 billion
Niger Delta Ministry – N53.8 billion
Niger Delta Development Commission – N71.2 billion

Excerpts from the 2018 budget speech Delivered by His Excellency, President Muhammadu Buhari:

The 2018 Budget will consolidate on the achievements of previous budgets and deliver on Nigeria’s Economic Recovery and Growth Plan (ERGP) 2018 – 2020.

By all accounts, 2018 is expected to be a year of better outcomes. The tepid economic recovery is expected to pick up pace and the global political terrain is expected to stabilize. The International Monetary Fund (IMF) is anticipating global GDP growth of 3.7 percent in 2018. Emerging markets and developing economies are expected to lead with GDP growth of 4.9 percent, while advanced economies are projected to grow at a slower rate of 2 percent.

In the non-oil sector, crop production has been one of the main contributors to non-oil growth, which rose to 0.45 percent in the second quarter of this year. This was primarily driven by our ongoing financial, capacity building and infrastructure development programs.

Significant progress has also been made in the Solid Minerals development sector. In Ondo State, for instance, work is ongoing to fully exploit the bitumen resources to meet the 600,000 MTs of asphalt imported per annum for roads and other construction projects. To consolidate on these efforts, we have also established a 30 billion Naira Solid Minerals Development Fund to support other minerals exploration activities across the country.

In the oil and gas sector, the relatively higher crude oil prices supported our economic recovery. Our mutually beneficial engagement with oil producing communities in the Niger Delta contributed immensely to the recovery in oil production experienced in recent months.

We would like to thank the leadership and communities in the Niger-Delta for their continued support and to also reiterate our assurances that this Administration will continue to honour our commitments to them. We cannot afford to go back to those dark days of insecurity and vandalism.

Our Sovereign Wealth Fund, which was established in 2011 with US$1 billion, did not receive additional investment for 4 years when oil prices were as high as US$120 per barrel. However, despite record low oil prices, this Administration was able to invest an additional US$500 million into the Fund. This further demonstrates that in our struggle to have a stable and secure nation today, we have not, and will not, lose sight of the need to lay a solid foundation for the future prosperity of successive generations.

Although the economy is diversified with non-oil Sector accounting for over 90 percent of total Nominal GDP, the Government’s revenues are not as diversified yet. Our Tax-to-GDP ratio of about 6% is one of the lowest in the world. This situation is not consistent with our goal of having a diversified, sustainable and inclusive economy. Accordingly, we are stepping up efforts to ensure all taxable Nigerians comply with the legal requirement to declare income from all sources and remit taxes due to the appropriate authorities.

In 2016 this Administration adopted a policy of allocating at least 30 percent of our annual budget to capital expenditure. This was entrenched in the ERGP to unlock further growth in the economy. This tradition was maintained in the 2017 Budget and has been reflected in the proposal for 2018, in which 30.8 percent of total expenditure has been set aside for the capital vote.

Increased Investment in Infrastructure – we shall continue to develop our infrastructure across the country.

For instance, at the outset of this Administration in 2015, the Abuja Metro-Rail Project, which began in 2007 was only 50% completed, after 8 years. Today, in just 18 months, we have pushed the project to 98% completion. This was achieved as the Nigerian Government was diligently able to meet its counterpart funding obligations for the Chinese loans.

We have also continued work on key strategic Roads. Over 766 kilometres of roads were constructed or rehabilitated across the country in 2017. For instance, work is at various stages of completion on these strategic roads with immense socio-economic benefits:

1. Rehabilitation of Ilorin-Jebba-Mokwa-Birnin-Gwari-Kaduna Road;
2. Dualization of Oyo-Ogbomosho-Ilorin Road;
3. Rehabilitation of Gombe-Numan-Yola Road;
4. Dualization of Kano-Maiduguri Road;
5. Rehabilitation of Sokoto-Tambuwal-Jega Road and Kotangora-Makera Road that transverse Sokoto, Kebbi and Niger States;
6. Rehabilitation and Reconstruction of Enugu-Port-Harcourt Road;
7. Rehabilitation of Enugu-Onitsha Dual Carriageway Road;
8. Rehabilitation of Aleshi-Ugep Road and the Iyamoyun-Ugep Section in Cross River State;
9. Rehabilitation, Reconstruction and Expansion of Lagos-Ibadan Dual Carriageway Road;
10. Construction of Loko-Oweto Bridge over River Benue in Nasarawa and Benue States; and
11. Construction Gokanni Bridge along Tegina-Mokwa-Jebba Road in Niger State.

The agricultural sector played a crucial role in Nigeria’s exit from recession. Today, it remains the largest employer of labour and holds significant potential to realise our vision of repositioning Nigeria as a food secured nation.

We will consolidate on existing policies and develop new ones to ensure the numerous value chain challenges in the agricultural sector are addressed. As I mentioned earlier, several investors have deployed significant capital in the production and processing of rice, sugar, maize, soya, cassava, yams, tomato, oil palm, rubber and poultry, to mention a few. We are also seeing increased investment in the agro-inputs manufacturing sector such as fertilisers.

The 2018 Budget Proposals are for a Budget of Consolidation. Our principal objective will be to reinforce and build on our recent accomplishments. Specifically, we will sustain the reflationary policies of our past two budgets. In this regard, the key parameters and assumptions for the 2018 Budget are as set out in the 2018-2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP). These include:

1. Benchmark oil price benchmark of US$45 per barrel;
2. Oil production estimate of 2.3 million barrels per day, including condensates;
3. Exchange rate of N305/US$ for 2018;
4. Real GDP growth of 3.5 percent; and
5. Inflation Rate of 12.4 percent.

Federally-Collectible Revenue Estimates – Based on the above fiscal assumptions and parameters, total federally-collectible revenue is estimated at 11.983 trillion Naira in 2018. Thus, the three tiers of Government shall receive about 12 percent more revenues in 2018 than the 2017 estimate. Of the amount, the sum of 6.387 trillion Naira is expected to be realised from oil and gas sources. Total receipts from the non-oil sector are projected at 5.597 trillion Naira.

Federal Government Revenue Estimates – The Federal Government’s estimated total revenue is 6.607 trillion Naira in 2018, which is about 30 percent more than the 2017 target. As we pursue our goal of revenue diversification, non-oil revenues will become a larger share of total revenues. In 2018, we project oil revenues of 2.442 trillion Naira, and non-oil as well as other revenues of 4.165 trillion Naira.

Non-oil and other revenue sources of 4.165 trillion Naira, include several items including: Share of Companies Income Tax (CIT) of 794.7 billion Naira, share of Value Added Tax (VAT) of 207.9 billion Naira, Customs & Excise Receipts of 324.9 billion Naira, FGN Independently Generated Revenues (IGR) of 847.9 billion Naira, FGN’s Share of Tax Amnesty Income of 87.8 billion Naira, and various recoveries of 512.4 billion Naira, 710 billion Naira as proceeds from the restructuring of government’s equity in Joint Ventures and other sundry incomes of 678.4 billion Naira.

Proposed Expenditure for 2018 – A total expenditure of 8.612 trillion Naira is proposed for 2018. This is a nominal increase of 16 percent above the 2017 Budget estimate. In keeping with our policy, 30.8 percent (or 2.652 trillion Naira) of aggregate expenditure (inclusive of capital in Statutory Transfers) has been allocated to the capital budget.

We expect our fiscal operations to result in a deficit of 2.005 trillion Naira or 1.77 percent of GDP. This reduction is in line with our plans under the ERGP to progressively reduce deficit and borrowings.

We plan to finance the deficit partly by new borrowings estimated at 1.699 trillion Naira. Fifty percent of this borrowing will be sourced externally, whilst the balance will be sourced domestically. The balance of the deficit of 306 billion Naira is to be financed from proceeds of privatisation of some non-oil assets by the Bureau of Public Enterprises (BPE).

The proposed 8.612 trillion Naira of 2018 Aggregate Expenditure comprises:

3. Recurrent Costs of N3.494 trillion;
4. Debt Service of N2.014 trillion;
5. Statutory Transfers of about N456 billion;
6. Sinking Fund of N220 billion (to retire maturing bond to Local Contractors);
7. Capital Expenditure of N2.428 trillion (excluding the capital component of Statutory Transfers).