President Muhammadu Buhari presents 2020 Budget Proposal of N10.33 trillion to the National Assembly

President Muhammadu Buhari has formally presented the 2020 budget proposal of N10.33 trillion to a joint session of the National Assembly. The ceremony which took place on Tuesday, 8 October 2019 was presided over by Senate President, Ahmed Lawan (APC: Yobe) and the Speaker of he House of Representatives, Rt. Hon. Femi Gbajabiamila (APC:Lagos), who delivered the welcome remarks and vote of thanks respectively.  It will be recalled that President Muhammadu Buhari had written to the National Assembly on the 3rd of October 2019 informing them of his intentions to present the 2020 budget proposal on the scheduled day.

Giving the welcome remarks at the first Joint Session of the 9th National Assembly for the presentation of the Budget, the Senate President welcomed the President saying that all Members of the National Assembly and Nigerians had looked forward to the day with great expectations.  In particular, he noted that lawmakers had converged to listen and receive the fiscal plans for the year 2020, on behalf of the people they represent.  He reaffirmed the 9th National Assembly’s capacity, commitment and willingness to treat legislative matters that will impact the lives of citizens with every sense of urgency as demonstrated by its quick deliberation and passage of the Executive’s 2020-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) and promised to treat the 2020 Budget Estimates with the same commitment or more.  He however mentioned that this commitment would be guided by the legislative requirement of thorough scrutiny as he ended his remarks.

Termed the “Budget of Sustaining Growth and Job Creation”, the 2020 budget proposal of N10.33 trillion is comprised of:

• Statutory transfers – N556.7 billion;
• Debt service – N2.45 trillion;
• Sinking fund – N296 billion to retire certain maturing bonds issued to local contractors;
• Non-debt recurrent expenditure – N4.88 trillion; and
• Capital expenditure – N2.14 trillion

  It is also premised on the following assumptions:

• Oil benchmark price: $57 per barrel
• Oil production: 2.18million bpd
• Exchange rate: N305/$1
• Oil Revenue: N2.64 trillion
• Non-Oil Revenue N1.81 trillion and other revenues of N3.7 trillion. This figure according to the budget speech is 7 percent higher than the 2019 comparative estimate of N7.594 trillion that was passed. A breakdown of the sum of N556.7 billion provided for Statutory Transfers in the 2020 Budget includes the following:
  
  a. N125 billion for the National Assembly;
  
  b. N110 billion for the Judiciary;
  
  c. N37.83 billion for the North East Development Commission (NEDC);
  
  d. N44.5 billion for the Basic Health Care Provision Fund (BHCPF);
  
  e. N111.79 billion for the Universal Basic Education Commission (UBEC); and
  
  f. N80.88 billion for the Niger Delta Development Commission (NDDC), which is now supervised by the Ministry of Niger Delta Affairs.

The President also noted that the budgetary allocation to the National Human Rights Commission had been increased from N1.5 billion that was approved in the 2019 budget to N2.5 billion in the 2020 budget to enable the Commission perform its functions more effectively. This represents a 67% increase in funding.

Performance of the 2019 Budget

Speaking about the 2019 Budget performance, the President stated that the “Budget of Continuity” was based on a benchmark oil price of US$60 per barrel, oil production of 2.3 million barrels per day and an exchange rate of N305 to the Dollar.  Thus, based on these parameters, it had projected a deficit of N1.918 trillion or 1.37 percent of Gross Domestic Product.  However, as of June 2019, Federal Government’s actual aggregate revenue (excluding Government-Owned Enterprises) was N2.04 trillion with a revenue performance of only 58 percent of the 2019 Budget’s target due to the under performance of both oil and non-oil revenue sources. In other words, oil revenues were below target by 49 percent as at June 2019 with lower-than-projected oil production, deductions for cost under-recovery on supply of premium motor spirit (PMS) as well as higher expenditures on pipeline security/maintenance and frontier exploration.

He also stated that daily oil production averaged 1.86 mbpd as at June 2019, as against the estimated 2.3 mbpd that was assumed.  However, the shortfall was partly offset as the market price of Bonny Light crude oil averaged US$67.20 per barrel which was higher than the benchmark price of US$60. Nonetheless, revenue projections from restructuring of Joint Venture Oil and Gas assets and enactment of new fiscal terms for Production Sharing Contracts did not materialise, as the enabling legislation for these reforms is yet to be passed into law. President Buhari also gave a bleak view of the performance of non-oil taxes and independent revenues as well as receipts from Value Added Tax which were below expectations due to lower levels of activities in certain economic sectors after the holding of the general elections in March, 2019. He stated that corporate taxes were also affected by the seasonality of collections which tend to peak in the second half of the calendar year.

In addition, he attributed some failures in the 2019 Budget implementation to the delay in the approval and under performance of revenue collections. As such, only recurrent expenditure items have been implemented substantially. For instance, of the prorated expenditure of N4.46 trillion budgeted, only N3.39 trillion had been spent by June 30, 2019 with capital releases under the 2019 Budget commencing in the third quarter.  Following this, as at 30th September 2019, a total of about N294.63 billion had been released for capital projects with a further direction given to the Ministry of Finance, Budget and National Planning to release an additional N600 billion of the 2019 capital budget by the end of the year.

Despite the delay in capital releases, a deficit of N1.35 trillion was recorded at the end of June 2019 which represents 70 percent of the budgeted deficit for the full year.  The President however reassured that despite the anomalies, Nigeria has been able to meet its debt service obligations with staff salaries and overhead costs being largely covered.

2020 BUDGET PRIORITIES
President Buhari explained that the 2020 Appropriation Bill was designed with the following objectives:

a. Fiscal consolidation to strengthen the macroeconomic environment;

b. Investment in critical infrastructure, human capital development and enabling institutions, especially in key job creating sectors;

c. Incentivising private sector investment essential to complement the government’s development plans, policies and programmes; and

d. Enhancing its social investment programs to further deepen their impact on those marginalised and most vulnerable Nigerians

He listed some of the key capital spending allocations in the 2020 Budget to include:

• Works and Housing: N262 billion;
• Power: N127 billion;
• Transportation: N123 billion;
• Universal Basic Education Commission: N112 billion;
• Defence: N100 billion;
• Zonal Intervention Projects: N100 billion;
• Agriculture and Rural Development: N83 billion;
• Water Resources: N82 billion;
• Niger Delta Development Commission: N81 billion;
• Education: N48 billion;
• Health: N46 billion;
• Industry, Trade and Investment: N40 billion;
• North East Development Commission: N38 billion;
• Interior: N35 billion;
• Social Investment Programmes: N30 billion;
•  Federal Capital Territory: N28 billion; and
• Niger Delta Affairs Ministry: N24 billion.

The President concluded his presentation by commending the patriotic resolve of the 9th National Assembly to collaborate with the Executive in efforts to deliver inclusive growth and enhance the welfare of the people. He also assured the National Assembly of the Executive’s strong commitment to deepen the relationship with the National Assembly.

Following the President’s budget address, the Speaker, Hon. Femi Gbajabiamila ended the ceremony with a vote of thanks lauding the President for fulfilling his constitutional obligation timeously.  Some highlights of the Speaker’s remarks admitted that there were  flaws in the process of passage and implementation of Nigeria’s annual budgets. He stated that while some of the challenges were structural, others were a function of negligence in adhering to procedure. He however promised that the 9th Assembly had resolved to improve on these imperfections and leave a legacy of budgets that are enacted without rancour and achieve the objectives of national development for which they are intended.  The Speaker further mentioned that the National Assembly fully intended to return to a January to December budget cycle and put an end to the policy instability and economic uncertainty that characterized an unpredictable budget cycle. He concluded by stating that while the National Assembly would seek collaboration with the Executive, it would not yield on its constitutional obligation to ensure faithful compliance with the letter and spirit of the Appropriation Act by the Ministries, Departments and Agencies of Government.

CLICK HERE TO READ THE PRESIDENT’S SPEECH AT THE PRESENTATION OF THE 2020 BUDGET