The President, Muhammadu Buhari on Thursday, 8 October 2020 presented the sum of N13.08 trillion as the proposed 2021 Budget estimates to the National Assembly in a Joint Sitting. The ceremony was presided over by Senate President, Dr. 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.
In his opening remarks, the Senate President welcomed the President and noted that the 2021 budget is an opportunity to consolidate on the gains of the 2020 budget. He added that the implementation of the 2020 budget was impacted by the outbreak of the novel coronavirus (COVID19), which necessitated a reduction in the budget and a reordering of priorities given the grim realties from the Pandemic that has affected economies across the globe. He further noted that the pandemic has brought about urgency in the diversification of the economy, the need to critically examine revenue collection, expenditure and plug leakages to make money available for development. He reiterated the National Assembly’s readiness and determination to pass the budget before the end of year to sustain the January to December cycle.
The President, in his address termed the 2021 Budget as the “Budget of Economic Recovery and Resilience” stating that the budget is designed to further deliver on the goals of Nigeria’s Economic Sustainability Plan, which seeks to provide a clear road map for the post COVID-19 recovery plan. According to him, the priorities of the 2021 Budget focuses on:
- Accelerating the pace of economic recovery;
- Promoting economic diversification;
- Enhancing competitiveness; and
- Ensuring social inclusion.
Highlighting the Parameters and Fiscal Assumptions contained in the 2021 Budget, the President explained that the 2021-2023 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) sets out the budget parameters as follows:
- Benchmark oil price of 40 US Dollars per barrel;
- Daily oil production estimate of 1.86 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day);
- Exchange rate of N379 per US Dollar; and
- GDP growth projected at 3.0 percent and inflation closing at 11.95 percent.
On the Finance Act (Amendment) Bill 2020, he informed lawmakers that the Minister of Finance, Budget and National Planning have been directed to finalise an amendment to the Bill and forward it to the National Assembly for consideration and passage into law. The Bill is targeted at supporting the realisation of the 2021 revenue projections, allow for the adoption of appropriate counter-cyclical fiscal policies and enhance the efficiency of fiscal incentives.
Giving a breakdown on the aggregate expenditure of N13.08 trillion, the President noted that the sum of N5.65 trillion has been allocated for Non-debt Recurrent Costs; N3.76 trillion as Personnel Costs; N501.19 billion as Pensions, Gratuities and Retirees Benefits; N625.50 billion as Overheads; N3.124 trillion as Debt Service; N484.49 billion as Statutory Transfers; and N220 billion as Sinking Fund (to retire certain maturing bonds).
On Statutory Transfers in the 2021 Budget, he stated that this represents an increase of N56.46 billion (or 13%) above the revised 2020 Budget and comprised of the following allocation:
- Niger Delta Development Commission (NDDC) – N63.51 billion
- North East Development Commission (NEDC) – N29.70 billion
- National Judicial Council (NJC) – N110 billion
- Universal Basic Education Commission – N70.05 billion
- Independent National Electoral Commission – N40 billion
- National Assembly – N128 billion
- Public Complaints Commission (PCC) – N5.20 billion
- National Human Rights Commission (NHRC) – N3 billion
- Basic Health Care Provision Fund – N35.03 billion
In compliance with the Fiscal Responsibility Act (FRA) 2007, the President stated that all beneficiaries of Statutory Transfers have been directed to provide the Budget Office of the Federation with periodic reports on the allocation and expenditure of funds for inclusion in the quarterly Budget Implementation Report.
Speaking on efforts to enhance national security and human capital development, a large sum of the 2021 recurrent cost estimates has been allocated to paying salaries and overheads of the following MDAs which provide critical public services:
- N227.02 billion for the Ministry of Interior;
- N441.39 billion for the Ministry of Police Affairs;
- N545.10 billion for Ministry of Education;
- N840.56 billion for Ministry of Defence;
- N380.21 billion for Ministry of Health.
On Personnel Cost, the President had mentioned that only Federal staff that have been captured on the Integrated Personnel Payroll Information System (‘IPPIS’) platform will receive salaries to check the incidence of payments to non-existent personnel and unauthorised allowances. He added that all agencies have been directed to ensure that they obtain all necessary approvals before embarking on any fresh recruitment and any breach of these directives will be severely sanctioned.
The President further explained that the total overhead costs of MDAs are expected to rise to N625.50 billion in 2021 and this rise is due to the inclusion of overheads of 50 government owned enterprises and provisions for newly created agencies. He noted that MDAs must adhere to expenditure controls.
On the debt service, the President stated that Nigeria is committed to meeting its debt service obligations. He added that there was a N445.57 billion increase in the cost of debt service from N2.68 trillion in 2020. N2.183 trillion is set aside for servicing domestic debts, N940.89 billion for foreign debts and N220 billion to the Sinking Fund for payments of bonds issued to local contractors and creditors.
The President noted that the Capital Budget is N1.15 trillion higher than the sum of N2.69 trillion budgeted in 2020 and this represents 29% of the aggregate expenditure. He stressed that the priority of the capital budget is the completion of on-going projects and those that will benefit the people. Highlights of the 2021 Capital Projects spending allocations are as follows:
- Power- N198 billion (inclusive of N150 billion for the Power Sector Recovery Plan);
- Works and Housing- N404 billion;
- Transportation: N256 billion;
- Defence: N121 billion;
- Agriculture and Rural Development: N110 billion;
- Water Resources: N153 billion;
- Industry, Trade and Investment: N51 billion;
- Education: N127 billion;
- Universal Basic Education Commission: N70 billion;
- Health: N132 billion;
- Zonal Intervention Projects: N100 billion;
- Niger Delta Development Commission: N64 billion.
Lastly, the President stated that the 2021 budget deficit is N5.20 trillion representing 3.64 percent of estimated GDP. He noted that this is slightly higher that the 3 percent threshold set in the Fiscal Responsibility 2007 but is justified by the existential challenges posed by COVID19 and its aftermath. He added that this deficit will be financed by new borrowings of N4.28 trillion, privatisation proceeds of N205.15 billion and drawdowns on multilateral and bilateral loans secured for specific projects and programmes of N709.69 billion.
The President concluded his presentation by commending the commitment of the 9th Assembly towards ensuring a harmonious and productive relationship with the Executive and expressed optimism over the prompt passage of the 2021 budget estimates.
Following the President’s budget address, the Speaker, Hon. Femi Gbajabiamila ended the ceremony with a vote of thanks in which he expressed his appreciation for the President fulfilling the obligation of his office. He restated the National Assembly’s commitment to nation-building and delivery of timely budget. He gave assurances that the Budget to be passed will reflect priorities of healthcare, education, public infrastructure and development of an economy that is less dependent on fossil fuels. He added that in considering the budget, Members would hold themselves to the highest levels of integrity and only act in the best interest of Nigerians.
Click here to view the President’s 2021 Budget Presentation Address
Also see the 2021 Budget Presentation Speeches by the Senate President & Speaker of the House
