Nigeria appears to be fanning the fame of an early budget passage in order to achieve a complete cycle after years of misses that was due mainly to late submission and a power tussle between its legislative and executive arms.
The Executive under the control of President Muhammadu Buhari says it is working towards sending the 2020 appropriation bill to the National Assembly by end of September, in order to get it approved on time so as to return the economy to operate the January – December budget cycle.
First was a pronouncement by President Buhari, through Boss Mustapha, the secretary to the government of the federation (SGF), giving a marching order to the newly inaugurated ministers to work on the 2020 budget to ensure that it is submitted in September, as soon as the National Assembly resumes; then later, a statement made Thursday by Zainab Ahmed, minister of Finance, Budget and Planning affirming that the 2020 appropriation bill is underway and would be sent to the legislature by month end.
“The 2020 budget preparation process is well-underway, and we intend to finalise and submit the 2020 appropriation bill to the National Assembly by the end of this month,” Zainab said at a Roundtable meeting on National Donor Coordination held in Abuja. Nigeria in the last five years has shown a penchant for submitting the budget as late as December of every year which has in turn delayed the passage.
Since the return to civil rule in 1999, the country has only achieved a complete budget cycle—in 2001, 2007, 2009 and in 2013—where implementation commenced January of every fiscal year, prompting analysts to cast a doubt on the possibility of getting it right this time.
Year in, year out, it takes an average of four months behind the January fiscal year before a budget starts running in Nigeria and in fact, under the administration of President Buhari, the distortion of the budget cycle has risen to about six months, making Ministries, Departments and Agencies of government starve of budgetary allocations. The National Bureau of Statistics (NBS) has on several occasions missed the release of data due to lack of funds.
“A major implication of a distortion in the Budget cycle process is that development will be slowed down because the capital expenditure will hardly be implemented and without the capital expenditure budget, you cannot improve the ease of doing business in the country and this will result in a low level of productivity as the economic environment won’t be attractive to investors as a result of shortage in infrastructure.” Ayo Akinwumi, head of research, FSDH, told BDSUNDAY.
The question is whether the 76-year-old president can change the narrative, since his anointed candidates are now at the helm of affairs in both the lower and the upper chambers of the legislature unlike when the legislature was under the leadership of perceived “political foes”.
Earlier in July, Femi Gbajabiamila, speaker of the House of Representatives, urged the executive arm of government to present the 2020 budget to the National Assembly by the September 2019, saying that he wants every budget to run from January to December fiscal year.
But even though President Buhari might be having the backings of the legislature to move the needle, he is still confronted with a shortfall in revenue that has been the country’s biggest fiscal headache since the collapse of crude oil prices in 2014.
Execution of budgets has continued to be constrained by low and unstable revenue inflow to the government. This has particularly continued to hinder higher execution of capital budget and efforts at driving higher growth in the country. It has also made the government to resort to excessive borrowing to be able to meet up with financial obligations in the budget.
Data from the Budget Office of the Federation shows that between 2016 and 2018, only an average of 31.13 percent of the budget was used on capital expenditure while the rest was spent on recurrent expenditure and in servicing debt.
In order to close the gap in infrastructural deficit, Nigeria is using a system of tax credits to encourage private companies to share the cost of infrastructure projects, Tunde Fowler, executive chairman of the Federal Inland Revenue Service (FIRS), said in an interview with Reuters, Wednesday.
He noted that more than 10 local companies had applied for the scheme to receive 50 percent of expenditure in tax credits. The tax regulator also plans to impose a 5 percent tax on every online purchase from next year.
MICHAEL ANI
