15 January 2014

Nigeria: The 2014 Appropriation Bill...(1)


Though the revenue projection is conservative, some of the allocations are discomforting

When they resume from recess next week, members of the National Assembly will be expected to immediately commence work on the 2014 Appropriation Bill transmitted by the President in December. We hope that the current politics of acrimony will give way to common sense so that both the legislature and the executive can work together to give the economy a direction this most crucial year with the early passage of the budget.

In the budget estimate, which was laid before the two chambers of the National Assembly last month by the Minister of Finance, Dr. Ngozi Okonjo-Iweala, the federal government has proposed spending N4.6 trillion for the 2014 fiscal year. It also estimates that N268.4 billion will be spent on the Subsidy Re-Investment and Empowerment Programme (SURE-P). According to Okonjo-Iweala, the budget supports the efforts to diversify the economy and create jobs.

The baseline assumptions in the budget are based on the benchmark price of $77.5 per barrel of crude oil, an estimated production capacity of 2.39 million barrel per day and an average exchange rate of N160 per dollar, same as in 2013. With targeted real GDP growth rate of 6.75% and projected gross federally collectible revenue of N10.88 trillion out of which oil and gas receipts would account for N7.16 trillion, we consider the projections generally conservative. However, there are issues with some of the basic assumptions that inform the budget as well as their fundamentals.

While the recurrent (non-debt) spending has been brought down by about N400 billion, from the N2.80 trillion earmarked in 2013 to N2.43 trillion in 2014, that gain has been wiped off by the increase in personnel cost from N1.718 trillion in 2013 to N1.723 trillion for 2014. Many Nigerians are also at a loss as to what informs some of the sub-heads and the amounts allocated to them. And for that reason, we expect the lawmakers to be rigorous when they debate the budget so that they can take out items that most critical observers consider not only frivolous but also out of touch with reality. A few of these items need highlighting.

For instance, the Ministry of Aviation has decided to splash huge sum of money again on automobiles even when still reeling under the furore of the N225 million bulletproof car scandal. According to the ministry's 2014 budget proposals, N250 million will be spent on eight operational vehicles for the Accident Investigation Bureau (AIB) and another N500 million to buy some trucks for the agency. Also, with no breakdown provided, a whopping sum of N7 billion has been allocated to the proposed national dialogue. Against the background that President Olusegun Obasanjo allocated less than a billion naira for a similar exercise in 2005, questions are being asked about how the Jonathan administration arrived at the huge sum to host a dialogue that many have already dismissed as a waste of time. Yet another N4 billion will be expended on hosting the World Economic Forum.

If these figures are correct, they definitely represent errors of judgment. It is imperative that government notes the extreme poverty and despair in the land and begins to speak to the issues in the budgetary proposal. In a political milieu in which incumbents recklessly abuse the public purse in pursuit of their private political ends, there is genuine public concern that some of the laughable items in the 2014 budget proposal may indeed be no more than avenues for political money laundering ahead of the next general elections.

It is therefore our hope that these frivolous items will not escape the scrutiny of the National Assembly, the arm of government which statutorily has the power of the purse. To enhance its moral authority in discharging this onerous responsibility, the National Assembly also needs to be transparent about its own N150 billion budget proposals too.

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