Nigeria’s Clueless President Buhari presents N8.612 trillion budget for 2018


• Deficit , debt servicing put at N 2.005 tr ,
N 2.014 tr
• Recurrent expenditure, capital projects
take N 3. 494tr , N 2 .652 tr
• Oil benchmark , exchange rate pegged at
$45 per barrel , N 305/ $
• ‘ How we deployed N 450b capital vote for
2017’

President Muhammadu Buhari yesterday
presented to a joint session of the
National Assembly a budget estimate of
N8 .612 trillion for the 2018 fiscal year .
The key parameters and assumptions for
the 2018 budget with a deficit of N 2 .005
trillion as presented include an oil
benchmark of $ 45 per barrel, oil
production estimate of 2 .3 million barrels
per day, exchange rate of N305 /$ for
2018, real Gross Domestic Product (GDP )
growth of 3. 5 per cent and an inflation
rate of 12.4 per cent .

The proposed N 8 .612 trillion of the 2018
aggregate expenditure comprises
recurrent costs of N 3 .494 trillion ; debt
service of N 2. 014 trillion ; statutory
transfers of about N 456 billion , sinking
fund of N 220 billion (to retire maturing
bond to local contractors) as well as
capital expenditure of N 2 .652 trillion
which is the 30. 8 per cent of the entire
budget .

On revenues , the president said that the
“ total federally – collectible revenue is
estimated at N 11.983 trillion in 2018.
Thus, the three tiers of government shall
receive about 12 per cent more revenues
in 2018 than the 2017 estimate . Of the
amount , N6 .387 trillion is expected to be
realised from oil and gas sources. Total
receipts from the non- oil sector are
projected at N5 .597 trillion. ”

President Buhari , however , disclosed that
“ the Federal Government ’ s estimated
total revenue is N 6 .607 trillion in 2018,
which is about 30 per cent 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, the Federal Government expects
to generate N2 .442 trillion as revenue
from the oil sector while it expects
N4 .165 from non- oil as well as other
revenues.
Buhari listed the non – oil and other
revenue sources of N 4 .165 trillion as
share of Companies Income Tax (CIT) of
N794 .7 billion , share of Value Added Tax
(VAT) of N207 .9 billion , Customs & Excise
receipts of N324 .9 billion , Federal
Government ’s Independently Generated
Revenues (IGR ) of N 847. 9 billion , share
of Tax Amnesty Income of N 87.8 billion
and various recoveries of N 512. 4 billion ,
N710 billion as proceeds from the
restructuring of government’ s equity in
joint ventures and other sundry incomes
of N 678 .4 billion .

“ It is expected that our fiscal operations
will result in a deficit of N 2 .005 trillion
or 1 .77 per cent of GDP . This reduction is
in line with our plans under the ERGP to
progressively reduce deficit and
borrowings ,” he noted
On how to finance the budget , Buhari
said: “ We plan to finance the deficit
partly by new borrowings estimated at
N1 .699 trillion. Fifty per cent of this
borrowing will be sourced externally,
whilst the balance will be sourced
domestically.”

The president also provided explanations
on how his administration intends to
manage the nation ’s debt.
“ We are closely monitoring our debt
service to revenue ratio . We shall
address this ratio through our non- oil
revenue – generation drive and
restructuring of the existing debt
portfolio . Presently , domestic debt
accounts for about 79 per cent of the
total debt.
“ Our medium – term strategy is to reduce
the proportion of our domestic debt to 60
per cent by the end of 2019 and increase
the external debt to 40 per cent . It is
noteworthy that rebalancing our debt
portfolio will enhance private sector
access to domestic credit . In addition ,
annual debt service costs will reduce as
external debts are serviced at lower rates
and repaid over a longer period than
domestic debt.”

He listed key capital spending allocations
in the 2018 budget as N555 . 88 billion for
power, works and housing;
transportation which is to get N263 . 10
billion ; and special intervention
programmes which will get N150 . 00
billion . Others are defence which has
N145 .00 billion ; agriculture and rural
development which takes N 118 .98 billion
and water resources with N 95.11 billion .
Buhari also said that industry, trade and
investment would get N 82.92 billion ;
interior to get N63. 26 billion ; education
takes N 61.73 billion ; Universal Basic
Education Commission will take N 109. 06
billion as health gets N 71.11 billion .

Similarly , the Federal Capital Territory is
to get N40. 30 billion while zonal
intervention projects will get N 100 .00
billion . The North East Intervention Fund
has been allocated N 45.00 billion just as
the Niger Delta Ministry gets N53. 89
billion and the Niger Delta Development
Commission gets N71. 20 billion .
Contrary to the position of some
Nigerians that they are yet to identify a
tangible project undertaken by the
executive under the 2017 fiscal plan for
which N2 .1 trillion was approved but
N450 billion has so far been released,
Buhari listed some, mostly roads, for
possible confirmation .

“ 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 .”
He listed the dualisation of Oyo –
Ogbomosho- Ilorin road; rehabilitation of
Gombe- Numan – Yola road; dualisation of
Kano- Maiduguri road ; rehabilitation of
Sokoto- Tambuwal- Jega road and
Kotangora – Makera road that traverses
Sokoto, Kebbi and Niger states ;
rehabilitation and reconstruction of
Enugu- Port – Harcourt road; rehabilitation
of Enugu – Onitsha dual carriageway road;
rehabilitation of Aleshi – Ugep road and
the Iyamoyun – Ugep section in Cross River
State.

The rest are rehabilitation , reconstruction
and expansion of Lagos – Ibadan dual
carriageway; construction of Loko – Oweto
Bridge over River Benue in Nasarawa and
Benue states ; and construction of
Gokanni Bridge along Tegina- Mokwa –
Jebba Road in Niger State .
President Buhari also announced that in
the year under focus, his administration
invested a lot of time and effort in
identifying alternative means of funding
new projects .
He said for example , the recent N100
billion Sukuk financing would cater
specifically for the development of 25
roads across the country , adding that the
economic team has also developed
different structures that empower
private investors to contribute to the
development of roads of significant
national importance .

“ Already, we are seeing results . For
example, the Bonny- Bodo road is being
jointly funded by the Federal
Government and Nigeria LNG Limited.
This project was conceived decades ago
but it was abandoned . This
administration restarted the project and
when completed, it will enable road
transportation access for key
communities in the Niger – Delta . The
Apapa Wharf- Toll Gate road in Lagos
State is also being constructed by private
sector investors in exchange for tax
credits.”
According to Buhari , the electricity sector
remains a work in progress, noting that
there has been a record of increased
generation capacity . “ We still have
challenges with the transmission and
distribution networks . That said, I am
pleased to announce that since 2015, the
Transmission Company of Nigeria (TCN )
and Niger – Delta Power Holding Company
(NDPHC ) have added 1, 950 MVA of
330- 132 kV transformer capacity at 10
transmission stations , as well as 2 , 930
MVA of 132- 33kV transformer capacity to
42 substations nationwide. With these
additions, the transmission network
today can handle up to 7 ,000 Mega Watts
(MW). ”

The president listed the challenges of the
administration to include the distribution
network where the substations cannot
take more than 5 ,000 MW. “ This is
constraining power delivery to
consumers. We are working with the
privatised distribution companies to see
how to overcome this challenge .
Nigerians should rest assured that this
administration is doing all it can to
alleviate the embarrassing power
situation in this country . To sustain the
continued expansion of generation
capacity and enhance evacuation , we
approved a Payment Assurance
Guarantee Scheme which enabled the
Nigerian Bulk Electricity Trader (NBET ) to
raise N 701 billion . This assures the
generation companies of up to 80 per
cent payment on their invoices . This
intervention has brought confidence
back into the sector and we expect
additional investment to flow through ,
particularly in the gas production
sector.”

Buhari restated his administration ’s
commitment to the development of
Green Alternative Energy Sources ,
revealing that it has signed Power
Purchase Agreements (PPA ) with 14 solar
companies . “ The administration has also
approved the completion of the 10 MW
Wind Farm in Katsina State , a project
that was abandoned since 2012; and the
concession of six small hydro – electric
power plants with a total capacity of 50
MW. ”

And to enable the successful takeoff of
these, and future green projects , he
informed the lawmakers that the Federal
Government would be launching the first
African Sovereign Green Bond in
December 2017. The bond , he disclosed ,
would be used to finance renewable
energy projects. 


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