Senator Udoma Udo Udoma, Minister of Budget and National Planning Wednesday gave the budget breakdown in Lagos, with analysts applauding the N6.04 trillion budget as one that will tackle both economic and security challenges.
The analysts expressed satisfaction with the over the N200 billion earmarked for pensions, as well as the N20 billion allocated to the amnesty programme.
They said it would adequately address the issue of insecurity and stimulate and tackle economic challenges facing the country.
According to them, the allocation of huge votes to the ministries of Works, Power and Housing, Education and Defence is a step in the right direction, as they will create the much-needed jobs and reduce idle hands that could worsen the issue of insecurity, with the education vote able to employ some 500,000 workers. They called it a budget for the sectors.
For instance, Mr Wale Abe, Chief Executive, Financial Market Association of Nigeria (FMAN), asserted that the budget would bring lots of job creation in the works, power and housing sectors, while the one voted for defence will help the country’s armed forces go a long way in the fight against insurgency across the country.
Minister Udoma had earlier said that the 2016 budget was an indication that there was light at the end of the tunnel.
“The bottom line is to increase the investment in infrastructure as a way of reviving the nation’s economy. What it will eventually translate into is, ‘It’s an infrastructure and job budget. We have also set aside money for social intervention as the President explained.”
Critical sectors like works, power and housing, for the first time, got N433.4 billion projected to be spent on that ministry. The amount is even higher than what has been earmarked for defence, which is put at N294.5 billion.
There are signs that the government may make good its intention to fulfil its electoral promises in the education sector with as much as N369.6 billion proposed for the sector. This sector is expected to be another job-creation one during the year.
Ecobank’s analyst, Olakunle Ezun, said: “The economy today is down because government has stopped spending in any sector; government is the largest spender, so if government has said it is going to spend 30 percent of its budget in 2016, what this means is that once government starts spending, there will be activity in the system, we will see jobs being created and, once jobs are created, the government will begin to generate revenue which will help to stimulate the economy and get the system working together.
“If government could follow the budget line by line, it will jumpstart the economy out of the current crisis that we find ourselves. The fact that we have special intervention lines that will help address the poverty in the country is something.”
The fiscal responsibility campaigner and lead Director, Centre for Social Justice (CSJ), Eze Onyekpere also lauded the proposed budget, describing it as a mix of welfare and development plan.
He, however, expressed worry at the deficit of N2.22 trillion and the oil benchmark of $38 per barrel, saying since oil was already selling below that amount at the international market, “the implication is that the resources to finance the budget may not be fully available.
“The fact is that the country shall borrow about N1.84trillion to finance the deficit and also set aside N1.36 trillion for debt servicing. We are accumulating debts in geometric proportions whilst our ability to repay is not growing as fast,” he said
Chief executive of Financial Derivatives Company Ltd, Bismark Rewane, in his “Bi-monthly Economic and Business Update,” explained that the spending and revenue estimates were based on the Keynesian model of counter-cyclical spending to stimulate growth, as spending in real terms is up 20 per cent and the deficit is to expand to $11 billion – 2.16 per cent of GDP.
According to him, for an austere and frugal leader, deficit financing – requiring an additional N1.84trillion – is a bitter pill to swallow, especially the reference to both domestic and, more importantly, international borrowing, adding that the Eurobond market would be a real test of Nigeria’s creditworthiness.
“The most notable shift in his economic ideology remains the mute but tacit acceptance of the adoption of a flexible exchange rate – a no-go area up to a few days ago,” he said.
Professionals in the nation’s construction sub-sector have high optimism that the 2016 budget of N6.08 trillion will begin to address infrastructure deficit in the country.
Speaking with our correspondent on the implication of 2016 budget on the sector, Raymond Adagun, an estate surveyor and valuer, said the budget, apart from housing and road sectors, would also no doubt enhance inclusive growth of the economy.
“Sectors such as works, power and housing have been allocated N433.4 billion. The budget is much clearer than the previous proposals in terms of ways to finance the implementation. Again you will notice that the amount budgeted for capital expenditure would help to achieve sustainable development”.
Kayode Afolayan, a builder, said since the set of assumptions of a benchmark price of $38 per barrel and a production estimate of 2.2 million barrels per day for 2016, its impact will be felt in the construction sector if the government has so much political will to drive its implementation.
“This is a budget that focused on non-oil revenues by broadening the tax base and improving on the effectiveness of the revenue collecting agencies. We expect that the revenue be ploughed into housing projects and infrastructure that will directly benefit the people.
“More so, that the federal government has adopted the zero budgeting system. What that means is that it would prioritise the most important projects to achieve rapid development of the construction industry and in, the long run, the economy.
“I am very certain about the fact the budget will minimise abandoned projects in the country when implemented to the letter, especially if the fight against corruption is sustained.”
For the pension sector, operators foresee a booming year.
According to Adeolu Adetola, group head of Research, ARM insurance, government has set out to deal with recurrent and expenditure issues.
He said from the budget of change, government was ready to deal properly with recurrent structure, and with the TSA, government will be more accountable.
“The benefit is that salaries will be paid on time and pension remittances will be timely,” he said.
“Also with the N5 trillion company income tax target and VAT, government is widening its dragnet to bring more companies into the tax bracket. What this means is that government will identify small businesses and bring them into corporate organisations and recognise them as tax paying entities. This will help to generate sore revenues for government expenses and, in turn, bring them into pension fold and ultimately grow the number.”
-Leadership
