2020 revenue: Nigerians raise queries over Presidency’s expenditure lines - The Naija Weekly

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Monday, November 11, 2019

2020 revenue: Nigerians raise queries over Presidency’s expenditure lines


When the news broke last week that President Muhammadu Buhari, had sacked about 35 Special Assistants attached to the office of the Vice President, Prof Yemi Osinbajo, even while on vacation in the United Kingdom, some of his aides explained away as part of measures by the presidency to cut the cost of governance in the country. The explanation came on the heels of growing concerns in some quarters  over the alarming cost of governance in Nigeria’s presidential system of government where less than 5million public officers spend more than half of the annual budget and leaving over 190 million other citizens without access to government resources to struggle for crumbs that fall from the master’s table.

On its face value, Buhari’s aides  appear to have made a good case for the sack of 35 citizens working under Osinbajo’s supervision consider thei sheer number and composition since some  critics were wondering what he needs 35 or more aides for at a time unemployment rate has reached a crescendo.

However, a careful evaluation of some of President’s expenditure lines under 2020 Appropriation Bill now before the National Assembly could easily deflated their argument.

Critics have described some of these expenditure lines as frivolous and quite unrealistic at a time revenue flows are heavily constrained.

They argue it is regrettable that despite the country’s humongous infrastructural deficit, Buhari was still allocating resources to expenditure lines that many Nigerians are not comfortable with.

While the oil revenue target for 2020 Budget is N2.64 trillion, non-oil revenue would attract NI.81  trillion and other sources of revenue  which include looted funds, diaspora remittances  would bring N3.7 trillion.

Furthermore, a lot of the revenue expenditures would go to rent and other lines which the presidency listed as rent, sewage evacuation, refreshments replacements of equipment that are still usable.

For instance, the  presidency would spend a total of N66,669,945 for rent in  the 2020 Budget proposal while  N45,678,55 will be used to fuel generators and plants.

Besides, the presidency  would  spend another N132,199,558 for  fuels and lubricants  while another  N67,950,392 would  be used to fuel  vehicles.

According to the 2020 budget proposal, the president would also spend N274,798,446 on electricity charges and N45,418,735 for sewage evacuation with a total of N67, 128,117 spent on internet access charges and about a total of N23,861,251 for  telephone charges.

While water rate will take N65,684,953 in the state house, purchase of newspapers was allocated a total of N26,432,346.

Also, the 2020 budget proposed a total of N4,517,445 for refreshment for the Chief of Staff to  the president. Whereas a total of N13,552,334 was allocated for  honorarium and sitting allowance, N20,391,700 is for overhead and N18,069,779 for miscellaneous.

For the Office of Chief Security Officer to the president, a total of N61,710,000 was allocated to fuel and lubricants. However, overheads will take N111,359,316.

Some of these expenses can be cut down to management size.

Already the Federal Government’s N10.3trillion 2020 Appropriation Bill presented to the joint session ofthe National Assembly on October 8, 2019 looks challenged ahead of its implementation.

The budget anchored on sustaining growth and job creation projects expenditure in the sum of N10.330 trillion. The proposal which represents an 11 per cent increase when compared to the 2019 appropriation of N9.12 trillion. The proposed retained revenue is N8.155 trillion and a deficit of N2.18 trillion or about 1.52 per cent of the GDP.

According to the Minister of Finance Budget and National Planning, Mrs Zainab Ahmed, the key assumptions include an oil benchmark price of $57 per barrel of crude oil; daily oil production of 2.18 million barrels per day (mbpd) and an exchange rate of N305 to a dollar. The real GDP is expected to grow at 2.93 per cent, while inflation rate is projected at 10.81 per cent. Out of the N10,330,416,607,347,  about N556,700,827,235 is projected for statutory transfers; N2,748,598,930,000 is for debt service obligations, N4,880,309,549,778 for recurrent (non-debt) expenditure while the sum of N2,144,807,300,334 is for contribution to the development fund for capital expenditure for the year ending December 31, 2020.

With about N2.18 trillion deficit  expected  to be financed mainly by new foreign and domestic borrowings – privatisation proceeds, signature bonuses and draw-downs on loans secured for specific purposes there are huge worries that this will further balloon an already bloated debt profile currently standing at about $81.274 billion.

According to experts, the deficit is 21.10 per cent of the overall expenditure of N10.33 trillion and 2.1 per cent of the projected revenue of N8.155 trillion.  Available statistics has it that as at the end of June 2019, a deficit of N1.35 trillion had been recorded in the implementation of the 2019 budget, representing 70 per cent of the budgeted deficit for the full year. This was also recorded at a time that not a single kobo was spent of capital expenditure for the year. So, the extent of the proposed deficit financing for 2020 raises very critical challenges. It is like sinking further into a slippery hole.

Perhaps, it is against this backdrop that the Federal Government recently read the riot act to  all its revenue-generating agencies to meet their targets or get  booted out.

Speaking at a budget breakdown session in Abuja, Minister of Finance Budget and National Planning, said: “Our fiscal reforms shall introduce new performance management frameworks to regulate the cost to revenue ratios for government-owned enterprises which shall come under significant scrutiny. We will reward exceptional revenue and cost management performance while severe consequences will attend failures to achieve agreed targets” she said.

Already, a Finance Bill had been forwarded to the National Assembly aimed at  raising revenue for the government. It is expected to promote fiscal equity by mitigating instances of regressive taxation. Apart from reforming domestic tax laws to align with global best practices, the bill would introduce tax incentives for investments in infrastructure and capital markets.

Also, it would support micro, small and medium business in line with the government’s  ease of doing business reforms.

Meanwhile government’s recent moves to increase revenue inflow to boost funding for the budget has triggered a flurry of expert reactions with some agreeing that the policy would further forestall executive profligacy

For instance,  a development economist,  Mr Odilim Enwegbara, said the policy was long overdue, since it was expected to have started in Buhari’s first term in 2015.

“What this government is starting now would  have been started in 2015. It would have stopped government revenue generating agencies from continuing to be committing the financial murder which they have done with impunity since the Fiscal Responsibility Act of 2007 technically allowed  them to remit only what’s  left over after deducting the cost of generating revenue to the extent that these agencies have been stretching their cost of generating revenues to close to 100 per cent  of the very revenue they generate. That has since been taken care of since the implementation of treasury single account (TSA).

“Setting revenue targets for revenue agencies in Nigeria is long overdue. If all over the world, revenue generating agencies have targets set for them, there’s nothing wrong with government here setting a revenue target for the revenue-collecting agencies here too.

As it is also common the world over, isn’t it time government made it clear to these agencies that no government agencies should get away with spending outside appropriation? This stringent approach is what obtains all over the world, where revenue-collecting agencies first send in their revenues to the treasury (in our case TSA) and then could later approach the budget office for any unforeseen expenditures as a result  of their revenue generation. It is the fiscal appropriation authorities ( lawmakers) that have all expenditures approval authorities so that the executive does not engage in  fiscal malpractices,” he said.

Lead Director, Centre for Social Justice (CSJ) and an economy analyst, Eze Onyekpere, agreed that many revenue-generating agencies do not comply with the Fiscal Responsibility Act which mandates the agencies to remit their operating surplus to the Federation Account. He said that if they would comply with  the order, there would be more money to the treasury.

“If the president doesn’t want to issue a threat because the threat is reminiscent of dictatorship.  But the fact is that many agencies are not remitting their operating surplus  in accordance with the Fiscal Responsibility Act (FRA).

If they comply with the threat there will be more money for the treasury.

“For Customs, Federal Government’s share underperformed by 30 per cent in 2016, 6 per cent in 2017, 6 per cent in 2018 and for the first half of 2019, it raised an extra 34 per cent more than the expected revenue. Therefore, the increase of the expected revenue to the Federation Account from Customs by NASS from N942.6 billion to N1.5 trillion is a step in the right direction.

“Independent Revenue underperformed by 84 per cent in 2016, 63 per cent in 2017, by 46 per cent  in 2018 and for the half year 2019 by 17 per cent. The increased revenue expectation from N631 billion to N849 billion looks overtly optimistic” he said.

For recoveries, Onyekpere, noted that in 2018, N374 billion was the revenue expected from domestic recoveries, assets and fines but nothing  came to the treasury from that source.

“In 2019, the sum of N203.38 billion was expected and as at June 2019, not a single kobo has accrued. Earlier in 2017, the sum of N565 billion was expected from recoveries and nothing came into treasury.  Therefore, providing the sum of N237 billion as revenue from the same source in 2020 may be an exercise in futility. Recoveries should only be included as funding source if the proceedings have already been concluded and the money is already in the treasury. If it is an expected sum, then it should not be made a revenue source as there is no certainty that it will be realised. It should only be appropriated when it has already been realised through a supplementary appropriation. But the foregoing development questions the veracity of media reportage and the declarations of the Economic and Financial Crimes Commission (EFCC) and other anti-corruption agencies on forfeitures in judicial proceedings, of assets suspected to have been proceeds of crime. National Assembly should do the needful by excluding this as a revenue source.

“However, it should use its oversight to monitor when actual forfeitures have been made by the anti-corruption agencies and demand for remittances to the treasury of the proceeds of crime.

“It is projected that if the proceeds of recoveries as reported in the media through judicial proceedings are properly accounted for, Federal Government  can get about N200 billion to fund the budget.”

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