The Federal Government hopes to raise a total of N565bn from recovered loot and fines to be paid by MTN Nigeria to fund the 2017 budget.
The Minister of Budget and National Planning, Udo Udoma, explained on Monday in Abuja during the public presentation of the 2017 budget breakdown that the disruptions to oil production and falling crude prices had made it impossible for the government to meet majority of its revenue projections.
The event was attended by the ministers of Health, Prof Isaac Adewole; Finance, Mrs. Kemi Adeosun; Agriculture, Chief Audu Ogbeh; Information and Culture, Lai Mohammed; and Petroleum Resources, Ibe Kachikwu, among others.
Providing useful insights into how the looted funds would be recovered and used, the Director-General, Budget Office of the Federation, Mr. Ben Akabueze, said that N288.6bn out of the N565bn would come from recovered looted funds.
He said, “With respect to the looted funds for the revenue profile in the 2017 budget, it is a total of N288.6bn. This includes N97.6bn, which is the naira equivalent of $320m expected from the Swiss (government), which is part of what was recovered from the Abacha loot.
“It also includes N72bn that has already been received in cash from cases of recoveries and the balance of N90bn is from other expected recoveries, which are at an advanced stage and we feel comfortable and confident that they will come through in 2017 and have to be reflected in the budget.”
The Nigerian Communications Commission had in October 2015 fined MTN N1.04tn for selling over five million unregistered SIM cards.
The fine was later reduced to N330bn, out of which MTN has paid N50bn to the government. The balance of N280bn will be paid in six tranches over a period of three years.
The persistent attacks on oil installations by militants in the Niger Delta and the harsh operating climate resulting in low tax receipts from companies, according to Udoma, dealt a huge blow on the government’s revenue in the first nine months of this year.
An analysis of the projected revenue items in the 2016 budget in relation to the actual receipts showed that the Federal Government recorded a decline of N1.9tn in nine months.
Udoma said the revenue performance in the period had been disappointing, noting that the development had made the government to review downwards some of the revenue parameters in the 2017 fiscal period to a more realistic one.
He explained that although for most part of the year, crude oil prices exceeded the benchmark price of $38 per barrel, there had been a significant shortfall in projected revenue because of disruptions to crude oil production as a result of militant activities in the Niger Delta.
For instance, the minister said that the projected oil revenue for the first nine months of 2016 was N2.8tn as against the N2.2tn realised, while the projected independent revenue was N1.1tn as against N200bn realised during the period.
He added that the projected revenue from the Nigeria Customs Service also declined from N300bn to N200bn within the period, while the projected non-oil tax receipts were N800bn as against N500bn realised during the period.
Udoma said, “The Federal Government of Nigeria’s oil revenues decreased sharply in 2015 and 2016 because of oil production shut-ins and sharp decline in oil price since 2014. The oil price steadied at an average of $110 per barrel from 2012 to 2014, but dropped to a record low of $29 per barrel in February 2016, a drop of 70 per cent.
“Although for most part of the year, crude oil prices exceeded the 2016 benchmark price of $38 per barrel, there has been a significant shortfall in projected revenue caused by the disruptions in crude oil production as a result of militant activity in the Niger Delta.
“In particular, four strategic oil fields are affected, including Trans-Niger Pipeline and Nembe Creek Trunkline axis, as well as the Qua Iboe Terminal.”
He said in the 2017 budget, the Federal Government adopted a more realistic revenue framework from which a revenue of N4.94tn would be generated.
Udoma said the Federal Government would make sure that it did all within its powers to take the country out of recession with the budget through spending in critical areas such as infrastructure.
He said the government was determined to bring succour to the people, noting that the only way it could do this was by taking strong action to change, in a fundamental way, the current trajectory of the Nigerian economy.
He added that a committee had been set up by President Muhammadu Buhari to come up with innovative and creative ways to raise additional revenues from the oil sector and other sectors to fund the 2017 budget.
The report of this committee, he added, would be ready soon for the National Assembly to take into account in considering the budget in the New Year.
Udoma stated, “This is not the time for a timid and cautious approach. This is a time for bold and focussed action. To get out of this recession and back on the path of growth, the government must find the resources to spend on infrastructure, and to spend to reflate the economy.
“This spending will help to stimulate and attract private sector capital and private sector spending. This is what the 2017 budget proposals seek to do. We should not allow ourselves to be discouraged by those who say we can’t find the money to fund the spending required to implement this budget. We must, and we can find the resources.
“We will challenge our revenue generating agencies, particularly the Federal Inland Revenue Service and the Customs, to improve their efficiency and broaden their reach so as to achieve the targets set for them in the 2017 budget.
“They must be tasked to leverage technology to drive revenue collection. We will be issuing new guidelines and templates for computing the operating surpluses of the various government agencies so that we can achieve the targets we have set for independent revenues.”
In terms of expenditure, the minister said spending would focus on critical economic sectors that had quick transformative potential such as infrastructure, agriculture, manufacturing, solid minerals, services and social development.
For instance, he said, a total of N1.047tn was dedicated to key infrastructural spending in 2017.
Some of them are power, works and housing, N529bn; transportation, N262bn; special intervention programmes, N150bn; defence, N140bn; water resources, N85bn; industry, trade and investment, N81bn; and interior, N63bn.
Others are Education, N50bn; Universal Basic Education Commission, N92bn; Health, N51bn; Federal Capital Territory, N37bn; Niger Delta Ministry, N33bn; Niger Delta Development Commission, N61bn; and Agriculture, N91bn.
He added that some new initiatives were added in the 2017 budget to support the diversification of the economy.
For instance, Udoma stated that a new social housing programme of N100bn was added in the budget and the sum of N50bn was allocated for special economic zone projects to be set up in each of the geo-political zones to drive manufacturing and exports
The sum of N20bn, according to him, is voted for the revival of the Export Expansion Grant in the form of tax credit, while N15bn is allocated for the recapitalisation of Bank of Industry and Bank of Agriculture for them to support Micro, Small and Medium-scale Enterprises.