Baring any last minute change, President Muhammadu Buhari will today sign the 2018 budget into law.
Minister of Information and Culture, Lai Mohammed, who disclosed this on the sidelines of a visit to London last Friday had simply said, “We will sign it off on Tuesday”.
Assuring that the delay in the passage of the budget would have little effect on government projects Lai also said, “Even once a budget is passed, there are still processes, due diligence to be done. This takes time”.
The National Assembly had in May passed a record N9.12trillion budget for 2018, N1.6trillion higher than the N8.6trillion presented to it by the president in November last year.
With the 2018 Appropriation Bill set to be signed into law by President Buhari today, increased liquidity that will follow the implementation of the budget is expected to boost business activities as 89,000 federal government workers will be getting insurance cover.
Although coming six months late, analysts and operators in the Nigerian business environment say the signing of the budget will kick of business activities that have slowed in recent times.
Traders in the money market say they anticipate a reduction in rates at the money market and a resumption of mop up of liquidity by the Central Bank of Nigeria.
Coming six months into the year, analysts say they expect that the budget will increase liquidity in the market. Last week, the Central Bank of Nigeria (CBN) did not hold any Open Market Operations auction as market liquidity moderated.
Head of Brokerage at Afrinvest West Africa, Adedoyin Allen, noted that the signing of the budget would see an increased inflow of money into the market resulting in a decline in rates.
He said, “Signing the budget will mean that there will be more money in circulation. There would be more money to be invested in the money market as well. So, we might experience some deduction, like a decline in rates due to more demand than supply.
“As it is going to be a four-day trading, the CBN may not issue more than one OMO auction to mop up excess liquidity and we are expecting some stability in rates as well.”
Noting that the late singing of the budget has become a trend, she said, “The signing of the budget coming late would not have much impact because as we have seen, even the last budget was not signed early enough. So, it is not a new trend; it is becoming regular”.
On his part, President of the Manufacturers Association of Nigeria (MAN), Mr Frank Jacobs, said the signing of the budget would increase the flow of funds in the economy, which would help manufacturers to sell their products.
Noting that the signing of the budget is a plus to the Nigerian economy, he said, “We have been waiting for it signature. It will be easy for people to know the direction of the economy. It is a step in the right direction and we are happy about it”.
In his reaction, the Director General of Lagos Chamber, Commerce and Industry (LCCI), Mr Muda Yusuf stressed that the delay in signing the 2018 budget was the longest in the past years, saying both the legislature and the executive should guide against such lateness in the future.
“The delay is not good for our economy. Both organs of government should work harder to avoid delay. With the signing, budget implementation will begin. It will have positive effect on businesses but the delay has done a lot of damages. There is going to be improvement in liquidity and some contractors will be paid while some budget will commence”, he noted.
Also, insurance operators have said the signing of the 2018 budget into law by the president will allow the Ministries, Departments and Agencies (MDAs) renew their respective insurance cover that could not be renewed because of the delay in signing the budget.
The president, Chartered Insurance Institute of Nigeria (CIIN), Mrs Funmi Babington-Ashaye, who disclosed that the federal government has allocated N15 billion to settle the insurance premium of employees in MDAs for the 2018 financial period, said, “Considering the fact that the government has allocated N181.19billion to the payment of pensions and gratuities of public servants, while N15billion has also been set aside to meet the MDAs’ life assurance premium obligations, the insurance sector should experience increased business momentum.”
The insurance industry, she stressed, has more to cheer from the budget.
On his own part, the President, Nigerian Council of Registered Insurance Brokers (NCRIB), Mr. Shola Tinubu, while stating that federal government has been finding it difficult to renew the group life cover of its workers and other insurances as and when due because of delay in passage and signing of the budget, urged government to push its insurance renewal date forward to avoid delay in its insurance renewals.
“In terms of group life of the government, I will advise them to get the renewal date ahead so that you don’t have this kind of problem every year,” he advised.
Meanwhile, with the federal government still owing N97 billion accrued pension rights to pensioners who retired from its service between April 2017 to May, 2018. The Head, Corporate Communications of National Pension Commission (PenCom), Mr Peter Aghahowa, said the accrued pension rights that has not been paid has been appropriated for in the 2018 budget expected to be signed into law.
He added that as soon as the budget is approved, the federal government will clear all its outstanding pension owed its retirees.
“We are also planning to present the accrued rights of the federal government workers expected to retire in 2019 to government on time so that they can make provision for that amount. So, we are hopeful that all the outstanding pensions would be paid because it is part of what has been appropriated for in the budget,” he pointed out.
An economist and shareholders with Independent Association of Nigeria (ISAN), Mr. Adebayo Adeleke, said that the signing of the budget is ceremonial, adding that it does not have very serious effect and impact on government performance.
According to Adeleke, that the president is signing the 2018 budget in June does not mean that they have not spent money from January 1 till date.
He noted that the government has been spending money and every month, there are federal, state and local government allocations.
He said, “The Nigerian system is working, the oil is been sold, we are earning dollar, the internal revenue is been generated, Federal Revenue and Allocation Committee meets every month and gives the three tiers of government money.
“The apparatus of government is working; the budget by definition is statement of financial intention. It is just good that we have a document that gives a general guide and talks about what the government is planning to do.”
The chief operating officer of InvestData Consulting Limited, Mr Ambrose Omordion, said with the signing of the 2018 budget, the economy would be reflated, resulting in the boosting of disposable income and spending power, increased aggregate consumer demand, healthier businesses and potentially more jobs.
“Furthermore, I fully expect to see an improvement in investor confidence home and abroad, with its multiplier effect on the economy, “ he added.
President of Shippers Association Lagos State (SALS), Rev Jonathan Nicol, told LEADERSHIP that the signing of the budget would increase liquidity for importation in the shipping sector.
“There will be liquidity; government will release cash into the system but as far as shippers are concerned, our containers are moved regularly. But because the budget was passed and signed in the middle of the year, we hope things will pick up bearing in mind that a lot of things are held up, but we hope things will speed up”, he noted.
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