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2018 Budget: Business Community Anxious

Months after President Muhammadu Buhari presented the 2018 appropriation bill, there are worries it may not be fully implemented. CHIMA AKWAJA, ANTHONY AWUNOR, BUKOLA IDOWU, OLUSHOLA BELLO, YUSUF BABALOLA, ZAKA KHALIQ and TAIWO OMILANI report.

Seven months after President Muhammadu Buhari presented the 2018 appropriation bill to the National Assembly, he grudgingly signed it into law, paving way for government to start spending on capital projects from the N9.12 trillion budget and preventing a government shutdown.

The budget had been increased by the legislators from the initial N8.61 trillion record budget that was presented by the executive. Asides this, president Buhari whilst signing the bill had complained of the additional 6,403 capital projects costing an additional N578 billion that was inserted in the bill as passed by the National Assembly and the slashing of N347 billion in the allocations to 4,700 projects in the original bill sent to the house.

This seeming discord and miscommunication between the executive and legislature has begun to sow a seed of doubt of the effectiveness of the budget on the economy in the mind of the business community. Industry players in all sectors of the economy who spoke with LEADERSHIP expressed fears that the budget as signed by the president may be difficult to fully implement.

Reacting to the signing of the budget, the National president of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), Iyalode Alaba Lawson, said the cutting of the allocation to some key capital projects was a source of concern to the organised private sector (OPS). 

Whilst appreciating the fact that the budget finally got signed, she said “in his speech, Mr. President identified and highlighted some key projects which had been earmarked for implementation in the 2018 Budget, in the area of Health, Security and Infrastructure but have either been dropped or the allocations for their implementation reduced. This is of serious concern to the organized private sector.”

This concern was also raised by managing director of Cowry Assets Management, Johnson Chukwu who while commending the passage of the budget said it also raises concerns in the business community. “The president mentioned that the national assembly cut down the amount budgeted for some capital project whereas they added fresh capital project to the budget.

“The president said those capital projects added will be difficult to implement and those that they cut down on will also be difficult to realise, so for me that is a great concern. The most important aspect of the budget to the private sector is the capital project component and if the president is saying that the capital project will be difficult to implement it should be of concern to all of us” he said.

According to Barrister Chukwuemeka Eze, a lawyer and tax expert, the budget as passed by the president will send a mixed signal to the business environment. “This is a budget that the president while signing it spent more time pointing out the challenges and problems inherent in the budget. It will send mixed signals to the business community because the president said he will be sending a supplementary budget to amend it. Meaning that what we are having is either half full or half empty. It cannot form the basis of overall planning.”

Noting that the controversies surrounding the passed budget would impede the Ease of Doing Business in Nigeria as well as the work of the Presidential Enabling Business Environment Council (PEBEC), Eze called for more cooperation and communication between the legislative and the executive arm of government.

Civil society organisation, Socio-Economic Rights, and Accountability Project (SERAP) in its reaction to the budget said the National Assembly violated the fundamental rights of Nigerians by cutting the proposed allocations for essential public services, including health, education, housing and security, to the tune of N19.15 billion in the 2018 budget presented by President Muhammadu Buhari.

SERAP, in a statement yesterday by its deputy director, Timothy Adewale, said the action of the federal lawmakers qualified as crime against humanity and should as such be referred to the International Criminal Court.

Despite the controversies, the business community are hoping that the supplementary budget as promised by President Buhari would come soon enough to make the full implementation of the budget feasible.

Furious with the national assembly for cutting down on provisions for Pension Redemption Fund by N5 billion, director, Centre for Pension Rights Advocacy (CPRA), Mr. Takor Ivor, said, successive governments at the federal level have failed to fund accrued rights of pensioners, saying, at a time that the federal government seems determined to offset the accrued rights, the National Assembly is scuttling the move.                                                                                  

Hoping that the supplementary budget will take care of the N5 billion cut-off, he charged members of the upper and the lower houses to be responsible when dealing with issues that addresses the masses.

According to him, “National Assembly has not done well with the cutting on pension budget. Yet, the amount in the budget is the actual figure and not an estimate, so, I could not even understand why they have to tamper with the figure. These are the people that ought to represent us, but they are now the one standing as a stumbling block for the retirees. They need to be responsible in decision-making process by understanding that they are all there because of the people.”

NACCIMA president noted that “while we acknowledge the statutory role of the Legislature in reviewing the budget presented by the Executive, we counsel that these projects be reconsidered for approval as soon as Mr. President presents the supplementary budget to the legislature as promised in his speech.

“We wish to use this opportunity to reaffirm the need for the Legislature and Executive to devise consultative mechanisms that will ensure quick passage and accent of the yearly budget which is a veritable guide to business operators to plan their yearly activities” said Lawson.

The Cowry Assets boss whilst noting that the passage of the budget will see that “the process of disbursement will now start. At least, let them start from the ones that have no controversy. Then the president can go back to the national assembly with the supplementary budget to amend some of those items that he is not comfortable with.”

He further stressed the need for collaboration between the executive and the legislative arm of government. “I think there needs to be some level of rapport between the executive and the national assembly because ideally if that interaction had taken place as one would have expected we would not be having issues where the national assembly will insert projects into the budget without the concurrence of the executive.”

Also, the NACCIMA president whilst raising concern over the late passage of the budget, said “the budget is a fundamental framework for strategic planning and decision making by both the public and private sector, as such delays have far reaching implications on the nation’s economy and the wellbeing of the people.

She emphasised that it is “a long-held and well known position that the act of late passage of annual budgets is neither good for the economy or our nation’s developmental aspirations for inclusive growth and sustainable development. It is particularly not helpful to the Private Sector which government has acknowledged as the engine of growth and development of the economy.

“Now that Mr. President has signed the 2018 budget,  all Ministries, Departments and Agencies of Government should immediately swing into action for the implementation of the budget to make up for time already lost in the 2018 budget year”, she stated.

On his part, director-general of Lagos Chamber, Commerce and Industry (LCCI), Mr. Muda Yusuf, said the implication of a late budget is that some aspect of the economy has been adversely affected.  “For instance planning with some of organizations both public and private sector has been slow down because there are some that cannot consummate their planning if the budget is not in place especially those that work with government projects; so that must have affected them.”

He further explained “we have people whose government is indebted such as contractors among others who need to be paid nearly the delay would have affected such persons. Then the implementation of the budget itself will also be affected negatively because the more the delay in budget approval, the higher the likelihood that the budget might not implemented properly. So there is going to be an issue with budget implementation especially capital budget implementation.”

Managing director and chief executive of AIICO Insurance Plc, Mr. Edwin Igbiti, hope there would be release of fund for capital projects, stating that, if federal government can appropriate enough funding for these projects, insurance industry will benefit from underwriting these projects, hence, boasting the premium income of the sector.

Noting that proper execution of the 2018 national budget will allow government renews insurances of its assets as well as its workforce, he charged government to focus more on capital project that will impact not only sectors in the financial system, but also the national economy and the people.

“We hope there would be release of funds for capital projects because some of these projects need to be insured. It will allow government to renew all its insurances, while it would equally generate profits for the insurance industry,” he pointed out.

On the LCCI expectations, Yusuf opined that expect to see edification of capital projects that will help and improve our infrastructure, saying improvement in infrastructure would increase productivity in the economy.

Reacting to whether the additional money inserted by the National Assembly would affect the implementation, LCCI Director General said that the executive has the discretion on the implementation and it is their priority to determine how the budget will be implemented.

He went on: “This will also determine their priority according to their understanding of the challenges economy is facing, if they determine this, it may affect new projects that may initially put in the budget. You know year in-year out the percentage seen is just 70 per cent to 80 per cent, we have never fully implemented the capital component of the budget.”

In his contribution, president, Manufacturers Association of Nigeria (MAN), Dr. Frank Jacobs recalled that 2017 budget has not been fully implemented because it was also signed late, so the only implication is that if the budget is signed early, the building of infrastructure would have taken place.

He continued, “As long as budget is implemented judiciously because we are going to look at it from now till next year but the good thing is that it was signed and government will begin to spend money and my members will able to sell their product”.

On the budget impact, MAN president said, definitely, the capital vote would impact the economy substantially, stressing that major problem the manufacturers and economy have today is that of basic infrastructure including power, road and railway, saying with a lot of money proposed to those items and if fully implemented, it is going to improve economy substantially.

Reacting, managing director of Coleman, cables and wires, Mr. George Onafowokan said the budget signed at half of the year will have negative impact on the economy because government is the bigger spender.

“The early implementation of the budget will determine the impact on economy. It is good that it has finally being signed but it already has its negative impact.  The determinant factor would be on the implementation budget and we see the budget has been positive but the delay is not helping the economy. It depends on the executive how they want to implement the budget and their areas of priority”, he said.   

Dr. Frank Ojadi, a logistics expert in his reaction said the signing of budget will stimulate the economy by increasing demand for importation of raw materials for construction and other capital project outlined by the Executive.

“I think they will release a lot of money for capital fund which will be expended on capital project then this means the capital project will invariably drive demand for raw materials needed for those things and I think the bulk of them will be under infrastructure development.

“So, clearly it will drive demand for goods used for construction and similar things as well as income of those that work in. That sector which will have a multiplier effect on the nation therefore it will stimulate demand for goods and movement of goods from one point to the other.

“It will stimulate it but the extent will be dependent on other factors which include whether there will be deployment of the fund right away so we see a very sharp demand for such services and giving that next year is election it is not likely it will slow down rather it will continue to grow” he said.

Adding his voice, chief technical officer, Commercio Nigeria Limited, an information technology company said the implementation of the budget would ensure that capital votes are released thus stimulating the economy as moves round from the government to contractors to employees and trickle down to their dependents even to the lowest rungs of the economy.

Chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion said that the signing of the budget by the president would boost investors’ confidence in the economy. He said, “we are likely going to see an upsurge in economic activities and it is going to accelerate the pace of economic recovery now that the budget has been signed.”

Omordion added that “the president has assented to it to stop further delay, because the amendments that were made by the national assembly are justified as the assumptions sent by the Executive are no longer realistic. So, we expect that economic activities can commence, particularly in the capital market.

“Activities in the capital market, most especially the equities segment of the market, have been down as a result of uncertainties caused by the delay in the budget passage. Now that the budget has been signed, the market will react positively, because we now have a short-term direction.”

In his reaction, president of Aviation Round Table (ART) and chief executive officer, Sabre Network, Elder Gbenga Olowo said it is important that government concession the airports within a given timeline and that funds should not be allocated to airports that are not profitable. “Government should concession the airports within a given timeline. What we are going to in three years is not good enough.  Why continued allocation of annual budget to unprofitable airports?” Olowo queried.





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