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My Fear For 2016 Budget

Buhari 2016-Budget-Presentation+++-

THE process of budgeting begins with the establishment of specific targets of performance, followed by executing plans to achieve the desired goals and from time to time compare the variance in order to address any deviation. The budget is planned in a manner to achieve the overall goal of organization or a nation as the case may be. It is a tool for directing and coordinating operation.

Budget in Nigeria especially in the public sector, appears as if there is no original specific objective that it set to achieve. In an organized setting every department is supposed to set budget objective/goals they want to achieve. The budget and planning office ordinarily is supposed to have researched to analyze what the budget for each year is meant to address.

What we see in Nigeria is that people involved just move in funds to where they think it will benefit them, or their departments and the monies will end up in private pockets once the budget is approved. The budget process in Nigeria has never achieved more than 60 percent of what it was purposed to achieve because the budgeting process has never been transparent. Most times the budgets are submitted very late and this will not give much time for debate and criticism. Ordinarily the budget is supposed to be submitted three months before the end of the year. The 2016 budget is not an exception to this late submission as the budget was sent to the National Assembly on December 2015.The 2016 budget released to the public after all, the media attention it generated was a shocker to people that love the country and to a large extent shows how unseriously we treat national budgeting. This budget is really an eye opener to the level of corruption in the public sector. There is a procedure for the withdrawal of budget in Nigeria, which is legitimate; why this simple process of budget withdrawal was not followed is really a story for another day.

It is obvious that the 2016 budget will not be implementable because the qualitative factors on which this budget was based are fundamentally faulty. When the budget was proposed the rate of crude oil was $38.00 dollars per barrel but currently the rate is $27.00 and this has led to a difference of $11.00.Thus the difference in fluctuation of price has not been provided for. The projection of import duties was made when the exchange rate was N199.00 and the parallel market was around N250.00 but today the exchange rate of Naira to USD is now N330.00 and it is expected that the rate may move up to N400 per US dollar before the second quarter of the year. The projection of expected income from import duties may not be realized because CBN cannot currently meet the demand of US dollars for business men that want to import goods and services. With this current exchange rate many businesses are closing down and this will tremendously reduce the income from import duties that the federal government has projected. Again many states have been faced with the challenge of meeting up with the salaries of the state workers. Lack of payment of salaries of workers has worsened the economy as many businesses are skeptical about importation of goods. States are likely to ask for the further bailout.

The increase in vandalisation of oil pipeline in the Niger Delta will affect the projection of barrel of crude that the country will sell to generate income. This will really affect implementation of the 2016 budget. Iran may increase the production by 250,000 barrel per day. Irrespective of the volume coming from US and Iran, their entrance into the market will definitely put a downward pressure on the market. This to a large extent will impact on the sale of Nigerian crude.

Odo Chukwuemeka Andrew (ACA), wrote from Abuja.