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of Sustaining Growth and Job Creation
Excellency, Muhammadu Buhari
Federal Republic of Nigeria
At the
Joint Session of the National Assembly, Abuja
October 8, 2019
1. I
will start by asking you to pardon my voice. As you can hear, I have a cold as
a result of working hard to meet your deadline!

2. I am
delighted to present the 2020 Federal Budget Proposals to this Joint Session of
the National Assembly, being my first budget presentation to this 9th National
Before presenting the Budget, let me thank all of you Distinguished and
Honourable Members of the National Assembly, for your avowed commitment to
cooperate with the Executive to accelerate the pace of our socio-economic
development and enhance the welfare of our people.
4. I
will also once again thank all Nigerians, who have demonstrated confidence in
our ability to deliver on our socio-economic development agenda, by re-electing
this Administration with a mandate to Continue the Change. We remain resolutely
committed to the actualization of our vision of a bright and prosperous future
for all Nigerians.
During this address, I will present highlights of our budget proposals for the
next fiscal year. The Honourable Minister of Finance, Budget and National
Planning will provide full details of these proposals, subsequently.
6. The
economic environment remains very challenging, globally. The International
Monetary Fund expects the global economic recovery to slow down from 3.6 per cent in
2018 to 3.5 per cent in 2020. This reflects uncertainties arising from security
and trade tensions with attendant implications on commodity price volatility.
Nearer to home, however, Sub-Saharan Africa is projected to continue to grow
from 3.1 per cent in 2018 to 3.6 per cent in 2020. This is driven by investor
confidence, oil production recovery in key exporting countries, sustained
strong agricultural production as well as public investment in non-dependent
8. Mr.
Senate President; Right Honourable Speaker; I am pleased to report that the
Nigerian economy thus far has recorded nine consecutive quarters of GDP growth.
Annual growth increased from 0.82 per cent in 2017 to 1.93 per cent in 2018, and
2.02 per cent in the first half of 2019. The continuous recovery reflects our
economy’s resilience and gives credence to the effectiveness of our economic
policies thus far.
9. We
also succeeded in significantly reducing inflation from a peak of 18.72 per cent in January 2017 to 11.02 per cent by August 2019. This was achieved through
effective fiscal and monetary policy coordination, exchange rate stability and
sensible management of our foreign exchange.
10. We
have sustained accretion to our external reserves, which have risen from US$23
billion in October 2016 to about US$42.5 billion by August 2019. The increase
is largely due to favourable prices of crude oil in the international market,
minimal disruption of crude oil production given the stable security situation
in the Niger Delta region and our import substitution drive, especially in key
11. The
foreign exchange market has also remained stable due to the effective
implementation of the Central Bank’s interventions to restore liquidity,
improve access and discourage currency speculation. Special windows were
created that enabled small businesses, investors and importers in priority
economic sectors to have timely access to foreign exchange.
Furthermore, as a sign of increased investor confidence in our economy, there
were remarkable inflows of foreign capital in the second quarter of 2019. The
total value of capital imported into Nigeria increased from US$12 billion in
the first half-year of 2018 to US$14 billion for the same period in 2019.
Distinguished and Honourable Members of the National Assembly, you will recall
that the 2019 ‘Budget of Continuity’ was based on a benchmark oil price of
US$60 per barrel, oil production of 2.3 mbpd, and an exchange rate of N305 to
the United States Dollar. Based on these parameters, we projected a deficit of
N1.918 trillion or 1.37 per cent of Gross Domestic Product.
14. As
at June 2019, the Federal Government’s actual aggregate revenue (excluding
Government-Owned Enterprises) was N2.04 trillion. This revenue performance is
only 58 per cent of the 2019 Budget’s target due to the underperformance of both
oil and non-oil revenue sources. Specifically, oil revenues were below target
by 49 per cent as of June 2019. This reflects the lower-than-projected oil
production, deductions for cost under-recovery on the supply of premium motor
spirit (PMS), as well as higher expenditures on pipeline security/maintenance
and Frontier exploration.
Daily oil production averaged 1.86 mbpd as at June 2019, as against the
estimated 2.3 mbpd that was assumed. This shortfall was partly offset as the
market price of Bonny Light crude oil averaged US$67.20 per barrel which was
higher than the benchmark price of US$60.
Additionally, revenue projections from a restructuring of Joint Venture Oil and
Gas assets and enactment of new fiscal terms for Production Sharing Contracts
did not materialize, as the enabling legislation for these reforms is yet to be
passed into law.
17. The
performance of non-oil taxes and independent revenues such as internally
generated revenues were N614.57 billion and N217.84 billion, respectively.
Receipts from Value Added Tax were below expectations due to lower levels of
activities in certain economic sectors, in the aftermath of national elections.
Corporate taxes were affected by the seasonality of collections, which tend to
peak in the second half of the calendar year.
19. On
the expenditure side, 2019 Budget implementation was also hindered by the
combination of delay in its approval and the underperformance of revenue
collections. As such, only recurrent expenditure items have been implemented
substantially. Of the prorated expenditure of N4.46 trillion budgeted, N3.39
trillion had been spent by June 30, 2019.
20. In
compliance with the provisions of the 2018 Appropriation Act, we implemented
the 2018 capital budget till June 2019. Capital releases under the 2019 Budget
commenced in the third quarter. As at 30th September 2019, a total of about
N294.63 billion had been released for capital projects. I have directed the
Ministry of Finance, Budget and National Planning to release an additional N600
billion of the 2019 capital budget by the end of the year.
Despite the delay in capital releases, a deficit of N1.35 trillion was recorded
at end of June 2019. This represents 70 per cent of the budgeted deficit for the
full year.
Despite these anomalies, I am happy to report that we met our debt service
obligations, we are currently on staff salaries and overhead costs have also been
largely covered.
Distinguished Senators, Honourable Members, let me now turn to 2020
Appropriation, which is designed to be a budget of:
Fiscal consolidation, to strengthen our macroeconomic environment;
Investing in critical infrastructure, human capital development and enabling
institutions, especially in key job-creating sectors;
Incentivising private sector investment essential to complement the Government’s
development plans, policies and programmes; and
Enhancing our social investment programs to further deepen their impact on
those marginalised and most vulnerable Nigerians.
Distinguished and Honourable Members of the National Assembly, 2020-2022
Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) set
out the parameters for the 2020 Budget. We have adopted a conservative oil price
benchmark of US$57 per barrel, daily oil production estimate of 2.18 mbpd and
an exchange rate of N305 per US Dollar for 2020.
25. We
expect enhanced real GDP growth of 2.93% in 2020, driven largely by non-oil
output, as economic diversification accelerates, and the enabling business
environment improves. However, inflation is expected to remain slightly above
single digits in 2020.
Accompanying the 2020 Budget Proposal is a Finance Bill for your kind
consideration and passage into law. This Finance Bill has five strategic
objectives, in terms of achieving incremental, but necessary, changes to our
fiscal laws. These objectives are:
Promoting fiscal equity by mitigating instances of regressive taxation;
Reforming domestic tax laws to align with global best practices;
Introducing tax incentives for investments in infrastructure and capital
Supporting Micro, Small and Medium-sized businesses in line with our Ease of
Doing Business Reforms; and
Raising Revenues for Government.
27. The
draft Finance Bill proposes an increase in the VAT rate from 5% to 7.5%. As
such, the 2020 Appropriation Bill is based on this new VAT rate. The additional
revenues will be used to fund health, education and infrastructure programmes.
As the States and Local Governments are allocated 85% of all VAT revenues, we
expect to see greater quality and efficiency in their spending in these areas
as well.
28. The
VAT Act already exempts pharmaceuticals, educational items, and basic
commodities, which exemptions we are expanding under the Finance Bill, 2019.
Specifically, Section 46 of the Finance Bill, 2019 expands the exempt items to
include the following:
Brown and white bread;
Cereals including maize, rice, wheat, millet, barley and sorghum;
c. Fish
of all kinds;
Flour and starch meals;
Fruits, nuts, pulses and vegetables of various kinds;
Roots such as yam, cocoyam, sweet and Irish potatoes;
g. Meat
and poultry products including eggs;
i. Salt
and herbs of various kinds; and
j. Natural
water and table water.
Additionally, our proposals also raise the threshold for VAT registration to
N25 million in turnover per annum, such that the revenue authorities can focus
their compliance efforts on larger businesses thereby bringing relief for our
Micro, Small and Medium-sized businesses.
30. It
is absolutely essential to intensify our revenue generation efforts. That said,
this Administration remains committed to ensuring that the inconvenience
associated with any fiscal policy adjustments, is moderated, such that the poor
and the vulnerable, who are most at risk, do not bear the brunt of these
31. The
sum of N8.155 trillion is estimated as the total Federal Government revenue in
2020 and comprises oil revenue N2.64 trillion, non-oil tax revenues of N1.81
trillion and other revenues of N3.7 trillion. This is 7 per cent higher than the
2019 comparative estimate of N7.594 trillion inclusive of the Government Owned
32. The
increasing share of non-oil revenues underscores our confidence in our revenue
diversification strategies, going forward. Furthermore, in our efforts to
enhance transparency and accountability, we shall continue our strict
implementation of Treasury Single Account (TSA) to capture the domiciliary
accounts in our foreign missions and those linked to Government Owned
33. An
aggregate expenditure of N10.33 trillion is proposed for the Federal Government
in 2020. The expenditure estimate includes statutory transfers of N556.7
billion, non-debt recurrent expenditure of N4.88 trillion and N2.14 trillion of
capital expenditure (excluding the capital component of statutory transfers).
Debt service is estimated at N2.45 trillion, and provision for Sinking Fund to
retire maturing bonds issued to local contractors is N296 billion.
34. The
sum of N556.7 billion is provided for Statutory Transfers in the 2020 Budget
and includes:
a. N125
billion for the National Assembly;
b. N110
billion for the Judiciary;
N37.83 billion for the North East Development Commission (NEDC);
N44.5 billion for the Basic Health Care Provision Fund (BHCPF);
N111.79 billion for the Universal Basic Education Commission (UBEC); and
N80.88 billion for the Niger Delta Development Commission (NDDC), which is now
supervised by the Ministry of Niger Delta Affairs.
35. We
have increased the budgetary allocation to the National Human Rights Commission
from N1.5 billion to N2.5 billion. This 67 per cent increase in funding is done
to enable the Commission to perform its functions more effectively.
36. The
non-debt recurrent expenditure includes N3.6 trillion for personnel and pension
costs, an increase of N620.28 billion over 2019. This increase reflects the new
minimum wage as well as our proposals to improve remuneration and welfare of
our Police and Armed Forces. You will all agree that Good Governance, Inclusive
Growth and Collective Prosperity can only be sustained in an environment of
peace and security.
37. 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 revenue targets.
38. We
shall also sustain our efforts in managing personnel costs. Accordingly, I have
directed the stoppage of the salary of any Federal Government staff that is not
captured on the Integrated Payroll and Personnel Information System (IPPIS)
platform by the end of October 2019. All agencies must obtain the necessary
approvals before embarking on any fresh recruitment and any contraventions of
these directives shall attract severe sanctions.
Overhead costs are projected at N426.6 billion in 2020. Additional provisions
were made only for the newly created Ministries. I am confident that the
benefits of these new Ministries as it relates to efficient and effective
service delivery to our citizens significantly outweighs their budgeted costs.
That said, the respective Heads of MDAs must ensure strict adherence to
government regulations regarding expenditure control measures. The proliferation of Zonal, State and Liaison Offices by Federal Ministries,
Departments and Agencies (‘MDAs’), with an attendant avoidable increase in public
expenditure, will no longer be tolerated.
41. As
I mentioned earlier, investing in critical infrastructure is a key component of
our fiscal strategy under the 2020 Budget Proposals. Accordingly, an aggregate
sum of N2.46 trillion (inclusive of N318.06 billion in statutory transfers) is
proposed for capital projects in 2020.
Although the 2020 capital budget is N721.33 billion (or 23 per cent) lower than
the 2019 budget provision of N3.18 trillion, it is still higher than the actual
and projected capital expenditure outturns for both the 2018 and 2019 fiscal
years, respectively. However, at 24 per cent of aggregate projected expenditure,
the 2020 provision falls significantly short of the 30 per cent target in the
Economic Recovery and Growth Plan (ERGP) 2017-2020.
43. The
main emphasis will be the completion of as many ongoing projects as possible,
rather than commencing new ones. MDAs have not been allowed to admit new
projects into their capital budget for 2020 unless adequate provision has been
made for the completion of ALL ongoing projects.
Accordingly, we have rolled over capital projects that are not likely to be
fully funded by the end of 2019 into the 2020 Budget. We are aware that the
National Assembly shares our view that these projects should be prioritised and
given adequate funding in the 2020 Appropriation Act.
45. Therefore,
I will once again commend the 9th National Assembly’s firm commitment to stop
the unnecessary cycle of delayed annual budgets. I am confident that with our
renewed partnership, the deliberations on the 2020 Budget shall be completed
before the end of 2019 so that the Appropriation Act will come into effect by
the 1st of January.
Some of the key capital spending allocations in the 2020 Budget include:
Works and Housing: N262 billion;
Power: N127 billion;
Transportation: N123 billion;
Universal Basic Education Commission: N112 billion;
Defence: N100 billion;
Zonal Intervention Projects: N100 billion;
Agriculture and Rural Development: N83 billion;
Water Resources: N82 billion;
Niger Delta Development Commission: N81 billion;
Education: N48 billion;
Health: N46 billion;
Industry, Trade and Investment: N40 billion;
North East Development Commission: N38 billion;
Interior: N35 billion;
Social Investment Programmes: N30 billion;
Federal Capital Territory: N28 billion; and
Niger Delta Affairs Ministry: N24 billion.
Although the Government’s actual spending has reduced, our plans to leverage
private sector funding through our tax credit schemes will ensure our capital
programmes are sustained.
48. For
example, we launched the Road Infrastructure Tax Credit Scheme, pursuant to
which I have approved the construction and rehabilitation of 19 Nigerian roads
and bridges of 794.4km across 11 States. Indeed, the Scheme has attracted private
investment of over N205 billion and the first set of tax credits are being
processed by the Federal Ministry of Finance, Budget and National Planning.
49. As
I mentioned during my Independence Day Speech, under the Presidential Power The initiative, we will modernise the National Grid in 3 phases; starting from 5
Gigawatts to 7 Gigawatts, then to 11 Gigawatts by 2023, and finally 25
Gigawatts afterwards in collaboration with the German Government and Siemens.
50. The budget deficit is projected to be N2.18 trillion in 2020. This includes
drawdowns on project-tied loans and the related capital expenditure.
This represents 1.52 per cent of estimated GDP, well below the 3 percent threshold set by the Fiscal Responsibility Act of 2007, and in line with the
ERGP target of 1.96 percent.
52. The
deficit will be financed by new foreign and domestic borrowings, Privatization
Proceeds, signature bonuses and drawdowns on the loans secured for specific
development projects.
Nigeria remains committed to meeting its debt service obligations. Accordingly,
we provided the sum of N2.45 trillion for debt service. Of this amount, 71
percent is to service domestic debt which accounts for about 68 per cent of the
total debt. The sum of N296 billion is provided for the Sinking Fund to retire
maturing bonds issued to local contractors.
54. I
am confident that our aggressive and re-energised revenue drive will maintain the debt-revenue ratio at acceptable and manageable levels. We will also continue
to be innovative in our borrowings by using instruments such as Sukuk, Green
Bonds and Diaspora Bonds.
55. Our
government remains committed to ensuring the equitable sharing of economic
prosperity. Our focus on inclusive growth and shared prosperity underscores our
keen interest in catering for the poor and most vulnerable. Accordingly, we are
revamping and improving the implementation of the National Social Investment
Programme through the newly created Ministry of Humanitarian Affairs, Disaster
Management and Social Development.
56. The
National Social Investment Programme is already creating jobs and economic
opportunity for local farmers and cooks, providing funding to artisans,
traders, youths, and supporting small businesses with business education and
57. The
provision of N65 billion for the Presidential Amnesty Programme has been
retained in the 2020 Budget. Furthermore, to fast track the rebuilding efforts
in the North East region, a provision of N37.83 billion has been made for the
North-East Development Commission.
58. The
2020 Budget is expected to accelerate the pace of our economic recovery,
promote economic diversification, enhance competitiveness and ensure social
inclusion. We are optimistic of attaining higher and more inclusive GDP growth
in order to achieve our objective of massive job creation and lifting many of
our citizens out of poverty.
59. The
efficiency of port operations will also be enhanced by implementing a single
customs window, speeding up the vessel and cargo handling and issuing more licenses
to build modern terminals in existing ports, especially outside Lagos.
Furthermore, completing the reforms to the governance and fiscal terms of the
Petroleum Industry will provide certainty and attract further investments into
the sector. A consequence of this will be an increase in jobs and in the government’s
take. I, therefore, seek your support in passing into law two Petroleum Industry
Executive Bills I will be forwarding to you shortly.
61. In
addition, we need to quickly review the fiscal terms for deep offshore oil
fields to reflect the current realities and for more revenue to accrue to the
government. The Deep Offshore and Inland Basin Production Sharing Contract
(Amendment) Bill 2018, was submitted to the 8th National Assembly in June 2018
but was unfortunately not passed into law.
62. I
will be re-forwarding the Bill to this Assembly very shortly and therefore urge
you to pass it. We estimate that this effort can generate at least 500 million
US dollars additional revenue for the Federal Government in 2020, and over one
billion dollars from 2021.
Whilst the Budget is our principal fiscal tool to achieve these socio-economic
development targets, we remain committed to prudently planning for our future
economic prosperity. In this regard, I have directed the reconstituted Ministry
of Finance, Budget and National Planning to commence preparations towards the
development of successor medium – and long-term economic development plans,
particularly as the Nigeria Vision 20-2020 and the ERGP expire next year.
64. Mr.
Senate President, Mr Speaker, Distinguished and Honourable Members of the
National Assembly, this speech would be incomplete without, once again,
commending the patriotic resolve of the 9th National Assembly to collaborate
with the Executive in the effort to deliver inclusive growth and enhance the
welfare our people. I assure you of the strong commitment of the Executive to
deepen the relationship with the National Assembly.
65. As
you review the 2020-2022 Medium Term Expenditure Framework (MTEF) and Fiscal
Strategy Paper (FSP), as well as the 2020 Budget estimates, we believe that the
legislative process will be quick, so as to restore the country to the
January-December financial year.
66. It
is with great pleasure, therefore, that I lay before this Distinguished Joint
Session of the National Assembly, the 2020 Budget Proposals of the Federal
Government of Nigeria.
67. I
thank you most sincerely for your attention.
68. May
God bless the Federal Republic of Nigeria

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