Following the successful
passage of the 2016 budget by the National
Assembly on Wednesday, mixed reactions of
optimism and pessimism from stakeholders are
already trailing the passage with some analysts
positing that financing the federal government’s
proposed increased spending and dealing with its
deficit would be the major challenges with the
Speaking with THISDAY yesterday, the Chief
Executive Officer, Financial Derivatives Company
Limited, Bismarck Rewane, explained that with the
concerns around the federal government’s rigid
foreign exchange policy, its cost of borrowing
from the Eurobond market would be higher.
“What this means is that while others are
borrowing at about three or four per cent interest
rate, Nigeria would borrow at about 11 or 12 per
cent. The risk would be priced into the rate of
borrowing. But this is the beginning of the
economic process. Once you approve a budget
and you try to raise money, then the conditions
for raising money would be put before you.
“Then you have to make up your mind whether to
go ahead or not. Now the real game has started,
the real economic game has just started. In
another week or more, you will see the pressure
to borrow, the pressure on the exchange rate.
Mind you, contractors would be paid in the next
five days, they would go to the forex exchange
market and put additional pressure,” Rewane said
in a telephone chat.
However, the Executive Director, Corporate
Services, BGL Capital, Mr. Femi Ademola,
expressed optimism that with the accretion in the
price of crude oil as well as the aggressiveness
displayed by the Federal Inland Revenue Service
(FIRS), financing the proposed increased spending
would not be a challenge.
“Hope is not lost yet. The other balance of $3.5
billion has been gotten from the multilateral
agencies. I think they are covered if they stick to
what they have planned to do. Again, budget is a
guide of action, it is not compulsory that the
entire projections would be met. So, they should
try and work to ensure that their revenue come in
as planned,” Ademola said.
The Head of Research at SCM Capital Limited
(formerly Sterling Capital), Mr. Sewa Wusu,
pointed out that having a budget deficit does not
mean the budget cannot be financed.
“What it means is that you have to look for ways
and means to finance the budget. But it is always
better to borrow to fund projects that are capable
of stimulating economic activities and create jobs.
What I think this budget has come to do is to
reflate the economy.
“Nigeria is not the only country going through
this budget financing challenges. Most African
countries are going through similar challenges.
For instance, Ghana had to borrow from the
International Monetary Fund (IMF),” he added.
The Managing Director/Chief Executive Officer of
APT Securities and Funds Limited, Alhaji Kasimu
Kurfi, lauded the federal government for taking
such a bold economic step assuring that the
budget would impact positively on the capital
“It is a welcome development, the capital market
will response positively by moving northwards.
The immediate release of the capital expenditure
as promised by the Minister of Finance during the
economic conference that over N300 billion will
be released into the economy is a good
development. We hope that will lead to rebound in
market especially as many companies surprised
us with good dividend yield. The immediate
release of funds will help the economy from GDP
growth of 2.0 per cent to double,” he said.
But analysts at CSL Stockbrokers Limited pointed
out that: “Financing the increased spending and
dealing with a deficit will be a challenge.”
According to them, “it is not clear where the rest
of the funds needed would come from. Foreign
investors, however, might take a dim view of
Nigerian eurobond issuance given concerns over
the authorities’ currency policy.”
The lead Director, Centre for Social Justice (CSJ),
Mr. Eze Onyekpere, said the passage of the
Appropriation Bill by the National Assembly
(NASS) paves the way for presidential assent to
the Appropriation Bill.
“What is available to Nigerians is the lump sum of
the overall budget and its division into sub-heads
of expenditure into recurrent non debt, capital,
statutory transfers, debt service, etc. But the
mischief is always in the details and we shall
appropriately react when the details are available.
“From the provisions of our laws, the harmonised
2016 Federal Appropriation Bill should have been
assented to by the President on or before the
clock strikes 11.59pm on December 31, 2015.
This is to pave way for the full commencement of
the financial year on January 1, 2016 in
accordance with the Financial Year Act.
“But this was not the case as we have lost three
months and no one is sure whether the President
will not have some misgivings to delay the
signing and thereby return the Bill to the NASS for
further re-touching,”Onyekpere said.
According to him, “there are lessons to be learnt
from this exercise and principally, it is the need to
start the budgeting process on time at the
executive level as this ensures that the legislative
end is also concluded on time to get the budget
ready before the end of the year.”
The president, he said, delayed the budget
presentation until December 22, 2015, adding that
the National Assembly merely waited for his
presentation before proceeding on the Christmas
and New Year legislative break.
“We hope he has learnt his lessons and his
learning should manifest in the 2017 budgeting
cycle. The fact that the Medium Term Expenditure
Framework (MTEF) 2016-2018 was not approved
by National Assembly until the final consideration
of the budget is a cause for worry. The MTEF
undergirds the budget and should have preceded
the presentation of the budget.
“Thus, an approved MTEF is a condition precedent
to the commencement of budget preparation and
should have guided its parameters. However, the
budget and the MTEF have been approved at the
same time and day. This is wrong in law and in
“Nigerians expect the President to immediately
assent to the bill and move the executive to
expeditiously start the implementation of the
budget. The budget should be implemented to the
letter and we are expectant of improvements in
livelihoods, infrastructure, social services,
employment, economic growth and raising the
dignity of Nigerians. The time for apologies is
over,” Onyekpere whose CSJ has been in the
vanguard of maintaining sound budgetary
“There is also the expectation that the Federal
government should expeditiously devise a
coherent and strategic framework to guide future
budgeting and governance, so that the policy
direction and road map can be clear for citizens
and the private sector to make rational economic
decisions. Someone needs to tell the President
that he has just two years to govern and to the
end of his tenure, not three as he presupposes.
The last year will be out to politicking and with
the first year almost ending, just two are
remaining,” the CSJ Lead Director noted.
Also reacting to the passage of the budget, a
financial and economic Analyst, Odilim Enwegbara
said for the first time since the return of
democratic rule, the 2016 Budget hallmarked the
only time the executive arm of government asked
for more and got less from the parliament.
He stated that padding by Ministries, Departments
and Agencies (MDAs) was eliminated because the
lawmakers did not insist on injecting Constituency
Projects to avoid running into murky waters.
On how to ensure a successful budget
implementation, he advocated the setting up of a
special federal budget monitoring and evaluation
“Government needs to have a special Federal
Budget Monitoring and Evaluation Task-force
comprising representatives from the ministries.
They should quarterly brief Nigerians about
budget implementation,” he said.