NECA applauds the signing of the 2020 Appropriation and Finance Bill

The umbrella organization of employers and foremost Business Membership Organization in the country, Nigeria Employers’ Consultative Association (NECA) applauds both the Presidency and the leadership of the National Assembly on the occasion of signing the Appropriation Bill 2021 and the Finance Bill 2020 (the second ever to accompany a Federal Budget) into law, with the implementation expected to commence from 1st January 2021. Noticeable in the signed Budget was a revised budget expenditure of N13.59trillion, which is higher than the N13.08trillion earlier presented by Mr. President to the National Assembly, with no changes in the revenue component of the budget.

The 2021 Budget projected aggregate expenditure of N13.59trillion, indicating a 26 percentage change over the 2020 Budget of N10.81trillion. Similarly, the revenue projection for 2021 was N7.88trllion, which is 35% over 2020 of N5.84trillion, leaving a N5.71 trillion deficit, which increased by 15% over last year to be financed by new foreign and domestic borrowings, proceeds from privatization, public and private partnerships, signature bonuses and drawdowns on loans secured for specific development projects. Achieving revenue generation projection has been a bane of the current administration, closing out at about 50% over the past 5 years, is becoming worrisome, which calls for a more drastic drive in achieving the set targets.

The 2021 Budget was tagged “The Budget of Recovery and Resilience” is premised on the ravaging effects of COVID-19. However, the Government needs to take into consideration the second wave of the covid-19 pandemic. Furthermore, the assumptions for the 2021 budget included the price of oil at $40 per barrel from the revised 2020 budget of $28 per barrel, oil production at 1.86m barrels per day, the exchange rate of N379 to US$1, and a projected a Gross Domestic Growth of 3%, which is very optimistic, which we believe is contradictory to the projection of the Central Bank of Nigeria (CBN) of 2% growth for 2021. The inflation rate projected at 11.95% could be achieved with drastic and concerted measures in stimulating aggregate demand by the fiscal and monetary authorities. In our opinion, we projected the GDP growth of 1.5% – 1.8% and Inflation rate tamed around 13-14% will close the year.

We call for comprehensive and deliberate management of the second wave of the COVID-19 in order to reduce the health and economic burden on the economy, as the major concern for the public has always been on the implementation of the Budget, considering the uncertainties the Pandemic has caused. We opined that the general volatility associated with oil prices and the ability to meet budgeted daily crude oil production will challenge the ability of the FGN to meet its revenue targets. The government should ensure that budgetary allocations are utilized for the specific purpose and leakages are blocked.