Hit or miss? Taking stock of 5 claims in Buhari’s 2018 budget speech

Comments 2

Nigeria’s president is firmly back in the driving seat after two medical leaves of absence. Now mid-term, President Muhammadu Buhari has outlined his spending plans for 2018. But do his key claims add up?

Nigeria’s lawmakers are debating President Muhammadu Buhari’s 2018 spending plan.

Buhari unveiled his proposed budget in early November 2017, as he seeks the national assembly’s approval of a N8.61 trillion (US$28.2 billion) budget. This is a 16% increase from the N7.44 trillion (US$24.4 billion) the lawmakers approved for 2017. (Note: Buhari said he is targeting to get the budget passed by January 2018.)

We tested some of the claims Buhari made in his speech.

Claim

“Despite record low oil prices, this administration was able to invest an additional US$500 million into the [Sovereign Wealth] Fund.”

Verdict

correct

To preface this claim, Buhari said that the country’s Sovereign Wealth Fund had not received any investment for four years under the previous government, even when oil prices were as high as US$120 a barrel.

The sovereign fund was set up in October 2012 to help Nigeria invest extra money made from selling crude oil, its major export. It is managed by the Nigeria Sovereign Investment Authority.

The fund allocates 40% of its resources to the Nigeria Infrastructure Fund while another 40% goes to the Future Generations Fund. The remainder is allocated to the Stabilisation Fund, a buffer against economic shocks.

In its 2016 financial statement, the investment agency reported it had received a capital contribution of US$250 million (N49 billion), which was approved by the National Economic Council in November 2015. The council also approved another US$250 million in February 2017.

Titilope Olubiyi, a spokesman for the investment authority, confirmed to Africa Check that they have received a total of US$500 million from the current administration and that this money had been paid in.

No additional contribution came from the previous administration after its initial seed fund of US$1 billion, she said.

Claim

“This administration was able to invest an unprecedented sum of over N1.2 trillion in capital projects through the 2016 budget… the highest ever in the history of this country.”

Verdict

incorrect

Vice president Yemi Osinbajo also made this claim in  August 2017.

Nigeria’s budget office produces implementation reports showing how much of the country’s budget and fiscal policies were achieved in a particular period.

Workers at a building site of the Abuja light rail project in September 2012 in Abuja. Nigeria is looking to strengthen its infrastructure. Photo: AFP/STRINGER
People are at work on a building site of the Abuja light rail project in September 2012. Nigeria is looking to strengthen its infrastructure. Photo: AFP/STRINGER

As at May 2017, when the previous year’s budget was still active, N1.219 trillion was due to have been released as capital spend (on infrastructure) to ministries, departments and agencies, according to the 4th quarter report of 2016.

(Note: In total N1.59 trillion was set aside for roads, hospitals and other capital works for the year.)

We pored through historical data on the country’s budget performance from 2007 to 2016. Data from the Central Bank of Nigeria shows that in the 2009 budget, along with two other supplementary budgets approved for that year, a total of N1.28 trillion was spent on different capital projects.

The claim that N1.2 trillion spent on capital projects in 2016 is the highest in the country’s history is inaccurate. The available evidence suggests a slightly higher amount of N1.28 trillion was spent in 2009.

Budget year Total amount spent on capital projects
2016 N1.2 trillion
2015 N362.3 billion
2014 N587 billion
2013 N1 trillion
2012 N744 billion
2011 N810 billion
2010 N956.1 billion
2009 N1.3 billion
2008 N787.2 billion
2007 N491 billion

Source: Budget implementation reports of the ministry of planning and budgeting and the Central Bank of Nigeria.

Claim

“As at 30 October 2017, our external reserves had increased to US$34 billion.”

Verdict

mostly-correct

A country has many uses for its external (or foreign) reserves, from paying for imports and stabilising markets to meeting its international financial obligations.

Nigeria’s reserves – mainly savings from crude oil sales, royalties, and taxes – provide a buffer against external economic shocks such as a sharp drop in oil prices. Buhari said his government had helped stabilise the foreign exchange market, thus increasing the country’s savings.

In June 2015, shortly after Buhari was sworn in, Nigeria’s gross foreign reserves were at US$28.34 billion. By the end of October 2017, it had grown to US$33.79 billion, data from the Central Bank of Nigeria showed.

Claim

“Our tax-to-GDP ratio of about 6% is one of the lowest in the world.”

Verdict

correct

The tax-to-gross domestic product ratio is a country’s total tax revenue expressed as a percentage of its GDP. It shows the share of a country’s output that is collected by the government through taxes.

In 2016, Nigeria collected roughly N6 trillion in tax, Taiwo Oyedele, the head of tax and corporate advisory services at auditing firm PricewaterhouseCoopers told Africa Check. This was made up of around N4 trillion collected by the Federal Inland Revenue Service, a little over N1 trillion from the Nigeria Customs Service and N801 billion by the 36 states.

With the country’s GDP for 2016 at about N101 trillion, the tax-to-GDP ratio works out to about 6%.

‘Due to public mistrust of government spending’

Is it one of the lowest tax-to-GDP rates in the world? The World Bank’s most recent data shows that Nigeria’s rate was 1.5% in 2013. This was the third lowest worldwide, only exceeding that of Kuwait (0.77%) and the United Arab Emirates’s 0.37%. (Note: Nigeria rebased its GDP in 2013 to capture some previously undercounted areas of the economy.)

Between 2003 and 2013, Nigeria’s tax revenue as a share of its GDP was highest in 2008 at 5.5%. This placed the country ahead of only 5 other nations: Estonia, Oman, Federated States of Micronesia, Kuwait and Bahrain.

Oyedele said the low tax compliance was partly due to the public’s mistrust of how authorities spend their taxes.

“This could be explained by the fact that people have to spend their money to take care of what government should ordinarily provide – whether it’s security, roads, water, electricity and so many other things.”

Claim

“Over 200,000 unemployed graduates have been employed under the N-Power Scheme in education, health and agriculture.”

Verdict

unproven

The N-Power initiative aims to provide young Nigerians with skills to help build the country’s economy. It was one of Buhari’s key campaign promises.

On its website, N-Power says it has 200,000 “beneficiaries”. We have contacted them to ask how this was recorded and will update this report should its officials respond.

Customer care department employees of the Nigerian job-finder site Jobberman at work in June 2013 in the upmarket Lagos suburb of Lekki. The site was set up by university student Ayodeji Adewunmi to address the country's huge youth unemployment problem. Photo: AFP/ PIUS UTOMI
Employees of the Nigerian job-finder site Jobberman at work in June 2013 in the Lagos suburb of Lekki. The site seeks to address the country’s huge youth unemployment problem. Photo: AFP/ PIUS UTOMI

A 16 November 2017 progress report from the presidency said some 174,160 graduates had been “deployed” from 2015 to date. About 25,000 people were disqualified for being ineligible or having incomplete records, the report stated. (Note: However, a few pages on, the report notes that “so far, 2,000 youth have been empowered through the N-Power programme”.)

The initiative is similar to those by previous governments, Austin Nweze, a political economy lecturer at the Pan-Atlantic University’s school of media and communication in Lagos, told Africa Check. He highlighted the YouWin programme under the previous administration of Goodluck Jonathan.

Nweze said that due to a lack of details about how the N-Power scheme was working out, it would be difficult to gauge its impact.

 

Further reading:

 

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Comments 2
  1. By Bankole Jamgbadi

    HI guys, good job. Quick one, under the Total amount spent on Capital project which you tagged incorrect, noticed a discrepancy – the claim was N1.12 Trillion and evidence you provided is N1.2 Billion. Trillion > Billion.

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