by Nasir El rufai

The attempt by President Jonathan to withdraw
the ‘fuel subsidy’ largely to raise revenues for a
wasteful government united Nigerians across
ethnic, religious and social strata for over a
week. One of the unintended consequences of
the administration’s unilateral action was
bringing to the front-burner questions about the
size of government, the excessive cost of
governance, and the fraud and corruption in the
oil sector. Nigerians now know that their
president would rather impose an overnight tax
on them than undertake an orderly deregulation
of the petroleum sector. They also know the
difference between an isolated fuel price hike
(for immediate revenue) and the policy review-
legislation-independent regulation-competitive
markets path that was implemented in the
telecoms sector deregulation between 2000 and
2001. Nigeria will be the better for it, as we are
now unanimous on seeing that some of the
spending items like the near N1 billion for food
in the Villa are justified and put in context.
For this reason, over the ensuing weeks, this
column will undertake a detailed sectoral
analysis of the 2012 budget proposal submitted
by the President to the National Assembly in
December 2011. Our objective is to enlighten all
stakeholders on the provisions contained in the
budget and suggest areas to reduce waste,
question spending priorities and cut out what
appears dysfunctional. Our hope is that the
National Assembly will in the end make the
budget work for the people of Nigeria. Today,
we will look at the revenues profile for 2012 and
issues arising there-from, and then throw a
searchlight on the much-headlined expenditure
for the security sector. Details of the budget are
available online here.
The federation expects to generate about N9.4
trillion in revenues in 2012, consisting of about
N6.4 trillion from oil and gas, N2.7 trillion from
personal income and company taxes, custom
duties, and value-added tax. Another N250
billion is expected from special levies and taxes
like the Education Tax. Out of this total, the
Federal Government share amounts to about
N3.6 trillion. This is because the FGN gets about
48.5% of the oil and non-oil revenues and taxes,
about 14% of VAT and gets to keep all of its
independent revenue. Omitted from the budget
is an additional 7.5% of the total – special funds
that include the ecological fund, the Federal
Capital Territory and mineral resources fund.
Also omitted is how much is deducted from the
gross oil revenue as our contribution to the Joint
Venture Cash Calls. All these need to be detailed
out for the National Assembly to do its
constitutional duty and ensure accountability,
but they are missing from both the Budget and
the Medium Term Expenditure Framework for
2012-2015.
Starting with projected revenue of about N3.6
trillion, the budget envisages a total spend of
N4.7 trillion, meaning that we intend to spend
about N1.1 trillion more than we expect to earn
this year. Where is the extra cash coming from?
It is not from ‘fuel subsidy’. The 2012 budget
already assumed that not a penny will be
deducted to subsidize petrol. The FGN hopes to
finance the deficit by borrowing some N794
billion this year, and get some windfall from
privatization (N10 billion), signature bonus (N75
billion) and the now-depleted excess crude
account (N225 billion). No provision has been
made in the Budget to transfer any amounts to
the Sovereign Wealth Fund. Once again, these
are items that need to be detailed for us as
citizens to know, and for the National Assembly
to decide upon.
What are the implications of these pieces of
information? How does the plan to borrow an
additional N794 billion sit with the
administration’s desire to “reduce” our
borrowing from the current levels nearing 20%
of GDP? What does the projected medium term
expenditure framework reveal about our
revenue and spending patterns? Are these
consistent with the desire of Nigerians to see a
smaller, less expensive and more efficient
federal government? We ask our readers to
bear these in mind as they reflect on the
numbers presented herein.
We should also note that with the ‘fuel subsidy’
not fully gone, the FGN’s assumption of zero-
subsidy-deduction is off the table, and the hole
in the budget will increase by at least half of the
‘expected N400+ billion’ to N1.3 trillion, so
further borrowing is necessary to fund this gap.
And as I wrote last week, there is not a single
kobo anywhere for the so-called SURE-P
programme unless the National Assembly raises
the benchmark price of crude oil by at least
another $20 with the risks attendant to that.
Looking closely at the spending proposals,
commendable efforts have been made to reduce
the level of statutory transfers to INEC, UBEC,
NDDC and the National Judicial Council. Sadly,
the transfer to the National Assembly remains at
the 2011 level of N150 billion. Unless this is
reduced, we will spend an average of N320
million per legislator in 2012 at a time when
Nigerians are clearly disgusted at the very high
quarterly allowances they draw, over and above
what the Revenue Mobilization Allocation and
Fiscal Commission has approved for them. The
National Assembly should listen to the voice of
Nigerians and reduce this provision
substantially. The provision for the salaries and
allowances of public servants has risen by about
N150 billion from the 2011 levels to N1.655
trillion. This increase cannot be due to the usual
annual salary increment. There is something
more and it contradicts the stated goal of the
administration to reduce the cost of governance.
The National Assembly should scrutinize this
more closely with a very sharp knife!
Other items of expenditure that need closer
review are the overheads – the N11 billion for
international travel, more than N30 billion for
“research and development”, maintenance of
vehicles, furniture, etc., over N20 billion,
stationery, magazines and newspapers at over
N5 billion, and nearly N17 billion (more than
$110 million) to purchase yet another plane for
the president, at a time when we are being
asked to sacrifice and pay more for petrol,
transportation, food and rent. There are other
items we will highlight in each sector but these
broad areas are indicative for the time being of
the need for close scrutiny by the citizens and
the National Assembly.
We will now briefly look at the provisions for
the security sector. The president announced
that the sector got allocated some N922 billion
for 2011. This number is the sum of the
budgetary allocations of the ministries of
defence, police affairs, and Interior plus Police
Commands and Formations and the Intelligence
Community (NSA’s office). The president forgot
to add the following – (1) Amnesty Programme
(N74 billion), (2) Military Pensions N60 billion,
(3) Army Internal Operations (N17 billion), (5)
Police Service Commission (N2.5bn), (6)
Customs, Immigration & Pensions (N8.6bn), (7)
SSS/NIA Pensions (N11.2bn), (9) Death Benefits
– Army & Police (N5.4bn), (10) Federal Road
Safety Commission (N28.9bn), (11) Maritime
Security (N4bn) and Police Reform Fund
(N15bn). Adding all these up brings the total of
our spending on the security sector to N1.145
trillion, not the N922bn highlighted. The
equivalent tally for 2011 was N1.174 trillion,
about N30 billion higher than this year.
We will begin the analysis of the security sector
with the budget of the Intelligence Community –
the office of the NSA, the SSS (Internal
Security), the National Intelligence Agency
(External Counter-Intelligence) and the
Presidential Air Fleet (PAF). The budget of the
Defence Intelligence Agency and Directorate of
Military Intelligence are under the Ministry of
Defence, and are therefore excluded.
It is worth noting that the NSA is one of the 20
special advisers approved by the National
Assembly for the president, but he sits in the
Federal Executive Council as a member. His
office is an advisory office and his main job is
coordinating the activities of the security
agencies, with staff strength of about 100. Each
agency is independent of the NSA and routinely
reports directly to the president. It is therefore
difficult to explain how the NSA has the highest
budget of all in the intelligence community-
higher than that of the SSS with about 15,000
staff and the smaller but far more effective,
NIA. The NSA’s budget consists of N212 million
for personnel cost, N3.64 billion for overheads
and a whopping N33 billion for capital projects!
The respective proposals for the SSS are N17bn,
N5bn and a paltry N1.8bn! No wonder the SSS is
handicapped in dealing with security threats
within our borders! The NIA is not much better
with N19.7bn for staff costs, N3.9bn for
overheads and N2.6bn for cap[ital projects.
A cursory look at the NSA’s capital projects is
even more revealing. Over N1.1bn will be spent
on satellite communications, over N3.5bn on
something called “data signal centre/
equipment” and N717 million for Iridium/
Thuraya Communication platform. I thought that
Iridium went out of business nearly a decade
ago, and Thuraya is an insecure form of
communication used mainly by global companies
to connect far-flung personnel. Are our agencies
using this for secure communications in the 21st
century? I wondered about that until I saw the
provision of N78 million for a presidential
communications network and N27bn for the
establishment of a “strategic operations
centre”. We all hope that the most advanced
technologies will be adopted in deploying these –
and certainly not low-earth orbit satellite
systems like the defunct Iridium!
The Presidential Air Fleet is under the NSA’s
office. Apart from modest provisions of N15.6
million for personnel costs, N969 million for
overheads (spares, checks, and aviation fuel can
be expensive!), there is a provision of N16.8bn
($110 million) for a brand new plane for the
presidency. This is quite an expensive plane
because a fully-equipped high-end Gulfstream 5
can be acquired brand new for between $40-50
million. The plane type and specifications were
not mentioned in the budget, and these should
interest the citizens of Nigeria and the National
Assembly.
Within the budget of the State House is a
proposal to buy two brand new, bullet-proof
Mercedes Benz 600E cars for the presidency at
about $1 million each. I guess since our two
topmen are getting new cars, it makes sense for
them to have an additional new aircraft as well –
but in a year in which we are living above our
means, spending at least N1.1 trillion we do not
have, and borrowing N794 billion to make ends
meet? We are broke as a nation, we now know.
We will collapse if the fuel subsidy is not
withdrawn, according to our president. Are our
leaders not too expensive? Are they sensitive to
our cries for improved electricity, affordable
transportation and jobs for our youths? The ball
is in the court of the National Assembly to
restructure this budget.`

First, what is our dumb a.r.se president doing to curb these excesses? Is it by creating more universites, more committees, more aides etc. The NA members are all rogues but the president isn't helping matters.

Yeske!:
First, what is our dumb a.r.se president doing to curb these excesses? Is it by creating more universites, more committees, more aides etc. The NA members are all rogues but the president isn't helping matters.

Some of us still don't get it. How can GEJ ever be the one to reform the system if he was so passionately supported and "endorsed" by those who created , in the first place, this hideous system benefitting only a few and condemning majority of Nigerians to abject poverty? It should have been clear to Nigeria that they had a treacherous turncoat as President when the first and highly callous announcement of GEJ was " leaner government not possible". He has then consistently followed that up with many anti-people and pro-AGIP decisions culminating in the new year 'present' he gave Nigeria in the form of doubled feul price only to do a face-saving u-turn after Nigerians resisted.

The bottom line is that the refusal of the average Nigerian to rise above ethnic, sectional and religious bias got us into this mess. I sincerely hope, for the sake of our nation, that Nigerians have learnt their lessons. Else we will gain another GEJ or Yar Adua in future i.e 'Voltrons' of the elitist greed keeping most Nigerians in shackles.