President Buhari
President Buhari

The Lagos Chamber of Commerce and Industry (LCCI) has commended President Muhammadu Buhari’s administration’s determination to alleviate infrastructural deficit by increasing the capital expenditure allocation in the 2016 budget to 30 percent. It was 15 percent in 2015 budget. The chamber also said that many of the assumptions made in the 2016 draft budget reflected the current realities in the country and desired spending priorities for national development.

Commenting on the Medium Term Expenditure Framework (MTEF) and fiscal strategy for 2016, Nike Akande, president, LCCI, said that one of the effective means of covering the huge infrastructure deficit is through Public Private Partnership (PPP) model. “To facilitate private capital flow into infrastructure building we employ the government to develop attractive policy frameworks for PPPs. We also urge the fiscal authorities to review and monitor the quality of capital expenditure and ensure that funds are directed to the critical infrastructure needed to drive productivity,” Akande said.

However, the chamber viewed the proposed budget’s benchmark for crude oil at $38 per barrel and the N197 per US dollar as conservative. It advised that, in that circumstances, the benchmarks be further adjusted. “We subscribe to the position of government that greater emphasis would be placed on non-oil revenue through diversification driven by agriculture, solid mineral and service sectors. The quick win is for government to focus on policies and regulations that attract private capital and encourage investment. In addition, efficiency of tax administration is very vital to expand the current non-oil revenue base. Exchange rate benchmark of N197/$ in the 2016 budget appears too conservative and at variance with prevailing realities. We hold that the exchange rate benchmark should be adjusted to N220/$ threshold in the 2016 budget,” Akande said.

Similarly, the chamber decried the growing budgetary provision for debt servicing. According to the MTEF and Fiscal Strategy Paper [FSP], N1.3 trillion is provided for domestic debt service in 2016 mainly to service existing commitments. “This figure represents 72% of the proposed capital expenditure in the budget. It is important that government devise an innovative strategy to reduce burden of debt service to the economy,” Akande said.

By Dike Onwuamaeze

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