BUDGET 2016: FASHOLA HIGHLIGHTS IMPACT, SAYS IMPLEMENTATION WILL LEAD ECONOMY OUT OF RECESSION
Says the way out of economic recession is stimulus spending that happened in America and Marshal Plan that happened in Europe
· “We must just stay focused. It is a tough time, we are mindful, but we think our methods will work”, Minister assures
Minister of Power, Works and Housing, Mr. Babatunde Fashola SAN, Tuesday, in Abuja, highlighted the goals of the 2016 Budget expressing confidence that the implementation modalities adopted by the present administration would lead the economy out of the current recession.
Fashola, who spoke, alongside eight of his colleagues in the Federal Executive Council, at the Town Hall Meeting/Policy Dialogue for Good Governance organized by the Alumni Association of the National Institute for Policy and Strategic Studies in collaboration with the Federal Ministry of Information and Culture, said by reordering the expenditure focus of the budget, government has set the economy on the path of growth and recovery.
The Minister, who described the allocation of 30 per cent of the N6 Trillion Budget to Capital Expenditure, as historic in the annals of budgeting in the country, said by doing so, government has ensured that more of the budget would impact on the larger society as against the previous practice where those in government, who constitute less than three per cent of the population, got the bulk share.
Highlighting the impact of the Budget across board, Fashola, who disclosed that N102 Billion was released to his Ministry out of the N300 Billion already released by the Federal Government, said as at July this year, N70 Billion had been paid out to contractors, project managers and consultants designing roads and bridges adding that with the payment, the various contractors have returned to site.
The payments, the Minister said, were being made on the condition, commitment and understanding that the contractors, who left site as a result of non-payment of their fees for over two years, would begin to reemploy back workers that they had laid off adding that adherence to this has led to the recall of thousands of workers previously laid off by the contractors.
Insisting that it is the only way out of recession, Fashola declared, “We begin to spend on the productive sector so that at every construction site not only do we see plants and equipment and machinery back and working, we see demand for diesel and petrol, water tankers begin to roll, sale of sand and gravel begin to happen , food vendors move back to those sites to supply food and water to those who are working and so on and so forth where activity begins. That is the way, there is no other way”.
“That is stimulus spending that happened in America, that is the Marshal Plan that happened in Europe; that was the Roosevelt Plan after the Great Depression. So we are not doing anything unusual. The only difference now is that we are working with leaner resources and seeking to do more with less”, he said.
He listed the road projects where contractors have returned to site as a result of the payments, to include the Kano-Katsina Road, Kano-Maiduguri Road, the Ilorin-Jebba Road, the Loko-Oweto Road, the Lagos-Ibadan Expressway and the Port Harcourt –Enugu Road among a number of others.
In the Power Sector, Fashola said with the money available, the Ministry was currently working to complete the 215MW Kaduna Power Plant, the transmission line for the Gurara 40MW plant, the Kashimbilla Plant and some of the other power projects, adding that it was also remobilizing contractors back to the transmission sites.
The Minister explained that it was necessary to revitalize the transmission lines, most of which had stopped for over two years as a result of non-payment of contractors, in order to be able to evacuate power being generated pointing out that some of the contractors couldn’t clear some of the equipment they imported.
“Some have been trapped at the ports for decades”, he further explained adding that government was now trying to clear all those parts for the contractors some of who, according to him, are owing clearing agents in the excess of about N3Billion. He, however, said the Ministry was working with the Office of the Vice President to sort out all the issues “and also ensure that monies when ultimately spent are spent for value”.
Fashola said in spite of the setbacks, progress was being made in such places as Irrua in Edo State where transmission work is currently going on, Okada Transmission project, also in Edo, where work has been completed adding that although problem was encountered in Itu local government last month where work stopped on the Itu-Calabar Transmission line over some communities issues, the project was back on track as the issues had been resolved.
Recalling his recent visit to Maiduguri, the Minister disclosed that the contractor handling the Damboa Transmission Power in Borno State and who had left site because of the violence and insecurity there, was back on track and said he would finish the project by the end of this year.
Expressing confidence in the implementation modalities of the administration, Fashola declared, “When all of these come together, clearly we will begin to see life getting back to normal”, adding, however, there was need to stay focused.
He told the audience, “It is a tough time, we are mindful. And the purpose of our coming here, if I may say so on behalf of our colleagues, is also to see whether there are things that we are missing and to listen to them, take them back in and see what we can do to improve them”.
On how the nation was drawn into economic recession, Fashola explained that in spite of the huge resources available to the previous administration, contractors handling various projects across the country were not paid for over two years resulting in their abandoning the sites and sacking their workers who as a result lost their means of livelihood.
“The story we met was that contractors, whether in Works, Power or Housing, saying that over the last two to three years, they had not been paid. So that was the time the seed for this recession was sown; money increasingly leaving the economy, leaving the hands of people who work on day to day basis”.
“The result was that workers were being laid off gradually, progressively and systematically and as workers lost their jobs, money stopped moving because they stopped buying, they lack purchasing power and those who were selling were also losing their livelihood. That is the story to where we are today”, he said.
The Minister, who also explained that out of the N300 Billion already released by the Federal Government since the Budget was signed, his
Ministry received N102 billion, added “It has been described as a lion share of the N300Billion but it is a lion share against our realities and the realities are that we inherited 206 roads under construction and the liabilities for those roads were in the region of N2.1Trillion”, pointing out that government has paid about N600 to N700 Billion of the amount.
Recommending fiscal spending as a way out of the recession, the Minister, who described the 2016 Budget size as ambitious, added that an increased budgetary size would enable the administration fund the various capital projects that would impact on the livelihood of the population.
He explained further, “From an average N4 Trillion, which is the average budgetary size of this country for over half a decade when we were earning $100 a barrel of oil per day, we are going now from there to N6Trillion when we are earning significantly less than that. It is ambitious”.
“But what has also changed, for those who say they haven’t seen change, let me dimension that, what has changed is that from spending 10 to 15 per cent of our budget on capital and spending more than 80 per cent on recurrent, this government has now committed to spending 30 per cent of N6 Trillion on capital and 70 per cent on recurrent”, he said.
According to Fashola, “In government circles, the people in government usually constitute barely 1 or 2 per cent of the entire population. So a government that continuously chose to spend 90 per cent of its earnings on one or two per cent of the population leaving 10 per cent for all the contractors, for all the roads, for all the suppliers, clearly was on the path to where we are today”.
Advocating public enlightenment on the annual budget, Fashola said there was need for all Nigerians to become more familiar with how the budget process works pointing out that many Nigerians still think that any time that budget was said to have been passed it was cash at hand.
“It is an approval to spend a certain agreed sum on identified areas”, he explained adding that it was important for members of the public to understand that when budget has been approved for a Ministry or a Department, it wasn’t cash.
Describing the Town Hall meeting as instituted by the administration as the reward for sticking to democracy, Fashola, who said it was the first time, in recent times that an administration was coming out to give account of its stewardship when no election was in sight, declared, “Government is out here saying this is what we are doing, this is what we want to do, this is the direction we are heading so that we have some measure of accountability”.