Thursday, 28th March 2024
To guardian.ng
Search

Closing the gaps in budget process

By Uche Uwaleke
31 August 2016   |   2:38 am
The many controversies dogging the 2016 Budget provide an opportunity for Nigeria to undertake a comprehensive budget reform that will close the structural and procedural gaps which limit transparency and accountability in the budget process.

Budget

The many controversies dogging the 2016 Budget provide an opportunity for Nigeria to undertake a comprehensive budget reform that will close the structural and procedural gaps which limit transparency and accountability in the budget process. Like in other countries of the world, the budget process in Nigeria has four stages namely formulation, approval, implementation and control. The first two are “ex-ante” (before the President’s assent) while the last two are “ex-post” (after the President’s assent).

A comprehensive reform in the budgeting system should therefore encompass the entire budget cycle. Nevertheless, studies have shown that although dysfunctions and distortions occur at all stages of the budget process, the first two stages are more susceptible to corruption and abuse and therefore getting it right at the ex-ante stages goes a long way in nipping in the bud the corruption associated with the ex-post stages. There is therefore the need to plug the loopholes in the ex-ante stages as much as possible if the ‘ghost of padding’ will not haunt the nation in future budget exercises.

A major flaw in the ex-ante stages is the fact that they are largely non-inclusive and non-transparent. This fact is confirmed by the 2015 Transparency Open Budget Index in which Nigeria scored 24 out of 100 below the global average score of 45. The Open Budget Survey is conducted biennially by the International Budget Partnership (IBP) covering 102 countries across different continents of the world and assesses participating countries based on three pillars of transparency, participation and oversight. The public needs access to budget information and opportunities to participate in the budget process. But as noted by the IBP, ‘’the Government of Nigeria provides the public with minimal budget information’’.

On this score, the government can establish formal regulations that oblige the Executive to engage with the public during the formulation stage and at the same time ensure that the budget proposals are comprehensive and detailed. The budget process should provide opportunities for professional bodies, organized private sector, the academia, Civil Society Organizations, organized labour and interested members of the public to make inputs on which programs should be a priority for funding each year especially with the adoption of the zero-based budgeting system. To this end, the country may consider the Canadian model where (in what is referred to as a “trial balloon”) the government releases the budget proposals to the general public prior to its official presentation to Parliament in an effort designed to gain insight on the potential public reaction to proposals in the budget. It is no surprise that Canada is one of the top 10 countries on the Transparency Open Budget Index.

Another huge gap in the ex-ante stages is the Constitutional provision which provides a timeframe with no timeline for the presentation and approval of the budget. A budget is supposed to be a financial plan prepared prior to an approved period. Therefore, for a budget to be relevant, it should be presented before the beginning of the fiscal year. By virtue of Section 318(1) of the 1999 Constitution, the financial year in Nigeria runs from the 1st of January to the 31st day of December. Sadly, timely budget presentation to the National Assembly has become an exception rather than the norm over the years.

Section 81 of the Constitution allows the President the liberty to lay the Appropriation Bill before the National Assembly at any time before the commencement of the next financial year. The implication of this ‘blank cheque’ is that while the President has between the 1st day of January and 31st day of December of every year to lay the Appropriation Bill, the National Assembly has no such timeframe within which to consider the budget proposals presented by the President. Even the Fiscal Responsibility Act (FRA) 2007 enacted to address the absence of timeline only made reference to the preparation of the Medium Term Expenditure Framework (MTEF) for the next three financial years which should be laid before the National Assembly for consideration ‘’not later than four months before commencement of the next financial year’’.

The Legislature is supposed to interrogate the budget bill prepared by the Executive before passage. Late submission of the budget bill makes it difficult for the National Assembly to undertake proper scrutiny of the budget and so the approval process is hamstrung by the limited time available for debate. A case in point is the 2016 Appropriation Bill which was laid before a joint session of the National Assembly on December 22, few days to the end of the year, and just about when the Law makers were to proceed on Christmas holidays.

As a matter of fact, since 1999, successive Presidents have laid the Appropriation Bill before the National Assembly very late in the year, the earliest being the one presented on October 10, 2012 which was still less than three months to the beginning of the next financial year. In comparison, the United States Congress spends about eight months to pass a federal government budget. Extant literature support the fact that the timing of the submission of budget proposals significantly affects the quality of analyses and deliberations by the Legislature. As a rule of thumb, a national legislature requires a minimum of three months for effective consideration of the annual budget estimates.

To help close the identified gaps in the budget process and make it more transparent and less vulnerable to corruption and abuse, a budget law is required similar to the US Congressional Budget Act of 1974 which lays out a formal framework for developing and enforcing a “budget resolution” to guide the budget process. Such a law should stipulate offences and penalties and possibly lay to rest the controversy regarding whether inflating expenditure heads for personal gains (otherwise known as padding) is a punishable offence. It should equally ensure that like the General bills, the Appropriation Bill is subjected to public hearing. Indeed, the review of the budget bill by the National Assembly provides a major opportunity for public scrutiny and civic engagement.

By providing a platform for open discussion on the budget, the legislature can help to broaden public debate on budget priorities. The envisaged budget law should also provide a timetable with dates for the various budget stages; strengthen a nonpartisan National Assembly Budget Office to aid in budgetary information and planning as well as encourage stronger collaboration between the various stakeholders namely government agencies, Ministries of Finance, Budget/National Planning, Fiscal Responsibility Commission and Civil Society Organizations.

For the reform to gain traction and be enduring, both the Executive and the Legislature must be committed to its implementation. In this light, the committee on budget process reform recently inaugurated by the Senate President, Bukola Saraki is a welcome development. Already, the Minister of Budget and National Planning, Senator Udo Udoma, is reported to have assured Nigerians that the 2017 Budget would be submitted to the National Assembly in October 2016. If this promise is kept, the National Assembly will be expected to scrutinize and pass the 2017 Appropriation Bill before the end of the year. This will be a welcome change indeed.
Uche Uwaleke, a Fellow of ICAN, is an Associate Professor of Finance and Head of Banking & Finance Department at Nasarawa State University Keffi.

0 Comments