Budgets as serial killers, harbingers of graft, underdevelopment

Budgeting, besides promoting transparency and accountability in the management of public finance, also serves as a fiscal instrument for self-assessment. But the processes, procedures, quality and quantity have long been enmeshed in criticism, yet without change. More damaging still, is the end result of the budget- implementation and development issues. CHIJIOKE NELSON writes on how Nigeria’s budgets have become instruments of underdevelopment.

“There is a reason why a budget, especially of Nigeria, has a cake-like shape. I still think the same reason is behind its woeful performance since the return to a new brand of the budget of the few, by the few and for the few in 1999,” an octogenarian who pleaded anonymity lamented, citing issues around pension payment, debts and policy implementation as related to budget.

Of course, the end of the 2016 fiscal year marked Nigeria’s 17th budget since the return to the civil rule and total budgets of about N53 trillion, with about N36 trillion spent on recurrent expenditures leaving about N17 trillion for development projects and a total debt stock in excess of N17 trillion (about $57.2 billion) as at December 2016.

Meanwhile, the preparations for the 2017 budget began on a shoddy note with the wrong assumptions made in the 2017-2019 Medium Term Expenditure Framework (MTEF) resubmitted by the presidency to the National Assembly (NASS) in October.

Already, the 2016 budget is currently reeling under cash crisis, with claims of disbursements for capital budget still not clear. Of course, the 2015 budget ended by ushering the country into recession.

Initially rejected by the Senate, the upper chamber had mandated three of its committees (Appropriation, Finance and National Planning) to rework the MTEF. This is the circle that Nigeria’s development plan undergoes yearly, coming out with nothing and strengthening the grip of underdevelopment.

An economist and fiscal governance campaigner, Dr. Uzochukwu Anakom, said: “The macroeconomic targets and figures make no sense to an average Nigerian and can be subject to as many interpretations as there are Nigerians. They commit the government to nothing. They raise several questions: What is the inflation target in the next three fiscal years? Will interest be in the single or double digits for it to be consistent with economic growth that can move Nigeria out of recession?

“Essentially, there are no projections for interest rate and lending to the economy. The MTEF contained no information on the build-up in external reserves and the Excess Crude Account (ECA) or the Sovereign Wealth Fund (SWF) under the macroeconomic parameters and targets for the three fiscal years 2017-2019,” he said.

There is currently, a suspicion of lack of knowledge or sheer ill-will, dogging the presentation of a $30 billion three-year borrowing plan, assumed to be part of the MTEF content. This is because it came without clear-cut details on projects. It is a case of poor budgeting that has set Nigeria backward. Already, the lawmakers have asked for the details.

“This added to the delay in the presentation and passage of the 2017 budget. Thus, the vicious circle will continue. There is the need for inclusive and transparent budgeting process in accordance with the provisions of the Nigerian Constitution and the Fiscal Responsibility Act. Otherwise, budgeting in Nigeria will remain a hollow ritual,” a development consultant, Jide Ojo, warned.

It is on record that Nigeria runs one of the most expensive democracies in the world, which is far above its financial limits, evidenced by the current financial crisis occasioned by ongoing crude oil price shock, as yearly budgets mostly run into deficits.

Shocking too is the fact that the “underdevelopment budget”, according to the octogenarian earlier mentioned, since 1999, has only been serving the interest of less than 20,000 top public officials- politicians and career civil servants, which has led to the pitiable state of the economy and the over 180 million citizens now.

Historically, Nigeria, few years ago, had the recognition of having the best fiscal policies in the sub-Saharan Africa. Despite the assertion, the nation, in about 17 years now, has had a running battle with budget implementation, with the main challenges ranging from abandonment of developmental projects and skewed votes in favour of recurrent expenditures.

The result has been poor execution or outright non-execution of projects after mobilisation, as well as over-pricing of projects, after delays in preparation and presentation, inconsistencies in timeframe and questionable figures.

The immediate past Director-General of Bureau of Public Procurement, Emeka Eze, said that the number of government projects currently abandoned across the country stood at 19,000 as at May 2016.

He said that besides duplication of office buildings, personnel and overhead cost, there was the tendency for each agency of government to assert its authority in the procurement process.

This explains why national budget is now seen as the “national cake”, but made available to few privileged individuals. Is it not surprising why the country remains under shock, even when an average of N1 trillion has been budgeted yearly for capital expenditure in 17 years?

Except in the 2016 budget process, it was a ritual and unfailing expectation from the authorities to argue over the level of implementation in terms of percentage, during budget defence. There is also a manifest lack of visible evidence to match the acclaimed implemented figures and national growth record against mass poverty and joblessness.

The Minister of Budget and National Planning, Udoma Udoma, has claimed that about N3.577 trillion, or 58.7 per cent of the N6.06 trillion 2016 budget has been spent. This included N2.44 trillion for capital, non-debt recurrent and controversial service-wide vote expenditures, in addition to about N1.14 trillion, or 46.7 per cent paid out to service domestic and foreign debts.

But out of these figures, only N753.6 billion has been implemented on capital projects as at September 2016, out of a total vote of N1.8 trillion, six months after signing the budget into law and nine months into the fiscal year.

While capital expenditure is approached in piece-meal, with growth retarding challenges, the recurrent component has been fully drawn down. This is the way every successive leadership has run the economy.

The argument over budget implementation has been associated with huge figures claimed to have been invested in power sector development in the first eight years of return to democracy, the failed vision 2000 and other infrastructure woes bordering on abandonment of projects and outright non-execution after mobilisation.

For the Executive Director at BGL Capital Limited, Femi Ademola, the problem of development in this country is not how big the budget is, but about the faithful implementation of the little.

Late Umaru Yar’Adua

“No matter how little the capital investment in the national budget is, overtime, it has ended up not being executed or done properly. How can the country make headway, especially now that recession has caught up with the economy? It has always been disappointing moments for implementation of budget,” he said.

Assessing the 2016 budget so far, a knowledge-based institution- the Centre for Social Justice (CSJ), in a note to The Guardian, said the implementation of federal budget has not lived up to expectations as it has been haphazard, missing of projected targets, while salaries and overheads are being disbursed on the other hand.

The Lead Director of CSJ, Eze Onyekpere, noted that out of the prorated total expected revenue of N1,927.87 trillion, by June 2016, only N976.35 billion had materialised. This is a variance of 51 per cent of the expected revenue by half year.

“The actual half year capital expenditure was N159.062 billion, representing a shortfall of N634.64 billion from the half year prorated sum of N793.702 billion, which is (80) percent variance from the appropriated capital budget,” he said.

This means that disbursements for capital expenditures are lagging seriously behind.

With $57.2 billion debt profile, mostly brokered in the last six years, Nigeria has been programmed to face another brand of headwinds in the future, as its debt service provisioning moved from 2015 record of about N943 billion, to more than N1.4 trillion in 2016. But the new debt plan of $30 billion, when executed in the next three years, will surely move the figure close to N2 trillion mark.

Again, the challenge remains if the budgeted investment upon which the deals are predicated will be implemented when approved.

It is also expected that by the end of the 2016 fiscal year, all things being equal, the country must have paid estimated N8.4 trillion in domestic and external debts servicing since 1999, with the last six years’ debt deals consuming close to half of the total figure in the yearly budgets.

In six years of the military regime from 1994 to May 1999, a total budget of N1.305 trillion was recorded, with some of the public corporations recently privatised under their payroll, compared with six years of the civilian rule- 1999 to 2005, estimated at N7.22 trillion, including the 1999 supplementary budget of N165 billion.

The controversial Service Wide Votes and a long standing inexplicable term, included in the budget by the Presidency rose from N301.84 billion, being 6.05 per cent of the 2014 budget, to N348.69 billion, representing 7.82 per cent of the 2015 budget, which runs counter to the austerity measure claims of the Federal Government. In 2016, it is also running in hundreds of billions.

There has never been a rendition of account of its accomplishments, projects and target development areas, except a hint in 2015, that it was targeted at security and currently, associated with pensions. This is beside a specific vote for security and provisions for the Defence Ministry.

The Oronsaye Committee, commissioned by government to reform the cost of governance, had corroborated the widely held view of the abuse of the utilisation of the service wide vote, noting that budget heads currently captured under the vote could actually be included either under specific Ministries, Department and Agencies (MDAs) or the contingency vote.

Currently, there are provisions for more than 65 roads and bridges, and rehabilitation works across the six geopolitical zones of the country in addition to a N20billion nationwide intervention fund for roads under the Ministry of Works.

Parts of these roads include the Lagos-Ibadan Expressway, Enugu-Port-Harcourt Expressway, Abuja-Lokoja Road, Ikot Ekpene Border- Aba – Owerri Dualisation, among others. These projects have severally been budgeted for since 2011, but not done. Presently, there is a N231.14billion provision for this purpose.

Similarly, the Subsidy Re-investment Programme (SURE-P) was established partly as a response to inefficiencies, leakages and corruption in subsidy payment in the country, with promises to halt the diversion of scarce public resources away from investments in critical infrastructure.

Unfortunately, it also toed the line of the country’s opaque budget system and ended in a scandal within a short period of time.

With a start off provision of N180 billion in 2012, targeted at railway, N33.4 billion; roads and bridges, N85.5 bIllion; Niger Delta, N21.7 billion; and Maternal and Child Healthcare N15.9 billion, among others, even as The Journey So Far, a publication of the agency put implementation at 49.9 per cent.

It affirmed that the unutilised funds were rolled over to 2013, in addition to new provision of N273.5 billion for the same projects, added with consultancy and logistics worth N1.5 billion. Besides, out of the N180 billion voted in 2012, N72.4 billion was utilised, leaving a balance of N107.6 billion. But how did the agency report N93.5 billion as balance? Why should SURE-P carry-over funds when roads like East-West Road, Enugu-Port-Harcourt, Abuja-Lokoja are left uncompleted?

Under transportation, railway projects were captured in the intervention projects of SURE-P in 2012, 2013 and 2014. While there are claims of execution, these projects never came up outstandingly. Lagos-Kano, Kano-Kaduna and Ajaokuta-Itakpe rail lines have always recurred.

Till this 2017, these roads are part of the government budget proposals. The story of railway rehabilitation is still ongoing.

In 2011, the dredging of the River Niger was provisioned in the budget and awarded at about N47 billion, with a mobilisation fee of N34 billion.

But going by the assertion of the current Minister of Transportation, Rotimi Amaechi, the job was not done, but now ongoing at a very low rate of N100 million, despite the inflationary trend through those years. It is yet unclear how this lower revaluation was achieved with such a humongous saving, and if the work plan remained the same.

But speaking on the implications of debts and consequences of non-implementation of budget, Onykpere added: “Nigeria spent N609.517 billion in debt servicing in the first half of 2016, while it earned N951.52 billion as overall retained revenue in the same first half of 2016. The implication is that in 2016, if the trend in the first six months continues to the end of the year, Nigeria will dedicate almost two thirds of its retained revenue to service accumulated debts.

“Without accumulating any further debt, is it possible that government will only pay its salaries and cater for the infrastructural needs of the people with only 36 per cent of its retained revenues. Such a situation poses a great challenge and a clear impossibility. The usual escape route in such situations is to borrow more and reschedule the debts – merely shifting the evil days.”

In 2012, there was an imbroglio between the Senate and the Ministry of Finance over the 2012 budget performance, as regards the contradictory figures emanating from the then Coordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala. It repeated in 2013, 2014 and even in 2015 budget processes.

Specifically, the drama of absurd order had revealed a laughable 30 per cent capital budget implementation in a whole fiscal year and raised pertinent questions bothering on the real essence of the fiscal document. Why are the figures emanating from the stakeholders not reflecting the true reality of the economy and what factors are inhibiting the realisation of the budget proposals?

Olusegun Obasanjo

“Late presentation and passage of budget has been hampering proper implementation of the budget over the years. Unfortunately, there is dearth of information on how much has been realised from recoveries, except hearsay. We do not also have accurate figure of how much has been saved with the introduction of the Treasury Single Account as well as the setting up of Efficiency Unit in the federal civil service,” Ojo said.

The 2015 budget processes started wrongly with regards to late presentations, underwent several withdrawals and amendments ahead of considerations by the National Assembly, an indication that the journey to approval was far. And it did happen that way.

The same episode was re-enacted in 2016. In fact, the budget was declared missing by some members of the National Assembly and had taken several days before the document was tracked, but not without change of figures and a fresh round of arguments and “grandstanding”. Finally, the budget was approved in May, five months after its commencement date.

The former President of the Chartered Institute of Bankers of Nigeria (CIBN), Okechukwu Unegbu, told The Guardian that delay in the passage of federal budget was not healthy for the nation’s economic development, because planning would be affected since there would be nothing the country could work on outside temporary borrowing.  A critical look at the nation’s budgeting processes overtime has shown a predictable pattern. The budgets lack freshness and have persistently failed to strategically identify key growth areas, with convincing proofs, out of which priorities could be pursued for each financial year.

For example, the National Assembly vote has always been pegged at N150 billion, whether the economy is moving forward, backward or stagnant. Except in 2017 that is still under consideration.

Since 1999, the 774 local government councils including six Area Councils of the Federal Capital Territory have received over N23.2 trillion, averaging N30 billion each, but these monies have been received on their behalf by the states, given the council Act. All of this is tied to yearly budget.

The subsisting council Act legalised State Joint Local Government Account, putting the state governors in control of council funds, which they misappropriate alongside state budgets, while councils are left to operate without functional budgets.

According to Onyekpere, there is practically nothing to show for the huge funds collected by the state governments as poverty is increasing at the local level and Nigerians are being denied access to the basic necessities of life like potable water, functional schools, primary health care services, electricity and feeder roads among others.

While there are repeated discussions on appropriations in the budgets across the Ministries, Departments and Agencies (MDAs), civil servants and public officers are not making any attempt to address these miscellaneous wastages in an environment of corruption and inefficiency, even as subsequent budgets continue to show lack of thorough physical and technical examinations and verifications.

For example, the frequent play on worded items like purchase, maintenance, upgrade, and furnish in relation to fixed assets are not supposed to be repeated on yearly basis, as they are supposed to have longer duration/usage. The budget officers and those responsible for the preparation of the budgets of these MDAs should be held accountable for such contempt, corruption and theft against the Nigerian people, but nothing happens in the end.

According to investigations, all the ministries are culprits and have frittered away public funds in billions of naira. For example, the Ministry of Agriculture, is notorious for its play on the word “seed”, repetitively allocating several hundreds of millions at each mention of “seed,” “seeds,” “seedling,” “improved seeds,” “seed and seedling,” as well as “insecticide,” “herbicides” and “fungicide.” But what is the difference between the “seed” series? Till to date, it is unknown to stakeholders.

Besides the play on words and names, each of these items was allocated multiple times. Specifically, “seed” was allocated (N2 billion and N150 million) and “seeds” (N82.5 million and N150 million) in the 2013 budget. In the 2012 budget, “seeds” had four allocations– N345.48 million, N304 million, N65.625 million and N76.5 million.

In the 2013 budget, “improved seeds” was allocated funds five times– N693 million, N220 million, N245 million, N437.5 million and N11.25 million. Also, “insecticide” was allocated twice in the 2013 budget– N26.25 million and N12.375 million; “herbicides” had three allocations – N187.5 million, N105 million and N27 million; and “fungicide” came twice– N13.125 million and N937,500. In 2012 budget, fungicide had double allocation too– N72.917 million and N18.5 million.

“The poor implementation of capital expenditure in the national budget is an offshoot of corruption, which has eaten deep into the fabric of Nigeria’s society.

First, both the bureaucratic and political leadership are paid to serve the people and there is no better way to serve the people than to deploy available public resources provided in the budget to the security and welfare of the people.

For the lawyer and tax professional, Chukwuemeka Eze, the “corruption in Nigeria is now like a 360 degrees movement. Unless you move out of the circle, you cannot change it. But who would move the country out of the circle? This is a system where there is no sanction for serious infractions like these.”

The Head of Association of Chartered Certified Accountants of Nigeria, Mrs. Oluwatoyin Ademola was also very angry. “The duplications and ambiguous sub-heads in budgets show lack of transparency and poor processes. It is a pitiable situation for the country, given its place among the nations.

“However, there are several questions that Who prepares the budget for the MDAs and who supervises them? Who collates the various budgets? What processes are in place before the budget can be collated or while being collated? Where is the place of the Financial Reporting Council? Who supervises the collated budget before it is passed to the National Assembly?

“Of course, we could equally ask what the lawmakers are doing to allow this whole embarrassment. Truly, if there’s a system and procedures, somebody should see something wrong in this development and somebody must be responsible and held responsible too.”