Budget: From wastes to economic growth
Continued from yesterday
Under the ZBB regime, all the milestones of budgeted activities are expected to be completed within the fiscal year (budget year). The budget should end in zero as no activity should be outstanding. There are no references to previous year’s budget or accruals when preparing the next year’s budget. Everything starts from the scratch (zero). On-going old activities are treated as new activities. All must go through the cost-benefit and value for money justification processes. Everything is up for reconsideration and no activity is any more sacrosanct.
The principle behind the ZBB is that the base starts from zero as against the traditional incremental budgeting where the base starts with current year’s budget or current year’s accruals. Everything starts from the scratch.
Despite the initial criticisms that trailed the 2016 budget, it easily can be considered as an inclusive budget because of the socio-economic content, some of which includes: provision for poverty alleviation (direct cash disbursement to the most poor), school feeding programme; training of 500,000 graduates from universities, polytechnics, and NCE teachers; social infrastructure projects which are known to stimulate local economies through the provision of direct and indirect jobs with long-term multiplier effects.
Some of the projects that have substantial sustainability content in the 2016 budget include: Lagos-Calabar rail; second Niger Bridge; Odukpani-Itu-Ikot Ekpene road; Lagos Ibadan Express road; Benin-Sagamu road; Itakpe-Warri signalling; Calabar-Ikom-Obudu rail; Kano-Damaturu-Ngala rail, 22 dams for commercial farming, Kaduna – Abuja-Ajaokuta rail line, 500,000 primary health centres. These are investments that impact on the lives of the ordinary citizens.
The ZBB Principles demand that all items of the budget would be prioritised and ranked on cost-benefit and value for money consideration before resources are allocated. The 1999 Constitution, Section 81 provides that the President shall cause to be prepared and laid before the NASS the estimates of the next financial year. There is no doubt also that the President is the accounting officer of the country. At the end of the day, the buck stops at his desk.
The budget estimates presented by the President are targeted at accomplishing certain set objectives. It would be inappropriate for NASS to add, reduce or cancel any item of the budget. If NASS has issues with the budget, the appropriate procedure is to document its observations, recommendations and comments for discussions with the President.
A millennium commentator put the score card of the country exactly in this way: “The Nigerian experience is a tale of woes, failures, and squandered hopes and opportunities. There is decay, there is stagnation, there is want and there is suffering. These are all products of mismanagement, greed, incompetence and ineptitude. These ailments now pervade our national lifestyle: schools, colleges, universities, hospitals, public utilities, in fact, all social facilities are mere shadows of what they should be. The economy has remained prostrate. The naira is grovelling on its belly. Purchasing power is low. Per capita income is discouraging. How do we free ourselves from the yoke of stagnation?” This was an opinion dating back to over 15 years. The situation has not changed. These are challenges that should trigger cooperation and collaboration between the NASS and the Executive arm of the government. They should work as one government, one team for the benefit of all. On July 27, 2010 The Guardian published an article in which I brought to the attention of the government that without concerted attempt to bring sense to our public finances, our children and grandchildren will be condemned to serving this generation’s mismanagement at the cost of investing in their own future. It would be a moral betrayal to choose the easy route by ducking the difficult decisions today at the cost of prosperity tomorrow.
The stakeholders should also bear in mind that socio-economic rights are those rights that give access to certain basic needs (resources, opportunities and services) necessary for human beings to lead a dignified life. The government, the business community and in certain circumstances, private individuals can be held accountable if they do not respect, protect, promote and fulfil these rights. Alberto Alesina (1997) reached the conclusion in a cross-national comparison of economic growth and political institutions: “Strong, stable and honest political institutions foster growth.”
Both public and private organisations have benefited from adopting the ZBB in driving their budget estimates. The Texas instrument adopted the ZBB in 1969. It became one of the fashionable tools in the 1970s. The state of Georgia whose governor was ex-President Jimmy Carter was one of the public organisations that adopted the zero-base budgeting. Eventually, when he became the President of the United States, he directed that all the Federal agencies should adopt the ZBB to improve productivity and optimise the benefits derived from scarce resources in pursuit of sustainable development.
Also in the quest to achieve sustainable development and inclusive growth for its citizens, the government of UAE adopted the ZBB as their budgeting tool for year 2011. In fact, the cabinet further adopted a multi-year fiscal planning which amounted to a cumulative zero-based budget of Dh 122 billion for 2011 to 2013. The result is quite evident in their development strides. The UAE cabinet specifically stated that the ZBB was introduced to positively impact on the well-being of UAE citizens (inclusive growth).
Time is of essence in the adoption of the ZBB for the 2017 budget. The processes are quite demanding in terms of time and resources. It is advisable to commence the processes for delivering the 2017 budget on time now. Finally, we cannot ignore the fact that the economy lost a lot of ground due to gross mismanagement in the past, and there is no doubt also that turning it round will take time and time is a luxury that we do not have. It is also equally difficult to reinvigorate an economy that has been flattering. The President, therefore, needs to navigate between politics and priorities. The Nigerian challenges are realistic targets for achieving greatness for his administration.
• Naphtali Iringe-Koko is a chartered accountant
No Comments yet