ASOLUKA: Infrastructural Decay Is Evidence Of Poor Capital Budget Implementation
How would you appraise the 2015 budget in terms of performance? WHAT would you expect? This is our election year. Don’t forget that in 2015, things began to slow down, and more attention was given to politics than governance. Two outcomes were possible from this: retention of old government or election of new one. The old government concentrated more on political stuffs and that meant slow down on governance and economic thoughts. For the new government, it is a new party coming into government.
The party has its own manifesto, and also, will study what is on ground before taking off. Obviously, there will be a lull; one wouldn’t have expected magic in an election year, especially, in our own type of situation. In 2015, I would have been surprised if our budget performance had been on a high tempo. I don’t have the figures to tell you whether it had up to 50 or 60 per cent performance rating or not. It would be very erroneous for people to think that money releases or cash backing to budget projections will amount to performance. These are two different things, so, when you talk about financial audit, as well as value for money, if we do the two, it will give a better idea of what the situation is. But usually, people assume that if the budget is N4.8trn, and by the end of June, six months, N2.4trn is released, they will say the budget is doing very well.
At the end of the year, if the amount budgeted is released, people will score it 100 per cent. So, to conclude, performance will not be predicated by the release of money. If it is release of money, I think they could have done fairly well, because almost 70 per cent of our budget was on recurrent expenditure, and the bulk of the recurrent expenditure was personnel cost, and with the introduction of Integrated Personnel Payroll Integration System (IPIS), except in October did we experience a hiccup in the payment of salaries at the Federal level, unlike the states. So, to that extent, you see that recurrent expenditure in terms of personnel cost was almost met. But the overhead cost, which is the other component of the recurrent expenditure, would have suffered a little bit. The main problem is on the capital, not only that it is very insignificant, about 30 per cent or less of our national budget; the releases also didn’t come in time.
The releases came in such a way that they become a little bit unhelpful in terms of project completion. If you use the capital performance in Nigeria, where, apart from being an election year has remained low, you will see the evidence everywhere — Quality of infrastructure and the level of infrastructure decay and other major projects. Obviously, government was unable to implement the capital vote; was there some diversion? Don’t say nothing has been done, because a new government has its own manifesto and different priorities, and also, the act of getting the facts on the ground and knowing where and how to take off could take some time.
The priority of the old government may not be the priority of this new one. And we would see that shift in the emphasis reflected in the budget. But the question you are asking is if money was voted for X and it has not been used, where is the money? And that is the misconception most people have about budget. Budget is mainly an estimation of income streams and how that income would be applied over services and all the other issues. Usually, if you say I am budgeting N5trn, it is not that the money is sitting, somewhere.
It is a kind of informed estimates from given income stream such as, NNPC, Customs, Inland Revenue Service, DPR and the rest. Last year, we earned this when we sold 2.3 million barrels of oil per day, and the price of oil hovered around $80, you could take $60 as a benchmark to estimate what you are going to earn. But you see that this year, even $60 became unrealistic. Even, reducing it to $55 was also unrealistic.
The oil price is about $43 per barrel and since Nigeria is like a mono economy, the bulk of our revenue is from oil. If the oil sector collapses in terms of expectations it affects the inflow. So, it is not like that money is not being used. Most times, it is because of the absence of the cash that you have cash backing. It is only when the cash becomes available that the minister of finance can release a warrant for that, and that brings us to the new system of the Treasury Single Accounts, that will give you a better view of how much you have in your kitty.
By now, shouldn’t we be talking of budget surplus, because most of the things that were supposed to be done have not… I don’t think we should make that statement, because you are still assuming that the estimated revenue was realised, and if the estimated revenue was realised, and the money has not been spent, the item provided for, then somewhere, somehow, the money stays. Though, technically, we define surplus from the onset from the revenue, when we have higher revenue than our estimated expenditure, and we call it a surplus budget.
But if there were project hitches, such that they were not accomplished, you could have that money as a rollover, but I am not too sure that the income flowed in as expected, in which case, it would be illogical to think that since that money that flowed in was not used in specified form, that money should stay somewhere. Would you say that the National Assembly has done well in terms of budget oversighting? This is very interesting.
The budget is initiated by the Executive arm, which is why Section 81 of the 1999 Constitution, as amended, provides that the President will present each year an estimate, not budget, because Section 80 (1-IV) are very emphatic. Section 80 (1) tells you that the revenue of Federal Government should be paid into consolidated revenue account of the Federation. But Section 80 (IV) is quite emphatic that no money shall be expended from that fund, except in a manner prescribed by the National Assembly.
This, in legislative parlance, is what we call the power of force that the legislature has over the executive arm. When the National Assembly passes that bill, it goes to the president for assent, it becomes law, and we call it the budget law. The National Assembly has standing committees in addition to executive monitoring committees, because the fiduciary duty of the National Assembly is to be the watchdog, on behalf of the people, on the performance of the executive. So, National Assembly normally would have standing committees that would supervise, but the technical word is oversight those Ministries, Department and Agencies of government (MDAs), or any office that is created by the National Assembly.
The oversight is to have growth in Section 88 of the Nigerian Constitution of 1999, as amended; it talks about the power of agencies to oversight these agencies to avoid corruption, abuse of office or waste in the use of budgeted resources. More importantly, the oversight is to ensure that the legislative intention is expressed in the budget is realised. I don’t think there is absence of oversight and audit.
We may comment on the quality of implementation, because when we talk about policy or programme, the execution is what we call implementation. Whether the implementation level is slow, high, good or bad, this would be determined. It could be that there was no implementation; it could also be that it was aborted implementation. We have the monitoring and valuation mechanism on the executive side, most times in the budget office, now in the planning office. Before, we had National Economic Intelligence Commission (NEIC) that goes round to monitor the performance of Federal project.
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