Ene: 2017 budget exposes insincerity of present administration
Nigeria Has No Reason To Borrow
Mr. Chidozie Paul Ene is principal partner in Chiedozie Paul Ene and Co., a firm of chartered accountants based in Abuja. In this interview with LEO SOBECHI, he says annual budgets have become perfunctory ritual, stressing that it does not make sense to budget beyond income.
A year after the 2016 budget, another estimate was sent to the NASS without any effort made by government to show the performance of 2016 budget, how do you think this will impact on the present budget?
In Nigeria, budgets have become annual ritual and after the fanfare of budget presentation, the country goes to sleep. It did not start with the present administration, but because of the way this administration came, the popularity and the promises made to the people, we expected that things will be done differently. We expected that probably, on a month by month basis, his ministers should inform Nigerians what they have achieved from where they were.
So I think the performance of the last budget would have been a very good guide even in the preparation of the current one. The last budget was predicated on zero-based budgeting. Zero-based budgeting is a concept that indicates that every piece of item in the budget must be justified before it is put there and why it should be there and why such quantum of money should be allocated to it. That would have given the launch pad from which Nigeria would have started performance evaluation and disclosure to the country. We intended to achieve this based on perceived need and perceived inflow, but we have been able to do this. These are the reasons and as a result of these, this next budget could not be based on so and so going from our experience of the inflow of revenue; this is what we think is possible now.
But that is not the case in Nigeria; a new budget must be higher than the older one. That is not what it should be. Once a budget is approved, if that budget is not followed to the letter, there must be compelling reasons why there should be variation. So some of them don’t understand when we tell them that our budget achieved 40 percent, they say, what are you talking about? Budget is supposed to deliver hundred percent. That is the way it should be, because you cannot for any reason budget beyond your income or your revenue, unless you are very sure that the funding for the difference is already there. So this idea of budgeting N7.2 trillion and at the end of the day you are only able to realise N4tr does not have to be so. Why do you have to make bogus promises when you don’t really have the resources of funding them? So we need to have a rethink. All these grandstanding, all these politicking about everything is not going to move this country forward. And I wish that the man the country has so much confidence in, believes in as an honest, corruption free and transparent person will initiate this. It will do our country a lot of good.Talking about warehousing funds in one common account, the finance minister once said there were still leakages in the system, particularly in customs.
Given that we are in the age of ICT, is it not possible to lay hands on government’s accounts no matter where they may be?
You also know that the movement of funds of even the ordinary man in the street now has become so easy and simple that you can pay anybody in any part of the world just from your phone. And in a matter of seconds the person gives response that he has received the payment. That is what technology has done. That is what technology has brought on us. And if we refuse to make use of it, then we continue to wallow where we are, where government business will remain nobody’s business. That is why there would always be leakages, hording of funds, padding of budgets and all that. These are all effects of not taking full advantage of the power of ICT. You can imagine, a ministry sends its budget to the National Assembly and something is added on it in this day and age, where information go both in hard and soft copies. How is that possible? Just because people refuse to do their jobs and because, they do not take full advantage of facilities available. And that happens because merit is not in our records. People don’t get punished for not doing their jobs; people don’t get punished for laxity, failures and lackadaisical attitude.
And people, of course are not rewarded for hardwork, so how do you expect things to run well. These are some of the reasons why things are not really happening. Government has the ability and capacity to even know once money is earned by its agencies. They have the capacity to know, it is all about ICT and having dedicated people at the control points and integrating and consolidating these at a particular point. So per minute per minute, government knows what it has.
One fundamental issue in management of Nigeria’s economy, which a lot of people were apprehensive about, is the impact of TSA on financial liquidity. Is the economy better now with TSA?
Some of us in the financial sector of the economy were very apprehensive when the government decided to toe this line of a blanket transfer of all public sector funds to one account, namely the CBN. In a country like Nigeria, which is a mono product economy and where government has been the biggest spender, any monetary policy approach that government intends to adopt, it ought to first of all look at what the effect would be on the general economy of the country. But I do not think the APC government did this, basically because they have promised the country change and they want to make sure that there is change at all costs.
We all know that if you pull out public sector funds from the commercial banks it can bring the economy to its knees. And that is exactly what happened to the economy. You denied other banks of loanable funds, which they in turn usually lend to those other sectors of the economy.
Of course you know that banking is just an intermediation business, where you take from the area of surplus to the area of need and in doing that you are able to expand and reflate the economy and make the GDP of the country to grow. But you will agree with me that the report of the NBS since first quarter of 2016 has been recording a negative GDP growth. Why, because, the totality of the economy is under very serious stress. And the total purchasing power of the average Nigerian has dropped; because when these funds were pulled out from the banks, the effect was so drastic that so many people lost their jobs in the banks and in other sectors of the economy, the industry, commerce areas etc; that is why we feel that that was a very wrong approach. They did not look at the effects and they seem not to have looked at the effects even as we speak, because one year down the line we did not have cause to review the effects of your policy on the economy of the country. I don’t think the economic team is doing a good job.
Are you now saying that the old Buharinomics have come to stop knowledge based injection of innovation to TSA operation?
Well, yes and no. Yes and no because the world has moved very far from where it was back in 1984, that is about 33 years now. A lot has happened in terms of developments and integration of the world into a global village based on the power of technology. So, we could do better. But when you also understand that in a country like ours the buck stops on the President’s table, and before you can do certain things, especially things radical and would revolutionalize the system, you need to get his approval. And you will agree with me that it is difficult for people that have finished their active life to embrace fully the powers and capabilities of ICT. So the answer is yes and no. If not that the buck stops on his table and that his team does not always watch his body language, a lot more would have been achieved. Not long ago there was panic downsizing in the banking industry based on the economic depression, but the federal government said no, don’t sack workers.
Can you situate this totalitarian disposition on the management of the economy?
It does not work. You can only control what is within your purview. Banking, though a highly regulated business is still private business. And private businesses are strictly run on profit. The reason for setting up such businesses is the profit motive. It is not like the public sector where it is service, so you cannot force them to have people who are not doing anything and they are paying them. Yes, government has a way of regulating things in its economy, but you have to do things that would work. It is just like towards the end of last year, when they also insisted that bureau de change must not exceed certain level in their foreign exchange dealings. Did it work? They arrested a few of them others went underground. And as we speak, you and I know what the situation is. What works more is diplomacy. More of the carrot approach than the stick.