Tardiness mars routine budget release reports

The Federal Government has said it would consider a new method of reporting the capital budget implementation that would specifically list projects and amounts covered in each financial release.

After more than three years of the “Change” administration, it appears that the realisation that this government has been following the previous traditions of opaque and blanket reporting of acclaimed capital votes is just coming.

The fourth quarter 2017 budget implementation report was released in August, two months after the 2018 budget was signed into law, prompting questions over the policy direction, sources of the inputs and stakeholders’ contributions to the new document, when the previous year was not fully reported.

Similarly, just last week, the minister of Budget and National Planning, Udoma Udo Udoma, said that N460 billion has so far been released for 2018 capital expenditure and was corroborated by the Minister of Finance, Mrs. Zainab Ahmed.

For transparency and monitoring purposes, there is the need to make available the list of projects that these releases covered, specific amounts associated with each project and where the projects were sited.

This is important because the releases are borrowed funds, with huge service bills and at a time that the national debt stock is enmeshed in sustainability controversy.

The Finance minister, Ahmed, although, has repeatedly said that the country’s debt profile is nothing to be afraid of, much less about becoming a crisis, she has admitted that there is revenue crisis.

This position, perhaps, is her approach to fend off fearful realities that confound the economy.

Granted, Nigeria’s debt to Gross Domestic Product (GDP) ratio is about 19 per cent and far below the international threshold, but that does not determine ability to pay. Revenue flow does.

Given the current low fiscal capacity, as admitted by government, it is difficult to understand the difference between debt crisis and revenue crisis, as posited by the minister.

Maybe, the pricing of the next debt (Eurobond) at the international market will offer insight into the nexus between a rising debt profile and deteriorating revenue ratio, as gauged by investor/creditor perception.

Besides, the continued shallow revenue base and admittances by government officials that the much-touted diversification and its benefits would remain deferred due to long term nature of investments, now call to question the implementation of more than N10 trillion debt deals in the last three years.

The Director-General of Debt Management Office, Patience Oniha, explained that for some infrastructure projects and foreign direct investments to impact positively on diversification, it will take a longer term to mature.

“What we are saying is that we need more patience to allow the investments to be completed, then the benefits will flow back to the economy.

Nigeria wants foreign direct investment and those in infrastructure, which is long-term in nature.

This is opposed to portfolio investors, that target bonds, commercial papers and treasury bills,” she said.

Currently, government is asking for $2.9 billion, which the minister said: “We are trying to raise a new Eurobond, which will be used to fund capital projects and I said earlier that this is $2.8 billion is mainly to finance capital projects.”

So, which projects, where, when and how much per project will this amount fund? This has remained the challenge of the country’s utilisation of debt proceeds and its transparent reporting.

The routine of delayed budget implementation report, spanning several administrations, with capital budget releases that are devoid of specifics, have created more suspicion to observed non-incremental in infrastructure.

Ahmed, while pointing to a “Monitoring Report”, as focal point for list of projects executed, however admitted that going forward, the ministry would consider listing of projects covered under each capital expenditure release.

“We are looking at the possibility, going forward, that when we release funds for capital projects, we would clearly determine what projects the funds are released for.

Going forward we want to do that as a support in monitoring the implementation from the beginning, not just after the funds have been utilised as currently obtains.

“We have so far in the 2018 budget, released N460 billion and this is for capital projects, but for us to give you the list of the capital projects, we have to review our Monitoring Report, that is where the schedule of the projects that have been implemented will be seen,” she said.

Amid claims of infrastructure investment through capital expenditure, a report by Afrinvest Securities Limited remarked: “The infrastructure gap in Nigeria is massive, and this has continued to widen.

In the past two decades, population has increased by more than 50 per cent and yet there have been no noteworthy infrastructure upgrades.

As population has expanded, especially in urban areas, the infrastructure stock has failed to catch up.

“The consequence is revealed in slow travel times, frequent accidents, high cost of transport, especially for businesses and high cost of residential and commercial buildings in cities.

“A painful reality that underlies governance, regulation and ultimately, development, is weak institutions. The quality of the public sector workforce, the policies promoted, and the processes and operations, are all determinants of a country’s growth and development.

“In Nigeria, there is lack of openness in public institutions as procurement, licenses and permits, recruitment and contract bids are couched as ‘top secret’ information. Even when these are advertised, the information is usually insufficient, thus creating a situation where there is a lack of meritocracy in government processes, which constitute a drag on productivity.

“Public institutions are also not accountable, as funding, projects, annual reports, are not made public and even when these are available, they are not timely and exhaustive.

“In the economic agenda of the current government, public sector reform was touted, but the role of institutions and development of institutions, especially as it relates to regulation, policy, transparency and accountability, have not been considered a priority, and no clear policies back this up.

“Transparency in governance and sound institutions are necessary to enhance public trust, thus generating support that make passing tough reforms slightly easier.”

2017 pitiful outcome

After delays, the country’s fiscal projections was not good enough. It was far from the projections widely presented to Nigerians earlier.

The statistics from the fourth quarter budget implementation report of 2017, which also indicated the full year projections, showed that out of the projected Federal Government retained revenue of N5.084 trillion, only N2.38 trillion was realised. This is 46.75 per cent of the projected revenue, with a variance of 53 per cent.

When other non-budgeted revenue heads such as refund from the Nigerian National Petroleum Corporation, exchange rate differential, among others, were added, it rose to N2.66 trillion, representing 52.27 per cent of the budgeted revenue and a variance of about 48 per cent.

The first shortfall is government’s revenue projection, estimated at N2.12 trillion, while only N1,125.05 billion was realized, being a performance of 53.01 per cent, leaving a variance of 47 per cent.

Non-oil revenue also came short, with N956.67 billion realised out of N1.41 trillion projection, representing 67.82 per cent performance, leaving a gap of 32 per cent.

A further breakdown of non-oil revenue shows that the key subheads of value added tax, company income tax, customs and excise, independent revenue all underperformed.

The expectation from VAT was N241.92 billion, while the sum of N130.05 billion was realized, being a 53.75 per cent performance; CIT was projected at N807.82 billion, while N543.34 billion was realised, being 67.26 per cent performance.

Except the Customs and Excise that hit 95.26 per cent performance, independent revenue joined others and remained the perennial under-performer, with N295.29 billion, being a performance of 36.5 per cent, out of N807.57 billion expectations.

The Lead Director at the Centre for Social Justice, Eze Onyekpere, said the performance leaves more questions than answers.

“Why did oil revenue underperform at a time of high oil prices, without reported cases of militancy leading to disruptions in oil production? The composite BIR for the year states that ‘the average price of crude oil in the international market also represents an increase of $9.77 per barrel (or 21.96 percent) above the US$44.5 per barrel oil price benchmark for the 2017 Budget.’

“The implication was that oil sold above the benchmark price in the international market. So, what is going on in the oil sector that we have not been told? Is it subsidy without appropriation which is illegal and an assault on the Constitution, mismanagement, fraud? – Nigerians need to know. Again, oil revenue still comes top despite all the mantra of diversification of the economy,” he said.