Bottom-up cash policy in MDAs: Discordant tunes on bureaucratic remedy for fiscal indiscipline

The bottom-up cash policy, a stopgap measure introduced last year to enhance fiscal discipline in government circle, is eliciting mixed reactions. While neutrals commend the policy and its potential of deepening transparency in financial approvals, concerned civil servants bemoan it as an avoidable bottleneck to efficiency in public administration, AMEH OCHOJILA reports.

The implementation of Nigeria’s Bottom-Up Cash policy may have heralded a paradigm shift in public finance management, particularly within Ministries, Departments, and Agencies (MDAs). The policy, rooted in the principle of accountable cash flow management, is aimed at addressing longstanding issues of fiscal indiscipline and corruption prevalent in the public sector.

When it was officially kick-started in February 2023, ministries and parastatals complained of being starved of cash through procedures and processes involved in complying with the Bottom-Up policy.

The policy operates on the principle that departmental heads must submit cash requests to their superiors, who then forward them to the accounting officer of the ministry, detailing the need for such funds. Such an officer, before the 15th of each month, sends approved requests to the Accountant General’s Office, which then forwards them to the Ministry of Finance for financial backing. Requests deemed irregular or unsubstantiated are denied.

Accountant General of the Federation (AGoF), Dr Oluwatoyin Madein, said the objectives include minimising the costs of holding cash balances; reducing risk (operational, credit and market risk); adding flexibility to how the timing of government cash inflows and outflows can be matched; and support other financial policies.

According to her, the overriding objective of cash management was to ensure that the government was able to fund its expenditures promptly and meet its obligations as they fell due.

The AGoF, however, pointed out that the bottom-up cash management policy guidelines were approved by the Minister of Finance, Budget and National Planning on June 1, 2020, while President Muhammadu Buhari gave formal approval of its implementation on August 24, 2022, setting the stage for its rollout.

She added that as a follow-up to the approval, a Treasury Circular was issued on February 2, 2023, notifying MDAs of the Go Live date of February 10, 2023.

The AGF said: “We can only succeed if every one of us does his part. Indeed, the success of the bottom-up cash planning policy will rely heavily on your ability and willingness to play your part. Being bottom-up, the process starts effectively with you.”

The main goal of the Bottom-Up Cash policy, according to Maidin, is to enhance budget execution and control by ensuring that funds are released in line with the approved budget and financial plan. The policy facilitates timely and efficient implementation of projects and programmes by disbursing funds directly to implementing agencies, she said.

The policy also entails the collection and aggregation of government cash needs through individual units, the facilitation of the optimal allocation, and the utilisation of government cash resources. Its overriding objective is to ensure that the government can fund its expenditures promptly and meet its obligations as and when due.

Before the new policy, budgeted funds were released to the MDA’s, which are retired by relevant officers after expenditures. However, by decentralising cash management and instilling accountability measures, the policy minimises wastage and curtails opportunities for corruption.

It streamlines budget execution, ensuring funds are allocated and utilised in line with approved plans. Furthermore, the policy facilitates timely project implementation by disbursing funds directly to implementing agencies.

The efficacy of the Bottom-Up Cash policy is evident in its role in uncovering malfeasance within MDAs, exemplified by recent revelations in the Ministry of Humanitarian Affairs and Poverty Alleviation. Through robust processes and oversight mechanisms, the policy acts as a safeguard against financial misconduct, safeguarding public funds from misappropriation.

The suspended Minister of Humanitarian Affairs, Dr Betta Edu, reportedly bypassed some of the processes spelt out by the policy and sent the request for the N585 million directly to the AGoF. She also allegedly violated the requirement for the approved funds to be paid to the requesting MDA before being expended on the projects they are meant for.

The AGoF, in a statement by the Director of Press of her office, Bawa Mokwa, stated that she did not honour Edu’s request because it was not her responsibility to make payments for projects and programmes on behalf of MDAs. Madein explained that allocations are released to self-accounting MDAs in line with the budget and such MDAs are responsible for the implementation of their projects and payments for such projects.

She explained that though the AGoF received the said request from the Ministry, it did not carry out the payment, but advised the Ministry on the appropriate steps to take in making such payments in line with the established payment procedures.

The AGoF stated that in such situations, payments are usually processed by the affected ministries as self-accounting entities, adding that no bulk payment is supposed to be made to an individual’s account in the name of the Project Account.

She believes that the scandal has raised the prospect of not only recovering huge sums of allegedly stolen public funds but also blocking further financial leakages. It also brings to the fore the importance of putting in place and meticulously implementing financial control policies in MDAs.

However, civil servants argue that compliance with the processes takes time to accomplish, thus keeping activities, including urgent ones, waiting. According to them, the policy was killing the system as there was no money to accomplish assigned tasks, adding that the system would further slow down the operation of the civil service that was already tied down by bureaucracy. They insist that the system would hinder technical workers and others who need certain daily cash and allowances to function.

But financial pundits insist that the policy is good and would help in curbing excessive cash in the hands of officers capable of fuelling corruption, noting that previously, abundant cash within the federal civil service system was embezzled by unscrupulous officers.

An Economist, Candidus Enokela, believes that the policy is one of the best fiscal policies in recent times, adding that public officers had deliberately exploited loopholes in the system.

“Our public officers make their own rules. They do not feel bound by the once-sacred public document called financial instructions that provides guidelines for public expenditures. When they are left with money, sometimes they do not see themselves as guardians of our common treasury with the duty to protect what has been entrusted to them. But this procedure takes a lot of time and many checks and balances before cash drops. That is the game-changer.

“Often, when these policies are introduced, they are criticised and fiercely resisted by internal and external stakeholders on various grounds. Government’s Integrated Financial Management System (GIFMIS), Treasury Single Account (TSA) and the Bottom-Up Cash Planning Policy have all been victims of these initial resistances,” he pointed out.

According to him, there is a need to connect the finance regulation policy to the law to halt efforts to circumvent the policy. Mike insisted that there is a disconnect between laws and financial guidelines and policies. According to him, the gaps need to be closed by law to punish any officer, who circumvents the process.

He suggested that civil servants, who knowingly approve and or give consent to corrupt requests should be punished according to the law, whether the infraction was carried by them or through the instruction of a superior.

A financial analyst with the Socioeconomic Research and Development Centre, Victor Idajili, said the implementation of the bottom-up cash policy needs to be supported to assist in cutting down leakages. According to him, Nigerian financial laws are adequate to deal with issues of corruption, but the operators of the laws are the problem.

“Our problem lies with the political will to curb corruption. That is just what is needed as there are wonderful financial regulatory policies in place,” he stated.

A public affairs analyst, Elempe Dele, toed the same line of argument and declared that Nigeria’s financial laws and regulations are good enough to tackle the challenges of fraud, adding that violators smartly circumvent the laws and processes quite easily.

Monday Ikpe, a lawyer also aligned with others on the need to support the new bottom-up cash policy to reduce leakages. The lawyer held that any intended policy that is aimed at curing corruption is highly welcome as corruption is the bane of all the crises in Nigeria. According to him, it is unfortunate that the culture of corruption is eating deep into civil service.

As Nigeria navigates economic challenges and strives for fiscal stability, the Bottom-Up Cash policy stands as a beacon of hope, signalling a renewed commitment to transparency, accountability, and good governance in public finance management.