Late passage and non-implementation of budgets, misappropriation of budget funds, among other fiscal irresponsibility issues, have been at the forefront of Nigeria?s socio-economic woes over time. But Dr Ngozi Okonjo-Iweala, Minister of Finance and co-ordinating minister for the economy, seems poised to correct all previous anomalies using the 2013 budget as a vehicle.???
By ?Sola AKINGBOYE
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Budgeting has been described as an integral component of constitutional democracy. Apart from promoting transparency and accountability in public fund management, budgeting is also a fiscal instrument for self-assessment. Post-budget review activities are used to gauge overall performance, and through such effort, improvements are made in subsequent exercises.
But such is not the case in Nigeria. Budgets in Nigeria have been described as mere annual rituals, their poor implementation is a huge indictment on both the executive and legislative arms of government both at the local, state, and federal levels. This backdrop has over the years sabotaged key public infrastructures such as transport, power, communication, among others, and the sad development has unfortunately led to a steady increase in the cost of doing business in the country. Even some schools of thought believe that Nigeria has painfully missed several opportunities of being a preferred country of destination for international investors.
Up till now, it is often said that Nigeria produces the best annual budget in the whole of sub-Saharan Africa. This assertion cannot be doubted given an intimidating array of top class financial experts in the Central Bank of Nigeria, CBN, and ministries in charge of Finance, Planning, and Budget and renowned analysts the country has produced. Sadly, no state or federal administration in the country has been able to achieve up to a mere 50 percent annual budget implementation level in previous years. Administration officials have always been quick to blame abysmal budget performance on dwindling revenue.
Budgets are also used by the electorates to measure campaign promises made by politicians. But owing to widespread political apathy and high illiteracy level in Nigeria, politicians are still able to deceive the citizenry about their achievements. It is, however, common to hear government officials boast of the number of projects they have executed. But interestingly, these officials have never attempted to reconcile their achievements with the overall budget proposals for the period under review. It is also necessary to note that complete budgeting protocol entails effective planning, monitoring, and implementation of recurrent and capital proposals.
Regrettably, budgeting culture in Nigeria mostly begins and ends with planning alone. The political class has not been able to appreciate the relationship between effective budget implementation and national development. Oversight functions carried out by the legislative arm of government in the past as it concerns budget monitoring have been nothing but mere window dressing. The level of official corruption in the country has in no small measure hindered the implementation of fiscal policies; it retards economic progress and development that had facilitated poverty for the majority of the population. In this sense, many analysts have estimated that at least 50 percent of federal, state and local government resources were frittered away through corruption. There is a high level of insensitivity and contemptuous disregard of fiscal and criminal laws involved in the unfettered looting of the treasury? a coup against the people perpetuated with the intent of denying the fundamental right to life of the majority and, if they survive the onslaught, to deny them of the right to live with human dignity.
A recent review of the Federal Budget 2012 capital allocations to states showed that many of the projects had no link with the needs and aspirations of the people. The projects, it said, were not identified by the people and, even if fully implemented, would not contribute to the improvement of the standard of living of the people.
In view of this, the Federal Ministry of Finance and the Budget Office of the Federation, under the leadership of the Minister of Finance and coordinating Minister for the economy, Dr Ngozi Okonjo-Iweala, recently engaged the general public, particularly the organised private sector and civil society organisations in order to secure their input for the preparation of the 2013 federal budget. Tagged ?Budget 2013 Consultative Forum?, the event was held in Lagos and Abuja on July 9 and 10, 2012, respectively. It was sequel to President Goodluck Jonathan?s bid to meet the September 30, 2012 deadline for the presentation of next year?s budget to the National Assembly.
The government said it is taking the measure to end the era of spreading its resources without meaningful impact. Speaking at the Lagos event, Dr Okonjo-Iweala said a committee is working towards the identification of areas of cross-cutting functions among MDAs? mandate so as to appropriately rationalise them in order to eliminate areas of wastages and duplication. Her words: ?In the budget, we want to have a look at those areas that the president will make a mark in developing the economy. We started this last year by channelling the resources into power, education, health, agriculture and others. We are going to continue this in the medium term. In doing this, we also have to look at the ministries, departments and agencies where there are overlaps. Before we do this, we have to meet the National Assembly to review the law because the agencies are backed by law. So, we want to look at them carefully and determine their relevance to the economy.?
Continuing, she said: ?Also, we have to look at the budget and pick out those expenditures that are not essential. For instance, last year, we saw some administrative overheads which were irrelevant. Some MDAs bought computers, furniture, etc, each year that are irrelevant. Things that you don?t have to repeat, they keep coming. In order to curb irrelevant expenditures in these MDAs, we want to see if we can computerise the expenditure pattern in the MDAs to actually cut irrelevant cost. In 2013, we shall sustain our consolidation effort on the need for prudence in the management of public finance, look at the need to reduce the debt stock by paying off some outstanding debt among others.?
Earlier, while playing host to the House of Representatives Committee on Finance recently, Okonjo-Iweala had disclosed that efforts would be made to increase the ratio of capital votes to recurrent expenditure. She revealed that the government had introduced zero capital budgeting into next year?s national economic blueprint, adding that cost-saving measures being adopted by the Federal Government may lead to the exclusion of some ministries, departments and agencies (MDAs) from allocations to capital projects in the 2013 budget. The idea, which the minister described as ?trade-offs?, is to enable the government deploy financial resources to ?a few priority sectors and completion of ongoing projects.?
Still sceptical about MDAs and the age-long misappropriation of funds accrued to them in the past years, the minister disclosed that most of the agencies to be affected in the zero capital budget regimes are among those to be rationalised as recommended by the Stephen Oronsaye committee, which she said is receiving government?s attention.
On the fate of the workforce to be affected by the said report, the Finance minister added that workers of the affected MDAs, which functions overlap, are to be merged as part of the government?s fiscal consolidation plan. ?In this budget (2013), we want to direct our resources where we can make impact. We are going to embark on trade-off which is an internationally recognised strategy but which is not practiced here. Now, accountability, transparency and probity will be our watchword because we have been spreading our resources without reasonable impact,? she said.
On his part, Dr. Bright Okogu, DG of the Budget Office, said at the Lagos forum that the consultative session was part of the work needed to ensure compliance with President Goodluck Jonathan?s directive that the 2013 budget should be ready for submission to the National Assembly by September 2012. Okogu added that his office was open to views, opinions and relevant contributions from all stakeholders that would enhance the quality of the budget. He also said that the forum was in line with the provision of the Fiscal Responsibility Act 2007, which stipulates the need for wide consultations in the preparation of the budget.
Corroborating Okonjo-Iweala position on MDAs, the DG noted that a multiplicity of overlapping functions had been observed in the MDAs, thereby necessitating the need to enhance prudent management of public resources and minimise leakages and their sources. ?As such, MDAs do not need to have capital budget. So we are going to remove capital budget for many of the MDAs. In 2013, we are going to focus on on-going projects. So, if MDAs will bring budget, it must be only on three conditions. Firstly, it must be an ongoing one; secondly, it must have reached certain level of completion; and thirdly, it can bring about some economic reforms that will make it important,? he said.
Equally, at the Abuja portion of the event, Okogu made it known that the Federal Government would not approve any new project proposals submitted by its MDAs for the 2013 fiscal year. He reiterated that some MDAs with huge debts might not receive capital votes in 2013 as their allocations would be used to pay off their debts. He was quick to add that paucity of funds had made it imperative for the decision on new projects to be taken. He therefore added that there was the need for the MDAs to prioritise few of their ongoing projects based on their internal rate of return and level of completion. He also drew attention to the fact that about 630 MDA projects requiring N7 trillion were currently ongoing.
The DG, while highlighting some of the uncompleted projects by some of the MDAs, said the 2013 spending plan would be devoted to completing the abandoned 6,294 projects in the following areas: Education 1,374, representing 22 percent; Health 968 (15 percent); Water 659 (11 percent); Works 400 (six percent); Power 532, representing eight percent; and others 2,361 (38 percent). He said government could not complete the projects due to shortfalls in releases, despite high oil revenue, and inadequate capacity in MDAs to implement budgets. He added that new philosophy would be presented to the National Assembly by September this year to ensure early passage and implementation of the budget from January 1, 2013. ?The parameters being proposed for the 2013 budget are $70 per barrel of crude; 2.55 million bpd of crude production; exchange rate of N155 to $1; and a fiscal deficit of N952.90 billion representing 2.04 percent from the current 2.7 percent of Gross Domestic Product (GDP)?, he stated.
Okogu also hinted that priority sectors, including security, power, works, agriculture, Niger Delta, aviation, health, education, transport and job creation would receive 80 percent of the country?s capital vote in 2013. He, however, said the Federal Government was currently negotiating with the National Assembly to reduce allocations for members? constituency projects. He reiterated that recurrent expenditure, which was trending down from 74.4 percent in 2011 to 71.5 percent in 2012, would further be reduced in 2013. This, he said, would be achieved through a combination of measures such as rationalisation of agencies, recovery of excessive claims on subsidy and cautious benchmark of oil prices.
Among several stakeholders at the Abuja forum was The Citizens Wealth Platform, a non-governmental organisation. Speaking through its co-ordinator, Eze Onyekpere, a budget analyst, the NGO called on the Federal Government to concentrate on completing abandoned projects by placing a moratorium on new ones in the 2013 budget. He said even with the little resources available for capital expenditure, the budget is suffused with thousands of projects which available resources cannot pay for in the medium term. ?This has led to so many abandoned projects; and projects under the Ministry of Works illustrate this anomalous situation. A presidential committee has identified that over N100 trillion will be needed to complete these projects,? Onyechere said.
He therefore advised government to focus on completing projects that contributed most to government?s policies on poverty reduction, economic growth and improving industrial capacity utilisation.
On poor capital budget implementation, the NGO said government should consider administrative and penal sanctions against accounting officers who sit on their capital votes for no justifiable reason. He suggested that the Budget Office should conduct quarterly budget performance review sessions for MDAs, which should involve detailed review of actual performance, and if there are major deviations, MDAs should be compelled to submit a remediation plan.
The civil society leader also urged government to invest in new refineries in 2013, even if it means privatising them shortly after they have started full production.
In his remarks, Garba Gusau, president of the Nigerian Association of Small and Medium Enterprises, NASME, complained that the 2012 budget was not SME-friendly, regretting that in spite of the growth in the SME sector in Nigeria, there remains a remarkable difference in the gains of the sector by states and Federal Government, even though policy statement and pronouncement say otherwise.
On the association?s expectation for the 2013 budget, Gusau urged government to address the poor infrastructure in the country and provide access to sustainable credits for SMEs.
Ilyas Saleh, chairman, North-West branch of the Manufacturers Association of Nigeria, MAN, urged the government to do more to curtail smuggling so as to ensure proper revenue accruals to the federation. He lauded the Federal Government?s initiative of providing funds for the rebuilding of the textile industry. He, however, called for a review of tariffs on imported textiles to enable the local industry to grow.
Earlier in Lagos, the Managing Director of Nestle Food Plc wanted the Federal Government to create a good business environment for businesses to thrive in the country. He lamented the high tariff on importation of basic raw materials and inadequate power generation, which he said affected investors in no small measure. He therefore urged the government to take a proactive measure in considering power sector as vital project to be tackled in the 2013 appropriation.
Corroborating this stance, the representative of Promasidor Ltd in his submission expressed dissatisfaction with the voracious method the FG was squeezing taxes from manufacturers through product sales promotions, pleading that the government should streamline its agencies to avert this trend.
Responding, Dr Okonjo-Iweala had assured the forum in Lagos that the 2013 budget would be sent to the Senate by September, adding that the budget would champion a new approach to rapid economic development based largely on revenue generated from taxes paid by businesses operating profitably in the country.
On the country?s debt portfolio and the 2013 budget, the Finance minister expressed her concern over the escalating domestic debt portfolio of the FG. She declared that the 2013 budget will be used to pay off the country?s debts, adding that the nation?s domestic debt profile currently looms at an imposing N5.9 trillion.
?We need to slow down the rate of borrowing domestically, it is worrisome. The interest rate at which the Federal Government is raising debt at the moment is high; we are raising debt at 15 percent, which is on the high side. Since I came on board, we have been trying to decelerate the rate at which the domestic debt is accumulating. In the 2011 budget, we borrowed N852bn, we reduced it to N744bn in the 2012 budget, and we are going to take it further down in the 2013 budget. What we are aiming for is to bring it down to a level of about N500bn in the medium term, which we think is a reasonable level. We are proposing in this budget a sinking fund where we can put few of our money in the form of bonds. Efforts are being made to make sure that the sinking fund is effectively managed, considering the nation?s domestic debt profile,? she stated.
The minister was clear in her statement that the debt-to-GDP ratio was still very manageable at less than 30 percent and that the external debt portfolio was not a source of concern. She said both domestic and external debts are still below 30 percent, adding that the set target is 30 percent to 35 percent, while the standard limit for our peer is 40 percent.
Going by this proactive initiative on the 2013 appropriation by the co-ordinating minister, and if such enormous preambles that surround the well-attended forum on how to get things done better in the coming year is anything to go by, then the President Jonathan administration, with the former World Bank Managing Director at the top management of the economy, may be on the path of making history. Effective budget implementation is the most critical step towards good governance, and President Jonathan, and indeed the state governors, must enforce compliance to budgetary procedures. Reducing the level of fiscal indiscipline in public expenditure pattern should also be a roadmap to fixing the myriad problems confronting the nation?s economy.
With a population of about 167 million, effective budget monitoring and implementation remains one sure route to Nigeria?s economic and socio-infrastructural rejuvenation. The time has come for the nation?s political leaders to realize that apart from economic stagnation and the resultant collapse of public infrastructure, continuous failure by government to achieve budget targets may lead to serious civil actions, which are capable of threatening the fragile democratic culture in the country. Most Nigerians are united in the view that the promises made by governments while presenting budgets in the past were never fulfilled, which continues to deny Nigerians the opportunity of reaping the benefit that underlines the promises in them.
Furthermore, it is believed that budget implementation would also help drive Nigeria up the ladder of developing nations. No doubt, if the federal and state governments strive to achieve a moderate 60 percent budget implementation benchmark, the fortunes of the nation will change for the better. Needless to stress, popular strategies and processes for achieving fiscal results, budget implementation and public procurement best practices should be the watchword in winning the confidence of Nigerians once again.
Source: http://www.nigerianorientnews.com/?p=1540
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