Wednesday, December 16, 2009

Budgeting as hollow ritual in Nigeria

After the November 19 impasse between the Senate and the House of Representatives over the venue for the presentation of the Nigeria’s 2010 budget, Special Adviser to the President on National Assembly Matters, Senator Mohammed Abba -Aji presented the appropriation bill to the two chambers of the National Assembly on Tuesday, 24 November 2009.

The N4.079 trillion budget is the highest in the history of Nigeria; the first that was not read and laid personally by the president and also the first to be presented without fanfare but in accordance with constitutional procedure. The financial statement was also presented same day as the Senate approved additional supplementary budget of N353.6 billion as part of total expenditure for the 2009 fiscal year. This is apart from the initial N3. 049 trillion that was approved by the National Assembly last April for the 2009 fiscal year.

In spite of these huge budget proposals, there has been perennial challenge of implementation.In analysing the 2009 budget, President Yar’Adua admitted that there were problems with the budget performance. He put the blame on four things: Global economic crisis, fall in oil price, the Niger Delta crisis and the low capacity utilisation of budget releases by the Ministries, Departments and Agencies (MDAs). According to him, “implementation of the 2009 Budget has been challenging with revenue from both oil and non-oil sources falling well below projections.

On a positive note, oil prices recovered during the course of the year from a low of US$37/barrel recorded in December 2008 to the present level of about US$79/barrel. However, oil production in our country suffered numerous disruptions during the first half of 2009. Non-oil revenue receipts were affected by the global economic downturn which impacted on the domestic business environment. Consequently, both oil and non-oil revenues were about 17% and 21%, respectively, below budgeted levels as at the end of the third quarter. On the expenditure side, while budgetary allocations have been promptly released to the MDAs, actual utilisation has been below expectation.”

While the president was very diplomatic in his assessment of the 2009 budget, members of the National Assembly were not impressed with successive national budget performance in Nigeria. As published in The Guardian of Thursday, November 26, 2009, Senator Smart Adeyemi (PDP, Kogi State) declared that the Senate should not be debating the 2010 budget when the 2009 budget it passed a year ago had not been implemented up to 30 per cent. Hon. John Halims Agoda representing Ethiope Federal Constituency in Delta State regretted that since 1999, no budget had been implemented faithfully. He was quoted as saying: "While the budget is working in other countries, why is ours not working? Do we need to go abroad for budget course? We have over the years sat and done good budget but at the end, we target 30, 40 per cent performance. Do we need performance index? We need to do something. I have gone through this ritual since 1999 and it is sad."

In my own opinion the problem with the budget implementation in Nigeria can be traced to the following factors: Nigeria’s monoculture economy; deficit budgeting; delayed passage of the budget by the legislature; ineffective oversight by the National Assembly; late budget releases by the relevant authorities such as the Federal Ministry of Finance, Office of Accountant General of the Federation as well as the Central Bank of Nigeria and corruption. Nigeria mostly depends on crude oil for its budget. Other non-oil sectors such as solid minerals, agriculture and manufacturing are underdeveloped. This is unhealthy for the economy. Concomitant to this is the perennial budget deficit the country runs in which the projected revenue is lower than the proposed expenditure. Nigeria ought to strive at having balanced or surplus budget.

On late passage of budget, while the Senate passed the 2009 appropriation bill in December 2008, the House of Representatives did not pass same until April 2009 or thereabout. This hampers economic planning and budget implementation. Oversight is among the constitutional roles of the legislature. In the performance of this function, the parliament can visit any MDAs and project sites and conduct probes on any issues affecting the country. In the course of time, it seems Nigerian legislature pays more attention to this oversight than their primary role of law making. However, in spite of plethora of inquiries into different MDAs, the report of the probes have neither been debated at plenary nor made available to the public. This fuels speculations that the motive behind such flurry of probes is self serving and not in the national interest. Is it not shocking that the report of the power sector inquiry where startling revelations were made never got debated at the plenary? In a recent television interview, I was amazed when the House of Reps Speaker claimed that the recommendations in the report have been communicated to the relevant agencies.

The bureaucratic process of securing budget releases is also stifling. Not fewer than three hurdles are crossed before approvals can be cash-backed. This has led to situations where contractors abandon sites after waiting endlessly for the next tranche of payments for contracts. Undoubtedly, the greatest challenge to budget implementation is corruption. It is baffling that even with the introduction of electronic payment; a lot of monies cannot still be accounted for.

A newstory in NEXT newspaper of 27 November, alleged that 70% of money advanced to MDAs has not been retired. It would be recalled that many civil servants and some lawmakers are currently in courts for frauds while Nigeria currently occupies 130th position on Transparency International Corruption Perception Index. All the aforesaid goes to show that low budget performance lies with both the operators and the regulators. Expectedly, all the malaise afflicting budget implementation at the national level also manifest at state and local government levels without much attention being paid. This unsatisfactory trend must be halted.