Wednesday, March 6, 2013

Does Nigeria now have implementable 2013 budget?

After about three months of accusations and counter-accusations between the federal executive and legislature on the 2013 budget, President Goodluck Jonathan on Tuesday, February 26, 2013 signed the appropriation bill into law. A logjam was created when after the President presented the N4.92trn budget to the National Assembly on October 10, 2012, the federal lawmakers decided to increase the oil benchmark from the proposed $75 per barrel to $79; refused to vote any money for the Securities and Exchange Commission; reduced the recurrent expenditure and increased the capital vote; inserted some constituency projects that were not included in the financial estimates by the executive and generally increased the overall budget by about N63bn. The Presidency took umbrage at this unhealthy development and decided to withhold assent to the appropriation bill. When the budget was passed on December 20, 2012, I was very excited and hopeful that for the very first time in many decades, there was a chance of our budget being implemented from the first day of the New Year. How wrong I was! The National Assembly did not even send the budget and its details to the President until January 14, 2013. And then the waiting game started in earnest.
The argument was canvassed that using any oil benchmark above the executive proposed $75 will make the budget difficult to implement. The Minister of Finance, Dr. Ngozi Okonjo-Iweala, was of the opinion that increasing the oil benchmark would affect Nigeria’s credit rating; make borrowing more expensive; lower the Foreign Direct Investment; and impact negatively on macroeconomic stability. Furthermore, the Governor of the Central Bank of Nigeria, Mallam Lamido Sanusi, opined that raising the benchmark would reduce the amount available for savings which is needful given the volatility of oil price in the international market. Non approval of the budget of the SEC is seen as an attempt to cripple the functions of the regulator of the Nigerian Stock Exchange.
It was a stratagem to arm-twist the President to respect the resolution of the House of Representatives which urged him to relieve the Director General of SEC, Ms. Arunma Oteh, of her position for alleged incompetence. In truth, if there is no vote for SEC, Nigeria’s capital market will be negatively impacted as the regulator will not be able to perform its oversight functions. Some people have accused the National Assembly of acting ultra vires saying that it has no right to starve a statutory body of funds. I think such a vindictive act amounts to an overkill as the legislature should not make a whole organisation to suffer for the alleged “sins” of one person. On the issue of constituency projects, the National Assembly has come out strongly to say that it is part of the democracy dividends for their constituents and is not an illegality. However, some analysts have said that some of these constituency projects are things within the purview of state and local governments.
As per the signing of the budget, that has in itself generated another round of controversies. Not only was the budget purportedly signed without press coverage (many commentators have argued that what was signed was not the budget but a memorandum of understanding on the budget), none of the key stakeholders and personages who witnessed the signing ceremony was willing to speak on the budget. They all declined comments on the epochal event which in previous times was done with fanfare with photos and video recording for public consumption. It is about a week now since the budget was purportedly signed and the Minister of Finance has yet to give a breakdown of the budget. Neither has the Presidency made known publicly the grey areas and objectionable portions of the budget.
The only official comment came from Dr. Reuben Abati, the Special Adviser to the President on Media. In a press release on February 26, he said inter alia that: “As part of the understanding reached with its leadership, the observations of the Executive arm of government about the Appropriation Bill as passed by the National Assembly will be further considered by the National Assembly through a legislative action, to ensure effective and smooth implementation of the 2013 Appropriation Act in all aspects.” Reading between the lines, one needs no soothsayer to know that it is not yet Uhuru on the budget impasse. In fact, unofficial sources said the President signed the budget for two reasons. The first is that he did not want to leave the budget unsigned till March. The second and the more important, he wanted to preempt the National Assembly from overriding his presidential veto. The National Assembly had been spoiling to mobilise two-thirds of its members to over-ride the presidential veto after 30 days.
This budget face-off leaves a sour taste in the mouth and it shows that the federal executive and legislative arms are working at cross purposes. Strangely, the two arms are controlled by the same political party. Just imagine if the two were to be controlled by different parties. The sing-song would have been that one of them wants to derail government and truncate democracy. The jaw-jaw that was being done post-passage of the budget ought to have been done before the financial plan’s presentation in October 2012. The two arms should have agreed on a workable crude oil benchmark, constituency projects, among other issues. As things stand, most of the gains that should have accrued to the country if the budget had taken effect from January 1 had been lost. Many importers have been left in a state of “animated suspension” due to this logjam. Remember, the original budget proposal submitted to the National Assembly contained stimulus packages for investors in the solid minerals, aviation, transport and agriculture sectors. None of the investors who had envisaged prompt implementation of these stimulus packages would be able to access them until now which is clear three months into the new year. Moreover, many contractors who had expected quick payments for work done or payment of mobilisation fee to site have been disillusioned. Generally speaking, the polemics that have trailed the 2013 budget is bad for our ailing economy; it is a good alibi for partial-implementation of the budget and should be avoided in future.
The recently initiated plan by the Senate to review the national planning and budgeting linkage with a view to recommending immediate improvement is a welcome development, if done in good faith. It will be recalled that on February 28, 2013, Senator Olubunmi Adetunmbi and 46 others sponsored a motion titled, “A call for review of the national planning and budgeting process.” Adetumbi observed that the traditional five-year development plans the country used to operate had been replaced by a medium-term expenditure framework. He sees this as an aberration and calls for the linking of multi-year development plans to the national budget in order to enhance economic growth.