Bukky Olajide, Wednesday, July 28, 2010

Yes, life goes on as usual whether 2009 budget or any budget at all is implemented or not. After all, we are used to unpassable roads, ever-noisy generator sets, water boreholes and other unconventional means of living. But, wait a minute. Are we going to continue this way? Will things go on unchallenged? Where are the members of the civil society? Have they become so toothless that they cannot even speak? Why should we get used to government budgeting huge sums of money every year and the budgetary performance is nothing to write home about? Now, the Centre for Social Justice (CSJ), a non-governmental organisation, is saying an emphatic NO to a continuous non-implementation of budgets. The CSJ has kick-started capacity building and training, publication of a monitoring manual, half-yearly reports as well as newsletters and Fiscal Responsibility Act Fora. As such, CSJ, led by a legal practitioner, Eze Onyekpere, the push and kick to engage the state is acquiring a new momentum.


In this article Bukky Olajide examines aspects of 2009 budget that were not implemented and see if there is any hope for the 2010 budget.


Like every other budget, the 2009 budget was presented late to the National Assembly, which culminated in its late passage also by the National Assembly.


The CSJ has observed that the late start of budget implementation in previous years, ultimately manifested as returned moneys to the treasury at a time the economic life of the country desperately needed massive infusion of resources.


According to the CSJ, budgets are meant inter alia to provide funds for Ministries, Departments and Agencies (MDAs) to carry out capital projects, facilitate the running of their affairs and through these, government policies are transformed into action for the benefit of Nigerians, it is against the principles of social justice and development for funds, approved for projects to be lying idle without any substantial reasons, in the face of infrastructural decay and grave social needs.


The CSJ said that it is even disheartening to know that the biggest culprits include the ministries –Education, Health, Power and Works – key ministers that have the greatest impact on human and social indicators, the standard of living and upgrading of infrastructure for economic growth.


“All the performance indicators in these ministries would qualify them for a declaration of a state of emergency in the sectors, indicating that available and budgeted resources have not been deployed for the realisation of the economic and social rights of Nigerians,” said the group.
 

In 2009, one of the reasons given by the government for partial implementation of budget. For example, that revenue from both oil and non-oil sources were below projections for the first half of 2009.


The aggregate revenue available for distribution to the three tiers of government fall short of the projected estimate of N1.8 trillion by N461.33 billion (or 27.75 per cent). At the Federal Government budget level, oil revenue under-performed by N94.7 billion (or 19.55 per cent) relative to the projected level of N484.54 billion.


Likewise, non-oil revenue under-performed by N205.23 billion relative to the projected level of N441.38 billion while the total revenue available for the implementation of the Federal Government budget (including the budgeted unspent balance of N150 billion for the first half of 2009 from the 2008 financial year), consequently fell short of its budgeted estimate of N1.2 trillion by N363.43 (or 32.09 per cent).


Also, in the first quarter of 2009, the benchmark production target of 2.292 mbpd was below the expected revenue.


For the third quarter of 2009, the total revenue accruable for distribution among the tiers of government was projected at N2.7 trillion. But the total revenue available for distribution was N2.1 trillion.


Because of the under-performance of both oil and non-oil revenue, the Federal Government augmented revenue with funding from the unspent balances from the 2008 fiscal year, drawings from the Excess Crude Account, domestic borrowing and concessional loan facilities.


But the CSJ felt that decreased revenue inflows to the Federal Government cannot be used as an excuse for poor budget implementation considering that since the beginning of the second quarter, the price of crude oil has been far above the reference commodity price.


The CSJ quoted the report of the Joint Finance and Appropriation Committee of the House of Representatives, which states that the actual expendable revenue accruing to the Federal Government was N27.98 billion higher than the budgeted figures during the first four months of the year.


“However, all tiers of government got more allocations than what they budgeted for 2009. Thus, shortfalls in realised revenue cannot be an excuse for low capital budget implementation at the federal level,” said the group.


Talking about misappropriation of funds, specifically in the 2009 budget, the group quoted section 27 of the Fiscal Responsibility Act, which states that the sums appropriated for a specific purpose shall be used solely for the purpose specified in the Appropriation Act.


Saying that contrary to this provision, there were indications that the sums appropriated for lawful purposes were misappropriated and mismanaged, they mentioned that as, the N5.2 billion Rural Electrification Agency scandal, Nigeria Electricity Regulatory Commission scam and the resurging Haliburton contract scandal.


Others are the resurging Siemens contract scandal, the N325 billion Liquefied Natural Gas Funds, the N380 billion import waiver scam by Obasanjo administration and the N258 billion reported by the EFCC to have been stolen by political office holders in 10 years of civil rule out of which EFCC has recovered about N50 billion.
 

“What baffles most Nigerians is the impunity with which the perpetrators of these scandals operate and are neither properly prosecuted nor punished,” said Onyekpere, the CSJ lead director.


The group also condemned the N160 million spent by the House of Representatives for the celebration of 10 years of democracy.


“This celebration eventually resulted into a scandal about the management of the finances. Pray, under what budget heading did the legislature approve of such outrageous expense during budget consideration and approvals,” said Onyekpere.
 

He said further, “this brings to the fore the need to define in clear and specific terms the nature of expenditure heads rather than lumping them all together as ‘miscellaneous’ and ‘other miscellaneous’ expenses whose declassification is only known to the beneficiaries of the appropriation.”
 

In plugging leakage in the system, the Federal Government, during the reporting period, acknowledged the existence of leakage in the revenue system and asked for a process audit of the operating surplus of agencies that were required to remit 80 per cent of their surplus to the treasury under section 22 of the Fiscal Responsibility Act.


The audit also included the review of concessions and leases by MDAs, especially in the airports, maritime, railways and other sectors to track utilisation fees received thereon as well as the economic adequacy of the base rate.


The audit was also to review the remittances of NNPC and other revenue generating agencies to the treasury.


However, the CSJ opined that the impact of the action(s) if any, taken as a result of the audit is yet to be felt in the economy citing section 9 of the 2009 Appropriation Act, which mandates all accounting officers of MDAs to furnish the National Assembly on a quarterly basis with detailed information of their internally generated revenue.


The group also decried non availability of yearly budgetary and fiscal reports contrary to section 49 of the FRA, where the Federal Government is to publish its audited accounts not later than six months after the end of the financial year.


According to the group, the Federal Government is to publish a consolidated budget execution report showing execution against physical and financial targets.


Also, in the 2009 budget, the sum of $30 million was approved as loan for Sao Tome and Principe.


The group’s comment, “it is a glaring that the country is in a situation of infrastructural decay and economic hardship where some Nigerians can hardly afford a meal in a day.


“For the Presidency to cough out such enormous amount of money as loan for another country without winding the level of hardship and unemployment in the country negates the principles of fiscal responsibility.


“This approval raises more questions than answers: what are the strategic interests that Nigeria needs to protect in that country? How will the loan translate into enhanced economic benefits to Nigerians,” said the group.


The group also measured federal public spending and situation assessment in two sectors; namely health and education to assess improvements since the advent of Fiscal Responsibility Act and found out that it revealed retrogression.


“Fiscal prudence is expected to free up resources for investment in these critical sectors,” they said.


Concerning the 2010 budget, CSJ stated that the 2010 to 2010 Middle Term Expenditure Framework (MTEF) projected a sectoral contribution of agriculture to real GDP of about 37.9 per cent in 2010 and also proposes 8.3 of the total capital budget to agriculture and water resources since it appears to be a major source for the diversification of the economy away from oil and gas.


“Surprisingly, the total federal budget allocation to the sector is only 4.40 per cent (representing 1.9 per cent decrease from the 2009 estimates).

“Also, the capital budget allocation decreased from 13.6 per cent of the capital budget to 8.5 per cent. It would be important as a minimum to raise the budget to at least the 2009 level of 6.30 per cent of the total budget.”


Furthermore, among others, while appreciating the allocation of about 1.167 billion to the National Health Insurance Scheme (NHIS), the group observed that the impact of the activities of the NHIS is yet to be felt by the majority of the populace funding from its personnel cost (50 per cent) of the budget and its ongoing capital projects such as the outsourcing of actually N25 million and production of beneficiary identity cards (N150 million).


The group also observed that the power sector has benefited from generous budgetary allocations since 1999 and the 2010 budget proposal allocates over 11.2 per cent of the total capital estimates to the sector.


Its words, “however, increased allocation has not resulted in enhanced service delivery and value for money by the Power Holding Company of Nigeria (PHCN).


“Further, sector analysis of the effect of power failure on the different sectors in the 2010 appropriation suggest that about 2.2 billion would leak out of the total expenditure of the various MDAs to cushion this effect.


“When the budget estimates of some sectors like the ministries of Mines and Steel, Aviation, Special Duties, National Salaries, Income and Wage Commission are put together, the total amount to be expended on the purchase of plants, generators, maintenance and fuelling in the 2010 appropriation is greater than it,” said CSJ.


The group noted that it appears that the major challenge bedevilling the realisation of the economic and social objectives of the constitution and the Millennium Development Goals is the absence of an entitlement mechanism that defines the rights and duties of the relevant stakeholders – the government as a primary duty holder and the benefiting citizens.


According to the group, further monitoring of service delivery in terms of the actual services delivered to the people has been replaced by the sheer volume of contracts awarded, new structures built and general, expenditure patterns that fail to measure value for money.


Its words, “also, alleviating poverty, providing for basic existential rights and wealth creation cannot proceed properly in an economy where industrial and trade policy are de-linked from poverty reduction.


“Importing and distributing tricycles (keke NAPEP) and Insecticide Treated Nets can never be a sustainable option to poverty reduction. It enriches the nations that produce these items while impoverishing the country.


Source: Guardian