Tackle Padding in Government Budget

The ugly trend of budget padding in the federal government’s yearly appropriation continues unabated, despite detections and reports of insertion of excess budgetary allocations and duplications of projects by ministries, departments and agencies as well as the legislature. This prevalent anomaly would be history if the government of the day musters the courage and the political will to establish a system to check and stop the malaise, writes Kunle Aderinokun

A budget is simply an estimation of revenue and expenses for a certain period and budgeting involves planning, forecasting, implementing, monitoring and control. Following these stages is the performance evaluation of the budget. What is ordinarily a simple task has, in Nigeria, become a controversial issue and perennially a conduit for unscrupulous civil servants and persons in authority to massively enrich themselves at the expense of the taxpayers. The sad story is that the same scenario has been playing out, year in, year out.

The constant nature of the budget padding is gradually making it a norm in the federal government’s appropriation and seriously becoming worrisome. Only the discerning usually detect such a shameful anomaly called budget padding. While there are appointed oversight authorities with clear mandates to examine proposed budgetary allocations right from the ministries, departments and agencies (MDAs) to the Ministry of Finance, Budget and National Planning and the National Assembly, in the spirit of checks and balances, Nigerians are still surprised and befuddled that it has been business as usual over the years. Are the supervising authorities in active connivance with the perpetrators? The jury is still out there to decide.

Just recently, the Independent Corrupt Practices and Other Related Offences Commission (ICPC) revealed that a total of N400 billion was inserted into the federal government’s budgets for the 2021 and 2022 fiscal years. According to ICPC,  the 2021 budget totalling N13.59 trillion was padded by civil servants in the various MDAs, with duplicated projects worth N300 billion and projects’ duplication worth N100 billion were also smuggled into the N17.12 trillion 2022 budget by some MDAs.

Making this disclosure during a meeting with the Senate Committee on Finance,  ICPC Chairman, Prof. Bolaji Owasanoye, noted there were duplicated projects totalling N300 billion in the 2021 budget and another set of duplicated projects at N100 billion in the 2022 budget. These, he said, were tracked through scrutiny of the approved projects for the various MDAs.

“N300 billion would have been wasted by the federal government on duplicated projects inserted into the 2021 budget and another N100 billion for the same purpose in the current fiscal year if not tracked and intercepted by the ICPC.

“The same preemptive move saved the country from spending N49.9 billion for salaries of ghost workers put on fictitious payrolls by some fraudulent officers in the various MDAs between January and June this year.

“The names of the MDAs involved in project duplications running into intercepted billions of naira and fictitious pay rolls are available and will be forwarded to the (Senate Finance) Committee.
“The good thing about the preemptive moves made by us is that monies for the fraudulent acts were prevented from being released to the affected MDAs and it is gratifying that the Finance Ministry and Accountant General Office cooperated with us,” he said.

Owasanoye advised relevant committees of the National Assembly to be vigilant for such project duplication in the proposed N19.76 trillion 2023 budget.

“From our end, the detection of such projects is done by verifying their locations and names, upon which we tell the appropriate authorities not to release wrongly budgeted monies for them,” he added.

This is not the first time budget padding would be detected in the federal government’s budget and reported. So that is not strange. What is strange is that nobody has been punished to serve as a deterrent to others. Even if the government claims the perpetrators have been punished, such has never been reported.  

The Ministry of Budget and National Planning, which is the supervisory ministry, has not made any statement since the latest discovery was reported by ICPC.

Speaking with THISDAY, an economist and President, of the Association of Capital Market Academics of Nigeria, Prof. Uche Uwaleke, commended the ICPC for “officially confirming a practice that has gone on for quite some time”, saying, it’s most likely a lot more budgetary abuses would have been discovered, had the agency beamed its searchlight to cover periods before 2021.

The reality, according to him, is that there are still so many loopholes in the budgetary system of the federal government despite efforts at plugging them.

“A bold attempt to address the issue of padding and other forms of sharp practices in the budgetary system was made at the inception of this administration with the introduction of the zero-based budgeting (ZBB) system, which requires that any item to be included in the budget must first be justified as opposed to the traditional system of merely carrying forward items from previous year’s budget. What has become obvious from the recent revelation by ICPC is that the ZBB system only exists on paper.

“As a corollary, the IPPIS was introduced, in part, to curb the problem of ghost workers. Again, what has become manifest, even by the government’s (Minister of Digital Technology) own admission, is that the integrity of the IPPIS is regularly being compromised,” he noted.

“It goes without saying that budget transparency in Nigeria is greatly hampered by the fact that the National Assembly often does not have sufficient time to interrogate the Appropriation Bill in detail. Over the years, many MDAs have been accused of withholding information vital to debating items inserted in a proposed budget,” he added.
Nevertheless, Uwaleke, a former Imo State Commissioner for Finance, posited:  “I think the way forward is to enact a Budget Law that not only addresses, via clear guidelines, the various stages of the budgetary process, (from preparation, consideration and approval to execution and monitoring) but also spells out stiff sanctions for any breach of the Budget law.”

“As part of this proactive process, the National Assembly Budget and Research Office (NABRO) should be adequately resourced and strengthened to be in a position to detect any budget padding before the Appropriation Bill gets passed.”

Fiscal Policy Partner and Africa Tax Leader, PwC Nigeria, Mr. Taiwo Oyedele, thinks that “Corruption thrives where there are enabling conditions and easy opportunities with inadequate preventive measures, weak or slow system of detection and low risk of punitive consequences.”

To him, budget padding could be prevented with improved transparency, robust checks and balances and the use of technology, not only in the budgeting process but also in the awards of contracts, projects execution, monitoring and reporting.

Reasoning from another perspective,  the CEO of The CFG Advisory, Mr. Tilewa Adebajo, stated that “This is rather unfortunate at a time when the FGN debt profile has exceeded US$100 billion and we have over US$25 trillion in illegal ways and means financing with the CBN unaccounted for in the official debt numbers.”

He advised that since Nigeria’s revenues could no longer cover debt service payments, not to mention recurrent and capital expenditure, “it’s time for urgent structural reforms and right-sizing government.”

As for the CEO of Global Analytics Derivatives Ltd, Mr. Tope Fasua, the National Assembly and the ministry of finance have always been accused of padding the budget. Lamenting that Nigeria had lost the corruption under President Muhammadu Buhari, he expressed the hope that the next administration would have an intelligent system to block budget padding.

“We know the National Assembly is usually accused of padding their budget because they want their interest to show. Oftentimes, they almost discard the budget presented to them by different MDAs and write their own, which becomes the final one with a lot of their projects- constituent projects and others- inserted into them. They said they have the final authority because constitutionally, they are so mandated. That’s one.

“It’s not what I think we should keep discussing ad infinitum, We should be thinking of a solution; if anybody after this administration can make a change to this reality. From what we heard from many of them, there is a radical solution to this kind of shenanigan or financial indiscipline going on in the economy. I hope whoever is coming should not be talking about business as usual,” Fasua noted.
In his assertion, Group Executive Director, Cordros Capital Limited, Mr. Femi Ademola, CFA, said the recurring budget padding was worrisome and must be investigated further, especially given its MDAs-wide nature.  

“On the surface, the discovery by ICPC, of duplicated projects worth N400 billion in the Nigerian 2021 and 2022 budgets is worrisome; especially since this is becoming a recurring development. It is therefore very necessary to investigate further to identify the immediate and remote causes of the development. The fact that it cuts across MDAs is even more concerning.

“We need to check if the reason for this is that several MDAs are involved in the execution of the project and they all made budgetary allocations for the same projects. We also need to check how these paddings escaped the scrutiny of the budget office that compiled the budgets of all the MDAs,” he noted.

The recurrent budget padding, especially at a time the economy is in dire straits, is an absurdity that should be arrested. The task before the next government is to put a system in place to forestall any semblance of corruption in the nation’s budget preparation and implementation.

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