When Budget Becomes Racket
By Olusegun Adeniyi
Given how a serious national economic planning instrument has been cynically subverted over the years, there cannot be a more apt summation of the futility of budgets in Nigeria than a 2019 Twitter thread by ‘Laolu Samuel-Biyi. I have twice referenced his conclusion on this page: “If you want to keep hope alive in Nigeria, don’t look at the budget”. Difficult to fault him. When a national budget is reduced to sharing money between and among powerful interests, as in Nigeria, how can a society develop?
Last Friday, President Muhammadu Buhari presented the 2023 Appropriation bill to the National Assembly. It is his last and final one in office. The estimated expenditure for the 2023 fiscal year is N19.7 trillion with a proposed deficit of N10.78 trillion, representing 4.78 per cent of the estimated Gross Domestic Product (GDP). This is above the 3 percent per cent threshold set by the Fiscal Responsibility Act 2007. While I leave experts to continue their dissection of the 2023 budget which, in any case, will be reviewed when a new President takes over on 29th May next year, it may be important to look back before we leap forward. That way, we will understand that we don’t do budget in Nigeria. We simply share money.
For the current 2022 fiscal year, the sum of N17.3 trillion was appropriated by the National Assembly. N817.6 billion was for statutory transfers, N3.978 trillion for debt servicing, N7.108 trillion for recurrent expenditure and N5.415 trillion for capital development. Let’s start with a few projections that tell compelling stories about our priorities as a country. The Nigeria Customs Service (NSC) is expected to bring in N1.032 trillion from import duty and N98.529 billion from excise duty. Since excise duty is paid for locally manufactured goods, it is obvious that the federal government does not intend to encourage local manufacturing which is key to economic growth, job creation and the economic well-being of citizens. So, we have already made a statement of intent. Priority is given to the importation of products, which then explains why we have turned the Customs Service into a revenue generating agency rather than a development instrument to counter importation of products harmful to local industry or national security. We will come back to this another day.
Three weeks ago, the Senate Committee on Finance pledged that about 400 out of 541 Federal Government owned Ministries, Departments and Agencies (MDAs) identified by the Stephen Oronsaye-led Presidential Committee on Rationalisation of Agencies will be scrapped. According to committee chairman, Solomon Olamilekan, revenue generation is the most critical factor being considered by the federal government to decide which MDAs to retain or scrap. While we have heard this tale many times before, what Olamilekan failed to disclose is that dozens (may be hundreds) of new agencies and federal institutions have been added to that list by the current administration in recent years.
When some of us call for restructuring the country, it is essentially because of this misallocation of resources that has resulted in egregious behaviour in Abuja. For instance, according to the 2012 Oronsaye report, there are 106 public-funded core research and quasi-research centres spread across the country, including a full-fledged institute for the study of Trypanosomiasis. But only about 10 percent of their funds is expended on core research work with the rest going to staff salaries and procurements. According to the Oronsaye report (which identified 50 agencies without any enabling laws and 55 others not under the supervision of any ministry), a common feature is the prevalence of high personnel cost as “many of them receive more budgetary allocations for personnel than they require because that component of their budget is usually inflated”. Several of them are also “obvious duplications of existing bodies” which then underscores the fact of “overlaps and enormous wastage of scarce resources”. Four of these agencies are beyond scandalous: National Agency for Population Programmes and Development; Population Activities Fund; Population Fund Activities Agency and Population Research Fund!
Yet, as I stated earlier, many more of such agencies continue to be created. In the 2022 budget, for instance, the federal government featured a line item for the office of Retired National Assembly Clerks and Permanent Secretaries where over N581 million was allocated contrary to the Pension Reform Act 2004 (as amended in 2014). Ordinarily, these are/were career civil servants who for 30 to 35 years have been contributing to their pension account. Suddenly, they exit the scheme and begin to enjoy full life benefit at public expense. Not only is this absurd but it is also against the spirit of the pension reform. But who can blame them in a country where a governor who had served five months was deemed to have occupied office illegally by the Supreme Court but awarded an annual pension of a hundred million Naira?
With the current clamour to be exempted from the Contributory Pension Scheme (CPS) by the police and other public institutions that want to eat their cake and still have it, President Buhari may have unwittingly lent his name to the gradual destruction of one of the few successful public service reforms ever undertaken in Nigeria. Meanwhile, in the service wide provision of N1.93 trillion in the 2022 budget, monitoring of Integrated Payroll and Personnel Information System (IPPIS) has a provision of N1 billion. Despite that jumbo sum of money, these ‘monitors’ could still allow the Accountant General of the Federation to ‘misapply’ N108 billion without detection!
Looking at the capital component of the 2022 budget, several programmes are captured under capital projects. A good example is the convention of Annual National Local Government Summit—an ‘ongoing’ capital project in the Ministry of Special Duties—although one can say that the sum of N10.029 million budgeted for it is small potato. The National Veterinary Infrastructure and Abbattoirs/Slaughter Houses Development Programme is also captured as capital project in the sum of N310.114 million under the Federal Ministry of Agriculture and Rural Development.
In some cases, the budget provisions do not make any sense. For instance, in the Michael Imoudu Institute of Labour Studies under the Federal Ministry of Labour and Employment, the sums of N19 million, N14.25 million and N107.75 million were budgeted for the construction of office building, residential building and provision of electricity respectively. The question then is, what type of office can N19 million build or what kind of residential building can be executed with N14.25 million in today’s Nigeria? This type of ridiculous provision is replicated in virtually all the MDAs.
Under the Ministry of Works, several new projects simply have sums of money thrown at them without design while ongoing projects are allocated ridiculously low amounts. The construction and rehabilitation of Lokoja-Obajana-Kabba-Ilorin road described as ongoing has a provision of N3.35 million. Yes, N3.35 million! Besides, allocating equal funds to projects without regard to their scope, complexity and level of completion raises serious questions. The same amount of N208 million was allocated to both ongoing and new roads in Kano, Enugu, Kwara States with only N13.4 million for rehabilitation of Lafia-Obi -Awe -Tunga Road in Nasarawa State. All new projects in Akwa Ibom, Delta, Cross River, Kwara States also have equal provision of N50 million Naira. What kind of new road can N50 million deliver?
I can go on and on to list numerous aspects of the ongoing 2022 budget that make little sense. But I believe my point is made. Ordinarily, a national budget should reflect the federal government’s fiscal and monetary policies that are targeted at economic development. That is not the case in Nigeria. Indeed, if the main objective of a budget is to reduce inequalities by mobilising and allocating resources for investment in the public sector, then what we operationalize annually in Nigeria is more of a racket!
While this anomaly has been with us for decades, redressing it must be part of the conversation we need to have ahead of the 2023 general election.
The Rage of Nature
At a time the country is yet to recover from the 2012 floods which claimed 363 lives, displaced over 2.1 million Nigerians, with losses estimated at N2.6 trillion, we are back to another deluge. According to the National Emergency Management Agency (NEMA), as of last weekend, flood levels in most parts of the country had risen above the 2012 threshold by 11 per cent. Counting the cost in human displacement, livelihood disruption, infrastructure damage and environmental dislocation, Permanent Secretary, Federal Ministry of Humanitarian Affairs, Disaster Management and Social Development, Sani Gwarzo, confirmed on Tuesday that so far, the flood has wreaked havoc in 31 states and the FCT. “Over 500 persons are reported dead; 1,411,051 affected; 790,254 displaced persons with 1,546 persons injured. Furthermore, 44,099 houses are partially damaged; 45,249 houses totally damaged; 76,168 hectares of farmland partially damaged and 70,566 hectares of farmland are completely destroyed by the great deluge,” Gwarzo revealed.
At Ogbaru community in Anambra State last Friday, 85 people entered a boat to escape the rising water level. Only nine people survived to tell their story when the boat capsized along the floodplain. Same day in Kogi State, the Federal Road Safety Corps (FRSC) advised motorists and commuters to shun the Abuja-Lokoja highway and take alternative routes to avoid the gridlock that has already led to fuel scarcity in Abuja and environ. Not only are most parts of Lokoja now practically submerged, but dozens of residents cannot also be accounted for. In Nasarawa State, Olam Nigeria Limited, one of the foremost agro-business companies in the country has put its loss at over $15 million worth of planted crops after flood submerged 4500 hectares of rice farmland. Since that represents just about 7 percent of the total farmlands affected across the country, one can only imagine the implication for food security in Nigeria.
The challenge at hand is monumental. When climate change results in high intensity rainfall, it is only natural for streams and rivers to overflow their banks with dire consequences for lives and livelihoods. But with rising death toll and increasing numbers of displaced people across the country, government at all levels
must begin to find practical solutions to a problem that will not go away.
Saraki’s Delayed GCON
The investiture of the former Senate President, Dr Bukola Saraki, with the national honour of Grand Commander of the Order of Niger (GCON) can be delayed. But it cannot forever be denied. It is shameful that the presidency could be so small-minded on this issue. To be sure, I have always been cynical of the parameters for coming up with the list for national honours in Nigeria. For me, recipients ought to be strictly those who have made significant contributions to our country rather than those who have held or are holding certain public offices. On that basis, we may argue that there is no big deal in Saraki being denied a GCON.
However, we will be missing the point. The issue here is about the accountability mechanism that ensures public officials do not misuse power either for their friends or against their enemies. Based on the existing law, Saraki, like all former senate presidents, ought to be awarded the GCON. And President Buhari should have risen above the petty considerations of whatever may be his personal/political disagreement with Saraki to do the right thing. I hope the next president will redress the issue. Meanwhile, to Dr Ngozi Okonjo-iweala, GCON, Ms Amina Mohammed, GCON, Prince Nduka Obaigbena, CON, Mutawalli Kashim Ibrahim-Imam, OFR, Mr Remi Makanjuola, OON, Mr Iyinoluwa Aboyeji, OON and other honourees, my congratulations.
You can follow me on my Twitter handle, @Olusegunverdict and on olusegunadeniyi.com
