Unending Tales of Budget Padding

Finance

The recent claim by the Minister of Humanitarian Affairs, Disaster Management and Social Development, Sadiya Farouq, that the sum of N206 billion was injected into her ministry’s budget, is one tale too many. Ndubuisi  Francis interrogates this disturbing phenomenon

Just recently, the Nigeria Country Office of the World Bank Group (WBG) launched a new report titled, ‘Nigeria Public Finance Review: Fiscal Adjustment for Better and Sustainable Results.’

The detailed WBG report was conducted at the behest of the Federal Ministry of Finance, Budget and National Planning, and prepared in close collaboration with the Budget Office of the Federation (BoF), the National Bureau of Statistics (NBS), the Office of the Accountant General of the Federation (OAGF) and the Debt Management Office (DMO).

The salient details in that report are too many to be ignored. One of them is that  Nigeria’s budget credibility is low, thereby hindering sound fiscal and debt management. 

Budget management is also weak,  contributing to inefficiencies in management and the execution of public expenditure, the report surmised.

Even without the WBG report, it’s an unassailable fact that the nation’s public financial management space is replete with the unbecoming. Often,  officials saddled with the task of either managing or keeping public funds indulge in sundry rogue and manipulative tendencies that leave the country haemorrhaging while they stash their private vaults with monies meant for the public good.

Manipulative public officials at the highest levels, Ministries, Departments and Agencies (MDAs), have over the years continued to bleed the treasury for personal or group gains through the infamous annual budget ‘padding’ 

While individuals and MDAs use the budget padding device to funnel public funds into their private vaults, what is left to provide service to the masses is barely enough.

 The ‘Padding’ Lingo 

Padding as it pertains to the budget implies “something added dishonestly on an expense account,” loading or inflating a bill of expenditure, which is tantamount to an exaggeration or inflation.

According to The Chamber’s Dictionary, 10th edition (2008),  to pad means “to increase an amount due to be  paid by adding false charges.”

Padding a budget means making the budget proposal larger than the actual estimates for particular projects, and is done either by increasing a project’s expenses or decreasing its expected revenue. The goal of budget padding is to get an approval committee to grant an artificially high level of funding to the budget maker’s proposed project.

For decades, itchy fingers at the state and federal levels of the public sector are believed to have helped themselves with public funds through budget padding.

While this stealing method was uncommon during the military regimes, it made its way into public consciousness with the return of civil rule in 1999.

Indeed, former President, Chief Olusegun Obasanjo, fired one of his ministers for alleged involvement in budget padding.

However, budget padding assumes a life of its own under the President Muhammadu Buhari administration.

The first federal budget prepared by the Buhari administration (2016) was mired in ‘errors’  (padding), resulting in the sack of the then Director General of the Budget Office, Yahaya Gusau. 

Since then, it has become a yearly ritual, sometimes increasing in volume,  with accusations and counter-accusations.

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 the ICPC, the 2021 aggregate budget of N13.59 trillion was padded by civil servants in the various MDAs, with duplicated projects worth N300 billion while projects’ duplication worth N100 billion were also smuggled into the N17.12 trillion 2022 budget by some MDAs.

One Case Too Many 

The Senate Committee on Power on November  1 said it discovered N195 billion earmarked as counterpart funding for bilateral and multilateral projects in the 2023 budget proposal. 

The Committee Chairman, Senator Gabriel Suswam revealed that after a session with officials of the said ministry during the budget defence session,  his panel found out that even the ministry was not aware of the projects.  

Presently, the Ministry of Finance, Budget and National Planning are seemingly on the spot over the alleged insertion of projects amounting to hundreds of billions of Naira in the 2023 budget.

To fire the first salvo was the Minister of Humanitarian Affairs, Disaster Management, and Social Development, Sadiya Farouq, who said N206 billion was in her ministry’s budget.

Farouq, who appeared before the Senate Committee on Special Duties to defend the 2023 budget, claimed that the ministry requested some projects for the North East Development Commission (NEDC) and the National Social Safety Net Project in the 2022 budget.

Farouq said the funds were not released, expressing her surprise to see an inflated amount in the 2023 budget of the ministry.

Lawmakers in the National Assembly have already raised concerns about the abuse of the budgeting process following submissions by some government agencies that some amounts were inserted into their estimates without their knowledge allegedly by the ministry of finance. 

The Humanitarian Affairs minister, officials of the National Universities Commission (NUC), as well as the Ministries of Defence and Power, have so far disowned some line items running into billions of naira in their 2023 budget proposals.  

According to them, they could not explain what the amounts were meant for or the details of the projects tied to the funds since they were not part of proposals sent to the finance ministry for the 2023 fiscal year. 

They accused the finance ministry of inserting the money into their budgets.  

Meanwhile, the Minister of Finance, Budget and National Planning, Zainab Ahmed, last week dismissed the allegations of budget padding of projects and allocations in the 2023 Appropriation Bill made no sense. 

She stated this during her presentation before the House of Representatives Committee on Appropriations. 

Responding during a session with the House of Reps committee which had invited the minister, Ahmed said, “The 2023 budget proposal has been prepared with the utmost sincerity of purpose and in line with established regulations and procedures. Over the past week, there has been a lot of misinformation in the media regarding certain provisions in the 2023 budget totalling N423.8bn. The expenditures mostly relate to provisions for multilateral and bilateral loan-funded projects. 

“It is instructive that all these projects, now the subject of controversy, were included in the budgets of these MDAs, which were transmitted to the supervising ministers for their review and feedback on October 4, 2022, before the presentation to both the FEC and NASS. Until these recent controversies, none of the concerned MDAs raised any issues on the projects with the FMFBNP.” 

Zero Budgeting 

So much fuss was made at the inception of the Buhari administration about zero budgeting, a departure from the envelope-based system it inherited. 

Vice-President, Prof. Yemi Osinbajo had announced the departure with glee,  assuring that the new zero budgeting system would be carefully coordinated to ensure that it is policy-driven, especially regarding the proposed social intervention policy of the president.

Six years down the line has the zero budgeting system done better than the envelope-based budgeting which many current administration’s players and critics had severely condemned for harbouring traits such as repeated expenditures and providing avenues for massive corruption?

In the current dispensation, some line items are said to be inserted into the fiscal estimates without the consent of the supposed beneficiary agencies, resulting in duplication of projects or excess budgetary allocations, with the opportunity for the quiet looting of the public treasury.  

But what is more worrisome is that in most cases, the MDAs concerned are silent about the padding unless such insertions are detected by lawmakers during budget scrutiny.   

 Official Reactions

 The Attorney General of the Federation and Minister of Justice, Abubakar Malami, has described padding as bad.

Briefing State House reporters after the Federal Executive Council (FEC) meeting, Malami stated that the federal government was studying the revelations and promised that every necessary measure would be explored to address it. 

He said: “Whichever way one looks at it, budget padding is bad because if you budget N5 billion for road and N3 billion of that fund is diverted, it means the government has lost that money and it will take a longer period to complete the project 

“The government is concerned and will do what is necessary to address the issue.”

Malami’s assurance may just be one of the usual rhetorics that trailed previous years’ budget padding scandals with no one brought to book.

But as civil society organisations have said, the National Assembly should be more vigilant in its budget defence sessions with MDAs.

The problem of budget padding is also a challenge to the citizens who bear the burden of economic sabotage as attention is usually on what goes into the pocket of the corrupt public officers involved at the expense of developmental projects in the country.

Therefore, there is an increasing need for the citizen to expose such infractions to end the cycle of budget padding.

Appropriate windows of whistleblowing should also be opened to the citizens who are ready to offer information on illegal activities.