Restoring Sanctity to the Budget Process

Postscript by Waziri Adio

The National Assembly officially started consideration of the 2025 federal budget last week. At no other time in the last 25 years has the legislative process on a full-year budget started this late. Senator Solomon Adeola, Chairman of the Senate Committee on Appropriation, ascribed this to the ‘distraction’ caused by the four tax bills, which were sent for legislative treatment on 3^rd October 2024. This is as lame as an excuse can be. President Bola Tinubu did not present the 2025 proposed budget to the National Assembly until 18^th December 2024, exactly a week to Christmas. With festivities and holidays of the period, it would have taken more than magic for legislative work to commence on the budget in 2024. So, the blame lies elsewhere, and Senator Adeola knows it.

This tardy episode should focus attention on certain aspects of our budget process that need interrogation and reform. A country’s budget is more than a mere statement of intention or a wish-list. It is a sacred document that outlines the priorities of the state and authoritatively allocates scarce resources among competing needs in society. The budget process brings together two arms of government, with distinct roles, and culminates into a law of the land—the appropriation act. Such a document and the process that produces it should be imbued with the rigour and the sanctity they deserve. They should not be turned into an annual hollow ritual that is treated with levity. Neither should they be casually and serially violated by key actors in both the executive and the legislative arms.  

Over the time, there have been attempts to strengthen our budget process and public finance management in general. Some of these attempts include putting each budget in a multi-year context by mandating the development and approval of the Medium Term Expenditure Framework (MTEF) and setting a limit on budget deficit as stipulated in the Fiscal Responsibility Act 2007; and outlining the conditions guiding the overdrafts that the central bank can give to the federal government as contained in the CBN Act 2007, etc. Some of these safeguards are observed in the breach, and without consequences. We need to change this. In addition, we need to tackle other challenges that have come to the fore.

First, we need to devote enough time to the budget process. Senator Adeola pledged that joint committees of the Senate and House of Representatives will attend to the ministries, departments and agencies (MDAs) to ensure that the 2025 budget is passed by 31^st January 2025. That’s a kind concession. But such a concession would not have been necessary if the budget had been submitted much earlier. We need a law that clearly states that the president must submit the budget proposal for the next financial year not later than 30^th September of the current year. With this, the Budget Office can send out the budget circulars and budget envelops to the MDAs before or by June and the executive arm can submit the MTEF to the legislature by July or August.

There is nothing about the budget process that cannot be started early. The only reason for late presentation of budget proposals is because no law stipulates a deadline. Being mandated to submit the budget at least three months before the new financial year gives both the executive and the legislative arms enough time to do a more thorough job. It will also allow the executive adequate time to review the budget passed by the legislature and request for changes, if necessary, before presidential assent. A known fact is that those on the legislative side take advantage of the sense of urgency occasioned by late submission of budget proposals and that presidents have had to sign appropriation bills grudgingly just to save time. The way to cure this is to set a hard deadline.

This is a good segue to the second issue. There is need for clarity and safeguards about what the legislators can and cannot do to budget proposals. To be sure, sections 80 to 83 of the 1999 Constitution grant the National Assembly the so-called power of the purse: no money can be spent from the Consolidated Revenue Fund (CRF) except as authorised by the parliament through an appropriation act. This accords with the principle of checks and balances: while the executive prepares and implements budgets, the legislature vets/passes the budget, and the president signs the approved budget for it to become law and operational. The powers granted to the legislature on appropriation are not meant to be absolute or an excuse to impinge on executive powers.

The legislators have the powers to query, cut and even re-assign proposed expenditures within each MDA. They can also adjust, with justifications, the budget assumptions. But they do not have the latitude to rewrite the budget. It is also bad form for legislators to encourage MDA heads to lobby for increase in budgetary allocations. That should be off territory. Besides, having such latitude is an open licence to abuse. And there are well-documented cases of such over-reach, including legislators unilaterally creating and inserting projects into budgets and increasing the allocations of some MDAs in multiple folds, reportedly in favour of the principal officers and some committee chairpersons. This is a point where legislative over-reach, conflict of interests and abuse of powers intersect in a gaudy way.

Over different administrations, there have also been reported cases of direct extortion and intimidation of MDAs by legislators during budget defence, with willing collusion by some MDA heads and public push-backs by some. However, the executive folded by succumbing to what they frame as ‘constituency projects,’ a stratagem through which legislators get assigned projects in the budget and even reportedly nominate contractors. This may not be as brazen as legislators inserting projects into budgets or padding budgets but it is sleazy nonetheless. A ready excuse would be that even in America they practise pork barrel politics. But this is more of ranking Congressmen advocating for the accommodation of their constituencies in projects designed and implemented by the executive. 

However, it is not uncommon for our legislators to openly boast, without any sense of irony, of being the sponsors of certain projects in their constituencies. It is understandable that legislators also have a need to show that they are working for their constituents, but they do not have a responsibility for constructing or sponsoring roads, schools, stadiums, boreholes etc. Their responsibility is to make laws and to oversight the executive. Allocating projects to legislators creates distortions and a perverse sense of entitlement. The practice needs to be reconsidered. Budget padding should not only be immoral but also illegal and criminal. Overall, it is important for the executive to seek judicial interpretation of the extent of the constitutional powers of the legislators on budgeting, then set and enforce the limits.

Actually, the country and the budgeting process will be better served if legislators focus more on one of their core responsibilities: exercising oversight powers more diligently and effectively, and without an eye for personal gain. Budget defence by MDAs usually starts with a review of the performance of the previous/current budgets. Such reviews, alongside legislative oversight visits to MDAs, should surface issues not just about budget performance but also about possible violations that should be nipped in the bud. For many years, the executive was accumulating unbudgeted loans from CBN and in a way that contravened the CBN Act, and left lasting impact. This was the famous ways and means.

The legislative committees oversighting the Ministry of Finance and CBN should have picked this up if they were doing their jobs properly. If they had asked basic questions about revenue and expenditure of government, they would have figured out that the deficit was being financed outside of the authorised borrowing plan. The country did not get to know about FG’s growing indebtedness to CBN until after more than N20 trillion had been accumulated. Even after the loan has been securitised, the country is yet to live down the adverse effects of such a dramatic increase in money supply that was not backed by production.

It is possible the National Assembly dropped the ball wilfully or because of lack of capacity. There is definitely a knowledge asymmetry on the management of the economy. Those in the executive arm will always be ahead. But there is a provision for members of the National Assembly to engage experts and hire competent aides. They rarely do. Also, there have been talks for decades about the need to establish the equivalent of the US Congressional Budget Office, staffed with experts that can undertake cutting-edge economic analyses and projections to support our legislators. The third area of reform will thus be how to build the necessary supporting capacity, activate the appetite of our legislators for such technical knowledge and incentivise the will to undertake real budget work.

The fourth area is the need to eliminate off-budget spendings. We need to bring all expenditures under the budget to ensure full visibility and scrutiny and to prevent the natural consequence of opacity. Sunshine still remains the best disinfectant. No public money should be spent without appropriation, even if through default appropriation, supplementary appropriation or advances from contingencies’ fund as stipulated in sections 81, 82, and 83 of the 1999 Constitution. Without a doubt, there are extra-budgetary expenditures going on which apart from not passing through the parliament are also not following due process. There are two obvious ones: the Lagos-Calabar Coastal Highway and the presidential jet. There may be others. Even if good intention and justification are to be assumed, such a practice does not pass the smell test and should never be normalised. Whatever lacuna that is being exploited should be shut.  

Lastly, we need to change how we resource agencies that have been assigned dedicated revenue handles. Even with the policy on automatic sweep of operating surpluses, most of these super agencies are still awash with more cash than they need. And once available, money will be spent, and mostly on frivolities. The National Assembly does little in scrutinising the budgets or expenditures of these agencies. Rather, they treat them like juicy and special agencies—the same way the executive authorisers on these super agencies treat them.

The end result is that a handful of agencies have enormous resources to play with (and that is the appropriate term) while pressing areas of national need are under-resourced. These agencies should definitely be adequately funded, but their funding should be based on justified needs and available resources. Granting some agencies a portion of the revenues they generate or collect on behalf of government confers a special status on them. Worse: it turns these agencies to slush funds and centres of sleaze. This practice is suboptimal for the country and should stop.