Nigeria’s 2017 Budget – Is the Country Poor?

Chambers Umezulike July 3, 2017 0

After extensive parish-pump, pedestrian and partisan theatrics on the 2017 Appropriation Bill passage and minimal cause célèbre regarding its presidential assent, the 2017 Appropriation Act was finally signed into law on the 12th of June 2017 by the Acting President, Prof Yemi Osinbajo. Consequently, on 19 June 2017, as a convention, the Ministry of Budget and National Planning (MBNP) organized a public presentation of the Act. In attendance were numerous relevant governmental/non-governmental stakeholders. While I was partly impressed by Sen Udo Udoma’s (Minister of Budget and National Planning) presentation, in which he elementrified several components of the budget, let me start by registering few concerns and remarks:

First, the Budget Process – It is quite despondent that there was no sense of urgency on the part of the National Assembly to expedite the Appropriation Bill’s passage. The theatrics of the delay in the passage was driven my personal and partisan interests with utmost disregard over consequent budget implementation retardation denouement and the concerns of Nigerians. This was exactly an echolalia of what happened with the 2016 budget which affected its implementation. Nothing was learnt from the 2016 retardation. Note that, a financial year starts from 1 January of every year and ends on December 31. However, this budget cycle crisis has persisted over time and will affect the 2017 budget implementation, as well as the economic growth rate assumption of 2.2% by the government as discernible in its Economic Recovery and Growth Plan (EGRP).

Secondly, Nigeria is really a poor country – While Nigerians dance around the epileptic euphoria of being an oil-rich country, it’s imperative to note that the international energy dynamics have changed with oil losing its worth on a daily basis. While the country’s 2017 budget is at NGN7.44t ($25b), the highest ever, for a country of over 180 million population, this shows Nigeria is poor. The budget per capita is NGN40,000, roughly $100. That is what the government intends to spend on each Nigerian in the year. This is with the endemic poverty, low illiteracy and life expectancy rates, gross infrastructural deficit and low manufacturing capacity. Comparatively, Indonesia’s 2017 budget is at $158b for a population of 257 million putting the budget per capita at $614. Notably, as one of Nigeria’s former economic comparators, it has outperformed Nigeria on an avalanche of macro-economic metrics with far better infrastructure. Furthermore, the budget of the State of California in the United State alone for 2017 is at $179b.

The shocking part is that Nigeria’s $25b budget has a deficit of NGN2.35t (est. of $8b). This really means Nigeria is poor, for her not to be able to fund such nanoscopic deficit. In the 2016 fiscal year, Apple Inc. made revenue of $215b. Nigeria’s expected revenues from oil this year is roughly at $8b. This shows innovation and technology are the future of today’s world. But Nigeria cannot be considered ready for this, as she also appropriated a petty NGN41.7b for capital expenditure in Science and Technology in the budget.

Thirdly, Capital Expenditure – While the government prides itself for raising capital expenditure from 15% in 2015 (which is quite unbelievable) to 31% in 2017 [which is commendable], the country has to do more in this regard. The government cannot basically be using the budget for recurrent costs.

Major MDA Capital Allocations – Source, Budget Office of the Federation

Going back to the Minister’s presentation and further contents of the budget, he commented, “The budget was designed to expand partnership between public and private sectors, including development capital to leverage and springboard resources for growth and restore the economy, all in line with the ERGP’  In sum, the budget intends to focus on:

  1.      Infrastructural expansion – NGN553.7b for Works, Power and Housing and NGN241.7b for Transport. This is to spur growth, improve ease of doing business, facilitate diversification efforts, fund agricultural value chain and provide an enabling environment for businesses.
  2.      NGN 46b for the establishment of Special Economic Zones (SEZ) in each of the geo-political zones to drive manufacturing and exports – While this is welcoming. It seems it’s at this time Nigeria is really thinking of development. It can also be said that low oil prices is forcing the country to manufacture ideas. Its run-of-the-mill economic sense that if you cannot provide sufficient infrastructure and environment for businesses that you establish SEZs for such to attract foreign and domestic investors. East Asian countries such as Singapore, Indonesia and China all established such zones in the 70s and 80s. Nigeria is late to this party.
  3.      Encouraging the growth of small and medium industries through the recapitalization of the Banks of Industry and Agriculture with NGN15b to increase access to financing.
  4.      And providing a social safety net for poor Nigerians.

Key Assumptions and Macro-Framework of 2017 Budget – Source, Budget Office of the Federation

In furtherance, the NGN7.44t budget has key assumptions such as: oil production at 2.2mbpd, benchmark oil price at US$44.5/b, the exchange rate at N305/US$ and the aforementioned economic growth rate of 2.2%. The budget also envisages total revenue of NGN5.08t, exceeding that of 2016 by 30.2%, with capital expenditure at NGN2.36t.

Moving forward, first, the problem has always been implementation crisis as well as the lack of transparency, accountability and citizen engagement in governmental spending. There is a great need for increased transparency and accountability in the budget’s implementation with updates on capital releases for effective public oversight. This is following the Minister of Finance comment at the event that the government already has the first tranche capital release of NGN350b. Secondly, while there are already promises in this respect, both from the Executive and Legislature, something should be done quickly about the budget cycle crisis. Topical commitments to see that the 2018 budget is passed by December this year should be followed with sufficient political will and commitment to have that realized. Ultimately is swift implementation of the budget considering we are already at the half of the year.

I wish the government goodluck with the budget implementation.

 

Chambers Umezulike is a Senior Programme Manager at Connected Development and a Development Expert. He spends most of his time writing and choreographing researches on good and economic governance. He tweets via @Prof_Umezulike.

Enabling Greater Transparency, Accountability and Participation in Nigeria

Chambers Umezulike May 10, 2017 0

[The DG of Budget Office, Ben Akabueze making a  presentation during the Budget Transparency and Accountability Workshop]

 

It is widely accepted that transparency in government leads to the generation of government accountability since it allows citizens of a democracy to reduce government corruption, bribery and other malfeasance, and control their government. It is also widely accepted that an open, transparent government allows for the dissemination of information and proceedings of government, which in turn forces government to be accountable, helps to guarantee societal progress and effective public oversight, while ensuring participation.

There have been several transparency, accountability and participation movements all over the world. Such movements in developing countries have more justifications for clamouring for such as a result of poor governance, systemic wrecking of public funds, public records inaccessibility and impecunious citizen participation in governance. As a result, citizens of such countries have found it increasingly difficult to hold their governments to account.

This is the case of Nigeria, where several non-profits and movements have been pushing for greater governmental accountability and transparency. And for the first time since the history of the country, the present administration made a striking commitment by signing unto the Open Government Partnership (OGP). The OGP is a multilateral and multi-stakeholder initiative that aims to secure concrete commitments from national governments to promote transparency, empower citizens, harness new technologies to strengthen governance and fight corruption. Nigeria getting on-board the partnership through President Buhari’s commitment to such resulted in a synthesis of government and civil society efforts to realize open government in the country.

Currently, Nigeria just started implementing the National Action Plan (NAP), a key process of the OGP. The plan has 4 commitments that both the government and civil society have made and are implementing across ensuring fiscal transparency, fighting corruption, improving citizenry access to information and citizen engagement.

In line with these developments, the Budget Office of the Federation (BoF) and the Collaborative Africa Budget Reform Initiative organized a workshop on budget transparency and accountability on 9 May 2017 at Transcorp Hilton Hotels, Abuja. In attendance were several international and domestic stakeholders from the government, civil society and private sector. The workshop was organized to allow the Nigerian government examine how it can bolster transparency and participation outcomes in the country with focus on budget transparency – how budget information can be made more accessible, how to move forward in implementing reforms that improves Nigeria’s Open Budget Index Score (OBIS).

The workshop majorly kicked off through a presentation by the Director-General of BoF on Transparency, Accountability and Participation: Reforms and Why It Matters. He used his presentation to highlight progresses made on open government in the country, detailing the OGP and its NAP Commitments. He also mentioned that an area that requires commitments and attention of all relevant stakeholders is Nigeria’s OBIS which as at 2015 was at number 24 on the ranking under insufficient. He also mentioned that in a bid to counter such embarrassing trend, the BoF is on the verge of commissioning the Citizen’s Budget Portal where citizens would have timely information of budget processes including contracting and implementation. In addition, the portal will have further contents such as the BoF Help Desk and Hot Lines to take questions from the general public on budget issues and implementation.

This was followed by a presentation by Atiku Samuel of BudgIT on the Status of Budget Transparency in Nigeria. He took his time to explain the international standards of budget transparency and how the OBIS is measured. After this was a session on How to Make Budget Data More Accessible by Atzimba Baltazar of COMETA. She emphasised the need for a Citizen’s budget which should be a few paged document on governmental revenues, debts and expenditure in a fiscal year using infographics and cartoons to simplify understanding for the citizenry. She lifted lessons Nigeria could learn from countries such as Tanzania, Kenya and South Africa where citizen’s budgets are already been issued out.

The last session was a group discussion on 3 key questions: 1). Do you have enough information on the budget? 2). Who do you go to access the information and 3). How do you prefer to access this information? The resolutions after the group discussions on the questions, respectively, are:

1). Yes, while we have information on the budget including the Medium Term Expenditure Framework, Budget Proposal, Appropriation Act, Budget Implementation Reports etc. the problem is that accessibility to these documents atimes are not timely. Most of them are not in open source formats. Most of the budget line items are not detailed enough, and ultimately, a lay man would not be able to understand the technicalities on most of these documents. 2). It was generally agreed that this should be from the Budget Office, Ministry of Finance and few other primarily concerned MDAs. 3). In open source format – the citizen’s budget and the citizen’s budget portal will go a long way in assisting in this regard.

While one must applaud the BoF and the present administration on efforts to use open government as a tool in fighting corruption, increasing participation and ensuring effective public oversight, there should be sufficient governmental political will in implementing the NAP, other consequent commitments and responding to Freedom of Information (FOI) Requests. For CODE (Follow The Money), the citizen’s budget portal will be largely utilitarian in accessing key budget information for rural communities which we fail to access on time even through piles of FOI requests. Such will enable us take such details down to rural communities and in building their capacity for effective public oversight, ensuring service delivery and in holding their governments accountable.

 

Chambers Umezulike is a Programme Manager at Connected Development and a Development Expert. He spends most of his time writing and choreographing researches on good and economic governance. He tweets via @Prof_Umezulike.

Addressing Citizenry Extensive Concerns on the 2017 Budget Proposal

Chambers Umezulike February 24, 2017 0

On 23 February 2017, the Director-General (DG) of the Budget Office of the Federation choreographed a media briefing on several issues surrounding the 2017 Budget Proposal. The DG also used the briefing to make certain clarifications on public outcries over several budget items on the proposal. Most of these outcries were on many frivolous items (especially on electricity and utility bills of MDAs; several humongous expenses on the state house budget on utensils and feeding, electricity bills, travel expenses etc.); repetitions of budget items; budget cycle crisis; the budget preparation expenses; lack of details on some of the items; budget padding etc.

In attendance at the briefing were the media and Civil Society Organizations (CSO). In responding to some of these concerns, the DG took his time to counter some of the claims:

1). He stated that there was no sort of budget padding on the 2017 budget proposal.

2). That there were no frivolous items. That most of the extensive increments such as state house proposed expenditure on utensils and utility bills; electricity bills, security and cleaning services payments in MDAs etc. were either as a result of arrears of such bills/expenses or because funds were not later provided for them on the 2016 budget (meaning they were not implemented.)

3). He stated that there were no repetitions on the proposal, unless the repetitions being referred to were budget items on the 2016 one that re-reflected on the 2017 proposal, which was as a result of the fact that funds were not provided for such items on the former.

4). He reassured the audience of his liaison with the National Assembly to ensure that budget cycle would be from January – December of every year, which was clearly stated on the constitution, as against the culture of having a previous budget being implemented in another fiscal year.

5). He also explained that the details-deficit on some of the budget items were as a result of the perspective to keep the budget simple, for public consumption. That however that his agency would ensure further details on budget items when preparing subsequent budgets.

Representing Connected Development (CODE) at the event, I further engaged the DG and raised concerns over the NGN305/$ calculation on the budget proposal (while $1 is valued at NGN 520 at the contemporaneous market); if there are extensive plans for enhanced transparency and accountability in the 2017 budget implementation; our expectancy to lay hands on the 3rd and 4th quarters’ reports of 2016 budget implementation; his plans to ensure that revenue realization deficit would not frustrate the 2017 budget implementation drawing on the country’s experience with the 2016 one; and getting access to an extensive version of the budget that had further details on some of the line items. For the latter, I mentioned the ‘Talking Sanitation’, as well as ‘Afforestation’ and ‘Tree Planting’ budget items on the proposal, under the Ministry of Environment, which all lacked details such as where and how. Lack of such specific details has frustrated the works of CSOs that are into governmental capital expenditure tracking.

In addressing my concerns, the DG made commitments that were all in line with Nigeria’s commitments on the Open Government Partnership. He stated that the 3rd quarter 2016 budget implementation report would soon be in public domain while the 4th quarter’s would soon be out too. He further stated that there would be increased transparency, accountability and citizen engagement in the 2017 budget implementation. On this, he cited plans to have a digital platform for 24/7 citizen engagement on the budget. He also mentioned that there would be a breakdown on project basis subsequently when funds are released to MDAs. In addition, he promised a quarterly media briefing on the 2017 budget implementation. These were all good news and great outcomes for nonprofits that are into Open Governance advocacy. He mentioned categorically that the revenue realization plan on the proposal is quite realizable and that the FOREX regime crisis would not affect the budget implementation.

This media engagement is a step in the right direction as bringing all stakeholders involved and addressing public concerns on the budget proposal have boosted citizen participation in governance and also provided a platform for clarifications on several portions of the budget, as well as for stakeholders to make suggestions. It is hoped that the Director keeps to all the new commitments he made at the briefing and ensuring extensive open financial governance in the budget implementation. From our part, we are sending an FOI request for an extensive version of the budget, which he promised CODE would be provided with. And before I forget, he commented that he likes our name, ‘Follow The Money.’

 

Chambers Umezulike is a Program Officer at Connected Development and a Development Expert. He spends most of his time writing and choreographing researches on good and economic governance. He tweets via @Prof_Umezulike.