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.

Taming the Monster in the #Nigeria Budget System

Oludotun Babayemi December 27, 2016 4

The most important factor for economic development is not capital, but appropriate policies and institutions

If Nigeria’s population is the 7th largest in the world, and we really, want to grow, then we must not be doing 7.29 trillion Naira, as our budget (Just before you say, it’s only the federal budget, even if you average what the state, and local government present, as budget, it is still not worth it). That’s a paltry 23.9 billion dollars, see below, what the top 10 countries with the highest population, budget for their citizens, at the “federal” level. Coming down home to Africa, Angola with a population of  25 million, has a budget of 38.53 billion dollars. I will advise we start thinking about reducing our population growth – 2 per woman will be most reasonable, at this time, if we “really” want to grow! Japan has done it before, and I am saying, there is no reason why we cannot grow within this top 10 populated countries, it will take time, but we must be decisive, and serious!

2015 budget estimates for other countries are from the Central Intelligence Agency World Fact Book. The Nigeria Budget estimate is the 2017 proposed figure in the appropriation bill

2015 budget estimates for other countries are from the Central Intelligence Agency World Fact Book. The Nigeria Budget estimate is the 2017 proposed figure in the appropriation bill.

In the breakdown of the Nigeria 2017 budget, it is expected that only 30.7% will be available for the provision of basic amenities and infrastructures – health facilities, schools, roads, water, while about 40% will be provided for overhead expenses – salaries, travels, office expenses et al. The success of any business in the world lies in its people, and I also mean PEOPLE working in the various government institutions – executive, legislature and judiciary. Ideally, their business is to implement government agenda, policies, projects and programme, but in Nigeria, their performance is appalling. Although this sector employs a larger percentage of employed people, the numbers cannot account for the value it can create. Just as the numbers of ministries were reduced by the Buhari led government, can it also “significantly” reduce the number of people in the public sector, so as to reduce overhead expenses to 20% of the government budget. All Joe Abbah, and the bureau of public service reforms need do, to perform effectively, is to embrace technology and uphold strict staff performance management (and just before you will say, where should the retrenched go – read my blog, on the rice economy or get to the last paragraph). In Nigeria, most people in the public service which comprise of the executive, legislative, and judiciary in federal, state and local government, got to the position, in the spirit of “clientelism”. “They have just finished recruiting in the Nigeria Police, but leave story, they only chose senators, house of reps families and you know the oga at the tops people” affirmed my friend in the Nigeria Police. This needs to stop if we really want to grow!

Many developed and developing countries are still working towards linking performance to public expenditures framework or strategy. If these linkages are not made, there will be no way to determine if the budgetary allocations that the support programs are ultimately supporting are successful. On a lighter mood, I must thank the Budget Office for publishing actual money received by government agencies for capital expenditures (actually there is an open data version of it here), but we should not be thankful for seeing that except, we want to stay like Angola, if we want to grow like Malaysia, we should be publishing tangible outcomes the expenditures in the agencies are achieving. In essence, we should stop the line – item kind of budgeting, and adopt the result-based budgeting system. For instance, if Nigeria needs to produce the 4,700,000 million tonnes of rice, that china imports every year, the Ministry of Budget and National Planning can have an overhead budget from the Ministry of Agriculture for only the number of people that will implement that through a policy paper, coordination and regulation, as they will not be the one to work on the farm. Simple as ABC right? yes! but do you have the political will – (To be continued) in my other story on Nigeria and its National Planning.

 

 

 

Proposed Online Budget Portal for Nigerian Citizens

Chambers Umezulike December 1, 2016 0

Nigeria still has deep challenges in ensuring transparency and accountability in governmental activities and expenditure. Citizen engagement in governance has remained pretty poor. Participatory budgetary practices have remained poor and governmental data are still limitedly open to the public. Currently, the country has signed the Open Government Partnership with several commitments from Abuja to ensure and promote transparency and accountability in governance. Following this, on 15 November 2016, the Partnership to Engage, Reform and Learn (PERL) programme funded by the United Kingdom’s Department for International Development (DFID) organized a roundtable discussion with Civil Society Organizations (CSO) and the Media on the proposed online budget portal for citizens. This was in partnership with the country’s Budget Office or Ministry of Budget and National Planning (MBNP). In attendance were CSOs with core in ensuring transparency, accountability and citizen engagement in governance.

PERL is currently supporting the MBNP in developing an online portal for citizens to access budget information. The roundtable was then for relevant civil society groups to make inputs and suggestions on what information government should put on the online citizens’ portal. This was to ensure that that the online portal is reflective of citizens needs on the budget.

The portal encompasses features such as: Citizen Guide to the ‘2017’ Budget, Sectoral budget information, Geopolitical allocation of funds, Planning and key policy documents to be included on the portal, ‘2017’ Budget facts, Budget monitoring reports, FAQs, Budget Calendar and A feedback platform.

CODE made some inputs and suggestions on other features of the portal such as. 1). A mechanism for citizens to be able to sort/filter the budget sectorally, by states, LGAs, communities, quoted amounts etc. 2). A mechanism for one to be able to click on a budget item and have further details. 3). A mobile application component. 4). A Live chat. 5). And ultimately, for the portal to have information on budget implementation such as implementation stage, procurement processes, contractors etc. Other CSOs also made suggestions such as for the online portal to be in different languages, for the use of infographics and information of policies guiding the budget.

We are expecting that further collaboration between DFID PERL and the Budget Office while carrying other stakeholders along would see to the successful implementation of this platform. This we also expect would go a long way to ensure transparency, accountability and civic engagement in Nigeria’s governance.

The Future We See Through the Open Government Partnership in #Nigeria

Oludotun Babayemi October 25, 2016 0

“Amongst the 70 member countries of the Open Government Partnership (OGP), African countries has the most ambitious commitments, and also has the least number of implementations of their commitment as seen in the independent reporting mechanism but Nigeria can reverse that order as the country has made huge commitment at the London Corruption Summit and hopes to make it tandem with its anti-corruption campaign in the country” says Sanjay Pradhan during the first day of the OGP retreat in Nigeria on October 24, 2016 at the Hotel Seventeen in Kaduna .

The OGP CEO, Sanjay Pradhan making a presentation on OGP

The OGP CEO, Sanjay Pradhan making a presentation on OGP during the retreat in Nigeria

Looking at the panel to discuss commitments around the Nigeria OGP National Action Plan, I was deluded by the fact that the government representatives except for two, were not appropriate enough to discuss pertinent issues around beneficial ownership, open budget, open contracting,  transparency in extractives, access to information, and open data.  I quite  understand that the people in authority, in this ministries are hard to get for such conversation, but if it were really a “government – driven initiative” we should be seeing them coming to talk about these issues in the public.

I would have expected to see Zainab Ahmed, the Minister of State, Budget and National Planning making commitments of publishing online, location – based infrastructure data with their baseline indicators (current state) to the public by December 2017, so this can aid better planning; also the out-spoken Funmi Adeosun, the Minister for Finance committing that “detailed” government spending will be made available to the public by default as from November 2017, and also that the Bureau of Public Procurement will upgrade their website to include procurement plans, tender notices, bid evaluation,contract award documents, and termination information, while connecting it to a citizen feedback platform that can help make sure projects are really been implemented by contractors.

Nevertheless, there were some takeaways from the panel Joe Abbah, of the Bureau of Public Service Reforms had stated that by 2019, all FOIA request will be responded to in 2 minutes! In – fact, they have started something that looks like that in the Bureau, if you want to request for an information from the government, [APPLY HERE] I am sure you are all looking forward to this, it might not be rocket science! Also, the representative from the Nigeria Extractive Industries Transparency Initiative (NEITI) mentioned that for beneficial ownership to work, the Corporate Affairs Commission and the Companies and Allied Matter Act must be amended immediately to disclose beneficial ownership of companies, and not just the publishing of company names that are registered with the CAC which anyways, is a step in the right direction.

Looking across the Panel of government + CSOs

Looking across the Panel of government + CSOs

But why does it take the government a longer time than the 7 days proposed in the law to get a response to an FOIA request, the representative from the Ministry of Budget and National Planning stated that the oath of secrecy signed by civil servants prevents most of them to disclose information requested for through the FOIA. That’s so unimaginable! However, Joe Abbah, stated clearly, that we need to amend the public service rules because civil servants abide by rules and not laws!

My worry is not that leadership in the executive arm of government would not come out and make commitments, my worry is that implementing such commitment on the basis of a system that would not allow it to work efficiently is the reality, and such is the case for most African countries. As much as this becomes a drawback for me in this “government – CSO “driven movement, I am certain that few positives might be recorded, as we have started seeing from the Ministry of Justice, the agent of the state where the OGP is domiciled in Nigeria.