Nigerians have the constitutional obligation to make positive and useful contributions to the progress and advancement of the nation in line with provisions of section 24 of the 1999 Constitution. The 2015 federal budget, like many others before it, is faced with several challenges. More so, the custodians of the budget and their principals have not helped matters either. DAVID AGBA writes.
There is no doubt that Nigeria is going through very hard and difficult times; the economic and social fabric of Nigeria is under pressure – declining crude oil prices, reduced demand for her major export commodity, continued export of crude petroleum and import of refined products, the naira has taken a bashing and has been devalued twice in the last four months, whilst the budget proposal seems to have been set upon unrealistic and unrealizable oil benchmark.
It is obvious that there are still all manners of frivolities, wasteful and unclear expenditures prevalent in the budget.
Briefing the media on some of these frivolities, challenges and proffering solutions yesterday in Abuja, Lead Director of the Centre for Social Justice (CSJ), Barrister Eze Onyekpere observed that the 2015 appropriation bill, though, not yet passed in law, leaves much to be desired.
According to him, “the sum of N304,573,835,128 were identified as possible savings from the 2015 federal budget proposal. This sum is merely indicative of what can be saved. We did not exhaust all the possibilities by going through all the agencies under the respective Ministries. The National Assembly is enjoined, in the spirit of the austerity measures and the legislative oath of office to use a tooth pick and comb approach to review all the proposals and identify more wastes and monies that can be saved.”
Taking a deeper look at the budget proposal, he cited a few examples of the waste inherent in the document like; N732,420,920 for food and catering, welfare packages of N328 million in the Presidency; N97.9 million for stationeries and computer consumables amounting to 265,753 a day, including Saturdays and Sundays in a 365 day year, magazines and newspapers of N9.9 million amounting to N27,346 expenditure every day (for 365 days including Saturdays and Sundays), welfare package of N1.142 billion, “all in the proposal of the Secretary to the Government of the Federation. What is the National Assembly still doing with a proposal of N150 billion when the nation has declared austerity?” he queried.
On the kerosene issue, Onyekpere said: “Nigerians do not get kerosene at the stipulated price of N50. The Aig-Imokhuede led Technical Committee on Payment of Fuel Subsidies found and stated as follows:
“For example, in spite of a directive issued by President Ya’radua on June 15 2009 that NNPC should cease subsidy claims on kerosene, PPPRA resumed the processing of kerosene subsidy claims in June 2011 and NNPC resumed the deduction of kerosene subsidy claims to the tune of N331,547,318,068.06 in 2011. In addition, the distribution of DPK which was being solely imported by NNPC was skewed in favour of depot owners who have no retail outlets. Two thirds of the Kerosene sold by NNPC between 2009 and 2011 was sold to depot owners and “middlemen” who in turn sold the product to owners of retail outlets at inflated prices of between N115 and N125 per litre (compared to the ex-depot price of N40.90) leaving consumers to pay higher prices than the N50 per litre directed by Government. For several years now, the country has been incurring huge subsidy bills for kerosene and its citizens are not receiving the benefits- instead the country has been financing “rent” for the middle men”.
“Until now, Nigerians still do not enjoy the subsidy on kerosene. Thus what is the provision in the sum of N91.03 billion for kerosene subsidy doing in the budget? If you add this subsidy sum to the original sum we proposed for saving, it will now amount to over N395, 573,835,128.”
He faulted the budget preparation process, saying that the template sent to Ministries, Departments and Agencies (MDAs) for budget preparation seems to be deficient, adding that It does not differentiate between MDAs considering their statutory duties and peculiarities.
“Thus, every MDA must ask for a vote for security services, uniforms, printing of security and non security documents, maintenance of IT equipment and all manner of consultancy services. MDAs ask for a vote for welfare after they have made full provisions for the salaries and remuneration of their staff. Pray, what manner of welfare is this that is not covered by the staff remuneration? There are provisions for medical expenses and supplies after full provisions have been made for contributions to the National Health Insurance Scheme. In a period of austerity, MDAs still dedicate millions of naira to the repair of office furniture. But how much do you need to buy new furniture? MDAs demand money for refreshment and meals as if they are running a restaurant chain, while requests are perpetually made for purchase of library books in an anti-intellectual environment.
“Nigeria still intends to pay for pilgrimages against the constitutional bar on adopting state religion. We have graduated to a system where every MDA votes money for budget preparation and administration, while maintaining accounts and finance departments and employing qualified accountants and other professionals. The old story of “seeds”, “seedlings”, “improved seeds”, “fertiliser”, “organic fertiliser”, “inorganic fertiliser”, etc repeated ad nauseam continues as the Ministry of Agriculture displays impunity and insensitivity in its way and manner of budgeting,” he charged.
Speaking further, Onyekpere maintains that, contrary to the advice of the Oronsaye Committee, Service Wide Votes (SWV) continue to be used as a slush fund duplicating expenses that should properly be domiciled in MDAs, adding that, beyond this, the vote is used through a play on words to request for expenses that have no bearing on the welfare of the people.
He asked, “what is a request for subscription to professional bodies in the sum of N208 million doing in the SWV after MDAs have made their respective request? Where is the location of the projects that have been receiving funding over the years as “Special Intervention Projects” under the MDGs? Is there no terminal date for the Amnesty Programme that continues to gulp billions of naira every year? Evidently, the administration has abandoned the planning system of medium term sector strategies to inform the medium term expenditure framework leading to the budget. There seems to be no connection between the expenditure priorities and high level national development plans.”
He therefore recommended that the Medium Term Expenditure Framework (MTEF) should precede the budget. It should be ready and sent to the upper legislative chamber in late June before the mid-year legislative break. The MTEF should be approved before the presentation of the budget which should be based on it.
The budget should be sent to the National Assembly (NASS) in early September and should be approved by NASS before the end of the fiscal year in December.
The budget should be anchored, according to him, on long term and high level policy documents such as Vision 20:2020. Continued variation between policy, planning and budgeting will ensure Nigeria’s underdevelopment.
The National Planning Commission should take urgent steps to prepare the Second National Implementation Plan of Vision 20:2020. The President needs to support this initiative; the Transformation Agenda cannot take the place of the long term plan in Vision 20:2020.
Some other analysts have at different occasions suggested that the template for budget preparation sent to MDAs should be reviewed. It should recognise differentiation between MDAs in terms of mandate, roles and duties. It should not be an omnibus template applicable to all MDAs. The template should cut down on frivolous line items.
Touching on some key assumptions, Onyekpere affirmed that the benchmark price for crude oil should be reduced to not more than $50 per barrel. The excess (in the event of an increase in oil price) should be saved in the Excess Crude Account.
He advised the federal government mobilise the security forces to police oil production and transportation. As such, crude oil production benchmark should be increased to not less than 2.5mpd.
Nigeria needs to procure crude oil metering facilities at all stages of production and transportation to be able to provide reliable information and data for economic planning, he said.
Continuing, the Lead Director explained that to properly manage the value of the naira against major international currencies would require the avoidance of the creation of new money. This would imply the direct allocation of foreign exchange earned from oil money to the three tiers of government, in a secured form rather than monetising it by minting new naira.
He stated that this is the recommendation of Vision 20:2020 that has since been ignored by the monetary and fiscal authorities. “Thus, the exchange rate used in the budget proposal is not realistic and should be adjusted using the above recommended methodology.”
On fiscal items, especially looking at the expenditure side, he postulated that the federal government should adjust its priorities and restore the capital budget to not less than 25% of overall expenditure. The accompanying compilation of frivolities in the 2015 budget shows areas where the adjustments can come from.
“All borrowing for capital expenditure should be captured in the budget estimates and form part of the funding and revenue of the budget. They should not be treated as extra budgetary funds.
“To cut down recurrent expenditure, federal government needs to implement the recommendations of the Oronsaye Committee with necessary modifications as demanded by economic realities of Nigeria.
“The federal government should take steps to recover the N160 billion stolen by ghost workers and prosecute those who were responsible for the loss. The full implementation of the Integrated Payroll and Personnel Information System (IPPIS) and rolling it out across all MDAs has become imperative. The IPPIS should not be a project in perpetuity that takes forever to extend to all MDAs.
On borrowing and the nation’s debts, he said debts and new loans should only be incurred in accordance with sections 41-44 of the FRA. On no account should debts be incurred for recurrent expenditure.
“The President with advice from the Minister of Finance should set the debt limits for the three tiers of government and submit same to NASS for approval in accordance with section 42 of the FRA.
“For improved transparency in debt management, the Fiscal Responsibility Commission and the Debt Management Office should consider a collaboration to publish the details of Nigeria’s debts and the projects for which the loans were incurred,” he noted.
Onyekpere also charged the legislative arm of government to seriously consider cutting down their allocation by a minimum of 50%, so as to reduce the vote to N75 billion. The austerity measures provide an opportunity for NASS to lead by example by reducing its expenditure.
On revenue projections, he urged the government to take cognisance and seek to enforce (through the Fiscal Responsibility Commission) the express provisions of sections 22 and 23 of the FRA on the payment of 80% of the operating surplus of scheduled corporations to the Consolidated Revenue Fund.
He argued that the proposal to scrap the Fiscal Responsibility Commission should be dropped. “Rather, the FRC should be strengthened to perform its statutory duties so that more revenues will be collected and paid over to the Treasury.”