TELL Magazine

NGOZI-OKONJO IWEALA

Despite public outcry on the need to cut the cost of governance, the executive and the legislature continue to encourage corruption through padding of national budgets

It is not so difficult to see that the split in the ruling Peoples Democratic Party, PDP, and the gale of defections in the National Assembly, NASS, are the reasons the passage of the 2014 budget would be delayed. For the first time, legislators, especially in the Senate, are combing through the budget in a way they had not done before. Senators, especially of the opposition All Progressives Congress, APC, looking to stall the passage of the budget for some political gains, are digging out dirt from it and calling on their colleagues to return it to the executive.

Debates on this year’s budget in the Senate and the House of Representatives have been more expository than those of the previous years because the ruling party, which hitherto had comfortable majority in both chambers of the NASS, is now facing some serious challenge as a result of defections. Senators, especially those in opposition, are saying they would not support the passage of the budget until ministries, departments and agencies, MDAs, are made to defend every kobo in their budget, and when the executive shows evidence of the performance of the 2013 budget.

While the 2014 Appropriation Bill has passed second reading in the Senate and has been sent to the Appropriation Committee, the House of Representatives suspended consideration of the budget last Tuesday when a member raised a point of order that the bill did not comply with the provisions of the Fiscal Responsibility Act. John Enoh, chairman, House Committee on Appropriation, rejected the point of order saying the bill complied with all provisions of the Act, but Aminu Tambuwal, speaker, ruled that debate be suspended on the bill until the issue is resolved.

Although many are suspicious of the intentions of the legislators, especially those of the APC whose leadership has ordered a blockade of all executive bills until the rule of law is restored to the country, their close scrutiny of the budget has, however, brought to the fore the corruption perpetrated through annual budgeting.

Some of the legislators asked why in a total budget of N4.6 trillion, recurrent expenditure would be 74 per cent (N2.4 trillion) while capital allocation stands at less than 25 per cent of the entire budget (N1.1 trillion). The balance of the budget is N712 billion for debt servicing; N39.6 billion for statutory transfers and N268.37 billion for the Subsidy Reinvestment and Empowerment Programme, SURE-P.

More intriguing is the fact that after a two-year drop in recurrent expenditure, it suddenly went up again this year by nearly four per cent. In 2012, recurrent dropped from 74 per cent to 71 per cent, and in 2013, it dropped to 69 per cent. From 69 per cent last year, it has gone up to 74 per cent. Out of a total budget of N4.749 trillion in 2012, recurrent was N3.357 trillion while capital was N1.34 trillion. Last year, out of a budget of N4.92 trillion, recurrent gulped N2.41 trillion while N1.54 trillion went to capital projects.

The legislators were more enraged by the fact that recurrent expenditures are always fully implemented while capital releases may not get 30 per cent implementation.  It was so last year and in the previous years. Ahmed Lawan, a senator from Yobe State, while commenting on the 2014 budget in the Senate chamber, said that Ngozi Okonjo-Iweala, the finance minister and coordinating minister for the economy, promised the Senate during her clearance that she would reduce the country’s recurrent expenditure because high recurrent expenditure was bad for economic development.

Investigations by the magazine revealed that the cost of governance, which is captured by recurrent and capital administrative expenditure, is always on the high side because the budget has become a convenient avenue through which public servants siphon money. And they do this with the connivance, in many cases, of the legislators who perform oversight on them.

The budgeting process in the MDAs is similar. A budget officer requests for estimates from each department and it is collated as the annual budget, and submitted to the budget office of the ministry of finance. In most cases, since we operate what is called the “Envelop System,” the budget office simply tells the MDAs the funds available for it and the budget estimates are prepared by each MDA to meet the available funds.

A top source in one of the government agencies said what they do is to plan their budget with the available funds, which in most cases, are not enough to executive any capital expenditure. “So MDAs share out the money among all the sub-heads under recurrent,” he said. Thus, even when the funds available are above the recurrent need of the MDAs, the money still goes to recurrent and other administrative expenses.

More ignominious is the common practice where departments pad their budgets with monies that would go into private pockets. What they do is to list items they know would not be acquired and vote monies for them. When the funds are released, they are siphoned by those in charge.

The legislators who perform oversight on the agencies who are in a position to assess how their budgets performed are, in most cases, “settled” either financially or through awards of contracts. So the cost of governance continues to go up.

For instance, in the budget of this year, nearly all the MDAs included in their budgets funds for the acquisition of computer software. Nigeria’s foreign missions also included computer software acquisition in their budgets. The funds ranged from N10 million to N580 million requested by the office of the secretary to the government of the federation. The ministry of finance made a request of N63.2 million; National Pension Commission asked for N288.6 million and the Ministry of Police Affairs, N80 million. Again, while the Federal Medical Centre, Nguru, Yobe, asked for N15 million, that of Bayelsa requested for N63.9 million for its own software.

Kola Raheem, a software engineer and chief executive of Datatek Computers, told the magazine that one software can be developed for all the MDAs without all of them incurring individual costs. “There are two options: you can acquire one software that all the MDAs can access or you can acquire software and buy the licence for others who would use it. Its like a university, they instal only one software and other departments access it.”

Efforts to get officials of the ministry of finance to comment on the development were unsuccessful. When contacted, Bright Okogu, director-general, Budget Office in the ministry of finance told the magazine he could not comment on the budget until it is passed. “I’ll rather wait until the budget is passed. It is not right for me to say anything at this stage,” he told the magazine last Wednesday.

Babafemi Ojudu, a senator from Ekiti State and deputy chairman of the Senate Committee on Establishment and Public Service, told the magazine that budgets are usually padded by government agencies so that they have funds to siphon. He mentioned one incidence when he requested for copies of an in-house journal listed in the budget of a ministry. He said the heads of the ministry fidgeted and ended up not providing copies of the magazine – a development he interpreted as stealing of public funds.

Ojudu said the items are repeated every year in the budget and the legislators allow it to pass without any close scrutiny. He said the legislators have contributed to the corruption in the public service because they are also beneficiaries in one way or the other. He said it is the duty of the legislature to scrutinise the budget and ensure that funds on irrelevancies are diverted to productive sectors.

Due to wastages that result from duplication of functions and rent seeking, many have proposed rationalisation and harmonisation of the MDAs to save the country from ploughing all its resources on bureaucracy. Obadiah Mailafia, an economist and executive director of Centre for Policy and Economic Research, said it is a regrettable fact that corruption has kept the country’s recurrent expenditure on the upward swing. He said some Asian countries spend 70 per cent of their annual budget on capital projects while recurrent takes a meagre 30 per cent. He said that was why those countries overtook countries like Nigeria in terms of development.

While every government has mouthed the need to rationalise and harmonise the civil service to cut costs and for efficiency, no administration has initiated any significant measure to cut down government and save national resources. In 2000, there was a white paper on the Ahmed Joda Panel on the Review, Harmonisation and Rationalisation of Federal Government Parastatals, but the Olusegun Obasanjo administration never implemented it.

Agitations for restructuring of federal establishments continue when Goodluck Jonathan became President in 2010. The Presidential Advisory Committee he set up headed by Theophilous Danjuma, former defence minister, advised the government to rationalise and eliminate waste by reducing the number of ministries from 42 to 18. But Jonathan said reducing the cabinet size was against the provision of the 1999 Constitution, which requires the president to appoint at least a minister each from every state of the federation.

Later in 2012, Jonathan again set up another committee on the restructuring and rationalisation of federal government parastatals led by Steve Oronsaye, former head of the civil service of the federation. The Oronsaye committee submitted its report in April 2012 to President Jonathan. It recommended, among others, the abolition of 38 agencies, merger of 52 and the reversal of 14 ministries into departments.

Parastatals recommended for abolition include: Nigeria Investments Promotion Council; National Salaries and Wages Commission; Infrastructure Concessionary and Regulatory Commission; Fiscal Responsibility Commission; Nigeria Integrated Water Resources Management Commission; Gurara Water Management Authority; National Inland Water ways Authority and Standards Organisation of Nigeria.

Shortly after the Oronsaye committee submitted its report, President Jonathan appointed another committee to review the report. But nearly one year after, nothing has been heard of the report. While the administration acknowledges that development could never take place if recurrent continues to surpass capital expenditure, it has not found the political will to do what is right for the country.

The legislature, which often criticises the executive as responsible for the usually bloated annual budgets, has not help matters. In an era of urgent need to cut costs of government, the legislature is also busy lobbying for bills seeking to create more government agencies. A bill seeking to establish the Nigerian Financial Intelligence Commission has just passed the second reading in the House of Representatives, and a public hearing started last week.

Private bills have been sponsored in the past for the establishment of agencies such as the Nigeria Diaspora Commission, an agency for internally displaced persons and many others, but did not go beyond the first reading.