Reforming the federal government budgeting process

One of the lessons from the ongoing 2016 Budget impasse is that there is an urgent need to reform the federal budgeting process in order to improve effectiveness, efficiency, transparency and accountability in public spending. Therefore, President Buhari must initiate the reform process by setting up a Committee of Experts to examine the relevant sections of the Constitution and the Fiscal Responsibility Act (FRA) of 2007 and propose a Bill for the needed changes. Based on international best practices, the following are some changes that should be made to the federal government budgeting process in Nigeria.

Firstly, the budgeting process must be adequately sequenced and timed to ensure that the budget for a financial year is approved and signed into law by the President before the start of that financial year. A situation where the Appropriation Act is enacted months into the financial year is a sign of planlessness and a recipe for economic anarchy and retardation. In most countries, the time span from the start of the preparation of budget proposals by government agencies (MDAs) to the enactment of the Appropriation Act before the beginning of the financial year takes at least 12 months and there are defined time limits for each of the milestones in the budgeting process. Unfortunately, this is not currently the case in Nigeria. Section 81 of the 1999 Constitution simply states that “The President shall cause to be prepared and laid before each House of the National Assembly at any time in each financial year estimates of the revenues and expenditure of the Federation for the next following financial year”. It is therefore not surprising that President Buhari presented his 2016 Budget Proposal to the NASS on December 22, 2015, that is nine days before the beginning of the 2016 financial year. Therefore, section 81 the Constitution must be amended to compel the President to present his Budget to the NASS not later than four months before the beginning of the financial year, and the NASS must submit its amended Budget to the President for assent not later than 6 weeks before the beginning of the financial year starting January 1. This will give enough room for reconciliation in case there is a disagreement between the executive and the legislature.

Furthermore, the Fiscal Responsibility Act (FRA) of 2007 that guides the budgeting process is unwieldy and clumsy to say the least. The 24-page document needs to be amended to remove ambiguities, redundancies, ensure clarity and give adequate time for budget preparation, review and approval. To ensure proper sequencing and adequate timing, I would like to propose the following sequence and timing for budgeting process:

• Jan- Feb: Preparation/update of MTEF for next three years by the FMBP. The President submits the MTEF to the NASS by Feb. 28.
• March: Review/amendment of MTEF by NASS. Reconciliation of differences. Reconciled MTEF jointly approved by the NASS and President by March 31.
• April – May: Issuance of Budget Call to all MDAs by April 5. Preparation and submission of agencies’ budget proposals by MDAs to FMBP by May 31.
• June-July: Defense of budget proposals by MDAs and consolidation of Budget into Draft President’s Budget by July 31.
• August: Review/Approval of President’s Budget Proposal by the President and his Team of Economic Advisers and Federal Executive Council. Submission of Appropriation Bill to NASS by August 31.
• Sept 1 – Nov 15: Review of Appropriation Bill by NASS, Defense by MDAs and Public Hearings. Submission of Revised/Amended Budget to President for his assent/signature
• Nov 16- Dec 30: Review of Amended Budget, Reconciliation of differences and signing into law by President on or before December 30.

Secondly, Nigeria should return to the concept of national development planning practiced in the 1960s through early 1980s. That is, a Four-year Rolling National Development Plans (NDP) should replace the MTEF which currently forms the basis of the Annual Budget. Given the state of the Nigerian economy and the need long-range infrastructural development planning,, a NDP is a superior economic planning vehicle than the MTEF. Once these projects are contained in the NDP, they cannot be easily dropped or abandoned during the annual budgeting process.

Thirdly, the roles of the legislature and the executive in the budgeting process must be clearly defined in both the Constitution and FAR of 2007 in order to avoid or minimize tensions and disagreements. The simple rule is that “The Executive (president) proposes, while the congress/national assembly/parliament (legislature) disposes”. The legislature cannot propose and dispose at the same time, just as the executive cannot propose and dispose at the same time. The role of the legislature is to scrutinize the President’s budget and make adjustments without adding new projects. If the executive has objections to the changes made by the legislature, both bodies will meet to reconcile the disagreements after which the President will sign the amended budget into law.

Fourthly, a limit should be imposed on the budget allocation to the NASS. I believe that allocating 1% of the total budget to cover the recurrent and capital expenses of the NASS is about right. To ensure transparency and accountability, the NASS Budget Office will prepare the budget proposals for the NASS and submit same to FMBP for inclusion in the President’s Budget.

Fifthly, the practice of inserting or smuggling projects into the President’s Budget by members of the NASS during the review/amendment stage must made illegal because it is an abuse of legislative power for private gain. It also raises equity issues among the various constituencies. In the same vein, the inclusion of constituency projects in the federal budget should either be abolished or strict rules should be established for determining and including such projects.

Finally, civil society groups, leaders of the private businesses and ordinary citizens should be given a voice at both the budget preparation and budget review/amendment stages. This way, the budget will reflect the voice and views of a wider cross-section of the Nigerian society.

 

Emmanuel Ojameruaye

Dr. Emmanuel Ojameruaye is President, Capacity Development International, LLC based in Phoenix, USA