• Saturday, February 24, 2024
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2014 Draft Budget Proposals: A Damp Squib


As the debate rages in the National Assembly on the 2014 budget proposals, we are confronted once again with the challenge of lack of resources to adequately fund our infrastructure requirements.   Like in previous years, the 2014 budget falls far short of what we should be investing in capital at this stage of our development as a nation.  Although some progress has been made in investment in power, roads, railways and airports, more needs to be done to address the country’s huge infrastructure gap.  Compared to the 2013 budget, funding for capital in the 2014 budget is down by about N600bn in real terms, after allowing for the impact of inflation.  With a rising population and an infrastructure gap possibly in excess of N50trillion, Nigeria cannot afford a reduction in the funding for capital.

The Co-ordinating Minister for the Economy, Dr Ngozi Okonjo- Iweala, in her budget statement on 20 January kicked off the discussions on the ratio of re-current expenditure to capital in the 2014 budget proposals.   In her words: “We worked hard to reduce this ratio from 74.4 % in 2011,   to 71.5 % in 2012, and further to 67.5 % in 2013 but it has risen back to 74 % in 2014.”  I suspect that the ratio of re-current expenditure to capital, based on the actual performance of the 2013 budget, will be much higher than the 67.5% ratio quoted by the Minister.  Although the practice of publishing the details of MDA budgets in the Budget Office website is welcome, the publication of a single year’s set of data does not tell at a glance how well MDA budgets have performed in the past, and so leaves much to conjecture.  It is important that this information gap is closed so that the public can meaningfully participate in budget discussions from an informed position.  To enable stakeholders to better engage in the budget process and hold government accountable, it would be helpful if the budget proposals for 2014 are shown alongside the approved budget for 2013;  the actual budget performance for 2013;  and the actual budget performance for 2012, so that Nigerians can follow at a glance each MDA’s budget proposals and their actual delivery over a two year period.

Politicians must bear the full blame for the increase in public sector payroll.  They have done a ‘good job’ bastardising the recruitment process in the civil service, creating waste and inefficiency by their actions.   Reports abound of  vacancies advertised being filled by two or three times the posts available  due to pressures from politicians and ‘big men’ to employ their candidate.  It is believed to be common  practice now for announcements of vacancies in the public sector to attract list of names from members of the National Assembly, traditional rulers, senior politicians and their wives, and even ministers, all seeking to place their candidates, undermining the recruitment selection process.  We cannot continue like this.  We must find a way of releasing more resources for capital expenditure through the curbing of waste and inefficiency in the public sector.

The Finance Minister in her public presentation of the 2014 draft budget commented on the need to review the structure of the federal budget, going forward.  This is long overdue, but welcome nonetheless.   The size of government in Nigeria is bewildering to say the least – over 40 ministries, more than twice the number of ministries in the UK or Germany.  The president has pussyfooted long enough on the implementation of the Oronsaye report on streamlining federal government parastatals, commissions and agencies.  These bodies, reported to be in excess of 500, all duplicating each other’s roles and the roles of their supervising ministries, constitute a huge drain on the resources that would otherwise be ploughed back into job creating investment in infrastructure.

As the National Assembly debates the 2014 draft budget proposals, we are confronted once again with the issue of lack of accountability and transparency of our major revenue generating agencies. At the vanguard of these agencies are the NNPC and the Nigerian Ports Authority.  These super agencies, especially the NNPC, have become a government unto themselves and must be called to order.  The sad tragedy is that the government of the day seem handicapped to do anything about this.

The National Assembly and the government must confront this morass once and for all through legislation that is enforceable.  They must work together as a matter of urgency to review the laws governing these agencies, including the rules on what agencies must remit back to the treasury.  This review should also include regulatory bodies like the NCC, the NDIC and similar bodies.  The current arrangement for remitting receipts back to the treasury is corrupt and scandalously inadequate.  Monies that should be remitted back to Federal coffers are used to fund lavish benefits and welfare packages for staff and board members.  These bodies should be made to remit more of their income back to government.  The penalties for non compliance should be much stiffer and backed by custodial sentences, with board members and their DGs held jointly and severally liable for non compliance.

It was striking to note that the word ‘tax’ was only mentioned once in the president’s 22-page address to the National Assembly on the 2013 budget, and this was not even in connection with raising money.  It is foolhardy for any country to believe they can rely on just one source of revenue to fund all their needs.  Even Rome, two thousand years ago, was built on tributes and taxes.  It is common knowledge that the rich and big businesses in Nigeria pay little or no taxes.  This is one area where the government can generate a lot of income with good laws and better enforcement.  The current arrangement where everyone including the billionaire pays a withholding tax of 5% on fees received is simply a joke.  We need to review our tax laws to make them more progressive.

The perennial problem of corruption and same budget lines, seemingly repeating themselves every year, continue to bedevil the budget process.   There is need to review the way finite capital resources are prioritised between MDAs.  The government should not be allocating as much as N16.9bn in capital to the Office of the Government of the Federation, a back office department, when our hospitals lack the most basic drugs and life saving equipment.    If you are poor and unlucky to be struck by cancer or any other serious illness, the chances of you surviving in today’s Nigeria is virtually nil;   and so many of our fellow citizens go to federal hospitals to die.  This is unacceptable in a civilised society.

Whilst the thrust on key infrastructure projects like power is welcome, the total allocation for capital in the draft 2014 budget remains grossly inadequate.   We must explore new avenues for funding the country’s huge infrastructure gap.  We must address the issue of fraud and oil theft in the Niger Delta, allegedly aided and abetted by corrupt government officials and security agents.   No area should be sacrosanct, not even the current subsidy regime.

By: Emmanuel Nwachukwu