SENATOR BUKOLA SARAKI’S SUBMISSION ON THE 2014 BUDGET

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1)   THE BUDGET THEME

  • The proposed budget christened Budget for Job Creation and Growth’ represents N100 billion reduction from the N4.7 trillion that was budgeted for last year.

 

  • Key assumptions of the budget include: crude oil 2.3mbpd, crude oil price $77.5pb, exchange rate of N160 to a dollar and a GDP growth of 6.75%

 

  • The budget proposes a recurrent expenditure of N2.4 Trillion and a capital expenditure of N1.1 Trillion.

 

  • This translates to 76.3% of the budget for recurrent expenditure and just 23.7% for capital expenditure.

 

  • Aside infrastructure, there is a clear indication that the oil market is evolving fast with the entry of the Shale Oil from regions which we considered to be our oil market main stay; countries like the US, China and even the UK are vigorously pursuing shale oil. What this means is that there is need to diversify our economy radically.

 

  • It is hard to see how the capital outlay expected here will galvanize this economic shift or movement away from oil.

 

ROUTINE BUDGETING WITH LITTLE IMPACT

It is regrettable to note that our National Budget process, which should have a lot of development implications, is fast becoming a mere procedural ritual to fulfil a legal condition rather than a scrutiny on efficient resource allocation and use for the welfare of our people.

 

Let’s be frank and admit that our budget process has been inadequate. And a lot of the failure of the budgets in the past cannot be completely ascribed to the executive alone. We too have a low pass mark on the budget ourselves, as we have not guarded our budget process effectively and have shielded away from vesting it with the right integrity assurance value it deserves. Today, we have a situation where even civil servants find no hesitation in abusing the provisions of the budget with impunity.

 

This 2014 budget may be our last opportunity to redeem ourselves and correct this budget anomaly. If we don’t seize this opportunity and put things right soon it may begin to appear that National Assembly budget no longer matter. Why do I say so?

 

In recent years we have seen a growing trend where the budget is scorned and hardly executed above 50%.

Take the 2012 and 2013 budgets for instance, the percentage of implementation of the 2012 and 2013 budget has continued to dwindle while the level of extra-budgetary expenditure in the system unauthorized either by the appropriation Act or any other Act of the National Assembly has continued to rise.

 

It is the duty of the National assembly to rein in public expenditure and ensure probity through budgeting and oversight. It is an open secret that the levels of public revenues expended through extra-budgetary means have continued to grow at a frightening dimension.

 

Take the issue of revenues for e.g., how do we explain the expenditure of 700m daily on kerosene, even when there was no line item on the budget for kerosene subsidy in the 2013 budget. Again, the waste this exposes the budget to is not just as to the amount involved, but also the fact that the product is not available to Nigerians. How is it that this barefaced fleecing of the country and an unapologetic violation of the budget of this magnitude continue without any response from the National Assembly?

 

Another example is the parallel government called NNPC. Yes, it has become a parallel government. Otherwise how do you explain this- NNPC has openly told us that they had spent the missing $10bn (this is after questions were asked about unexplained shortfalls in remittances) of public revenue without appropriation? This is an amount far in excess of the national capital budget for the year 2014. No one would have known and NNPC would not have bothered to explain had there not been an enquiry over revenue shortfalls.

Indeed, it is fair to say that what we have today is that we have two parallel government budgets, one that is authorized by the National Assembly and another running as extra-budget expenditures.

 

Part of the problem in my view is the process of budgeting. Our budget process lacks thorough scrutiny and deliberation and there is no consequence for budget violation- a matter considered high crime in other countries.

 

My attitude is this, if we the National Assembly, make the mistake of going into the 2014 the same way we have been doing we are doomed to fail. We must open our budget process a little further to allow for deliberation and scrutiny.

 

A situation where aside our committee budgets it’s hard for senators to contribute to and understand budgets covering other sectors as there is very little debate on sectarian basis for allocation made and how such is finally utilized. We hardly know the impact of our budget on senatorial basis.

 

There is little time to review how our budget affects our states, our farmers, market women, family budget, small-scale entrepreneurs our people in general.

 

A situation where as chairmen or members of committees assigned to scrutinize budget allocation to committee area of jurisdiction you cannot explain or be responsible for the finally approved budget within your area of scrutiny is a grave situation that requires attention.

 

It is no longer unheard of for third parties to infiltrate the budget process and inject things into the budget but it is happening and could happen again.

 

Make no mistake about it. A violation of the budget either during passage or implementation of the budget it is a gross abuse of office.

 

No matter how you look at it, a situation where an agency of government can, without qualms and bare-facedly claim to spend in extra-budgetary discretion the sum of $10bn an amount far greater than the entire federal capital budget for all government agencies and programs including education, health, roads, aviation, power, for the year in a manner that the National Assembly has no say about, calls to question the relevance of the National assembly in the revenue and expenditure process of our governance and more so whether our 1999 Constitution is the source of all authority in Nigeria.

 

For the avoidance of doubt, the 1999 Constitution declares in Section 1(1) and says, “This Constitution is supreme and its provisions shall have binding force on all authorities and persons throughout the Federal Republic of Nigeria. It goes further to provide in Section 80(1) that “All revenues or other moneys raised or received by the Federation (not being revenues or other moneys payable under this Constitution or any Act of the National Assembly into any other public fund of the Federation established for a specific purpose) shall be paid into and form one Consolidated Revenue Fund of the Federation.

 

(2) No moneys shall be withdrawn from the Consolidated Revenue Fund of the Federation except to meet expenditure that is charged upon the fund by this Constitution or where the issue of those moneys has been authorised by an Appropriation Act, Supplementary Appropriation Act or an Act passed in pursuance of section 81 of this Constitution.

 

(3) No moneys shall be withdrawn from any public fund of the Federation, other than the Consolidated Revenue Fund of the Federation, unless the issue of those moneys has been authorised by an Act of the National Assembly.

 

(4) No moneys shall be withdrawn from the Consolidated Revenue Fund or any other public fund of the Federation, except in the manner prescribed by the National Assembly.”

 

 

While acknowledging that the executive have a pivotal role to play, the constitution recognizes the danger of allow such a very important and onerous duty to be performed only by the executive and demanded rightfully that the National Assembly the representative of the people approve the budget.

 

Our fellow Nigerians expect us to not just do that but that we do a thorough job of scrutinizing the budget and ensure that our scare resources are spent wisely and efficiently for the sole purpose of the welfare of our people.

 

I am happy that the SP has laid down the ground rule for this year’s budget consideration in his speech that this year’s budget “consideration will be robust and meticulous”. That we will “insist on accountability, probity and transparency. We will not wring our hands in apathy … we will work to ensure that the developmental goals underpinning the budget are fully realized”.

 

We can no longer allow ourselves to cave into the pressure to rush through for expediency sake in a job that requires rigor, thoroughness and cool-headedness consequently we create a budget that is hard to implement and when implemented produce unintended and incongruent consequences.

 

If we want budgets approved by the National Assembly to be faithfully implemented, then we must ensure that the process is deliberately exhaustive and followed. A situation where we have a revenue drop of over 40% is not good and shows lapse in budgeting. It means that the executive is not doing a thorough job before presenting to us the budget they seek approval for. We have allowed this situation to go on for long. The MTEF was passed without due process. The Fiscal Responsibility Act requires that mandatory and proper consultations with the states be carried out before the MTEF is prepared and presented. This did not happen. Last year’s capital releases came to not more than N900bn out of a total capital outlay of 1.4bn.

 

IMPORTANCE OF SCRUTINY

 

Much has been said about the need for further scrutiny but let us consider the present draft budget before us.

 

  • This budget even without much work reveals far too many costly inconsistencies. From the outset there are cost inconsistencies all over the budget and it would appear that there is a lack of meaningful attempt at efficient procurement evident in the entire budget. Some of the simplest is exemplified in a few reoccurring procurements all over the budget. Take for example the purchase of desktops where a unit is listed for 2m the same line item wherever listed under the budget of the ministry of education, a unit is put at 2m the market while the market reality will show that N200, 000 will be efficiently utilized to purchase a unit. On the same budget for works desktop were listed to cost N1m per unit.

 

  • There are however a few noticeable exceptions which are to be commended where capital expenditures were more or less efficiently appropriated. These include agriculture and rural development that allocates N35.1b to capital and N31.4b to recurrent respectively; water resources, N30.6b and N7.7b; power N59b and N3.3b; transport, N29.3b and N8.1b; works, N100.1b and N28.5b; lands and housing, N12.8b and N5.6 and aviation N26.1b and N6.1b.

 

  • The rest of the 42 ministries, departments and agencies (MDAs) will spend more on their recurrent than on capital and in some instances the difference is so huge. Here are a few cases: the Ministry of Interior which is expected to spend N144.7b in recurrent and just N6.29b on capital; Police formation and commands, N285.5b and N6.79b; Education including UBEC, N443.9b and N49.5b and Health, N216.4b and N46.3b.

 

 

2)  INEXPLICABLE BUDGET PRIORITIES AND DISPARITIES

 

  • Last year, N90.9m was budgeted for this item; what has happened or expected to happen this year that will propel this level of spending. Yet, this is aside N188.3m to be spent on office stationery and computer consumables (for which N507.9m was budgeted last year).

 

  • The education budget is the same. An e.g. is a line budget to procure 15 desktop computers for 30m, which translates to 2m per unit. There is no desktop computer costing over 500,000 naira in the open market. In fact since most of these will be bulk purchases the cost is expected to come down. More importantly, there is no suggestion that what is needed is the highest end of desktop computers.

 

  • A peep into the budget for the Ministry of Foreign Affairs brings its own excitement. For instance, there is plan to spend money for the maintenance of plants and generators in several of our foreign missions, including the one in London.

 

  • The foreign ministry’s headquarters would part with N201.7m for fumigation and cleaning services during the year.

 

  • Some others that illustrate the priority dichotomy are highlighted below:

 

  • Construction of a VIP Wing at the State House Clinic: N705 Million

 

  • Total Capital Budget for Obafemi Awolowo University Teaching Hospital: N328 Million

 

  • Total capital budget for University of Ilorin Teaching Hospital: N310 Million

 

  • Total Capital Budget for NOMA Children Hospital, Sokoto: N 89 M

 

  • Total capital budget for The Institute of Child Health, University of Benin Teaching Hospital, and Benin City: Nil

 

  • It is clear from the foregoing that to the formulators of the budget, the VIP Wing at the State House clinic is superior in terms of cost, priority and efficient allocation of resources to 2 teaching hospitals, a National Children’s Hospital and a Pediatric Research Institute combined.

 

 

3)  DEFENCE AND SECURITY BUDGET

 

  • The budget proposal rewards banditry and encourages militancy at the expense of the fighting men and women of the Nigerian military.
  • Set forth below are comparative figures from various elements of the budget associated with defence and national security:

 

  • Stipends and Allowances to 30,000 Niger Delta Militants under the Presidential Amnesty Programme: N23.6 Billion (twenty three billion, six hundred million Naira)

 

  • Reintegration of Transformed Ex Militants: N35.4 Billion (Thirty Five Billion, Four Hundred Million Naira)

 

  • Total Capital Budget for the Nigerian Army: N4.8 Billion (Four Billion, Eight Hundred Million Naira)

 

  • Total Capital Budget for the Ministry of Defence Headquarters, Army, Navy and Air Force: N34.2 billion (Thirty Four Billion, Two Hundred Million Naira)

 

  • Total capital budget for ALL Police formations and commands: N6 Billion (Six Billion Naira)

 

 

4)  DISCRETIONARY SPENDING COST INSENSITIVITY

  • There is too much discretionary spending in the system, which are hard to put in context. E.g. the use of the phrase ‘Welfare packages’, which will gulp as much as N40.4m in the headquarters of the Ministry of Water Resources? This is seen in many places. It is good to note that the said figure is not for the entire ministry and agencies under it, rather for the headquarters. Welfare package typically appears in the budget of every MDA and one wonders who audits this spending.

 

  • Other heads of interest demanding explanation include ‘Cleaning and fumigation services’ (for which the Headquarters of the Foreign Affairs Ministry would spend N201.7m and the Niger Delta Ministry will spend N25m on) and ‘Anniversaries and celebrations (for which the Ministry of Women Affairs will spend N71.6m)’. There are also budgetary heads for ‘Printing of security documents’; ‘Printing of non-security documents’; ‘Field and camping materials supplies’ (N4.39m in the Ministry of Women Affairs); ‘Uniforms and other clothing’; ‘Refreshments and meals’ (N16.7m in the Ministry of Women Affairs); ‘Honorarium and sitting allowance’ and ‘consultancy services for budget preparation’

 

  • The State House Headquarters there is a line item to purchase an embalming machine at the cost of N1.65m and a hydraulic post-mortem table at N4m.

 

  • General maintenance in the State House will cost N1.19b of which N138.9 will go for motor vehicle and transport equipment maintenance.

 

  • N907m will be spent for office and residential building maintenance; N17.4m for office furniture maintenance and N40m to maintain office and IT equipment.

 

5)  THE BUDGET IS FULL OF DISTORTIONS

  • The budget is full of distortions. In some areas items are simply restated verbatim several times and amounts allocated as many times as they are repeated. In the ministry of Education some university budgets are simply restated. In one case a university budget is simply re-pasted as another university budget.

 

  • Also, in the Foreign Affairs ministry budget, there are plans to spend N834.4m to purchase and freight 40 ‘representational cars’ to 40 of our foreign missions. This translates to N20.86m as average cost for the cars. Wouldn’t this cost be reduced if these cars were bought in the locations they are to be used?

 

  • Another example in the ministry of foreign affairs will suffice. For e.g. there are provisions for office equipment repeated 5 times and several allocations made for the same item repeatedly and the distortion is compounded by the fact that provisions are made for the same purpose but capture using other framing. In other cases items are included that are not measurable or executable. E.g. the Institute for Peace and Conflict Resolution will be spending N9m for ‘building democracy as an instrument of peace’.
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