NIGERIA AND LATE BUDGET APPROVALS: BACK TO SQUARE ZERO
NIGERIA AND LATE BUDGET APPROVALS: BACK TO SQUARE ZERO
We seem to be back at it again. One step forward, two steps backwards. Recent media reports about a brewing budget crisis between the Executive and the Legislature is discomforting and portends a real danger to the orderly development of our political economy.
For many years, we have had disjointed budget implementation cycles that have left many questions than answers. National budgets are approved march or April, four months into the budget year and six months later, by November, further releases are stopped and unused funds returned to the treasury. How much of the Nation's budget can be executed in six months, not with with the delays due to civil service bureaucracy and the 'Undue Process' bottleneck. So year on year, we go through the rigours of a budgeting process and we derive sub optimal benefits because of delays at every stage.
In the last two years, we have noticed some effort at changing this depressing trend. Preparations for Budget 2013 set new records in our recent history. The President sent the Appropriation bill to the National Assembly in October? and before the members shut down for the Christmas holidays in late December, the bill had been passed in both houses of the Legislature. An unprecedented record! Though the delay caused by the reluctance of the President to accent to the bill based on three key issues, almost blunted the advantage of the early passage.
The President I understand, objected to the oil price benchmark, the relocation of certain SURE-P funding from Community Services and Public works to constituency projects and the unusual and never-heard of refusal to appropriate funds for the Securities Exchange Commission(SEC) just because they had some problem with the DG ( who did the unthinkable by spilling the beans on the honourables). The Executive felt strongly that the Legislature needed to ammend the budget and it took several weeks before the President reconsidered his position and signed the appropriation bill into law. Subsequently, the President sent an amended appropriation bill to the National Assembly. It took another several weeks of going forth and backwards before the National Assembly ate the humble pie and halfheartedly approved the amendments, though implementation of some of the so called amendments remains difficult,if not impossible.
With all these impediments to a flawless implementation of the 2013 budget,it is estimated that between 65-70% of the Capital budget will be released at year end. This is some improvement over the previous years where we hardly reached 60% of the capital budget releases and utilization. And this is on top of the claim by the Government that it has had shortages in revenue this year, largely due to unprecedented wholesale thefts of Nigeria's crude. So we can conclude, that if this shortage did not occur, may be the capital releases would have been higher. I personally feel that these oil thefts can be significantly minimised if not eliminated completely. I am not persuaded that we have done our best in dealing with this economically devastating and globally embarrassing debacle. Sources from some of the oil majors suggest that helicopters flying over the Niger Delta coast will see the illegal ships and tankers loading Nigeria's crude oil illegally. As for those who are stealing and refining in make-shift refineries in the swamps, their locations are well established. Why we can neither prevent nor wipe out these illegal activities leave me bemused.
And so we were hoping that that the budget process and cycle will improve further this year for the 2014 budget. If the Executive submitted the Budget proposals to the National Assembly in October last year, my hope was that they would submit in September this year at the least. If the National Assembly passed the 2013 bill on the 24th of December last year, I had the hope that this year, they would pass the 2014 budget on the 1st of December. But alas! As at today,almost the end of November, the budget proposals are yet to be presented to the National Assembly. Media reports indicate that the presentation by Mr President has been postponed twice already.
The reasons for this delay and a return to our old ways are difficult to fathom. The media reports that it had to do with disagreements on oil benchmark price does not make much meaning to me. Every year, there have been arguements between the Executive and the Legislature on the appropriate oil price benchmark. Indeed, often, the Senate and the House start with different positions on this. But as part of the review process and the negotiations that go on, a common benchmark is agreed, most times involving compromises from all sides. Though the arguement as to what arm of Government is better placed( statutorily or by competency) to determine this benchmark has been going on for years, that has not been and should not be why the appropriation bill can not be submitted up till now. The other reason I heard for the last postponement, which was that the President had to travel for an investment forum in London is even more mundane. The appropriation bill to my mind, is the most important bill the President sends to the National Assembly every year and therefore must have higher priority than investment forum of any kind. What is more, the President is the one who determines his schedule and I can not see why there would be a conflict and even if one arose, the priority should be given to sorting out a critical National assignment. So somebody should give me a more intelligible reason!
We may be lucky, unlike the American Government that can be SHUT DOWN when appropriation is late in coming or who FALL OFF THE CLIFF when debt sealings are not approved by the Congress. But unlike America, our Country's Economy is heavily dependent on the Federal Government's annual budgets. In addition to the allocation of National resources to different sectors of the economy ,the budget sets the ground rules for the economic conduct for the year. Trade policies, tariffs and investment incentives are often embedded in our annual budgets. Indeed, the entire economy virtually freezes at the end of each year waiting for the new policies that will be released in the budget. So when we delay the approval of the annual budget, we do not only delay government or public sector activities but we paralyse Private Sector businesses as well.
For a Nation that professes that it is in a hurry to develop and join the league of most productive Nations in terms of GDP,anything that has the potential to slow down economic activities must be avoided by all means. I believe that our Political Leaders and Public 'Masters' at all levels must come to term with this fact and stop being clogs in the wheel of progress of our Nation. Let us develop a better budgeting and implementation culture that will show that we are truly serious to achieve Vision 2020.
Mazi Sam Ohuabunwa OFR
President, Nigerian-American Chamber of Commerce
Immediate Past Chairman, Nigerian Economic Summit Group(NESG)