Wednesday, 22 May 2013
Nigeria’s Budget And The Dance Of The Masquerade By Nasir Ahmad El-Rufai
Traditional masquerades have one enduring commonality: they run backwards and forwards; jump up and down and generality create an atmosphere of chaos. At the end of their exertions, though, not much would have changed because both the masquerade and the spectators know one thing: it is all drama.
If any scenario can be used to describe the imbroglio surrounding Nigeria’s budget this year, it must be that of the dance of the masquerade – from the Presidency to the National Assembly and back again, with little substance by way of policies and programmes to create jobs, stimulate economic activity and reduce poverty. If anything, the Nigerian public who are little more than befuddled spectators are left with nothing but the dust from the meaningless exertions for which they would be charged about 5 trillion naira.
Nigerians heaved a sigh of relief in September 2012 when the Finance minister, Dr. Ngozi Okonjo-Iweala announced that the N4.92trn 2013 draft budget had been concluded. She was emphatic that it would be presented to the National Assembly as soon as it resumed from its recess in September. Being the second time since 1999 that both chambers were likely to pass the Appropriation Act before year end, Nigerians thought the nation would mark a return to the normal budget cycle of January to December as opposed to the current cycle which runs from about April to March the next year, mainly due to arguments between the executive and the legislative arms and all the paraphernalia surrounding passing and signing the budget.
However, between the battle for an oil bench mark of $79 or $75, the N63bn added to the original budget proposal and the non-inclusion of a budgetary vote for the Securities and Exchange Commission, the Senate only confirmed receipt of the signed 2013 budget from President Goodluck Jonathan on the 14th March, thus ensuring that any hopes of a January-December budget cycle are crushed.
In the course of the budget analyses, we would see if like previous budgets, this budget does anything to put Nigeria’s battered economy on the path of growth or sustained development. What provisions does it offer the tens of millions of unemployed Nigerians with no hope of better future? What are its provisions for rescuing the 61% of Nigerians currently living in absolute poverty?
The 2013 Appropriation Act envisages spending N4.98trn, an increase of about 6% from the N4.69trn for 2012. This consists of statutory transfers of N387bn (7.7%); 11.9% (N591bn) is set aside for debt servicing; while personnel and overhead costs amount to N2.38trn (47.8%) and capital expenditure is some N1.62trn (32.5%). Less than one out of every three naira budgeted in 2013 would be invested in education, healthcare, roads and electricity. Whichever way one looks at these figures, they confirm surely that this budget is likely to be a failure on arrival.
For instance, with all the rhetoric that the cost of governance is reducing, one would expect figures that are closer to 25% as is the internationally acceptable standard for recurrent expenditure, but no, the recurrent budget is about 68% - more than double the capital expenditure provisions. In fact, 2013 recurrent figures show only a pathetic reduction of about 3.6% from the 2012 levels.
Let us look to the performance of the 2012 budget for an idea on the possible results of the 2013 budget, considering that the economic team is unchanged and contrary to expectations, the time of commencement of execution for the 2013 Appropriation Act would most likely replicate that of 2012.
Implementation in 2012 was shrouded in controversy; by the third quarter of the year, the finance ministry pegged implementation at 56% but when new facts emerged, the ministry reverted the figures to about 12.6%. The House of Representatives came up with a different figure entirely and issued a threat to have the President impeached if by September the same year the budget was not implemented 100%. The budget was not implemented 100% and neither was the president impeached. Interestingly, the implementation for the four quarters of 2012 fell below the projected estimates.
Looking at the above picture, it is clear that unless something drastic is done by government, the 2013 capital budget implementation will remain at similar levels with that of 2012 and the nation’s infrastructure deficit will continue to widen. There is the need to put in place checks and balances to ensure that Ministries, Departments and Agencies actually provide services with capital funds that have been budgeted and released to them.
One would have expected that the over-hyped performance contracts signed between the President and his ministers would lead to the weeding out of non performing ministers, or the Directors General of MDA’s that fall short on performance and implementation, but in spite of the dismal 2012 figures, they have all mostly retained their positions.
The President should be aware that this poor budgetary performance will turn out to be a major hurdle in his quest for a possible re-election. Nigerians will demand to know what he did with resources entrusted to him in the last five years before considering him for another term. The performance of this government has been below average at best and contrary to the Jonathan posters that flooded Abuja earlier in the year; we cannot describe poor performance as one “good term” and therefore deserving another.
An analysis of some key ministries would reveal the following structure: N278.8bn is budgeted for Health; about 79% (N223bn) of the entire sum is voted to recurrent expenditure, and 55.7bn (19.9%) for capital expenditure. The minister lamented a few days ago that the trio of HIV/AIDS, Tuberclosis and Malaria were still major public health issues in Nigeria. According to the World Health Organization (WHO), Nigeria has the highest number of malaria cases in the world contributing about 30% to the global burden. Our current doctor to patient ratio is 1 to 3,500 people and this miserable capital allocation at tertiary level is not sufficient to adequately address the challenges facing this sector. How does a forward thinking government justify allocating under one-fifth of its health budget to capital expenditure?
Education is generously allocated some N427.5bn. Problem is, like health, the major chunk of its allocations are misdirected; N60.1bn (14%) is allocated to capital expenditure. At N367bn (85.8%), recurrent expenditure is about 6 times the size of capital provisions in a country where about 1.5m (8.7% of 6-14year olds) children of primary school age are not in school, and only about 57.9% of the adult population is literate in English and even school teachers cannot pass basic primary school tests. The allocation is hardly adequate to cater for qualified teacher recruitment, school construction and raising the literacy rate among Nigerians. Sadly, a large slice of the federal education budget and administrative energy go to secondary schools that ought to be the business of state governments, while tertiary education – the proper purview of the federal government, suffers.
While this column feels that ‘stricto sensu’, agriculture ought to be the business of states and local government, the federal intervention in the sector has been confused, with mixed results at best. Agriculture is apportioned some N81bn in 2013 showing an increase of about 3.4% over 2012 allocations of N78.98bn. N32bn (39%) is allocated to recurrent expenditure and a slightly higher N48bn (59.2%) to capital expenditure. This capital allocation also is not adequate for targeted intervention in a sector that once provided employment to about 70% of rural Nigerians but currently employs barely 35%. The decision to procure cellphones for un-named farmers instead of spending the amount on improved seedlings, agro-chemicals, fertilizers, extension services and farm-to-market infrastructure, is indicative of the “spend-without-results” symptomatic of virtually all Jonathanian programmes since 2010.
Ironically, if you look at the Presidency’s budget of about N35.5bn you would see that all talk about an anti-corruption fight is just that, talk. There is N14.4bn (40.5%) provision for ‘State House Headquarters’ while only N9bn (25%) is allocated to the Economic and Financial Crimes Commission. Worse still, there is a paltry allocation of about N1.3bn (3.6%) to the National Emergency Management Agency; it is not therefore surprising that the agency is incapable of responding timely to emergency situations, and when they do so, often too little, too late.
Incidentally, even as you read this, the Presidency has sent the 2013 Appropriation Act Amendment proposal back to the National Assembly for approval and has requested for the review of some clauses in the budget which, according to him, can be detrimental to the work of the executive arm of government. Even by the warped processes that characterize the method of budget making and non-implementation, this must be a new record: budget review after two weeks of passage and presidential assent.
Next week, this column would further analyze budgetary provisions for some federal ministries. It is hoped that somewhere in the continued budget disagreements between the National Assembly and the Presidency, the budget structure would be changed into a functional document that is guaranteed to bring about some sort of change. In its current form, the 2013 budget is nothing more than the dance of the masquerade: forward, backwards, up, down, raise dust, while our nation generally records increasing levels of poverty, deteriorating human development indicators, infrastructure deficiencies and youth unemployment!