Inequality and Nigeria’s budget in ‘reverse gear’

Countries across the world are at different levels of development, but what marks the departure point is the sincerity of policy target, implementation and commitment to national growth sustenance, not for few, but for all.

One such example among the key issues that has held Nigeria down for too long is the way the budget is made- the process and transactional openness. For long, public policy in the country has deepened strategies that turn public funds into private pockets.

Otherwise, Nigerians demand to know why 30 per cent or less votes for capital expenditures would not be implemented, when 70 per cent of recurrent vote is finished alongside supplementary votes. Why are we still budgeting for the same things yearly? Why do we make provisions without specifics? Where are the borrowed funds?

Experts said many Ministries, Departments and Agencies in Nigeria are without strategic plans and for others, their policies have not been reviewed for over a decade, leaving the implementation of the policies characterised by “ideological confusion”.

Nigeria was ranked 142 out of 144 countries on the index of diversion of public funds on the World Economic Forum Index of official corruption. These are partly borrowed funds earmarked for projects.

For an economist, Dr. Uzochukwu Amakom, beside the complaints of short constitutional provisions, the doubts about competence in national leadership, as well as political will to act passionately for the good of all the citizens and the country at large have refused to go due to recurring failures of successive governments.

At a capacity building workshop on Reduction of Inequality Through Policies, Budgeting and Implementation, organised by the Centre for Social Justice (CSJ), in Abuja, Amakom reiterated that the country is failing in various measurements of Budget Inequality Index.

According to him, the evidence is well shown in the living standards of the mass populace and validated by the economic conditions- recession, that government is aware of, as well as a global report that tracks quality of life across countries- Human Development Index.

Public policy, which budgeting is central component, has a key role to play in national development. It helps set agenda; formulate strategies; improve enabling environment and mobilise resources and the way they are spent. The policy and budget process affects the content and implementation and ultimately whether service delivery to citizens, thus the reason for growing calls for inclusivity in the policy and budget process.

The Executive Director, African Centre for Leadership, Strategy and Development (Centre LSD), Dr. Otive Igbuzor, said “open and inclusive policy making is transparent, evidence-driven, accessible and responsive to as wide a range of citizens as possible. It strives to include a diverse number of voices and views,” but added that it is not sufficient in the country.

“Studies have shown that the quality of public services is declining in Nigeria. Among the several factors responsible include poor planning; lack of participatory, open, transparent and inclusive budgeting; diversion of public funds; poor human resource management and poor performance management.

“The challenge is that since return to civil rule in 1999, there has been a lot of sporadic and adhoc planning without adherence to long term planning. The National Economic Empowerment and National Development Strategy (NEEDS) and the Seven Point Agenda was abandoned after a few years.

“It is worse at the sub-national levels. Between 2004 and 2007, all the states developed the State Economic Empowerment and Development Strategies (SEEDS). But since 2007, most state governments do not have overarching development strategies,” he said.

A recent report by Oxfam on Inequality in Nigeria noted that the scale of inequality in Nigeria is extreme, as poverty in Nigeria is very high and ranked among the 30 most unequal countries in the world.

The Lead Director of CSJ, Eze Onyekpere, said that constitutional provisions showed that inequality is not a given- it does not just happen, but a product of the economic, social and political policy decisions and choices made by the state and citizens.

Citing Section 16 (1) of the Constitution, which among others, provides that the State shall, within the context of the ideals and objectives for which provisions are made in this Constitution, “harness the resources of the nation and promote national prosperity and an efficient, a dynamic and self-reliant economy; control the national economy in such manner as to secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity,” he questioned the realization of these since return to civil rule.

“An inclusive economy is also more likely to lead to stability and reduce the risks of fragility that leads to recessions and downturns. Citizens’ solidarity and popular participation, where all participate in baking the national cake, and also benefit from its dividends strengthens good governance and development.

“Beyond economic policy, a focus on education, health and social services will provide the founding blocks for reduction of inequality,” he said.

According to the 2015 Human Development report, Nigeria has the highest number of people living in multi-dimensional poverty (88.4 million) in the world, followed by Pakistan (83 million) and Ethiopia (78.9 million), with the gap between the rich and the poor in Nigeria very wide.

Conversely, the Nigerian lawmakers, who “pontificate” on the budget, are one of the best paid in the world, with average annual salary of $118,000 equivalent to 63 times the country’s per capita as at in 2013.

This is really a drama of absurd order, featuring the world’s highest paid lawmakers that preside over some of the world’s poorest people.

In Nigeria, the poor is taxed heavily, basically the civil servants, whose payments are deducted at source, while the rich and big multinational receive questionable tax waivers, tax holidays and loopholes for tax avoidance. At the moment, it is not clear whether the lawmakers and political office holders pay tax.

Igbuzor cited the report: “The share of government budget which are allocated to education, health and social protection- three critical policy areas to tackle poverty and inequality) are among the lowest in Africa.

“For example, in 2012, 6.5 per cent of the budget was allocated to education, 3.5 per cent to health and 6.7 per cent to social protection (in 2010). By comparison, in Ghana, these shares were respectively 18.5 per cent (in 2015), 13.8 per cent (in 2015) and 9.1 per cent (in 2010).

“The end result is that from 2005 to 2015, a total of N77 trillion was appropriated through budgets towards the development of the country, yet the state of roads, electricity and water supply, schools and hospitals remain inadequate to meet even the basic needs for a large part of the population.”

There is need for a deliberate policy interventions and political commitment, backed by an active, vibrant civil society and enlightened, proactive citizens can break the cycle.

This must start with the 2018 budget, which government has so far indicated that it is ongoing, with a clear policy options through investments in the neglected areas in efforts to tame the harbingers of poverty and inequality in the country.

The Acting Chairman of Fiscal Responsibility Commission, Victor Muruako, has  however, commended the Nigerian knowledge institution- CSJ, as it seeks to use social entrepreneurship to enhance and deepen economic and fiscal reforms for the realisation of nation’s awareness and needed development reforms.

He said the commission’s collaboration with CSJ is born out of commonness of purpose of both parties to ensure that we have a Nigeria where fiscal governance and policy formulation and implementation is guided by inclusiveness.

“The scope of inequality goes beyond the “unfair situation in a society whereby some people have more opportunities and resources than others. It also includes what causes it and what circumstances it thrives upon.

“Inequality is a global problem and our dear country Nigeria has got its fair share of this problem. There is no debating the fact that inequality hampers development and that to achieve development in the real sense of the word, reducing inequality should be one of the top items on the to-do list of any nation.

This collaboration has also taken one of the pioneer steps in improving the fiscal governance space in Nigeria. Sequel to the 2013-2015 Benchmarking of 16 Federal MDAs on fiscal discipline, which resulted to the Fiscal Responsibility Index, we have just concluded the benchmarking of eight MDAs on the basis of inclusiveness of their budgeting practice.

“This will result in the Budget Inequality Index (BII), the project around which this capacity building is built. We hope that the outcome of this benchmarking exercise will ensure that equality concerns are better mainstreamed in the nation’s budgeting process, policy-making and implementation,” he said.