Fiscal ‘misgovernance’: Time to make the difference
By now, majority of Nigerians are fully aware that the new administration is picking holes in the management of public resources by the immediate past administration. The issues are bothering on unaccounted funds in form of “missing” and/or not properly utilised resources. There is also a case of diversion of loan proceeds meant for a project to another. The budget process and contents are still being contested by stakeholders. Yet, claims and counter-claims on projects’ execution rise each day. There is no transparency and a measurable means of checks by government on what is claimed and what actually is implemented. This is the story of fiscal ‘misgovernance’.
The Centre for Social Justice (CSJ), which in late 2014, organised the Fiscal Governance Tribunal, just released its report titled: “Voices and Views”. It was held across the country to give Nigerians of all classes the opportunity to reveal their experiences with the fiscal system and to proffer solutions to its myriads of challenges. The Tribunals were designed against the background that different stakeholders have different experiences with the fiscal system. These experiences are shaped by power relations and what the stakeholders demand from the system.
The Lead Director of CSJ, Eze Onyekpere, said “the Tribunals provided opportunities for testimonies from stakeholders including contractors and service providers, communities where projects are located, community based organisations, women’s groups, youth associations, various shades of civil society groups, the academia, fiscal governance experts and professional groups, organised labour, private sector and government agencies.
“The testimonies dwelt on who or which government agencies were involved in the experience and the subject matter of the testimony. It answered questions including; what was the issue at stake? Where is the project located? Where did the encounter with fiscal governance operatives take place? It also sought to unravel why the particular experience happened and how to replicate pleasant experiences and best practices while putting an end to violations of the law and impunity for fiscal malfeasance.”
Besides, these were done within the context of extant laws such as the Constitution of the Federal Republic of Nigeria 1999, Fiscal Responsibility Act, Public Procurement Act, Financial Regulations, Treasury Circulars, Code of Conduct for Public Officers and various standards on international good practices in fiscal management. The overall purpose was to give citizens a voice in public finance and fiscal management and to provide evidence for the executive and legislature to reform fiscal management.
Identifying the need to use the legal framework to institutionalise generally agreed fiscal policy positions to make it difficult for change, unless there are clear and urgent circumstances that make continuity unreasonable, the report called on the National Planning Commission and the legislature to identify the bills and ensure their enactment for the realisation of the effective fiscal governance and other strategic plans. The bills should command priority attention in the legislature.
“Experts gave testimonies about the plan, policy budget continuum and the absence of a convergence between the three. Contractors and service providers testified about the problems associated with capital budget implementation and the public procurement system. Communities and their groups gave their experience about project location, contract implementation, environmental and community issues. The private sector operatives, economists, lawyers and other professionals who also recounted the experience of their interactions with the system,” onyekpere noted.
However, administrative issues (the will) were identified as the key needed to improve the implementation of existing laws; enforcement; new proposals for laws to plug existing gaps and leakages; specific actions to be taken by the executive, legislature and the whole gamut of civil society, among others.
Already, Fiscal Responsibility Index (FRI) has been developed from the outcome of the Tribunals in an effort to gauge the performance of various government agencies in the implementation of good and fit fiscal practices.
Poor Monitoring and Evaluation Framework
There is the need to mainstream the monitoring and evaluation framework in the design and implementation of any subsequent national development strategy and plan. Extant plans and policies that do not have functional monitoring and evaluation frameworks should be re-designed and re-modeled. There should be link with the budget, so that it will facilitate the constant fine-tuning of expenditure priorities for the achievement of strategic goals.
Review and Course Correction
Plans and policies need to be living and iterative documents, with provisions for timely review and course correction; thorough and timeliness of MTEF preparation/processes; inclusion of the National Planning Commission (NPC), Central Bank of Nigeria (CBN), Debt Management Office (DMO), the Fiscal Responsibility Commission (FRC) and the National Bureau of Statistics with the Ministry of Finance/Budget Office of the Federation as the lead agencies in the preparation process. There is also need to consult other stakeholders like the civil society, organised labour and private sector for input, as they act as “foot soldiers” and grassroots persons.
There should also be a proper articulation of the macroeconomic projections for the next three financial years and their underlying assumptions; and the evaluation and analysis of the macroeconomic projections for the preceding three financial years. This has been the bane of national budgeting process in recent years. National budget are fast becoming a stereotype and at best recycling of the former document with different figures.
The perpetual liquidity challenge
Dealing with the excess liquidity challenge requires innovative approaches, in view of the sources of the problem. One potentially enduring solution, which would avoid the creation of new money and boost the value of the Naira in the foreign exchange market relates to the allocation of foreign exchange earned from oil to the three tiers of government rather than monetizing it. But this may lead to capital flight. Therefore, the Central Bank would need to develop capacity for liquidity forecasting and programming.
Revenue and Expenditure Framework
The MTEF is a composite document and should be harmonised so that all aspects of the MTEF are in consonance with one another. Policy statements and directions in the Fiscal Strategy Paper should not be stated for the fun of it, but should find expression in reduced or increased sources of revenue for the government.
Abandonment of Projects, Procurements
The new government should inaugurate the National Council on Public Procurement; National Assembly (NASS) should take steps to enact the Project Continuity and Implementation Bill envisaged by Vision 20:2020 into law. It is also imperative for NASS to pass the Capital Budget (Roll Over) Bill so that funds voted for a particular capital project if not utilised within the year, can be carried over to the next succeeding year.
Procurement awards should no longer be based on preliminary engineering designs, but the final designs. Proper feasibility studies, costing, environmental impact assessment, land acquisition and settlement of community and all preliminary issues should precede the award of contract. Project identification and planning should be participatory to secure the buy-in of the communities where projects are situated. Sound needs assessment and procurement planning should be the basis for the inclusion of projects in the budget and their eventual implementation. The costing exercise should not be perfunctory or made to satisfy all righteousness so that the contract can be awarded. It should be thoroughly and meticulously prepared taking cognisance of all foreseeable issues that may arise in the period of implementation. And where the delays are due to tardiness on the part of MDAs, the Bureau for Public Procurement should consider administrative sanctions against the Accounting Officer or the temporary transfer of the procurement function to another government agency with the capacity to expeditiously implement same.
Oil Price Based Fiscal Rule
The government should continue with the Excess Crude Account initiative, but make it more transparent. It should appoint Accountant-General of the Federation to manage it. All revenues accruing from oil and gas activities and other sources of revenue should be paid directly into the Federation Account.
This is anchored on the fact that section 80 of the 1999 Constitution establishing the Consolidated Revenue Fund of the Federation prevails over any other law that authorises agencies to keep their funds, appropriate and manage same, deduct the cost of operations and later pay a part to the treasury.
The Nigerian National Petroleum Corporation should be properly funded through appropriation from a number of sources including borrowing and a contingency fund to cater for emergencies such as oil spills, pipeline vandalisation, among others. Other agencies, which in the course of their business, generate revenues should also pay same into the treasury and be properly funded through the appropriation process.
Petroleum subsidy should be removed, but if it must be retained; it should be converted into a subsidy on production rather than consumption.
The enactment of a new Audit Bill into law is long overdue and NASS should take this up. The contours of the new law should guarantee functional and operative independence for the office of the Auditor-General and his staff; establish the Audit Service Commission; give powers to conduct value for money and forensic audits; to recover public property in specie, make surcharges and get guarantees of non repetition in a timely and speedy manner.
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