IGBUZOR: Delay Can Only Be Justified By Radical Changes
We Expect To See Social Protection
Dr. Otive Igbuzor, a policy analyst, is the Executive Director of the African Centre for Leadership, Strategy & Development (Centre LSD). In this interview with IKECHUKWU ONYEWUCHI, he argues that though the delay of the 2016 budget is worrisome, the adoption of zero-based budgeting approach by the new government bodes well for Nigeria, as the traditional model has robbed the country of transparent, impactful allocation of resources.
What do you make of the delay in presenting the 2016 budget to the National Assembly for deliberation, especially with the absence, at the moment, of the Medium Term Expenditure Framework (MTEF)?
THE delay is a cause of concern to everyone interested in accelerated development of Nigeria. This is because a budget is a very important document in delivering services to citizens. It can be argued that it is only through the instrumentality of the budget that the government can allocate resources to deliver services to the people, especially, the poor and excluded. This is compounded by the fact that there is no strategic plan.
Meanwhile, the current Vision 20:2020 has some weaknesses and is not in line with the manifesto of the All Progressives Congress (APC). There is the need for the government to quickly formulate a strategic plan. Moreover, there is no medium term sector strategy (MTSS) for the Ministries, Departments and Agencies (MDAs), drawing on the overarching strategy or development plan. And there is no MTEF. The government has argued that it is better to be slow and steady. The development of a country requires comprehensive planning and strategy and I hope that behind the scene, a lot of planning and strategising is going on. I hope that the planning and strategising will be used to address some of the problems that have beset the budgetary process in Nigeria since the return to civilian rule in 1999.
What then should be the appropriate approach to budgeting?
The budgetary process in the past has not been participatory. Citizens and communities do not participate in formulating policies and agreeing on projects that go into the budget. Meanwhile, it is well known that wherever participatory budget is implemented, it has expanded citizenship, empowered excluded groups, redefined rights, deepened democracy and stimulated civil society.
Secondly, the budgetary process has not been open. Corruption in any country starts from the budgetary process. In very corrupt countries, the budget is done in secret. Releases are done without the knowledge of citizens. Procurement information is not made available to citizens and corruption is guarded and protected. This is why I have been advocating for an open budget system. A budget is regarded as open if citizens have access to the key budget documents; have high level of involvement in the budgetary process and have access to procurement information.
As a matter of fact, democracy will be meaningless if the citizens do not participate in how government raise and spend money. The priorities of the budget in the past are not in accord with the development challenges of the country and there is no synergy between plans, policy and budget.
In Nigeria, for the past 10 years, there has been increasing economic growth. But at the same time, poverty is increasing. The budget must therefore prioritise pro-poor programmes and the challenges of poverty.
There are several frivolous expenditures in the budget that will not stand any reasoning and logic in the past. For instance, in the 2015 Federal Government budget, over 732 million naira was budgeted for food in the presidency; over 826 million naira for rehabilitation of villa facilities; over 27 million naira daily for newspapers in the Office of Secretary to the Government of the Federation and several security and welfare packages for various ministries, departments and agencies.
The institutions and mechanisms for oversight of the budgetary process are weak. In any modern democracy, the legislature, civil society and media are expected to play oversight functions in addition to the internal control system put in place by the executive. I hope that the delay will address all these problems.
What is your impression of the zero-based budgeting for the 2016 fiscal year?
The Federal Government, through the Vice-President, Prof. Yemi Osinbajo has stated categorically that the Federal Government will start using zero based budgeting for its 2016 budgeting. According to him, zero based budgeting entails careful planning anchored on the needs and costs. It is different from the current envelop budgeting or traditionally incremental budgeting, whereby, the planning is based on existing income and expenditure as the deciding factor in national planning levels, which often incurs waste and assumes previous costs as constant.
I believe zero-based budgeting has a lot of advantages, including efficient allocation of resources, as it is based on needs and benefits, rather than history and drives managers to find cost effective ways to improve operations. It also detects inflated budgets and increases staff motivation by providing greater initiative and responsibility in decision-making. Also, it increases communication and coordination within the organisation; identifies and eliminates wasteful and obsolete operations; identifies opportunities for outsourcing; forces cost centers to identify their mission and their relationship to overall goals and facilitates more effective delegation of authority.
But there are some challenges with the adoption of zero-based budgeting. It is very time consuming and it is doubtful whether it is possible for the Federal Government to do a proper zero-based budgeting just with few months to the end of the year. Also, zero-based budgeting requires specific training, especially, as it is different from the traditional or incremental budgeting that has been used over the years in Nigeria.
Additionally, the amount of information required to back up zero-based budgeting is huge and can overwhelm public servants that are not used to this kind of budgeting. And it is difficult and problematic for departments with intangible outputs like education, health and value re-orientaion to justify every line item.
Despite the challenges, the adoption of zero-based budgeting is a commendable move by the Federal Government. Indeed, it is another success story of advocacy by civil society. The national budget in Nigeria is a copy and paste job, because of the type of budgeting that is done in the country. We practice a line budgeting. This kind of budgeting does not require justification from the scratch as in zero based budgeting, or linkage to performance as in performance budgeting. The end result is that the line budgets are increased slightly or decreased depending on the priorities.
There is the need for strengthening of government accounting and financial reporting. This involves the procedure for recording, communicating, summarising, analysing and interpreting financial statement of government. The system should have integrity. Government should strengthen the office of the Auditor General and auditing process carried out by qualified auditors on the records and financial statements of MDAs.
In every modern democracy, the legislature has a great role to play in ensuring transparency and accountability in the budgetary process. In this regard, there is the need to strengthen the Public Accounts Committee (PAC). The convention is that opposition party heads the PAC. Moreover, enabling environment should be provided for civil society and media to play their roles as watchdog of the society including legislative oversight
The budget is said to be projected in the region of N8trn; where is government likely to source income in the face of dwindling oil revenue?
I think it is achievable. There are many countries in the world that do not have oil but mobilise a lot of resources for the government. In fact, all over the world, the main source of mobilising resources for government is tax. There is a lot of tax evasion and tax avoidance in Nigeria. The source of income for the government can come from increased tax mobilsation, diversification of the economy, especially, to solid minerals, tourism and agriculture and introduction of property tax. In addition, the government has said that they have recovered a lot of loot from politicians and I think all of these should contribute to the income.
This would be the first budget by the APC-led administration, given that the party promised social interventionist policies, what do you think would be the major flashpoints for budget?
I believe that social protection will occupy a special place in the budget. We may see provisions for payment of unemployment allowance, school feeding and other social protection measures. We may also see increased budgetary allocation to education and health. All social democratic parties across the world give better allocation to social services and social protection programmes. We may also see allocation for social housing. The philosophy of APC is social democracy. The budgetary allocation should follow the ideology, programmes and focus of the party.