Ogola: Why Buhari’s budgets fail
As President Muhammadu Buhari presents 2018 budget proposal to Joint Session of National Assembly on Tuesday, issues of improper planning and non-adherence to due processes of law have been identified as causes of failure of national budgets, especially since this administration assumed power. Senator Foster Ogola (PDP Bayelsa West) member, Senate Committee on Public Accounts, Appropriation and Vice Chairman of Senate Committee on Capital Market, spoke with AZIMAZI MOMOH JIMOH on critical issues militating against successes of national budgets and how to resolve them.
• Absence Of Long-term Development Plans Limit Government’s Economic Strategies
• Over Budgeting And Deficit Budgeting Leads To Frustration
What is your assessment of the implementation of 2017 budget?
The implementation of 2015, 2016 and 2017 budgets have been poor because of the burden that comes with them. Where you prepare a budget of N4trn and 50 percent is to be funded from loans not yet secured, you can imagine what happens. The lender always has superior hand. And if you don’t meet his conditions, he won’t lend. So, you won’t have enough money to fund the budget.
Nigeria played with Niger Delta by going there with Python Dance, Crocodile Smile and bombing of oil installations and youth camps, which damaged revenue base. No matter the effectiveness of Federal Inland Revenue Service, it cannot achieve budget estimates to fund national budget, which is funded with foreign exchange. And once you stop exporting maximally, your balance of payment cannot be achieved. And so, no country will sell anything to you to implement your budget.
The Federal Government said it is making peace with Niger Delta, yet the military went there last month to do Operation Crocodile Smile without any provocation. You can see why the national budget is failing. This year, maximum implementation of the capital budget is 10 percent. The recurrent budget is hardly 40 percent. And that is because salaries must be paid. But how many people are being paid full dues?
Personally, I am not satisfied with the budgeting pattern, because it comes with too many carry-overs, and which cannot be implemented.
From your experience as a legislator, what do you think has gone wrong with the budget planning?
What I think is wrong is that the planning is done yearly under the Medium Term Expenditure Framework (MTEF). Sometime ago, I was one of those that established it during Goodluck Jonathan’s administration in Bayelsa State. I was Special Adviser, Investment and Economic Development. MTEF is a yearly activity. Countries that have recorded milestones in budgeting have a five-year budget plan. You review and carry over, but you know what you will achieve in five years. You know what you will achieve in 10 years time.
The first country that developed from the Developing World is Singapore. When it did its own under 40 years, it obtained First World status. If you read the book: ‘From Third World to First World,’ you will see how Singapore developed. The South Koreans and Chinese went to Singapore, borrowed their personnel and developed a similar feat in a shorter time. In addition, China called on its citizens from the United States and Europe to support the idea. And they are where they are now.
So, there must be a manpower capacity building programme for national human capital development because the people that plan and strategise for countries are not the ordinary university graduates.
And the national curriculum cannot also achieve national planning proficiency. So, there must be a department created for grooming people and checking. What did we achieve with 2015 budget? In 2016, what did we achieve? In the next 10 years, where does Nigeria want to be in space technology?
Again, we must plan effectively how to fund budget. Instead of bringing up an N8trn budget and achieving 20 percent of it, it is better we have a N2trn budget and you ensure you do everything possible to actualise it.
As the year begins, you know there will be a budget. So, you plan on who to send you money, who to lend you and what else to do to generate foreign exchange. Because if you don’t export, nobody will be able to import and there will be no import duty for Customs to charge. Nobody will be able to produce, so Customs cannot charge Excise Duty. If people are now closing shops, FIRS cannot generate and tax people to be able to survive. It is a vicious cycle of poverty going on in the country. So, we must have focus. Do we need to produce oil? Yes. We want to produce gas? Yes. Then, activate Brass LNG and Olokola LNG. Allow people to bring in their capital and give them tax holidays to produce more refineries. You will save money importing what we have. The equivalent output of each processed barrel of oil is $2,500. But we are selling it and begging people to buy at $30 to $50.
Then there is the issue of yam and cassava exportation. One ton of cassava and yam sold at $300 can become $5,000, when you produce industrial starch, industrial glue, sucrose and printing ink from these products. We allow Malaysia, Indonesia and other countries to remove all the essentials and bring back the garbage called vegetable oil.
How do we get out of the problem of late budgets?
This is the reason National Assembly leadership insisted we should stop this midyear budgeting. We may get to a situation whereby in the next two years, we will be passing 2019 budget in 2020. And constitutionally, no government can spend any money beyond six months. And so, we said this year’s budget must end in December. We asked Executive arm of government, through the Presidency to bring the budget latest first week of October. So, we will have three months to consider the budget and pass it. And then by January, everything starts afresh. By December, we know everything is ending. Presently, we operate a country where we are not sure of the budget until May or June.
The implication is that the private sector has to wait to know the policy trajectory of Federal Government before investments. For instance, nobody would like to build a tourist centre or an industrial conglomerate, only for Federal Government to proscribe that type of business. By the time the private sector and states begin to key in, the year is gone. Who do you blame? The Executive arm.
Again, the Executive is never properly organised in budget matters. When we pass a budget, that is the time the Executive now remembers it has to construct a railway, a road to Minna, a bridge at Kontagora and Yobe, or put more budget for North East people. So, after the budget has been passed for
Third Reading, you are now forced to review it. The two arms of government must come out with a framework and proper timetable.
At the National Assembly, we have set up a budget office that studies budget implementation and planning on how to bring in new budgets and key into old one. We have passed the law, though Federal Government is yet to sign it. Mr. President should please sign it, so that the office can work with the Executive.
There is also the question of late submission of MTEF. If you bring MTEF in October, you are not expected to submit budget proposal in October. I had predicted that the Federal Government wouldn’t present 2018 budget in October. We are already beyond October 31. Where is the 2018 budget? In this year’s budget 2017, there is hardly any public office – ministry, department and agency -that has awarded one contract. They are still reviewing.
And look at the problem created by procurement processes. We have reduced Procurement Act implementation from six months to three months. Mr. President is yet to sign it. We did that so that the Procurement process, in compliance with the Procurement Act will be shortened. A lot of things are incongruously forced together.
Is it still possible to pass 2018 budget this December so as to restore the January to December timeline?
I doubt it, because the Executive ought to start planning the next budget and tracking its implementation from beginning of the financial year, which is January. They waited until it is too late. They have no effective tracking apart from capital releases of the performance. Enough money has not been budgeted for the National Assembly, which is supposed to oversight the implementation. We are the prefects who should flog ministries, departments and agencies into place to ensure that there is value for money audit. But we are not empowered to do that. They buy one car for us and everyone grumbles. But the Executive, council chairmen and counselors use cars. But the National Assembly, which uses less than 2.5 percent of N7trn budget, is scrutinised by the people. Nobody cares about the remaining 97 percent.
The Press is also joining the public to beam light where there is no problem, while keeping a blind eye on where it should, where the money is being expended.
It appears the Senate is having issues with budget proposals submitted by the President for some statutory agencies like NNPC and CBN, among others…
You can see that there is a framework. But we don’t just want to follow the Executive in what it did. They have submitted the budget estimates for these agencies, but the question is: What was the performance of the last three years budgets? What are the obstacles experienced by the agencies?
Until we have that, we cannot go ahead to talk of 2018 budget. They bring these budgets late from the Executive. We cannot tell NNPC or others to bring their budgets. It is the function of the Executive. The Executive is not discharging its responsibility, as far as budget development, preparation and implementation is concerned.
We now decided under the leadership of Senate President Bukola Saraki and Speaker House of Representatives Yakubu Dogara that every MDA should bring its budget, as well as explain 2016 budget. When they do that, we will now see the bottleneck. So, when we receive 2018 budget, there is a pedestal on which the new budget will stand. Then, we can say, ‘you did not do this, so why are you still requesting for the money? There has to be value for money in budget screening, budget defence and budget implementation. We are not having that now and we need to do so.
By God’s grace, I’m a member of the Senate Public Accounts Committee. We are behind schedule because they are not coming together. Now we are separating Office of the Accountant General from the Auditor General of the Federation. We are separating the Attorney General from Minister of Justice.
We are doing this constitutionally to ensure there will be no overlapping of interests of Executive functions. The present Executive arm sees National Assembly as a separate government. But we are part of the government and we should be working together as one. When there is a dispute, the Judiciary comes in. We have tried legislatively to rearrange the budget each time it comes to ensure there is a spread. The idea that civil servants alone can generate a budget is wrong. We represent the people.
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