The Vicious Cycle of Budget Delays And Non-Implementation

Idris Ahmed

27 May 2011

Everything that could possibly go wrong with Nigerian budgets has gone wrong. The estimates are submitted late; the National Assembly takes too long to pass it; its procedure for scrutinising the budget is faulty and prone to corruption; it often hikes the estimates in unreasonable ways; most of the budget is left unimplemented, and there are no adequate mechanisms for monitoring budget performance.

Since this administration came on board in 2007, there has been a constant blame game between the Executive and the lawmakers as to why the yearly budgets fail. While the National Assembly is blaming the ministries, departments and agencies of government for poor budget implementation, the MDAs on the other hand often blame the Federal Ministry of Finance for not releasing funds on time.

The Ministry of Finance says the MDAs should be held responsible, saying money is released to them s on time. Sometimes the MDAs shift the blame to the Bureau for Public Procurement [BPR]. They say the Due Process Office does not approve their proposals on time for contractors to commence work in earnest. The Due Process Office on the other hand says that the MDAs lack integrity and transparency as contracts are awarded to favour particular contractors.

“The law requires that everyone gets equal right to bid for contract. Contractors are made to pay N5 million to process contract files and sometimes when contracts are approved, the contractors are not aware of it,” Director General of the Bureau for Public Procurement (BPP) Engineer Emeka Eze had said.

Over the last four years, the cycle of blames continues and Federal Government’s budgets have consistently maintained these patterns of low turnover. From poor and low implementation to corruption, from lack of transparency and poor integrity on the part of those who are supposed to implement the budget to mismanagement of funds, everything is e wrong with the federal government budgets.

As at the end of 2007, out of the N831 billion capital expenditure, only 48 percent was implemented and the same percentage figure was implemented out of N860 billion capital vote in 2008. Government claimed to have implemented about 60 percent of the 2009 capital budget but the National Assembly members say the implementation was below 50 percent. The percentage implementation figure for the 2010 budget is yet to be declared, but sources told Daily Trust that it was about 50 percent.

Because of the poor implementation of budget, former Minister of Finance Mansur Muhtar openly criticised the MDAs. He said, “During the bilateral discussions and budget defence meetings that led to the finalisation of the 2010 budget, many MDAs clamoured for additional resources in excess of their 2009 capital votes but were unable to demonstrate commensurate executive capacity to justify increased allocations.”

Director General of the Budget Office of the Federation Dr Bright Okogu said his experience with the implementation of the 2009 Budget was far less than anticipated. While capital budgets implementation remains abysmally low, in 2009, the BPR signed “no objection” to 602 contracts; 562 of them were certified, and 36 put on awaiting while 10 were rejected. Less than 300 of these contracts were processed to the Federal Executive Council and the cost of executing the entire contracts runs into N1.94 trillion.

Despite the year-in-year-out low budget performance, many ministries struggle for money they don’t know what to do with. “Many of us ask for money that we don’t really need. We have capacity to implement budget, what we don’t have is integrity,” Engineer Emeka said.

Because of low budget implementation over the years, infrastructure development remains low and the gap between the rich and the poor remains very wide gap.

What really is responsible for budgets failures? The World Bank Country Director in Nigeria Onno Ruhl said it was due to lack of planning. He said Nigeria needs to invest more in capital spending. He said while delay in submitting budget proposals to the National Assembly is one of the problems of budget implementation, the political will to implement that matters the most.

He said, “It is the politics of spending that is much more important and also planning. Budget for what you can spend.” He also wants the government to look at the issue of procurement reform. “I think there is the need to drive down the unit cost of spending. Sometimes you see construction projects whose cost is really high. Drive down the unit cost so that Nigerians get value for their money. It is an important challenge,” he said.

To the former Chairman of Revenue Mobilization, Allocation and Fiscal Commission (RMAFC) Engineer Hamman Tukur, budgets fail because both the preparation and defence are defective. He faulted the delays in budget submission to the National Assembly by the Presidency and also the ways and manner by which the National Assembly subjects individual MDAs to budget defence. “I think the budget is a whole budget and if the National Assembly has any issues with the budget, they should invite the executive to clarify them and not the individual MDAs to negotiate their budget,” Tukur said.

It has become normal for the budgets to be submitted late into the year by the executive to the legislature for approval and the legislature approves the budgets in the last month of the first quarter of the year. Experts believe that for any budget to have its desired impact there should be enough time for its implementation.

Nigeria’s budgetary process from 1999 to date has been characterised by delays in preparation, submission and appropriation. In some cases, budgets were approved as late as the 3rd quarter of the fiscal year. Worse still, supplementary budgets were usually concluded at the tail end of the financial year. All these do not allow for proper execution of projects, coordination of programmes and the overall monitoring of the budget resulting in decay of infrastructure and economic downfall.

As a result, their implementations suffer not only because of the delayed approval but also due to incongruence between the amounts appropriated and the estimated revenue. A top government official working with one of the agencies of government under the Presidency said in 2007, members of the legislature imputed about N100 billion into the agency’s budget and later came to redeem half of it after the budget was signed by the President.

“When I asked him whether he expected me to go to the bank and withdraw N50 billion for him, the man could not locate his way out of my office. These things happen in all the ministries and if you don’t play with them the lawmakers make sure that your budget never gets approved.”

The ways and manner in which budgets are proposed and implemented in Nigeria make a mockery of budget making. In economic terms, budget is a practice and instrument used by governments to facilitate the provision of goods and services to the citizenry in order to meet their social and economic needs. It is a vital tool of economic development. It is supposed to be an annual financial plan which serves as a vehicle for efficient mobilization, allocation and management of resources.

A budget which is appropriately formulated and effectively implemented will also go a long way in meeting the aspirations of the people and also accelerate the achievement of national development objectives which has to take into account economic growth, income and wealth redistribution, poverty reduction and employment generation.

Experts believe that a good budget must possess certain basic characteristics which should include comprehensiveness, transparency, accountability, realistic revenue projections, linkage of resource availability with expenditure plans and focuses on project priorities.

In Nigeria, two factors have distorted budget implementation and these are late or non release of allocations and also expenditure indiscipline. More often than not, there is inconsistency in release of budgetary allocations and refusal to follow the approved budgets. Instead, indiscriminate or non-budgeted projects and extraneous spending are pursued to the detriment of the projects that are articulated in the budget.

For example, the 2011 budget is still not signed by the President because the initial proposal of N4.2 trillion was jacked up to N4.9 trillion by the National Assembly and the increase made it not implementable, according to the Minister of Finance Olusegun Aganga.

Nigeria’s constitution has not clearly given the Legislature the power to increase the budget beyond the revenue and expenditure estimates submitted by the Executive. Neither is there any provision for the Legislative arm to negotiate with individual MDAs with a view to review provisions made for the MDAs by the Executive arm.

As a new administration is sworn-in this weekend, President Goodluck Jonathan, the Executive and the National Assembly must find a good working relationship that will culminate into better implementation of annual budgets. President of the African Business Roundtable Alhaji Bamanga Tukur said there should be synergy between the recurrent and capital votes and government should prioritise and invest more in infrastructure. “In budgeting, the weakest link determines the link,” he said.

For Onno Ruhl, the new National Assembly and the new administration should find equilibrium where they will share the same objectives and philosophy. He said this is important for Nigeria because if the Executive proposes a budget and the budget is increased by the National Assembly by 20 percent, they would have to come to terms because the Executive knows what it can spend.

Engineer Tukur on the other hand is of the view that unless the budget is proposed early in the year for the National Assembly to approve on time, the cycle of budget implementation failure will continue.

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