The 2018 budget passed into law last Wednesday, a record 200 days after the fiscal policy was first presented to a joint session of the lower and upper legislative chambers, has fueled fears in some quarters that the attendant delay may have a rippled negative effect on the economy. Ibrahim Apekhade Yusuf in this report examines the issues
Most economies around the world attach a lot of importance to the national budget. Of course, the reason for this is not farfetched: a lot rides on the budget and has implication for the economy both at the public and private sub-sectors.
But the irony however is that around here, the many rituals around the nation’s budget which culminate in the delay in passing the fiscal policy has done more harm than good.
Too little, too late
The 2018 Appropriation Bill officially signed into law last Wednesday also went the way of others: it came in late in the day!
President Muhammadu Buhari signed the budget as passed by the National Assembly at about 12:00 noon inside his office at the Presidential Villa in Abuja.
President Buhari had received the 2018 Appropriation Bill from the National Assembly 10 days after passage, as the lawmakers said they needed to harmonise the budget.
The president recalled that when he submitted the 2018 budget proposals to the National Assembly on 7th November 2017, he had hoped that the usual legislative review process would be quick, so as to move Nigeria towards a predictable January-December financial year. But alas that was not to be.
“While the Federal Government’s budget represents less than 10% of aggregate yearly expenditures in the economy, it has a very significant accelerator effect on the financial plans of other tiers of government, and even more importantly, the private sector, which mostly operates on a January-December financial year. Notwithstanding the delay this year, I am determined to continue to work with the National Assembly towards improving the budgeting process and restoring our country to the January-December fiscal cycle,” President Buhari stressed.
A jinxed budget
Like previous budgets, the 2018 Appropriation Bill had a lot of extraneous materials, a development, which may have contributed to the delay.
Tellingly, the president said the National Assembly made cuts amounting to N347 billion in the allocations to 4,700 projects submitted to them for consideration and introduced 6,403 projects of their own amounting to N578 billion.
Many of the projects cut, Buhari noted, “Are critical and may be difficult, if not impossible, to implement with the reduced allocation. Some of the new projects inserted by the National Assembly have not been properly conceptualised, designed and costed and will therefore be difficult to execute.”
Besides, he said many of these new projects introduced by the National Assembly have been added to the budgets of most MDAs with no consideration for institutional capacity to execute them or the incremental recurrent expenditure that may be required.
Like other successive budget in the past, the 2018 budget was passed exactly seven months after it was submitted for scrutiny to the lawmakers and finally passed six months into the year.
The total budget figure of N9.12 trillion was 23 percent higher than that of the 2017 budget.
The 2018 budget, the largest in the history of the country, was premised on some key revenue assumptions including Crude Oil price benchmark of $51 per barrel as against $45 per barrel proposed by the executive.
The crude oil production volume was retained at 2.3 million barrels per day, while the exchange rate was pegged at N305/USD.
While answering question on why Buhari delayed signing the budget, the Minister of Budget and National Planning, Senator Udoma Udo Udoma, said the President was reviewing it.
In November 2017, President Buhari presented N8.612 trillion budget estimates to a joint session of the National Assembly.
According to Buhari, the budget called “Budget of Consolidation” is expected to consolidate on the achievements of previous budgets, and deliver on Nigeria’s Economic Recovery and Growth Plan (ERGP) for 2018 – 2020.
But, it took the lawmakers over six months after to pass the budget, even as they raised the estimates by N508 billion upon passage, stating that the upward review was done with “due consultation of the executive.”
A source said, while the Presidency wanted the increment in the budget to be used for funding deficit, the National Assembly insisted it must be allocated to ‘projects’ decided by them.
Knocks, kudos for budget
Although the president said he decided to sign the 2018 Budget in order not to further slowdown the pace of recovery of our economy, which has doubtlessly been affected by the delay in passing the budget, but it is not certain that his assurance was assuring enough.
In what many observers described as an effort in futility, they blamed the system for encouraging laxity in the way the budget process is carried out.
Speaking with a cross-section of Nigerians drawn from all walks of life, they expressed outrage over the delay in passage of the budget.
Firing the first salvo, the Director General of Nigeria Employers’ Consultative Association of Nigeria (NECA), Mr. Segun Oshinowo, while reacting to fears in some quarters is that the delay in passage of the 2018 budget would have some rippled negative effect on the economy, noted that the cycle that the budget is supposed to address is January 2018 to December 2018, adding that “If you’re now finalising that process in June, it then means that there is something fundamentally wrong and which I will call inappropriateness in our budget planning cycle. So the starting point would be to resolve as a nation that we’re not going to be caught in the vicious cycle where the budget does not align with the period it is supposed to be implemented. That’s really important.”
Echoing similar sentiments, Ahmed Popoola is the Managing Director/Chief Executive Officer, CRC Credit Bureau Limited, said the idea of signing the budget late is counterproductive and does not bode well for the economy. “It’s really shortchanging the citizens and the populace at large because a lot of the project that are meant to have been implemented either they end up not been done at all or they’re rushed and the people don’t get value for what is put in the budget.”
While commenting on the specific timeline the budget can be passed, the CRC Credit boss impressed on the executive and legislative arm of government the need to expedite the budget process.
“We need a law around the budget cycle and say this is maximum and latest period the Executive must submit budget to the National Assembly and this is the latest period that the budget must be passed. Just give them about five or six months to do their job, then submit your own estimate on time so that all the work they need to do on them because the budget could be divided into sections each committee will go and liaise with the various ministry and departmental agencies (MDAs) proposing what they want to do and it takes a lot of time and if you want to do thorough job, then of course, you must do it on time knowing full well that our budget year is meant to be January to December.”
In the review of the 2018 budget, Wale Ajayi, Partner, Tax, Regulatory and People Services KPMG in Nigeria, said, the full expectations of the 2018 budget may not be realised, given the delay in the passage of the Appropriation Bill.
Dr Samuel Nzekwe, a former President, Association of National Accountants of Nigeria (ANAN) said that the delay had created confusion within the system because there was no way the economy could move forward.
According to him, lack of cash in the system has also led to more poverty and suffering among the people.
“There is no liquidity in the system and this has affected the nation’s capital market as the government is the biggest spender in any economy.
“People do not have sufficient funds to throw around by investing in the stock market as they used the little they have to keep the body and souls together.” he said.
The former ANAN president also said the delay in the passing the budget had also affected contractors in the country and urged the National Assembly to resolve their difference and pass the budget.
Dr Titus Okunronmu, former Director, Budgetary Department, Central Bank of Nigeria (CBN), noted that the passage of the national budget had in the last three years suffered undue delays.
The former CBN director stressed that there was no country where budget passage is being delayed until May.
“This development will obviously affect Medium Term Programmes as well as slow down economic development in the country.” he said.
Okunronmu advised the federal government to put its home in order, do the right thing at the right time so that meaningful development could be achieved in the country.
In the view of Prof. Leo Ukpong, a professor of Financial Economics in the University of Uyo, Awka Ibom State, one way to stem the tide of bureaucratic bottlenecks around the budget is to criminalise lateness.
“The delay is really political rather than bureaucratic process. Besides constitutional amendment or tie it with some kind of penalty to the legislators and the executive because it could be delayed by the legislators, it could be delayed by the executive. Without penalising them somehow, either the next budget, the executive would be denied certain percentage because of the delay or the legislators would have to forfeit something because of the delay.”
Hope rising
Mr. Joshua Okeowo Oderinde, former chairman, Institute of Chartered Accountants of Nigeria (ICAN), Ikeja District, says regardless of the delay, a lot can still be achieved within the shortest possible time.
“Even if it is signed in January and we don’t implement it to the letter, it will not achieve its purpose. But once everybody have made their inputs and Mr. President has sign, we should all have positive mind towards successful implementation of the budget. It’s not how far but how well that matters.”
Oderinde who is also Finance Director at FIIRO, Oshodi said, “Nigerians indeed hope that President Buhari’s assurance that the National Assembly is working on the enactment of an organic budget law so as to improve the efficiency of the nation’s budgetary process, will not be a forlorn hope after all.
Thankfully, Nigerians hope that President Buhari’s assurance that the National Assembly is working towards the enactment of an organic budget law to improve the efficiency of the nation’s budgetary process, is not a forlorn hope after all.