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  • Not yet Uhuru for Buhari’s ‘Budget of Change’

    Not yet Uhuru for Buhari’s ‘Budget of Change’

    The implementation of this year’s budget cannot begin earlier than next month. GBADE OGUNWALE writes on the intrigues and politics surrounding the N6.07 trillion document.

    SINCE the National Assembly opened debate on the N6.07 trillion 2016 Appropriation Bill, christened Budget of Change, the standing committees of the Senate have been grappling with conflicting figures in the allocations for Ministries, Departments and Agencies (MDAs).

    Owing to the discrepancies in the figures contained in the proposal, the upper legislative chamber has served a notice that the bill may not be passed earlier than next month.

    The notice came shortly after an earlier assurance by the lawmakers that the bill will be passed by February 22.

    The Budget of Change, the first by President Muhammadu Buhari, is generating ripples over its sloppy preparation.

    There were claims that the Senate and House of Representatives were served with different versions of the bill presented by the President to the joint session of the National Assembly on December 22.

    The Senate claimed it was given a version different from the one read by the President but the lower chamber said it got the authentic copy.

    In the midst of the confusion, the Presidency forwarded an adjusted copy to the Senate for consideration, urging the National Assembly to work with the copy presented by the President.

    The bill is predicated on a crude oil benchmark of $38 per barrel and a production estimate of 2.2 million barrels per day.

    The brief summary of some of the features indicated a Gross Domestic Product (GDP) Growth Rate Projection of 4.37 per cent; Revenue Projection of N3.86 trillion; Deficit of N2.22 trillion; Oil Related Revenue of N820 billion; and Non-oil Revenues of N1.45 trillion.

    The budget also projected Independent Revenues of N1.51 trillion and the Capital Expenditure pegged at N1.8 trillion.

    A breakdown of the budget as it relates to the various ministries are as follows: Works, Power and Housing (N433.4 billion); Transport (N202.0 billion); Special Intervention Programmes (N300 billion); Education (N369.6 billion); Defence (N294.5 billion); Health (N221.7 bilion); Ministry of Interior (N145.3 billion); Foreign & Domestic Debt Service (N1.36 trillion); Sinking Fund towards the retirement of maturing loans (N113 billion); and Non-debt Recurrent Expenditure (N2.65 trillion).

    Going by official calculations, the deficit in the budget is expected to be financed by a combination of domestic borrowing of N984 billion and a foreign component of N900 billion.

    Controversy broke a few days after the submission of the document and the leadership of the Senate declared the budget missing. But, the senator representing Zamfara Central Senatorial District, Kabiru Marafa, described the claim as the joke of the year.

    Senator Marafa alleged that the leadership of the upper legislative chamber was only playing politics with the document, blaming the brewing controversy on those he described as “fifth columnists” acting the Senate leadership’s script.

    He said: “These fifth columnists were shouting at different times that the budget was missing; the budget had been doctored; the budget was padded and that it could no longer be passed as earlier planned.

    “Honestly speaking, if I am to comment on the controversy that has been trailing the 2016 Budget in the Senate, I will say it is all the work of the fifth columnists there.

    “You remember we woke up one day, 15 days or so, after the receipt of the budget in the National Assembly and the Senate President just came and said there was no budget; that the budget was stolen, thus embarrassing everybody.

    “But, the following day, the Speaker came out to say the budget was not stolen. Next, they said the budget was doctored; next they said it was padded; next they said there were discrepancies all over the place.

    “We knew how they came into the leadership of the National Assembly or the Senate. Was it a coincidence that the issue of padding and everything just came up after the Supreme Court told Saraki to go and face your trial?

    “Suddenly, we started hearing that we cannot pass the budget as we promised because there were discrepancies and so on and so forth. In a nutshell, the noise about the budget is all about the issue of corruption trial at the Code of Conduct Tribunal (CCT). No more, no less”.

    It has been from one controversy to the other since the budget was eventually “found”. The story has since changed to allegations of padding and multiple headings in the budgetary proposals made by  MDAs.

    According to Senate Majority Leader Ali Ndume, owing to the conflicting and multiple sub-headings, leading to inflated figures, the appropriation bill would have to go through a surgical operation.

    By Ndume’s submission, President Buhari may not need to withdraw the budget, rework it  and represent a clean copy as being suggested in some quarters.

    The Senate Leader said the National Assembly would do the needful by expunging every superfluous item embedded into the document.

    In the course of budget defence before the standing committees, a number of extraneous items carrying huge votes have been discovered.

    Defending his Ministry’s allocation, Health Minister Prof. Isaac Adewole disowned the estimate, saying it was different from what emanated from the ministry.

    Inflation of figures was also discovered in the estimates of many other MDAs.

    Although the discrepancies have caused a lot of embarrassment, particularly for the Presidency, observers say there is nothing strange in the discovered loopholes.

    They argue that padding of budgets has been a regular practice in budgeting over the years.

    In the past, they say, the MDAs would simply “negotiate” terms with the relevant committees, with the view to passing the figures as presented.

    An observer said: “In some instances, the negotiations involved inflating the figures based on mutual understanding between the MDAs and committee members. The difference between the actual figures and the inflated outcome would then be shared.”

    “In times past, some committees used to insist on having their share of the excess budgeting upfront. But, circumstances have forced the lawmakers to be wary of dealing with the MDAs the way they used to deal with them in the past.”

     

    Anti-corruption crusade,

    seperation of power

     

    It was learnt that the ongoing war being waged against corruption by the Buhari administration has compelled lawmakers to scrutinise the budget without demanding for gratification.

    Another observer said: “The fear that heads of the MDAs could expose any demand for gratification may have forced the legislators to be on their guard.

    “Besides the new-found institutional independence, members of the National Assembly are mindful of the anti-graft posture of the present administration.

    “The fact that both Senate President Bukola Saraki and his deputy, Ike Ekweremadu, are standing trial for alleged cases of corruption and forgery is enough deterrent.”

    The strident calls by various segments of the society on the National Assembly for openness and transparency in the legislature’s votes, have also put the lawmakers on the edge.

    Unlike its previous fixed budget of N150 billion annually, the National Assembly’s vote in this year’s appropriation has been pegged at N115 billion.

    Not a few Nigerians have demanded from the leadership a breakdown of the N115 billion budget for public consumption and scrutiny.

     

    Budget Mafia

     

    Until the President wielded the big stick against the Director-General, Budget Office, Yahaya Gusau, some faceless officials in the Budget Office remained untamed.

    Gusau’s sack came in the wake of widespread irregularities detected in the 2016 Budget presently under consideration by the National Assembly.

    The faceless officials known as Budget Mafia, have been operating within the comfort of the Budget Office. Going by the reports on the budgets and counter claims from the MDAs, discrepancies in the budgetary figures emanated from the Budget Office. Despite the deafening public outcry over the scandal, the Budget Office did not offer any explanation.

    Tijani Abdullahi, who was named by the President to replace Gusau, has a mandate to overhaul the budget office.  He has been asked to beef up budget surveillance. Besides the change of guard, the President announced the appointment of Ben Akabueze, a one-time Lagos State Commissioner for Budget and Planning, as Special Adviser on Budget and National Planning.

     

    Budget passage delay

    inevitable

     

    The Senate committees have continued to detect strange insertions in budget estimates of the MDAs. These discoveries may delay the passage of the budget far beyond March as the Senate leadership has vowed to do a thorough job on the document to give the country a clean budget at the end of the day.

    Political opponents have tagged the 2016 Appropriation Bill as budget of corruption; budget of shame and budget of errors. Some have even called for its withdrawal with the view to correcting the observed errors before representing it afresh for consideration.

    Besides, internal wrangling arising from discontent in the choice of leadership may further hamper a smooth sail for the budget even as standing committees continue to work on budgetary proposals of the MDAs.

    Perhaps, the major obstacle in the way of the Appropriation Bill is the dwindling oil prices in the international market. The budget is premised on $38 per barrel benchmark, the current oil price has fallen to $30. The implementation of the budget may be hampered by the shrinking national economy and the prevalent liquidity squeeze.

    The government is banking on short and long-term borrowing from local and foreign sources, to finance the Budget of Change.

    Analysts are of the view that diversification of the economy and frugality in government spending would help in cutting wastage in the system.

  • Not yet uhuru

    Not yet uhuru

    • Electricity consumers can only pay for what they consume with appropriate billing

    Electricity distribution companies (DISCOs) have finally had their way with the ratification by the Federal Government of new electricity tariffs in the country. The DISCOs had been clamouring for tariff increase even before the ink dried on the paper which transferred the companies to them from the defunct Power Holding Company of Nigeria (PHCN) about two years ago. Minister of Power, Works and Housing, Mr Babatunde Fashola, had earlier hinted of the new tariff structure, pleading with Nigerians to show understanding.

    Based on the new tariff regime,  consumers under the Abuja Electricity Distribution Company, who are paying N19.96 as energy charge currently, will now pay N29.56, representing an increase of 48.1 per cent; those under the Eko Disco will now pay N28.75 instead of N18.75, representing 53.3 per cent increase.

    For those under Ikeja, Kaduna and Benin Discos, who used to pay N14.96, N20.66 and N18.46 for a unit of electricity, they will now pay N22.96, N31.71, and N27.72, respectively. These represent 53.5 per cent, 53.5 per cent and 49.62 per cent rise for the three Discos, respectively. Commercial consumers (C2) under the Ibadan and Enugu Discos, who used to pay N26.79 and N29.05 for a unit of energy will now pay N38.87 and N42.4. These represent 45.1 per cent and 45.9 per cent increase in the respective rates.

    The electricity sector is plagued by a number of challenges; and appropriate tariff is only one. The fact is; not all electricity consumers are metered. The implication is that consumers without meters are not captured and are therefore not billed. Moreover, meter readers hardly read the meters of many consumers with meters; the defunct PHCN merely spread the cost of such consumers to those who were paying or those they considered had the ability to pay. We thus had many cases of ‘crazy bills’ and these, largely, the DISCOs inherited and have kept faith with.

    Fashola made allusion to this when responding to the question by one of the DISCO directors who solicited his support in getting debtor government agencies to pay up. The minister said the government would pay all its ‘verifiable’ debts.

    Appropriate billing should be the priority of the DISCOS if they want paid only for services rendered. Even as things stand, it is difficult to say if what has been approved is appropriate, given what we know about the country’s power sector.

    The starting point should be to get every electricity consumer captured in the system. The DISCOs should then provide prepaid meters for all.

    We must confess though that some of the provisions in the new arrangement are in the consumers’ interest. These include the scrapping of the obnoxious fixed charges and the respite for unmetered customers who can no longer be forced to pay the disputed bill, but, rather, pay the last undisputed bill while the contested bill goes through the dispute resolution process. This is an improvement on the former arrangement under which such consumers first paid and then complained, albeit without effect.

    We disagree with Fashola’s comparison of the power sector with the telecommunication sector because they are not the same. The usual analogy by some people which he reechoed does not hold water for the simple reason that telephone subscribers can migrate from one network to another at will. It is not so with the electricity sector.

    All said, we do not share the minister’s view that increased tariff would necessarily translate to improved power supply. These same power companies that are complaining of lack of capital gave out a princely N500million to the electioneering campaign of the Peoples Democratic Party (PDP) last year. Has the government pondered how many prepaid meters that can buy even in spite of the slide in the fortune of the naira? Apparently, it is helpless Nigerians that are going to account for that unwarranted generosity.

    The only way to make electricity consumers pay for what they consume is by providing them with prepaid meters. That, not tariff hike, should be the place to start.

     

  • Not yet Uhuru

    Not yet Uhuru

    Although the April 11 elections were better conducted, there is still room for improvement

    AFTER many twists and turns, and fears of conflagration that could consume the country, the 2015 elections are largely over. Winners and losers have emerged and political parties have seen how they are rated in the states and constituencies.

    Generally, the governorship and state assembly elections held on April 11 were better conducted than the presidential and National Assembly elections held on March 28. While the card reader malfunctioned in many polling units in the earlier election, the degree of failure had drastically reduced by the time state elections were conducted. Polling officials reported promptly at their duty posts and materials were distributed in the correct proportion. It was an election that elicited commendation from journalists, local and international observers who had little to complain about the conduct of the electoral commission’s officials and security agents that were largely less aggressive and obtrusive.

    If things continue to improve, Nigerians can say that democracy is growing in the country. For too long, they have groaned under the yoke of state institutions primed to manipulate the system and process to achieve programmed end. A foundation is now being laid to ensure that leaders could be elected or rejected by the people and their will respected.

    It was obvious tha t the result of the presidential election had a sobering effect on the system. In states like Adamawa, Plateau and Benue, the ruling parties were voted out with little or no incidents. In Gombe, despite the failure of the Peoples Democratic Party (PDP) all through the North East, the party was the choice of the people and their verdict was respected. In Taraba, it was inconclusive and a supplementary poll would be conducted on April 25. In all the states of the North West, the PDP fell to the rival All Progressives Congress (APC). Yet, there were no protests on the streets, thus confirming that it represented the wish of the electorate.

    In Benue State where the APC alleged that it was short-changed in 2011, it scaled the hurdles effortlessly in the last elections, thus breaking the myth that any political party perceived to enjoy massive support of the Hausa-Fulani would be rejected by the Tiv. In Lagos, the PDP and incumbent president threw everything into the race. It was a close contest, but the APC was returned and peace reigned.

    However, evidence of manipulations, irregularities and widespread violence were reported in states like Abia, Akwa Ibom and Rivers. Lives were lost as security men were allegedly compromised and thwarted the will of the people. After protests, the Abia governorship poll has been declared inconclusive as were the Taraba and Imo elections. It is hoped that the tradition being set would be established and Nigerians would have cause to rejoice.

    However, we find it intriguing that despite the protests by the APC about a possible collusion between the PDP, the police and the Resident Electoral Commissioners in some places, necessary changes were not made. In Abia, the returning officer for Abia North said that the result declared for the March 28 election did not emanate from him. We expected that proper investigation would immediately be launched into the commissioner’s complaint, but this was not so. Until officials found to have betrayed the people are prosecuted and where found culpable punished, manipulation of the process would continue.

    So, we call on the in-coming Buhari administration to continue efforts to sanitise the electoral process by initiating a review of the Uwais commission report towards ensuring that the people’s input into choosing the commission’s chairman is institutionalised. The commission’s clamour for an Electoral Offences Commission should also be revisited.

    The government must acknowledge that electoral corruption represents a virulent form of corruption that is worse than financial and material corruption which has been eating deep into the fabric of the society. It must be stamped out. Similarly, the civil society groups, domestic and foreign observer groups, the media and all lovers of democracy should join in watching the process in the conduct of the supplementary elections of April 25. Progress has been made, but we are not yet there.

  • Not yet uhuru

    Not yet uhuru

    LAST week, the Nigerian Deposit Insurance Corporation (NDIC) released its 2012 annual report on the state of the nation’s lenders. Among its many highlights, it showed that the banking industry recorded a total of 3,380 fraud cases. The figure for 2011 was 2,352. However, there was a significant decline in the amount involved, from N28.4 billion in 2011 to N18.04 billion in 2012 – that is, 36.4 percent. In the same vein, the contingency loss rose from N4.072 billion in 2011 to N4.52 billion – a quantum jump of 10 percent.

    Among the other highlights, the banking sector’s total assets reportedly grew from N21.89 trillion in 2011 to N24.58 trillion in 2012 (10.91percent). As for the ratio of non-performing loans to total loans, this is said to have decreased from 4.95 percent in 2011 to 3.51 percent in 2012. The NDIC attributes this to the purchase of the non-performing assets of the banks by the Asset Management Corporation of Nigeria (AMCON). Credit to agriculture stood at 3.6 percent of the entire loan portfolio in 2012 –a slight improvement from 3.11 percent in 2011.

    In all, the NDIC rated 10 of the 24 banks as “sound”; nine were rated “satisfactory” just as one bank was rated “marginal”. It found no bank “unsound”.

    Four years after the exercise undertaken by the Sanusi Lamido Sanusi-led Central Bank of Nigeria (CBN) to cleanse the industry of its rot, the mere suggestion that fraud continues to fester ought to trigger alarm. If it is any indication, it is of how the internal controls instituted by the banks in the aftermath of the exercise have failed to square up to the challenge of fraud.

    And here we are dealing with a quantum jump in fraud cases from 2,352 to 3,380 all in one year! Taken together with the jump in contingency losses by as much as 10 percent, there can be no better indication of how much the system has remained fraud-ridden.

    The challenge of course is to bring fraud cases to the barest minimum. That would obviously require taking a comprehensive look at the internal controls of the banks, with a view to bringing them up to date. Investing in new technologies to fight fraud would be a positive move at this time; however, a programme of human capital development to address the problem would seem infinitely better in the long run. The challenge for the Bankers’ Committee is one of finding the right mix. What the NDIC report suggests is that it is yet to get there.

    At the heart of the NDIC report is the question of the state of the financial services sector. Most instructive is the NDIC’s rating of the financial services sector as relatively stable in spite of its findings of only 10 “sound” banks out of 24. The nation deserves more than a “relatively stable” financial sector. We say this because it’s been eight years since the first round of banking reforms – consolidation – and four since the second cycle – sanitisation – ended. Once the nation had a motley club of 84 banks; now there are 24 with the anaemic banks supposedly gone with their toxic assets.

    What Nigerians are interested in is whether anything has changed in any substantial sense. Are the banks better primed to assume their financial intermediation roles to the credit-starved economy? Are the costs of funds to the real sector any cheaper now than they were prior to the reforms? What about the plan to deepen the financial services sector? Is the informal sector now better served post-reforms? These are the questions that bother Nigerians – not some high-minded system stability.

    Above all, does anyone need other proof of the neglect of the vital agricultural sector than the paltry 3.6 percent credit extended to it in 2012?