Reforming the Federal Budgetary Process

By March ending, it had become apparent that the 2017 federal budget would not be passed for another extended period of time. The finance ministry consequently announced that implementation of the 2016 capital expenditure will continue till May, or when the 2017 budget is passed – whichever comes earlier.

These developments highlight the lack of commitment to full implementation of the yearly capex. Indeed, it has been a perennial problem. Late passage of the budgets has disarticulated the budget cycle.

If the fiscal authorities are serious about realigning the budget cycle, back to the 12month period of January to December, then the 2017 capex should be slashed by more than 50%. The dim hope of this happening underscores the recession of sincerity in the federal budgetary process.

The appropriation bill is usually presented late by the President to the National Assembly. When the bill gets to the legislature, it goes through a process of selfserving padding, horse-trading, and inducement by the heads of government's agencies for their budgets to pass.

The reason the appropriation bills are submitted late is unfathomable, if not disingenuous. Items of the capital expenditure are mostly repetitive. Appropriations for the same roads, motor vehicles, computers, cooking utensils, and the like are made year in and year out.

The new APC government of President Muhammadu Buhari promised to overhaul the budget-making, by adopting zero-based budgeting. In reality, however, the fiscal authorities have only made common cause with the past. Repetitive items – including cooking utensils for the presidential villa – were common features of the 2016 and 2017 appropriation bills.

In fact, an utterly incredulous level of cynicism in making the federal budgets came to light with the 2016 budget. After President Buhari had presented the appropriation bill rather sanctimoniously to the National Assembly, and submitted copies for debate, the lawmakers uncovered many expenditures that were repeated several times in the bill. When the scandal broke in the news, the Presidency claimed those copies were submitted in error. But the 'correct' copies could not be made readily available.

With the procedural sabotage of the budgets, the Nigerian populace is denied essential public infrastructures and services, while members of the legislature and the executive line their pockets. President Umaru Yar'Adua was so concerned about this he went tough on nonremittance of unspent budgets into the Consolidated Revenue Fund at the end of the fiscal year in December.

But for the budget to become an effective public policy tool, what is required is reform to remove delays and corruption from the appropriation process. The budget also has to be passed on a timely basis and implemented scrupulously.

The introduction of the Medium Term Expenditure Framework (MTEF) was supposed to provide a rolling plan, and facilitate quicker resolution of the vital budgetary variables, including the benchmarks for oil production and price, level of the deficit, GDP growth projection and the exchange rate. But rather than fasttrack the appropriation process, the MTEF has merely introduced intrigues to the process earlier than before.

So far, therefore, the federal budget is less of an instrument for the stipulation of public expenditures and projection of revenues. It is more a document of intrigues, grandstanding and legalised corruption by both the executive and the legislature.

But the budget is very important. The federal government is the biggest spender in the economy. When the budget is delayed, the private sector is in a predicament. For the private sector to become less dependent on the federal budget – the 2017 budget proposal is less than 5% of the GDP – the appropriation process and budget implementation have to be efficient, boosting private sector development over time.

Two reforms are germane to realising this efficiency. First, there has to be a law which specifies the deadline for passing the budget. The law would also specify when the appropriation bill must be submitted by the President to the National Assembly. Although this would be an administrative statute, it would nevertheless have bite. Dereliction of appropriation duty would be clearly identified, either on the side of the executive or legislature, with some political consequences.

However, this law would have flexibility to accommodate unavoidable delays or occasional political impasse. It could have provisions similar to the Continuing Resolution in the United States, which enables the government to continue to spend money for a limited period, pending the budget resolution. Such interim expenditures will have limits, and certainly cannot exceed corresponding figures for the last budget that was passed.

The second reform, which will make the first even more realisable, is that government must embrace big data. Public budgeting can leverage data and connectivity to enhance quicker and honest appropriation decisions. Indeed, this would be a rudimentary use, in a world where robots are now deployed to carry out routinely, tasks that involve complex decision-making, because of the impulse provided by big data.

The budgets, from 1999 till date and going forward, should be inputted into a database by expenditure item. (This process will streamline the items and eliminate duplicates.) Interconnected to this database would be databases on government's revenues and vital economic data, including the exchange rates, oil production, prices and inflation rates. This would be a game changer for the Budget Office that would transform to an ICT-driven and skilled environment.

To determine the next budget, what the executive needs are a few strategy meetings in which government's revenue and expenditure targets are reached on the basis of economic policy and growth targets for the next year. The targets are convertible to algorithms, which would spin the budget figures. Using the same big data, the legislature can tweak the policy decisions of the executive, therefore the algorithm, and arrive at the budget resolution for presidential assent.

The arduous task is implementing the budget. But the existing grossly inefficient system of making and passing the budget makes a mountain out of a molehill. Such a disingenuous process has always led to poor budgetary outcomes, which the country cannot continue to have.