Still on the Funding of Our Super Agencies
Two recent developments beamed an extra spotlight on some of Nigeria’s government agencies that are funded through special arrangements. The first development is a 28 December 2023 circular by the Minister of Finance mandating, among others, that 50% of the revenue generated by self-funded agencies be automatically remitted to the Federal Government. The second is the publication, early last week, of the 2024 budgets of 63 government owned enterprises (GOEs). Both developments are consequential and commendable. But much more needs to be done to further optimise these laudable initiatives.
In my column of 24th December 2023 (“Revisiting How Nigeria’s Super Agencies are Funded”), I identified three sets of government institutions that I stylised as Nigeria’s “Super Agencies”: those that receive a percentage of the revenue that they collect on behalf of the federation; those that are assigned portions of some revenue handles; and those that are allowed to keep a share of the fees/levies that they charge and the fines they impose. In that piece, I argued that while possibly emanating from a good place, these special funding arrangements have created costly unintended consequences, such as perverse incentives, mind-blowing profligacy, suboptimal allocation of scarce resources, revenue leakages, and avenues for patronage and corruption.
The circular from the finance ministry, if painstakingly implemented, should limit the games that some of these super agencies play with the revenue that they collect/generate and the portions that they are expected to remit. The 2023 circular is a major improvement on a 2021 circular from the same ministry. All things being equal, the Federal Government should earn more revenue as remittances from this set of agencies.
But the circular will not address how prudently the agencies are applying the revenue they are allowed to keep. Neither will it resolve the question of whether some of the expenditure lines in the budgets of some of these agencies can be justified. So, as commendable as the intervention by Minister Wale Edun is, it can only be the starting point. Much more needs to happen.
This is where the 282-page document on the 2024 proposed budget of 63 GOEs, released by the Budget Office of the Federation, steps into the gap. It represents a significant step forward. To the best of my knowledge, this is the first time that the disaggregated budgets of these GOEs will be in the public domain. The GOEs used to be a complete black hole. The previous administration insisted that their budgets must be submitted to and approved by the National Assembly. At some point, GOEs’ budgets became part of the overall budget of the Federal Government and started featuring in the Medium-Term Expenditure Framework (MTEF). But in the publicly available budget documents, the GOEs used to appear as aggregated as one-liners: GOEs’ revenue and GOEs’ expenditure.
It is conceivable that the budgets of the GOEs were previously made available, either in parts or as a whole, to our legislators and to the Ministry of Finance. A few of the agencies have also published aggregated and sanitised versions of their annual reports. Even when the level of details is not even, the 2024 proposed budget of the GOEs is the most detailed I have seen on these super agencies.
The Budget Office has thus done a huge favour to all of us by giving us a full view of the budgets of 30 self-funded, 11 partially-funded and 22 fully-funded GOEs. (Actually, the number is 62 as TETFUND, which is in the main budget, is just listed. Also not included is the budget of NNPCL, an organisation that has notably relapsed to its dark past after a brief flirtation with transparency: it stopped publishing the monthly operational and financial report that was started in 2016 and it did not, contrary to its recent tradition, release its 2022 audited financial statement within 2023).
The Budget Office document puts the total revenue of the 62 GOEs at N4.93 trillion, out of which the GOEs proposed to spend N3.77 trillion. This proposed expenditure represents 76.5% of the revenue of the GOEs and 13.14% of the total sum of N28.7 trillion appropriated for the Federal Government in 2024. By whatever measure, the proposed expenditure of the GOEs is material.
The previous and current openness that led to the unveiling of this important document is deserving of utmost praise. But openness is not an end in itself.
It can only be a means to an end. Accountability actors within and outside government and public financial management experts should be poring over this important document and should be asking serious questions around optimal approaches to resource mobilisation, allocation and application on one hand and should be discussing the design and implementation of appropriate policies for necessary course correction on the other.
In this piece, I will make a few general observations and ask a few questions about the 2024 budgets of the GOEs under three broad headings.
With N61 billion as annual average expenditure, GOEs deserve more intense scrutiny: The Ministry of Finance and the rest of us should not just be content with the GOEs remitting more revenue to the government. In the present circumstances, getting them to remit more is definitely a necessary step. But it is not sufficient. The quantum of public funds at play in these few agencies should earn them more than the passing and perfunctory examination that they are currently getting. The emphasis here is that what we are dealing with here is public funds, not private funds of these agencies or of those who run them.
With a proposed expenditure of N3.77 trillion, it means that the 62 GOEs will spend N61 billion on the average in 2024. If we include the N672 billion budgeted for TETFUND, this means that the average