Published On: Sun, Aug 12th, 2018

Plot to oust SARAKI deepens

By UCHE CHRIS

The National Assembly is in disarray; so is the prospect of the 2018 budget. Since the announcement of the much speculated and expected defection from the APC to the PDP by Senate President Dr. Bukola Saraki, before the long adjournment for their vacation, the NASS has been in turmoil, the end of which remains uncertain.

President-of-the-Senate-Bukola-Saraki

Just last week the proposed reconvening of the Assembly to attend to the demands of the executive regarding INEC N248 budget for the 2019 polls and virement of the budget was aborted following its invasion by men of the DSS which has claimed its DG Lawal Daura. Speculations had been rife that the meeting would provide a convenient opportunity to oust Saraki as senate president.

APC has not hidden its dismay at the unfolding political anomaly where the opposition party heads the legislature in a government controlled by the party and has vehemently demanded the resignation of Saraki. With the raging crisis in the assembly, observers believe that the obvious casualty will be the budget which was signed by President Buhari as was in 2017 on the brokered conditions of a complete review through virement and a supplementary budget.

Although the leadership of NASS has agreed to reconvene this week to decide on the INEC budget after meeting with its Chairman Prof. Mahmood Yakubu last week, sources said this action does not cover the virement and supplementary budget. President Buhari had strongly objected to the budget as passed by the NASS as a result of its increase from N8.6 trillion to N9.1 trillion, citing funding constraints and distortion of its priority projects and policy direction.

Government in the budget had planned to complete some major capital projects such as the Lagos-Ibadan road, Second Niger Bridge and the Mambilla power plant, the East-West Road, Bonny-Bodo Road, and Itakpe-Ajaokuta Rail Project which were cut by an aggregate of N11.5 billion. In total the NASS added about N586 billion to the budget.

With the growing war of attrition and mutual suspicion between the two factions in the NASS, governance and executive bills will take the back seat. It is unlikely that the Saraki led NASS will be disposed to expedite action on the budget by reconvening for fear of being upstaged by his APC opponents. Also his faction may not be in a hurry to address the executive issues simply to undermine the performance of government for electoral purposes and score cheap political points.

Generally, the old problems in budgeting by the government have been magnified in the 2018 budget, leading observers and experts to believe that this year’s budget will perform worse than any other by this government. Unlike other budgets, the government seems disinclined to its validity and implementation. President Buhari expressed his misgivings about the budget before signing it, insisting that he was doing so against his better judgment and preference, accusing the NASS of distorting its framework by adding their own projects and expenditure.

President Buhari NASS of tampering with the 2018 budget sent to them by cutting essential projects and inserting non-essential ones. Up to 6, 403 projects initiated by the lawmakers were smuggled into the budget, Mr Buhari noted in his speech. Secondly, he accused them of sabotaging the executive’s effort of regularising the country’s budget on a January-December financial year.

“It is in this regard that I am concerned about some of the changes that the National Assembly has made to the budget proposals that I presented. The logic behind the constitutional direction that budgets should be proposed by the Executive is that, it is the Executive that knows and defines its policies and projects.

“Unfortunately, that has not been given much regard in what has been sent to me. 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,” Mr Buhari said. An N8.6 trillion budget proposal submitted to the National Assembly on November 7, 2017 was increased to N9.1 trillion when it was finally passed in May.

Senator Udo Udoma, Minister of Budget and Planning, in his budget breakdown after the signing by President Buhari, acknowledged that the global economy is still characterized by uncertainty. However, the sluggish economic recovery in 2017 is expected to pick up pace while the global political terrain is expected to stabilize. Global GDP growth is projected at 3.9% in 2018 up from 3.8% in 2017.

Emerging markets and developing economies are expected to lead with GDP growth of 4.9% Advanced economies are projected to grow at a slower rate of 2.5%, but Nigeria is expecting a 3.5 percent growth in 2018.

According him, the 2018 Budget proposal seeks to continue the reflationary policies of the 2016 and 2017 budgets which helped put the economy back on the path of growth.

Thus, “we plan to continue to spend more on ongoing infrastructure projects that have potentials for job creation and inclusive growth. We will continue to leverage private capital and counterpart funding for the delivery of infrastructure projects. As with 2016 and 2017 budgets, the 2018 budget has been prepared on the Zero Based Budget (ZBB) Principles”, he said.

Actually the problem of the budget is not the insertion of projects to the tune of N586 billion as alleged by the president; the real issue is the prolonged delay in its passage which has not abated as the needed virement to restructure the expenditure patterns is not likely to take any sooner.. And both arms of government were responsible for the delay:

Given the subsisting strained relationship between them the NASS insisted on performing its oversight functions diligently, while most of the MDAs shunned their budget defence alleging extortion by the members. Also members claimed that the MDAs stayed away because of their padded proposals.

Simply put, the budget has become a victim of the face-off between the two arms of government. With this delay it is obvious that any hope in the budget will be dashed because a budget is expected to have 70 percent performance level to significantly affect the economy positively. No budget of this government has performed more than 30 percent. The 2017 budget recorded only 19 percent implementation.

This is even more significant in an election year when politics assumes higher stakes and relevance for the second term bid of the President. Generally once INEC blows the whistle for campaigns governance takes the back seat; so by that tradition, not much will be done with the budget until after the election and the expected economic amelioration will be postponed till then.

The second challenge facing the budget is the huge deficit level contained in it, especially for capital expenditure. This practice has been the undoing of the previous budgets which relied on borrowings to fund capital projects; as would be expected, such borrowings did not materialized, thus putting the projects in jeopardy. And with the haphazard implementation of capital projects, the budget becomes a mere consumption spending with little impact on the economy.

Although the bench marks for the budget such as the oil price and oil production quota appear realistic and even conservative, indications are already emerging that the reverse may actually be the case, which will further increase the deficit. Oil price has maintained a healthy level of over $70 per barrel against the benchmark of $51.

With total revenue put at N7.165 trillion against total expenditure of N9.120 trillion, deficit stands at N1.955 trillion, which will be sourced from both domestic and external borrowings amounting to N793 billion and N849 billion respectively, leaving a shortfall of N300 billion.

In other words, the expected borrowings do not cover the deficit in the budget by N300 billion. This has already built in a failure rate of 17 percent in the capital expenditure of the budget even before implementation.

Finally the high percentage of debt service in the budget points to its soft underbelly. Experts believe that government focus on debt per GDP ratio is deceptive and counterproductive because it does not give a true picture of the state of the economy and its capacity to fund the budget. They argue that the more realistic and practical index would be debt to revenue ratio, which stand at 38 percent, while debt to GDP is about 16 percent. Debt service is N2.014 trillion; in addition to N4 trillion recurrent expenditure – both constituting more than 60 percent of total expenditure.

Dr. Boniface Chizea, financial expert, former banker and chief executive of BIC consultancy services, believes the rift between presidency and NASS is affecting the budget, but the thing is, “have been implementing the budget?  How well have we been implementing the budget? Can you vouch that this budget will be fully implemented?

“For us budget is just a structured procedure; it’s like a ritual we go through. Of course, if there is a big ticket item like spending over N200billion for election, why was it not captured in the budget originally? How much due diligence went into it? With election so close can the NASS ask how are we going to spend it? Like just have a breakdown down, how much you are spending on manpower, how much are you spending on supply of materials, and so on, so that you can do some little tracking of the spending?

“The fact that we did budget and something as important as election was coming and we did not include it in the budget exposes our lack of seriousness. Does that not tell you about level seriousness that we have?  Obviously, the delay in the budget will affect us, but then how much follow the budget?”

Dr. Bongo Adi

Dr. Bongo Adi, Faculty Member, Lagos Business School, is convinced that the damage has already been done. “It’s already having a lot of impact on so many fronts, starting from the country’s reputation. Because it’s beginning to appear that the business of government in Nigeria has turned into some kind of a chaotic situation. Something you wouldn’t see happening in other parts of the world.

“That has actually put the country in a very bad light before the international community. It has turned the business of governance into a caricature, passing off those responsible as irresponsible people.

“The problems of the country; the myriads of challenges that this country is confronting isn’t enough to get these people to realize that things must be done. That’s not actually their concern.

“While the country is in a big mess, unemployment is very high, poverty level is increasing, GDP is not growing at the expected level to counteract poverty, unemployment, joblessness and so on. While we are facing all these challenges, all they care about is power grabbing and all of that. So obviously, what is going on there has had telling impact on the nation”

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