By Otive Igbuzor
The 2018 budget is based on an Oil benchmark crude oil price of US$45 per barrel; an oil production estimate of 2.3 million barrels per day; and an average exchange rate of N305 to the US dollar; and target Gross Domestic Product (GDP) growth rate of 3.5 per cent.
First and foremost, there are still issues with the process of making the 2018 budget. Citizens and communities do not participate in the selection of projects that go into the budget. Legislators are not consulted on the selection of projects into the budget. The oversight of the budget process by the legislature, civil society and the media is still weak. The Public Accounts Committee which was very popular in the second republic has become very ineffective. There is still confusion on the limits of legislative power in appropriation.
Secondly, there is no much improvement in the content of the budget. There is still low budgetary allocation to sectors that will have impact on the lives of citizens such as Agriculture, health, education and infrastructure. For instance, while the budgetary allocation to education by Republic of Benin and Ethiopia is more that 20 percent of the total budget since 2012, that of Nigeria is less than 10 percent. In the 2018 budget, the allocation to education is 7.03 percent. It is very clear that allocation to education is very low in Nigeria especially when compared to other African countries: Burundi -16.59 % in 2010; 14.98 % in 2011; 16.43 % in 2012 and 17.24 % in 2013; Benin-25.02 % in 2012; 22.34 % in 2013; and 22.23 in 2014; Ethiopia 26.30 % in 2010; 29.67 % in 2011; 30.54 % in 2012 and 27.02 in 2013; and Madagascar- 19.78 % in 2011; 20.33 % in 2012 and 13.99% in 2013.
Frivolous, inappropriate, unclear and wasteful estimates have continued in the 2018 budget. The Centre for Social Justice has documented that this amounted to two hundred and nineteen billion, three hundred and seventy million, two hundred and seventy-two thousand seven hundred and thirty-three naira, forty kobo (N219, 370,272,739.40) in the 2018 proposed budget. These include items such as over one billion (N1,144,066,298) for fumigation of the office of the National Security Adviser; N2.2 billion for Social Media Mining Suite for Directorate of State Security; over N907 million for replacement of vehicles spares and tyres in the Presidential CVU; over N4 billion for annual routine maintenance of mechanical/electrical installations of the Villa and over N254 million for procurement of anti-terrorism, chemical, bioradiation and nuclear weapon equipment by National Security and Civil Defence Commission.
Thirdly, there has always been issue with budget realism. In the past three years, the exchange rate has been fixed around N305 to the US dollar. This is very far from reality. Even the oil revenue is projected at 2.3 million barrels per day. There is a large variance between projected parameters and actual results. For instance, the OPEC quota to Nigeria is 1.9 million barrels per day but 2018 proposed budget is 2.3 million barrels per day.
Fourthly, geographical analysis of the budget indicates that there is no systematic way to ensure fairness and equity e.g. 84 % of specialised and focused projects in the Ministry of Agriculture goes to Yobe State; for road projects-SW (21.4%); SS (19.17%); NC (17.76%);SE (15.96%);NW (14.69%) NE (11.27%); Power generation NW(16%); NE (47%); NC (35%); SS (2%); SW (0%); SE (0%). Power Transmission: SW (26%); SS (15%); SE (19%); NC (5%); NE (9%) and NW(26%). Aviation Capital budget: SW (12%); SS (8%); SE (9%); NW(26%); NE(1%); NC(44%); Railway counterpart fund (SE (16%); SS (5%); NC (13%); NE (14%); NW (47%); Inland Waterways and Maritime Capital Budget: SW (21%); NC (17%); NE (0%); NW (3%); SE (9%); SS (50%).
In addition, recurrent expenditure continues to increase when efforts should be made to decrease it. In the 2018 proposed budget, there is an increase by 11.38 percent over the 2017 approved allocation. Furthermore, although there is a slight improvement in the terms of early submission of the budget by the Executive to the National Assembly, it is still not in tandem with the Fiscal Responsibility Act and the Budget may not be passed even in the First quarter of 2018.
Another huge issue with the 2018 budget is service wide votes. Service Wide Votes became part of the budgetary process in Nigeria from 2003 to 2007. It was actually introduced to improve budget credibility and enhance fiscal discipline. Service Wide Votes is made up of unallocated funds set aside to meet genuine budget details of which cannot be ascertained at the time of making the budget because of sudden escalation of prices, contract variation, natural disasters, etc The international good practice in budgeting is to set aside unallocated amounts for unforeseeable or indeterminate expenditure at the time of budgeting. But to promote transparency and accountability, it is recommended that “Contingency Budget” or service wide votes should be between 3 and 10 percent of the original budget. But service wide votes have increased steadily in Nigeria. In the 2018 proposed budget, it increased from 31.7 percent in 2017 to 36 percent of the 2018 proposed budget.
The budget is crucial in allocating resources and delivering services to citizens. But there are a lot of blockages to the budgetary process in Nigeria. Previous advocacy efforts have led to some improvement, but a lot still needs to be done especially in terms of process, content and implementation issues. There is the need to promote citizens engagement in the entire budget cycle from selection of projects through implementation to monitoring and evaluation. There is the need to promote budget literacy and enhance social, economic and political resilience. Citizens groups need to work more closely with the legislature and the media to ensure effective tracking, monitoring and oversight.
Igbuzor, PhD, is Policy Analyst and Strategist. Email: [email protected]