The delay in passing the 2018 budget by the National Assembly due to discrepancies by the executive arm of government slows down the fragile Nigerian economy which exited recession last year

By Anayo Ezugwu

THE Nigerian government raised so much hope last year when it promised that December will be the end of its financial year. But some Nigerians were doubtful the government will keep its promise when it presented its 2018 budget to the National Assembly on November 7. The doubts were premised on the previous experience where the legislators took their time to scrutinise the budget before passing the appropriation bill.

The doubting Thomases appear to be justified. Four months after President Muhammudu Buhari presented a budget proposal of N8.612 trillion for the 2018 fiscal year before a joint session of the National Assembly; it is yet to be passed. Consequently, businesses in government and in the private sector, which heavily depends on spending of the former, are put on hold. And the fragile economic recovery last year after the exit of recession seems threatened because the executive and the legislature are not agreed on the spirit of the budget.

For instance, among other things, the House of Representatives Committee on Industry, was on Monday, February 12,  outraged when they found a proposition in the 2018 budget for acquisition of an office building at N20 million.  It therefore directed Okechukwu Enelamah, minister of trade and investment, to show proof of existence of a proposed N20 million structure to be purchased as office building.

While asking the minister to show members the location of the building, the lawmakers also questions the wisdom behind a proposal for the purchase of additional three operational vehicles by the ministry, noting that a similar proposal was approved in 2017.

The minister, in his response, appealed to the lawmakers for time to enable him provide document that would show the location of the building being proposed for purchase by the ministry. The minister had presented a budget of N26,123,720,105.00 as total budget estimate for the ministry and its agencies for the approval of the lawmakers but they picked holes with many of the line items exhibiting fault lines.

Prior to this, the senate had on December 19, 2017, threatened to dump the fiscal estimate over alleged inconsistencies and abysmal performance of the 2017 budget. The lawmakers criticised the performance of the 2017 budget, taking cognisance of what they called extremely low releases by the ministry of finance to fund projected capital projects.

They insisted that the promised passage of the 2018 budget before the end of the year was no longer feasible. The senators said the promise by President Buhari that 40 percent of the 2017 budget would be achieved before the end of the year while the remaining balance of 60 percent would be rolled over to 2018, has not been adhered to.

Senator Solomon Adeola, chairman, Senate Committee on Local Content, during the Christmas holidays explained why the Senate may not pass into law the   2018 appropriation bill any time soon until March or April 2018.

Adeola absolved the Senate of delaying the passage of the proposed 2018 budget, accusing the ministries and departments of refusing to submit documents necessary for passage of the bill.

During the end-of-year get-together organised for members and chieftains of the All Progressives Congress, APC, he said Senate would not allow itself to be a rubber stamp for the executive. Adeola said rather than blaming the Senate, government ministries, agencies and parastatals, should be blamed for failure to provide the necessary documentations to defend their respective financial proposals before the Senate.

Disclosing that members of the Senate had worked round the clock to ensure prompt passage of the budget by December 21, 2017, the lawmaker lamented the lack of sense of urgency by the federal government’s agencies in defending their fiscal proposals to enable the senate pass the budget in record time. The Senator, however, declared that unless the Senate is provided with documentation, fact and figures to work with, the senate could not just rubber stamp the 2018 budget.

Nonetheless, experts believed that the delay in passage of the 2018 budget is slowing down economic activities in the country. Austin Nweze, economist, told Realnews that it has become a norm in Nigeria to wait from December till May the next year before the budget could be passed into law. He said in an ideal society budget is supposed to run from January 1 to December 31.

Acknowledging that the delay in passing the budget is affecting many companies and corporate organisations and equally preventing them from planning for the year because of government involvement in the economy, he stressed that they need to know what government plans are before spending.

“Basically it holds down the entire economic activities because government involvement in business is over 75 percent, which is not good but that is the way the economy is structured. Government still has great influence on the economy. So with the delay, economic activities cannot happen until the document becomes a legal document.

“As a result of the delay other people who also do business with companies and government will not fully begin to implement their plan as a result everything is slowed down but once the budget is passed, there is confidence for people to start spending and it helps to boost the economy as well.”

It is not just the passage of the budget but getting funds to be released to various MDAs and contractors. In 2016 and 2017 budgets not all the MDAs got all the money allocated to them. Some got 20 percent, some less and some more.

According to Nweze, the federal government is still implementing the 2017 budget and it will run till March 31. He said if the National Assembly approves the 2018 budget today the two budgets will run concurrently in some key projects.

He, however, regretted that overtime the country found it difficult to run an annual budget that is to say from January 1 to December 31. The solution lies in the fact that as an emerging democracy, Nigeria should not be running annual budget but a five-year budget whereby a government coming into power will have a master plan of what they want to do in a period of four years. With this they will have a budget of five years and if they are returning to power they already have a budget for the fifth year. Or if a new government is coming in what they need is just to make adjustments.

That is a way to reduce corruption because the annual budget encourages a lot of corruption. Nweke thinks for a developing economy like Nigeria annual budget is not the best. “It encourages corruption and slows down development. But if you have a five-year or four-year budget and make adjustments annually for inflation, it helps businesses to plan, it helps government to plan and there is accountability.

“And corruption is reduced because if you know what is going to happen then you can plan ahead knowing that this budget will run for five years. But what happens now is that a project that may take four or five years, every year you see the project being repeated in the budget, so where is the money going to. Our budgeting process and system is now quite straight because countries that use annual budgeting system are developed economies,” Nweze said.

– Feb.  17, 2018 @ 8:00 GMT |