Reflections on the approval of the 2017 federal budget

Eze Onyekpere

The National Assembly on the 11^th of May 2017 approved the 2017 federal budget. This approval is coming 5 months after the estimates were submitted by the President on December 14, 2016. The late approval is not a best practice; neither is it worthy of replication. It provides the experience for NASS to say “never again” for late budget approval. A conscientious and hardworking NASS will not need more than 2 months to finish the consideration of the federal budget. But the way and manner members of NASS were congratulating themselves creates the impression that they had achieved a feat. It may be a feat in the sense that the budget had been over-delayed beyond reasonable comprehension.

Again, there are feelers that NASS will provide or has already provided in the Appropriation Act for the 2017 budget to run for 12 consecutive months from the date of presidential assent. This will amount to perpetuating abnormality if NASS insists on this approach as it did in 2016. The constitutional provision which gave NASS the power to define the financial year did not provide for arbitrariness and uncertainty as a part of fiscal governance. It did not contemplate that the financial year will be redefined every year based on the dereliction of duty of the executive and legislature. It gives NASS the power to amend the Financial Year Act and redefine the financial year once and for all.  The clear implication of what NASS did in 2016 and seeks to do in 2017 is that the financial year of 2016 will be different from that of 2017 and may also differ from the incoming 2018 financial year. This will be an absurd interpretation of constitutional legislative powers.

The financial year is not defined as the period from January 1 to December 31 for fun. The definition facilitates other issues such as budget reporting contemplated under the Fiscal Responsibility Act, constitutional preparation and submission of audit by the Auditor General of the Federation to NASS and other actions contemplated under the Finance (Control and Management) Act. Thus, disrupting the normalcy of the regular financial year and pretending that all is well displays the highest lack of understanding of the interconnectedness of all aspects of public finance management.

The decision of NASS to make the details of its budget available to Nigerians is attracting accolades from Nigerians and lawmakers are busy congratulating themselves for “a promise kept”. However, it has been the insistence of all reasonable Nigerians that no one, agency or institution under a constitutional democracy has the right to spend public funds in a way and manner unknown to the public who hold the ultimate sovereign power. The fact that NASS decided after making their vote a first line charge in 2010 to stop publishing the details of their expenditure is unfounded and has no backing in law and policy. It contravened the Freedom of Information Act and section 48 of the Fiscal Responsibility Act. This was the decision of Abdu-Kafarati, Judge of the Federal High Court sitting in Abuja in Centre for Social Justice v the Minister of Finance (Suit No. FHC/ABJ/CS/301/2013). The decision was disobeyed; despite the filing and follow up of proper contempt proceedings, the court was not keen on citing the Minister for contempt. The bigger challenge is not just access to the publication of the vote of NASS but it should extend to the publication of the vote of all agencies enjoying statutory transfers. They are the National Judicial Council, Niger Delta Development Commission, Universal Basic Education Commission, Independent National Electoral Commission and the National Human Rights Commission. The same arguments applicable to NASS are applicable across board to all agencies receiving and spending public money.

The approved budget is in the sum of N7.44 trillion being N143 billion higher than the estimates submitted by the President. This is N1.38 trillion higher than the sum approved in the 2016 Appropriation Act, being 22.76 percent increase over the 2016 approved sum. In United States Dollar terms, using the prevailing exchange rate of N380 to 1USD, the budget figure of N7.44 trillion is a paltry USD19.58 billion. The provision of section 11 of the National Health Act (NHA) providing for the Basic Health Care Provision Fund being one percent of the Consolidated Revenue Fund was ignored. The provision should have been in the sum of N47.59 billion. The conspiracy of the executive and legislative arms of government in refusing to implement the clear provision of the NHA stands condemned; it is an act of callous insensitivity to the plight of poor Nigerians, particularly women and children, whose rights to life and health are violated on a daily basis because the government sees them as expendable persons.

Dedicating 24.73 percent of the overall budget to debt service is an indication that Nigeria’s debt profile is becoming unsustainable. The capital vote of 29.30 percent is just a little higher than debt service. With a deficit financing of 2.35 trillion, the debt service is about 36 percent of our expected revenue. This shows that we may soon be back to the debt situation pre the debt relief period. The debt service compared to capital allocation of ten key ministries shows the opportunity costs of servicing debts. The capital allocation to 10 key ministries (agriculture, education, health works, power and housing, solid minerals, interior, defence, transport, trade and investment and Niger Delta) as a percentage of debt service is 72.99% while debt service is 84.49% of the overall capital vote. These few details will suffice for now as the author will return to the analysis of the fuller details of the Appropriation Act at a later date when the Acting President gives his assent to the 2017 Appropriation Bill to become the Appropriation Act 2017.

The approval of the 2017 budget by NASS does not mean that it automatically becomes law because the Acting President will still scrutinize same and if there are any major points of disagreement, return same to NASS for correction. Thus, an iterative process has been set in motion. It is therefore expected that the budget may take one or two weeks before becoming effective through the assent of the Acting President. And after assent, the mechanisms for procurement, disbursement and release of funds will still be activated and this may take the next one moth. Thus, the 2017 federal budget has just 6 months to the end of the recognized Nigerian financial year for its implementation.

In the circumstances, to forestall and prevent the continuation of the insanity of approving a budget five months into the financial year, it is imperative that the executive starts the process of preparing the Medium Term Expenditure Framework 2018-2020 immediately. This is necessary as it provides the background to the budget and its key macroeconomic and fundamental benchmarks. Also, the Fiscal Responsibility Act expects the MTEF to be endorsed by the Executive Council of the Federation by the end of the second quarter of every year, in the instant case, being June 2017.  Although, the 2018 personnel budget call circular is already on the website of the Budget Office of the Federation (see http://www.budgetoffice.gov.ng/index.php/resources/internal-resources/call-circular), this is not enough to show that the 2018 budgeting process has kick-started in earnest. We need to learn and improve from the mistakes of the past.