A total of 27 Nigerian Ministries, Departments and Agencies (MDAs) appear to have padded the 2017 budget by up to 6.44 per cent of the N7 trillion estimate, data obtained by BudgetIT shows.
The MDAs have budgeted for items that look suspicious, prone to fraud, outrageous, and frivolous, worth N466 billion, according to data from BudgetIT, a civic organisation with the primary aim of raising the standard of transparency and accountability in government.
Budget provisions from four ministries, namely Power, Works and Housing, Defence, Interior, and Industry, Trade and Investment, constitute 87 per cent of the budget, with up to N404 billion in suspicious items.
The Ministry of Power, Works and Housing ranks highest in the group, with N185 billion of suspect budget items; the Defence Ministry contains N99 billion doubtful items. The Ministry of Industry, Trade and Investment, and the Ministry of Interior, contain suspicious items amounting to N69 billion and N51 billion respectively.
BudgetIT Data shows that just as the 2016 budget that was allegedly heavily padded, the 2017 budget contains a lot of items that are frivolous, outrageous, fraudulent, or items that suggest that the budget is padded.
The Federal Ministry of Works and Housing budgeted N183 billion for construction and provision of fixed assets in unnamed locations; it budgeted N669 million for dualisation of Ibadan road (Mayfair junction)-Lagere-Iremo-Enuwa-
Ilesha bypass c/no. 6080, a road which ‘concerned citizens’ who spoke to BudgetIT said has been dualised already.
Also N44 billion was budgeted by the Federal Ministry of Industry, Trade and Investment, as capital cost (N23 billion) and research and development cost (N21 billion).
As most of the items stated as capital costs are procured on a yearly basis, analysts say that the country could save money by maintaining these items, instead of purchasing them every year. BudgetIT also notes that the money budgeted for research and development looks unduly high and prone to embezzlement.
In the office of the Secretary to the Government of the Federation (SGF) the National Commission for refugees budgeted N868 million for ‘durable solutions’ and care and maintenance of ‘persons-of-concerns’. People who spoke to BudgetIT said this line item is vague, as they sought to know the meaning of ‘durable solutions’.
The Federal Government had promised that the 2017 budget was going to be prepared based on the Zero Based Budgeting (ZBB) process, instead of the inherited ‘envelope’ based model. With the ZBB, every item in the budget was to be justified before it is included in the budget, unlike the envelope system, where incremental budgeting process was the norm.
Explaining the rational for ZBB recently at the Bureau for Public Sector Reforms (BPSR) Lunch Time Dinner on 27 January, Ben Akabueze, Director-General Budget Office of the Federation, said that under the ZBB model “allocation is based on programme efficiency and necessity, rather than budget history.”
He said the ZBB focuses on project justification, as opposed to incremental budget.
“Previous budget is only a starting point and past pattern of spending is no longer taken as given.”
Akabueze explained that the zero based budgeting process encourages cost reduction by “avoiding automatic cost increases” though he also admitted that it is costly, complex and time consuming to prepare.
He further explained that “unlike in the preparation of previous budgets, where the excel template was used, a web-based application was used in preparing the 2017 budget.”
He said “to avoid unauthorised changes in the budget figures, only the trained officials nominated by MDAs were given access to work and upload information on their respective pages on the platform. All changes or adjustments were made auditable and traceable to any of the officers.”
Sammy Chidoka, a director who oversees the corporate finance advisory group at Planet Capital Limited, said that the fact that there are still suspicious items in the 2017 budget shows there are still lapses in the process. He also criticised the delay in the passage of the budget.
“It is not a good thing at all. The National Assembly and the executive arm of the government are from the same party. One would expect that they would do everything to get us out of recession. They should ensure that the budget is passed on time and in the accurate form.”
Chidoka said that the delayed passage of 2017 budget does not present a good outlook for both the average Nigerian and the people in charge of the economy. He said that people expected the executive arm of government to have presented the budget by October 2016, hoping that the national assembly would pass the budget by January 2017, at the latest.
Johnson Chukwu, Managing Director and Chief Executive Officer, Cowry Assets Management Limited, said the padding situation is unfortunate and that the budget office has to take the blame because there are software that can detect infractions such as duplication of expenditure items.
“This is going to cause a long delay in the passage,” Chukwu told BusinessDay in a telephone discussion.
“If the budget is not good, the assembly cannot pass it because once it is passed it becomes law. The National Assembly cannot pass into law, a document that is not correct,” he said.
Chukwu said that late passage of the budget would cause implementation issues which could jeopardise prospects for economic recovery.
“Late passage of the budget will lead to the inability of the government to implement the budget so as to revamp the economy.”