Recent pronouncements and actions from the Ministry of Budget and National Planning point to the expectation that the 2018 budget proposals will get to the National Assembly for consideration before the end of October 2017 as promised by the Executive arm of government. This is a worthy and welcome departure from the past. The decision to present the budget early is informed by the National Assembly’s unnecessary delay in budget approval in the last few years and particularly in the last two years. Delay in the approval of budget is unhealthy for economic recovery and growth, even when there is agreement that the Executive can rely on past budget approval or existing budget to spend money on some important recurrent items. Some members of the Legislature are already insinuating that the budget approved for 2017 can be implemented till sometime next year. The implication of such a statement is that they do not care whether the draft budget is submitted 0n time or not, they will take their time to consider it. It is like working at a crossroads with the thinking on the executive arm which cannot augur well for the progress being made in exiting economic recession.
Budget consideration by the Legislature is a major assignment and part of the existence of a National Assembly. In what is referred to as budget cycle, the second phase of the cycle is Legislative Cycle or Legislative Phase which end product is authorisation of spending on budget programmes and projects. The first phase has to do with the preparation of the budget by the Executive arm of the government and this is done through submission, presentation and defence of the budget estimates by the Ministries, Departments and Agencies of the government. The final output of the exercise of the first phase, the Draft Budget, is then presented to the Legislature for its consideration and approval of programmes/projects and fund allocation. The way budget considerations have been treated by the National Assembly in the past few years undermined the importance of the exercise. Even many state Houses of Assembly treat budget matters with the seriousness and urgency required and the impact of the budget implementation is felt within the short time the budget was passed. The National Assembly members would have budget on their laps and adjourned for weeks to go on festivities that have nothing to do with economic development. On resumption, they begin with the fanfare of inviting the MDAs for comprehensive defence of the budget instead of asking them to clear the grey areas. They would start looking for where to put their constituency petty projects in the draft budget instead of looking for national spread of major capital projects, etc. In the process, they engage in intimidation and harassment of the ministers and directors of agencies with a view to showing that they are more powerful than the Executive in budget matters. The whole processes become so long that by the time the budget is passed, three to four useful months in a particular year would have been wasted.
Many studies, including the one I and my colleagues recently conducted and published, have confirmed that budget implementation can take up to three or four months before its effects are felt. The results, for example, show that capital expenditure on social and administration sectors would have quicker effects within three to four months of implementing the budget than those on economic and service sectors which take longer periods. In the case of Nigeria where lots of bottlenecks are put in place in the name of following due process, budget implementation starts long after the passage of the budget. What this means is that when a budget is presented by the Executive arm of government in December and it is eventually passed by the Legislature in April or May of the following year with further delay in release of funds by the Ministry of Finance following snail’s pace due process, the actual spending cannot take place until May or June. The long delays in implementation thus cause further three to four months delay in budget effects on the economy. At the end of that budget year, not much effect would have been noticed and by law, the MDAs would have to return unspent funds.
I was shocked, yet surprised, the last time some federal lawmakers accused the Ministry of Power, Works and Housing of spending less than 20 per cent of its allocation and returned the remaining amount. Shocked because the lawmakers deliberately cut down heavily on the ministry’s budget request for the following year on the grounds that if it could return large proportion of the approved budget unspent, it does not need to get bigger or equal amount in new budget approval. Surprised to know that Nigeria has so evolved that ministries could return unspent funds unlike before when end-of-year massive spending on frivolities would wipe off the funds and nothing would be achieved with none queried from any quarter!
A number of factors were involved in prolonging the period of current economic recession and the delay in budget approval and implementation is a major candidate which is from the fiscal policy side while rigid adherence to high interest rates from the monetary policy side contributed its own profane effects. As it were, the fiscal policy operators have decided to present the budget early enough (October 2017) for consideration by the Legislature with the hope that budget implementation could start in January or February 2018. This is a desirable and laudable shift from what used to be and it is imperative that the Legislature too must adjust their modus operandi in support of the new procedures and processes. South Africa recently witnessed recession shortly after Nigeria’s recession took hold but the recovery was fast because every arm in the governance of the country played its role and the central bank supported the fiscal side to reflate the economy.
If the budget proposal is submitted before the end of October, the National Assembly should be able to pass the budget before going on recess for Christmas. Passage of the 2018 budget before the New Year simply implies that the effects of its implementation on the economy should be visible by the beginning of the second quarter of the year. This is desirable for an economy coming out of recession to avoid relapse and promote rapid growth. It is a matter of commitment, national priority over personal convenience and patriotism over party allegiance.
By 2019, Nigeria would have practised democracy for 20 years for the first time since our flag independence. Before then, some institutions should have matured and institutional framework put in place to show that the country has come of age democratically. Such institutions include the Legislature at both federal and state levels, the Judiciary, the Due Process Office, human rights and the agency for checking corruption. For instance, the executive arm should standardise the month of the year for budget presentation while the legislature should fix the period for budget consideration and approval. Such institutionalised framework allows the private sector to plan their operation and key into the economic planning of the government.
Nigeria pays a lot of money for the services of the Legislature and is not getting value for the money. Fortunately, Nigerians, particularly the youths, are becoming wiser and impatient. They know which institution or institutions are not measuring up to the required standard and will not mind protesting against such as the first step towards political emancipation. Any further delay in budget approval henceforth should attract a form of orderly protest from both youths and non-partisan elite.
A quick recovery from the recession can be engineered by timely passage of the 2018 budget and sagacious implementation of the recurrent expenditure which promotes the demand side and the capital projects/programmes which have higher multiplier effects on economic variables like employment generation, lowering of inflation and general increase in outputs. Appealing to the legislative arm of government is akin to begging them to do the work they are overpaid for. It is unnecessary to make an appeal. Getting the 2018 budget passed by the National Assembly before the beginning of the year is like telling Nigerians that they are co-partners in moving Nigeria forward and taking democracy in Nigeria to a higher level. The choice is theirs.
–Tella is Professor of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun State, [email protected]
Source- The Punch