On the Proposed Budget and Related Matters
By Waziri Adio
When President Bola Tinubu presented the 2025 proposed budget to the National Assembly just eleven days ago, it was clear that even this extra pliant set of legislators would need some additional flexibility to pass the budget within the working days left in 2024. No president, until Tinubu came along, had ever waited till two weeks to the beginning of a new financial year to table his proposed budget. Not even in 1999 (when the newness of the experiment could be an excuse) or in 2009 (when a sitting president was mortally sick) was the budget presented this late. But there is a new sheriff in town who felt it was not a bad idea to wait until a week before Christmas to present the budget for parliamentary consideration.
Shortly after listening to the president amidst remarkable giggles and applauses, the legislators approved a separate request to extend the capital components of the 2024 budget(s) till 30th June 2025. They dispensed with two traditions at a stroke. The first was the customary extension, if a new budget had not been passed, of the capital budget till the end of the first quarter (31st March); then another extension till when the new budget was passed and signed. Tinubu requested for an extension of half a year at a go, and the parliamentarians promptly obliged without any condition.
Capital provisions are usually multi-year, and since capital allocations are usually released late, it made sense to allow their extension while salaries and overhead would continue as approved in the old budget. This is to prevent government from shutting down in case the legislators take their time in passing the budget (we have had instances where executive-legislative bickering stretched budget passage to seven or eight months). However, once a budget is passed, the other budget should naturally lapse. Things are neater that way.
The possibility of two or more budgets running concurrently was an oddity until the Tinubu era. Clearly, the 2025 budget will be passed within the first quarter of next year. Meanwhile, the capital budget for 2024 would be running till 30th June. This shows that the aberration of implementing multiple budgets in late 2023 and throughout 2024 is being normalised, with the enthusiastic endorsement of our legislators.
The second tradition that has been casually shredded is keeping Nigeria within the predictability of the January to December budgeting cycle. It took a lot of heavy lifting, discipline and meticulous planning by the executive and legislative arms to return the country to this tradition. A major milestone was recorded on 17th December 2019 when former President Muhammadu Buhari signed the 2020 budget. This good and necessary tradition stood for five years.
The only reason why this tradition is being rolled back now, even with a legislature that adopts a fast-food approach to law-making, is because the 2025 budget was not presented on time. It is difficult to find a persuasive justification for this tardiness. The only trick for getting the budget passed and signed on time is preparing the budget proposal on time. If budget circulars are issued early, say by the end of the second quarter, the president should be able to present the budget to the National Assembly by September. This will give the legislators a whole quarter to work on the appropriation bill, and enough time for the executive to do a proper review of the passed budget and request for changes, if necessary, before presidential assent. Not submitting budget proposals on time allows for all sorts, including insertions and overreach by legislators. The way to cure such mischief, assuming there is the appetite for it, is to start the budgeting process early. And there is no compelling excuse not to.
However, President Tinubu has not taken a saw to all our budgeting traditions. He is, in this sense, a selective iconoclast. One tradition that he has religiously kept is that of bogus projections. While presenting the N49.74 trillion budget, the president gave a brief review of the 2024 budget(s): revenue projection performing at 75% and planned expenditure at 85% as at the end of the third quarter. This is all well and good. But it is not a substitute for a detailed budget implementation report for Q3 2024, which should have been published by now by the Budget Office of the Federation.
This is where we can have a clear view of revenue flows, expenditures by type and the deficit so far. It is in the detailed budget performance report that the fiction of our projections comes out to mock us. In any case, a budget based on crude oil production of 2.06 million barrels per day, FGN net revenue at N36.35 trillion, deficit of N13.39 trillion and inflation at 15% continues the game of orchestrated optical illusion that we have played with ourselves for decades.
It is, however, not an innocuous game. Unmet revenue projection leads inexorably to budget underperformance, increased deficit and more borrowing, which increases our debt burden. In the proposed budget, N16.33 trillion or 33% of the proposed budget or 45% of projected revenue is devoted to debt service alone. Debt service is the highest single item in the 2025 budget (or the second highest item if the N3 trillion capital allocation in statutory transfers is added to the N14.85 trillion in the main budget to take overall capital to N17.86 trillion). Whatever option we fancy, debt service as the highest or the second highest budget item is not a good look. And with the over-ambitious projection and expansionary approach that is out of sync with probable revenue, we are further locking ourselves in a vicious cycle. This is a time to faithfully keep deficit and debt (and resultant higher debt service) in check.
A ready and oft-used counter to this argument is that we also live in a time of great need, and that we need to spend to put the economy on sound footing and increase the productive capacities of our people. While this line of argument might appear persuasive, more than a few of the proposed expenditure do not pass the muster of necessity and regeneration or even transparency. Why do we propose to spend N238.05 billion for a hospital for the Nigeria Intelligence Agency (NIA) while the capital budget for the entire Ministry of Health and Social Welfare is N653.61 billion? Why do we need to allocate N50 billion as capital supplementation for a building for FIRS, an agency that gets 4% as cost of collection and with a hefty budget likely to be about half a trillion Naira? And how do we have a N761.97 billion as a one-line item for Special Projects?
There are other curious items I have seen in the proposed budget. One glaring example is the plan to transfer N146.14 billion to MOFI (Ministry of Finance Incorporated) as counterpart funding for the Lagos Green Line Metro Rail Phase 1. This raises many questions. The proposed allocation for the metro-line within a state is 65% of the capital budget and 57% of the entire budget of the Ministry of Transport. If this is counterpart funding from a recapitalised MOFI, why is the money coming from the budget of a federal ministry? Why can’t MOFI raise its counterpart funding from the market? How was the decision arrived at that this is a project to invest federal money into and will such facility be available to other states outside of Lagos?
Similarly, the lavish allocations to the development commissions not only raise similar questions but will likely cause more challenges down the line. The proposed allocations are as follows: N290.99 billion for the North East Development Commission (NEDC); N341.27 billion for the South East Development Commission (SEDC); N498.40 billion for the South West Development Commission (SWDC); N585.93 billion for the North West Development Commission (NWDC); and N776.53 billion for the Niger Delta Development Commission (NDDC). For a strange reason, the proposed budgets for these commissions all go to personnel, with zero allocation for overhead and capital (which I think must be a mistake, but it is still rich that such mistakes can make it to such a sacred document).
Beyond being conduits for elite settlement, these commissions have done little to uplift the material conditions of the people in their respective zones. There is nothing in the trajectory of the NDDC or the NEDC to recommend the creation and federal funding of three new zonal commissions. Collectively, these five commissions account for 5% of federal budget. And since the FG is eager to start and fund these commissions, more will be created. The North Central will surely demand what has now become a national cake. It is also not improbable for the Niger Delta to ask for a region-specific commission since NDDC also includes Abia, Imo and Ondo states as oil-producing states. In short order, we may start creating federally funded state development commissions.
On a separate but related note, I have searched unsuccessfully for two items in the current budget documents, as I did in previous main and supplementary budgets: the funding of the Lagos-Calabar Coastal Highway and the purchase of the presidential jet. Maybe they are tucked somewhere I am yet to get to or maybe they are couched in a way that is not apparent. Anyone who has seen them should kindly share. My interest is not about the utility or the urgency or even the cost of these items.
I am interested in them for two reasons. One, citizens deserve to know how their common wealth is being expended and the processes followed to ensure there is proper value for money. These things should not be a matter of speculations or gossips. Two, no public money should be spent without appropriation and accountability in a democracy. We are not under an absolute monarchy where the king owns all and can whatever he likes. Beyond the concern about the sanctity of the budgeting process, there are higher values of transparency, answerability and democratic stewardship at play here.
These higher values currently seem lost on those constitutionally bestowed with the power of the purse and oversight, but should never be lost on us as citizens. We are citizens, not subjects; and we have a duty to ask pointed questions of those holding power in trust and to always insist that they do better.
