10 August 2011

Nigeria: Budgeting for Public Good Through Best Practices


The clamour for the passage of the Fiscal Responsibility and Public Procurement bills in 2007 gave flesh to the fiscal reforms of the President Olusegun Obasanjo tenures which also ended that year. The signing into Acts of these public finance bills in 2007 by President Umaru Musa Yar' Adua of blessed memory were meant to guide the new fiscal and procurements regimes which after four years now are expected to yield concrete fruits in terms of not only putting food on the table of Nigerians but also to enhance the quality of their menu, through good budget practices, from formulation and enactment, to actual execution, audit and performance evaluations.

The need for prudent management of the people's money and the promotion of the economic objectives of the constitution contained in chapter 2 section 16 were behind the enactment of the Fiscal Responsibility and Public Procurement Acts 2007. : Some of these objectives are that

1. The Nigerian state shall:

A) harness the resources of the nation and promote national prosperity and an efficient, a dynamic and self-reliant economy;

(b) control the national economy in such manner as to secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity;

(c) without prejudice to its right to operate or participate in areas of the economy, other than the major sectors of the economy, manage and operate the major sectors of the economy;

(d) without prejudice to the right of any person to participate in areas of the economy within the major sector of the economy, protect the right of every citizen to engage in any economic activities outside the major sectors of the economy.

So far the potentials of these laws and the constitutional provisions to change the face of Nigeria's economy have not been realized due to the poor budget attitudes and habits of the Nigerian government which are still very far from international best practices thereby failing to kick-start the economy to create wealth, generate employment and raise revenue for infrastructural and human capital renewal which the country's economy dearly needs if the Vision 20-20-20 and the Millennium Development Goals(MDGs) are to be met. In this season of transformations well formulated and implemented annual Appropriation Acts still remain the single most important tool for the transformation of the nation's economy.Our poor and retrogressive budget practices have not escaped the eyes of the world bodies, which watch our budget practices among the performance of other nations. One of such bodies is the International Budget Partnership (IBP), a non-profit organization with offices in USA, India, Mexico, and South Africa, which collaborates with civil society organizations in developing countries to analyze, monitor, and influence government budget processes, institutions, and outcomes. The aim of the Partnership is to make budget systems more responsive to the needs of poor and low-income people in the society and, accordingly, to make these systems more transparent and accountable to the public.

Within the IBP, there is a program called the Open Budget Initiative (OBI), which is a global research and advocacy program to promote increased public access to budget information and the adoption of accountable budgeting systems. One of the flagship activities of the OBI is the publication of the Open Budget Survey, which is the only independent and comprehensive measure of government budget transparency worldwide. When it first started in 2006 the Open Budget Survey was conducted in 59 countries around the world and now has expanded to 101 countries for the Survey of 2012.

The previous results in 2006 and 2008 and 2010 revealed as follows:

That in 2006, Nigeria scored 20 per cent in the Open Budget Index against its contemporary nations like Brazil which had 73 per cent, India 52 per cent, Ghana 42 per cent, South Africa 85 per cent and Botswana 65 per cent .The result of the 2008 Open Budget Survey showed that South Africa achieved the highest level of transparency and popular participation in the annual budget circle in the world, with 87 per cent score. This means according to the International Budget Partnership that "the government provides the public with extensive information on the central government's budget and financial activities during the course of the budget year. This gives citizens tools to hold government accountable for its management of the public's money".

The same year 2008, Nigeria scored 19 per cent in the exercise meaning that the Nigerian "government provides the public with scant information on the central government's budget and financial activities during the course of that budget year. This makes it very difficult for citizens to hold government accountable for its management of the public's money." This record was not by anyway an improvement on the 2006 situations.

In 2010, India scored 67 per cent, South Africa 92 ,Brazil 71, Malaysia 39 per cent, Indonesia 51per cent, Egypt 49 per cent, Kenya 49 per cent, while Nigeria scored 18 per cent. Though a very low performance, it was better than Vietnam with 14 per cent and Cambodia 15 per cent , China 13 per cent, Sudan 8 per cent in the Open Budget Survey and these coincided with the ratings of the Transparency International on Corruption Index which rated Nigeria 134th with 2.4 score meaning ( highly corrupt) and Fitch- which rated the Nigerian economy (BB- minus) due to the depletion of the Excess Crude Account. By 2012, the IBP will also publish its findings on budget practices among the 101 countries where the Open Budget Survey will be carried out. We hope Nigeria will change its budget practices for the better.

In the light of these, therefore, the Nigerian government and people must come to the full realisation that there is no alternative to the Fiscal responsibility and public Procurement Acts 2007; without which the economy cannot be revived for the common good. These laws have rooms for transparency, Accountability, popular participation in the budget and budgeting processes. The idea that open budgets transform lives must spring from the fact that it garners all the available resources and the creative energies of people to engineer and manage the economy.

Democratic systems that run economies in an exclusive manner cannot transform the lives of people because it will engender corruption and stifle the democratisation of the nation's resources

Transparent budget processes hold the key to Nigeria's development, since development cannot take place without planning and a nation's annual budget is central to its economic planning. Open budgets therefore requires that the key eight budget documents are made accessible to the people on time. These are the Pre-Budget Statements in line with the Fiscal Responsibility Act 2007; this means the Medium -Term Expenditure Framework, Executive Budget Proposals, The Enacted Budget Quarterly or monthly In- Year Reports on revenues collected and Mid-Year Review for the first six months of the budget year to discuss any changes in economic assumptions that affect approved budget policies

At the end of the year, the executive should publish a Year-End-Report summarising the progress made in achieving the policy goals of the Enacted Budget. Best budgetary practices equally call for an independent Auditor-body that should issue Audit Report that covers all budgetary activities carried out by the implementing MDAs. In a democracy, it is also expected that government should issue a reader-friendly version of the budget known globally as the Citizens Budget. The availability of these documents strengthen transparency ,while the effectiveness and quality of oversight carried out by the legislature and the Auditor-general for the Federation and opportunities offered citizens groups to engage government in budget decision making and monitoring enhance accountability and ensures good governance. The progressing and developing world is moving towards annual budget Public Hearings in the Legislature.

The 2012 budget plans and processes offer us once more an opportunity to improve on our fiscal policies and standards.The budget is a government's plan on how it is going to use the people's resources to meet their needs. Transparency means all of a country's people can access information on how much is allocated to different types of spending, what revenues are collected, and how international donor assistance and other public resources are used. The IBP that monitors these standards globally believes that open budgets are empowering; they allow people to be the judge of whether or not their government officials are good stewards of public funds.

While providing the public with comprehensive and timely information on the government's budget and financial activities and opportunities to participate in decision making can strengthen oversight and improve policy choices, keeping the process closed can have the opposite effect. Restricting access to information creates opportunities for governments to hide unpopular, wasteful, and corrupt spending, ultimately reducing the resources available to fight poverty.

Good budgets will transform lives when it expands the productive capacity of the economy, creates jobs that will add value and engage a lot of idle hands that are littered all over the economy. This way government's revenue generation capacity will be improved from taxes it collects from the pool of taxable adults who are gainfully employed. These are the challenges before the 2012 Nigeria budget.

Jim-Nwoko, a public finance researcher wrote in from Abuja.

Copyright © 2011 Daily Champion. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.