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Budget: Blocking the Leakages and Wastages

09 Dec 2012

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House of reps in session

The early presentation of the 2013 budget proposals  to the National Assembly appears to be yielding some good fruits. It has given the various committees in the parliament and civil society groups  ample opportunity to review the proposals and take definite steps to plug all loopholes  in the budgeting process.  In this report, Onwuka Nzeshi reviews some of the efforts



Last Tuesday, the House of Representatives  went tough on revenue generating agencies  in the country.  Its  Committee on Finance had on that day  commenced a fresh  investigation into the operations of government  agencies to ascertain the quantum of revenue they generate annually and how much they have remitted to government coffers since 2009.

Out of the sixty two (62) agencies invited for the exercise about fifteen including the Central Bank of Nigeria, Nigeria Customs Service , Nigeria Ports Authority, Asset Management Corporation of Nigeria,  Nigeria Communications Commission and Nigeria Export Processing Zone were absent.

Others that failed to turn up for the screening of their financial profiles were the Federal Airports Authority of Nigeria, Nigeria Airspace Management Agency, Nigeria Civil Aviation Authority and  National Pension Commission.

The Nigeria National Petroleum Corporation was partially present having put up an appearance without its  Group Managing Director, Mr Andrew Yakubu. Its delegation was asked to go home and prepare to reappear the following day as no agency will be deemed present if its delegation  did not include officials from  either  the topmost or second level  management cadres.   

Speaker of the House, Hon. Aminu Tambuwal said investigations into  the operations of  the revenue agencies was in line  with the  Legislative Agenda of the 7th House  to plug all  leakages in  federally collectable revenue and  ensure  full and transparent disclosure of all revenues and receipts by corporations and agencies on behalf of government as prescribed by  the Fiscal Responsibility Act.
The  probe, he said, was also  borne out of the  need to return Nigeria  to a sound  fiscal health and financial prudence  anchored on constitutionality and legality.              

                       
Tambuwal who was represented at the event by his deputy, Hon Emeka Ihedioha said that for a long time,  revenue leakages had plagued  the country’s finances to the detriment of the  economy and well being of  Nigerians.
According to him, the Nigerian Constitution and extant  laws on revenue generation and expenditure have  been observed more in breach. He said that whereas

Section 162 of the Constitution stated explicitly what constitutes  revenue and how it should be remitted, most government agencies hide under some clauses in their establishment laws to rip off the government and the people of Nigeria.
“From this Constitutional provision, the inescapable truth is that there is no government agency or company or statutory corporation that earns any revenue that is not expected to be remitted back to government.

“The method of remitting the revenue and the Government Account or Fund where it may be remitted may be different but there is no room whatsoever for discretionary approach to revenue and remittances.

“Indeed the Constitution establishes the Federation Account (S.162); the Consolidated Revenue Fund of the Federation (S.80 (i); and other Public Funds (S.80). All revenue must be paid into any of these funds set up by the Constitution. If by an Act of the National Assembly, an agency is set up for a specific purpose, (S.80 (i), revenues from such Agency is not for the discretionary use of the agency. Such revenues are public funds not private funds,” he said.

In addition to the issue of revenue remittance, Tambuwal observed that the revenue generating  agencies were  also in breach of    another  important aspect of the  public finance operation which has to do with  the rule that no  expenditure must be made without appropriation by the National Assembly.

“ It is the wisdom of our Constitution that irrespective of how revenue or other moneys are raised or received, there can be no expenditure of such moneys or revenue without Appropriation. This is the inescapable conclusion of the provisions of Section 80(3) and 80(4) of the Constitution, which we all swore to promote, protect and defend.

“ Let me repeat, that, there can be no expenditure without appropriation by the National Assembly. It is important to note that Appropriation by the National Assembly is not an end in itself. The Appropriation process allows all Nigerians the opportunity of knowing what funds accruing to government is used for in a transparent and accountable manner.

“ When a financial measure is brought to the National Assembly, it is exposed to robust debate. It passes through rigorous and painstaking processes, that is made open to all stakeholders and Nigerians for their input. This enhances a better budgeting process and accountability,” Tambuwal said.

The House of Representatives had shortly after  its inauguration launched as  Legislative Agenda in which  it observed  that  there had been public  concern about federal revenue leakages, with reports of Ministries, Departments and Agencies (MDAs) of government failing to adequately account for revenues received on behalf of the country in their areas of activity.

The House then pledged to take steps  to plug the leakages by ensuring that MDAs will be made to account for, and remit to the Consolidated Revenue Fund of the Federation incomes received on behalf of the Federal Government.

In the opening remarks at the current investigation, Chairman, House Committee on Finance, Hon. Abdulmuminu Jibrin explained that the ongoing investigation was not meant to witchhunt any agency or embarrass  individuals  but to  enable the Committee track previously uncaptured internally generated revenue of government; have a clearer picture of actual revenue generation and expenditure of the Federal Government and   monitor agencies compliance with the Fiscal Responsibility Act.

The overall objective, Jibrin said was to enable all the stakeholders  deliberate on how the Fiscal Responsibility  Act can be more effective to ensure more prudent spending of government funds;  ensure prompt and complete remittances of operating surpluses and dividends and assist the government  make projections for internally generated revenue for the fiscal year 2013. He said there was need for the harmonisation of Budget office projections with agency projections and  reconcile  actual remittances with the claims of the agencies.
In a bid to change the game, the House Committee on Finance has  proposed a consolidated amendment to the legislations establishing the agencies to delete clauses that contravened  the 1999 Constitution on revenue remittances.

It has also proposed the creation of a special sub-head in the revenue framework  to capture the gross earnings of all revenue agencies instead of the current situation where they generated revenue  spent same and remitted only the “operating  surplus”  to either the Federation Account or  Consolidated Revenue of the Federation.

These are certainly brilliant ideas on plugging the numerous leakages in  public finance management in Nigeria. However, this is not the first time the problem has been identified by the government  and even  non-state actors . The real task is for the parliament to summon enough courage to amend the relevant laws that has paved the way for these leakages. It is the failure of past parliamentary sessions to take the bull by the horns that has kept the national treasury bleeding on all sides.

Wasteful Budgetting
Beyond the plague of non-remittance of revenue by agencies of government, the National Assembly also need to watch out for the pitfall of  wasteful budgetting, another ploy by top government officials  to enrich themselves and their cronies at the expense of national development.

As the two chambers of the National Assembly engage the various Ministries, Departments and Agencies(MDAs) on the 2013 Appropriation Bill, a civil society group, Citizens Wealth Platform(CWP) has spotted over N115 billion “wasteful expenditure” items  in the budget proposal which President Goodluck Jonathan presented to the parliament.

A  report released recently    by the CWP on the 2013 Federal  Budget Estimates    recommended that both the  Presidency  and the National Assembly need to  reduce their line item  budgets by fifty per cent while the budget of the MDAs should also  be slashed by the same margin to save funds for capital expenditure and reduce the infrastructure deficit challenge facing Nigeria.

The  72-page analytical  report  also  recommended that  the budget of every MDA, including the statutory transfers to the National Assembly, National Judicial Council(NJC), Universal Basic Education Commission(UBEC), Independent National Electoral Commission (INEC) and National Human Rights Commission(NHRC)  should be dis-aggregated and published in  order to promote transparency and accountability in the budgeting process.

The questionable expenditures identified by the report  include requests by virtually every MDA  for welfare packages, travel and transport, security votes, refreshment and meals,  kitchen utensils and sports activities even when the welfare of  civil servants have been provided for under personnel cost.

The budget estimate, the CWP said,  has also made provisions for drugs and medicals for the personnel of  MDAs even when civil servants have been enrolled for medicare under the National Health Insurance Scheme.

The  CWP disclosed that apart from these requests for items already covered by personnel cost, the budget proposal contains strange and unjustifiable sub-heads such as uniforms and clothing for institutions that are neither military nor para-military and special  security votes for the Nigeria Police, Army, Navy and Air Force whose primary duty is security.

The report also criticised the allocation of N724.4million and N643million to the National Hajj Commission of Nigeria and Nigera Christian Pilgrim Commission respectively and demanded that these funds should be re-channeled to other areas of national priority as the Nigerian Constitution forbids the adoption of state religion.

It  cited the provision of N254.7 million for the renovation of 7 Kofo Abayomi Street, Victoria Island in the vote of the Nigeria Nuclear Regulatory Authority (Code 23020118) and the same sum is also demanded for the same address in the proposal of the Department of Petroleum Resources(Code 23020118) and the Nigeria Content Development and Monitoring Board for the same project  with the same code.

Similarly, the report disclosed that these three agencies have duplications in their proposals for real time monitoring of gas facilities and other activities for which huge funds have been equally  replicated  to the three organisations.

The provision of N250million for the Federal Ministry of Energy (Power) for the purpose of mobilising support for the power sector and another N43.8m for advocacy and awareness for PHCN successor companies also came under attack in the report.

“There is no need for mobilising support. Nigerians are already agreed on the need to reform the power sector. The main challenge is that the process has been slow and delayed. On the other hand,the emerging private sector entities do not need the Ministry of Energy to create awareness for them,” CWP said in its  report.

The report also cited among other things the request for the purchase of computers and acquisition of computer software by many MDAs who had the same provisions in the 2012 budget. It urged the National Assembly to ignore such  requests and remove the items from the budget as computer systems and software already purchased could not have expired within one year.


The report  reminded the National Assembly  of the pledge by government to reduce frivolous expenditure and charged the Presidency and National Assembly to lead by example.

The CWP  said that in spite of governments avowed commitment to reducing the cost of governance,  the budget has been riddled with “unclear and nebulous” expenditures that contribute  nothing to public welfare.

Facilitator of  CWP, Mr Eze Onyekpere told THISDAY in an interview    that after  a detailed analysis of the 2013 budget proposal, it had been  observed that  MDAs have demonstrated a desire to draw money from the public treasury for wasteful expenditure through repetition of previous year’s budget requests and bloated allocations for nebulous  items. 

“Budgets are supposed to be crafted in a language and manner that makes it amenable to public understanding, monitoring and tracking. But this has not been reflected in many proposals. This is wrong and unacceptable.

“The Federal Government has stated its intention to reduce frivolous expenditure, yet our budget proposals are suffused with same.
“These are hard times and Nigerians are interested in prioritising public expenditure to those areas that make the most meaningful impact in their lives. More funds should be channeled to capital expenditure including roads, railways, power transmission and the social sectors of education and health. Our national priorities should reflect our status as an under-developed nation,”he said.

Onyekpere disclosed that a copy of the report has been despatched to the 109 Senators and 360 members of the House of Representatives. He  said that the CWP was committed to ensuring that public resources were deployed and  utilised in the best interest of the citizenry.

Onyekpere charged
the legislators to thoroughly scrutinise the budget  so as to cut down on wastages or  eliminate  them completely  from the budget proposal before its  passage into law.

Chairman, House of Representatives  Committee on Appropriation, Hon. John Enoh confirmed that the CWP report on the 2013 Federal Budget Estimates has been received at his office. Enoh however declined  to make comments on the report because, according to him,  he needed to study it before making any comments.   

A similar report was produced and presented to the National Assembly on the wastages  identified in the 2012 Budget but not much came out of it.

Investigations revealed that even when the National Assembly deleted about N14 billion worth of nebulous expenditure from the Federal Ministry of Agriculture, it was forced to return at least N10billion to the same ministry due to immense political pressure.  It turned out to be one step forward and two steps backward. It is hoped that the story will be different this time.

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