Finance
As the World Bank-assisted States Fiscal, Transparency Accountability and Sustainability (SFTAS) Programme designed to enthrone fiscal discipline at the sub-national level gradually approaches a terminal point, it has become increasingly necessary to sustain the ideals, Ndubuisi Francis reports
Between 2015 and 2016, the consequences of decades-long financial profligacy characterised by careless fiscal management at the sub-national level crystallised into a near-fiscal crisis for most states of the federation.
No fewer than 27 states could not as much as pay the salaries and emoluments of their workers.
This culminated in the federal government doling out a series of bailout funds for them to pay salaries arrears and stay afloat.
However, aware of the danger that sub-national fiscal risks posed to the federal government, it dawned on the government at the centre that fiscal coordination of states was imperative.
This spurred the federal government into requesting World Bank financing to establish a system of performance-based grants to states, conditional on the sustained implementation of national fiscal management plans.
This gave birth to the four-year States Fiscal Transparency, Accountability and Sustainability (SFTAS) Programme for Results (2018 to 2022).
To incentivise states to adopt good fiscal practices which they should have been applying in the first place, the World Bank-funded SFTAS programme set aside $1.5 billion for disbursement as grants to states that bring their Public Finance Management (PFM) architecture up to speed.
A state desiring to participate must meet two otherwise simple Eligibility Criteria.
These are (i) publishing annual state budgets, and (ii) publishing audited financial statements.
Thereafter, a state can access the financial grant according to certain Disbursement-Linked Indicators (DLIs). The grant size to a state in a given period depends on the number of DLIs achieved. Those too are basic good practice issues which any government that respects itself would long have adopted. Well, economists understand incentives and state governments understand free money.
By 2020, all 36 states of the federation had met the eligibility criteria for the year and became eligible to receive performance-based grants. Results indicate that states are performing strongly across all zones. Most states are now engaging citizens in their budget process and publishing Citizens Budgets.
Many states have passed a consolidated state revenue code and achieved annual internally generated revenue (IGR) growth of at least 20 per cent while also addressing payroll fraud by linking biometric data and Bank Verification Numbers (BVNs)
A large number of states have also strengthened public procurement laws, as well as created fiscal responsibility and public debt laws.
No fewer than 32 states currently submit quarterly debt reports to the Debt Management Office (DMO), while a number of them have started to clear their domestic expenditure arrears owed to contractors, civil servants and pensioners.
As of August 2022, the federal government had disbursed N471.9 billion to state governments under the programme.
According to the SFTAS’ Programme Coordinating Unit SFTAS-PCU), Federal Ministry of Finance, Budget and National Planning, the disbursements were made “following the achievement of results in different DLIs in the Annual Performance Assessments (APAs) 2018, 2019 and 2020 carried out by the Office of the Auditor-General of the Federation as the Independent Verification Agent (IVA).”
The emergence of SFTAS has not only bolstered the internally generated revenue (IGR) of various states in areas like property taxation, but it has also plugged leakages and led to greater efficiency in public finance management.
Sustaining the Ideals of SFTAS
As highlighted earlier, the World Bank-assisted SFTAS is a four-year programme, already in its lap.
Since its commencement in 2018, it has made a tremendous impact in reordering public finance management at the sub-national level.
As part of overall measures to sustain the ideals of the programme at the state level as it coasts home to its terminal point, the SFTAS-PCU has been holding sensitisation workshops for civil society organisations (CSOs) across the country.
In conjunction with the SFTAS-PCU, the World Bank has intensified campaigns on sustaining fiscal reforms at the sub-national level for which the fee programme was created.
According to the SFTAS Programme Communications Specialist, Ibrahim Mohammed, the World Bank recently held a roundtable discussion with select civil society organisations and donor partners in Abuja to fine-tune strategies for advancing and sustaining the ideals of promoting fiscal transparency accountability and sustainability in the states beyond the tenure of current administrations in the 36 states of the federation.
The roundtable discussion which provided a platform for the CSOs and representatives of donor agencies to interact on areas of mutual interest had in attendance CSO members from Dataphyte, iEngage, Follow the Tax, Connected Development, Centre for Fiscal Transparency and Integrity Watch, Paradigm Leadership Support Initiative (PLSI) and Public Private Development Centre (PPDC) while donors included the UK Foreign, Commonwealth and Development Office (FCDO); Partnership to Engage, Reform and Learn (PERL), Bill and Melinda Gates Foundation and Mac Arthur Foundation.
Implementing agencies and partners like the Open Government Partnership (OGP) and Nigeria Governors Forum were also present at the discussion.
In her opening remarks, the World Bank SFTAS Task Team Leader (TTL), Ms. Deborah Isser explained that the World Bank-supported SFTAS Programme has incentivised state performance through four rounds of performance assessments covering the years 2018 -2021.
She said: “We are currently finalising the 2021 Annual Performance Assessment, which will be the last PforR (Programme for Results) disbursement. The programme will continue with technical assistance support through June 30, 2023, and we will be focusing on the issues of sustainability- consolidating and deepening results achieved under SFTAS beyond the end of the programme and in the absence of direct monetary incentives for disbursement-linked indicators”.
Isser stressed that the meeting was convened to discuss how best to coordinate initiatives among donor partners and CSOs to ensure the sustainability of SFTAS ideals beyond the grants.
She urged CSOs and development partners engaged in PFM reforms at the subnational level to redouble their efforts in strengthening fiscal reforms to promote fiscal transparency accountability and sustainability at the sub-national level in line with the ideals of the SFTAS Programme.
Participants at the roundtable discussion drawn from the CSOs and development partners agreed to work with the World Bank, the Federal Ministry of Finance, Budget and National Planning implementing agencies and partners to develop strategies for ensuring the sustainability of the fiscal reforms that will outlive various administrations in the states especially given the commitment and enthusiasm shown by current governors in the states.
Speaking on behalf of the Nigerian Governors Forum (NGF/SFTAS), Mr. Lanre Ajogbasile, observed that the CSOs, when empowered with the necessary tools and templates and the needed capacity, will be better placed to interrogate work processes through sustained close monitoring to ensure the sustainability of fiscal reforms in the states.
Ajogbasile charged CSOs with interest in public financial management to evolve innovative measures and create demand-side pressure for states to sustain the reforms and results and to push for continued fiscal transparency in the states.
He added that NGF was available to provide technical assistance to CSOs to enhance their capacity for constructive engagement with sub-nationals.
In the same vein, an Abuja-based economist, Chris Uwadoka in an article made available to THISDAY said: “To sustain and deepen the results of SFTAS, recourse must be made to the boldest public finance reform initiative of the federal government – the Fiscal Responsibility Commission.
“The tribal knowledge assembled by the Commission which, all these years, has patiently but persistently engaged state governments using technical assistance, moral suasion, name-and-shame, peer comparison, etc need to be harvested.
“For one, a worthwhile sustainability strategy would include supporting the commission to monitor states against the sustained implementation of the SFTAS eligibility criteria and performance-based indicators.
“Also, the commission’s long-standing engagement with civil society organisations (CSOs) in the area of outreach activities will come in handy towards creating demand-side pressure for states to sustain the reforms and results on fiscal transparency and accountability.”
There’s a consensus that the SFTAS Programme has made a tremendous impact in instilling fiscal discipline in states, and strengthened and reordered public finance management at the sub-national level.
