Muhammadu Buhari & Yemi Osibanjo |
Restoring sanity to public
financial management however will require dogged commitment to produce
growth-enhancing fiscal plans and the elimination of waste and corruption. Unlike the three previous
administrations since 1999, the Muhammadu
Buhari administration has confronted the reality
that our current budgeting system cannot deliver development.
According to Prof. Osinbajo, the
government will use the Zero-Budgeting format in preparing the 2016 national
budget in preference to the existing traditional incremental budgeting or
Envelope Budgeting format that has served indolent, corrupt federal officials
so well, but failed to drive development.
This is long overdue as repeated
calls for a more efficient budget formulation and implementation process were
ignored by past presidents Olusegun
Obasanjo, Umaru Yar’Adua and Goodluck Jonathan.
Defined as a summary or plan of
the expected revenues and expenditure for fiscal year, a government budget sets
out revenues, costs, expenses and cash flows, while expressing strategic plans
and national development targets.
Development planners broadly
identify three types of government budget as: the operating or current budget,
the capital or investment budget and cash flow budget. The emphasis is on the
operating (recurrent) and capital outlays.
Traditional budgeting relies
mainly on the incremental format with planning based on existing income and
expenditure, where officials simply add to the preceding year’s vote on each
line item, making allowance for inflation. This system may have worked well in
the past when Nigeria had five-year development plans and, later, three-year
rolling plans and budgets were formulated to meet defined planning targets. The
problem with our budgeting is multifaceted.
First, we have failed to move
with the best in the world, away from the “envelope” system to zero-based
budgeting that according to experts, “involves evaluating the inputs and
outputs for specific activities as opposed to the traditional line item
format”. Second, national planning has derailed: there is an absence of commitment
to implement any and achieve specific development targets. Budgets have become
mere ad hoc spending plans with poor linkages to medium or long-term national
growth objectives beyond the slogans of politicians. Moreover, our budgeting
has been overtaken by ineptitude, corruption and a signal lack of
professionalism.
Instead of plans that can provide
infrastructure, stimulate production and job creation, we have consumptive
budgets that feed parasitic political and bureaucratic classes and by the
brazen abuse of the envelope system, sustains a gigantic system of corruption.
That is why incrementally, “Service wide” vote, for instance, rose from N301.84
billion in the 2014 budget to N348.69 billion in 2015. Not tied to specifics,
such outlays easily become “pocket money” for officials.
For the same reason, expenditures
on kitchen equipment, cutlery, presidential villa gate, computers, printers,
cars and generators, among others, keep on returning to the budget each year.
Since these are items that no sane person replaces every year, it is obvious
that our envelope system feeds a vast complex of fraud that encourages
officials to generate invoices, fake contracts and receipts to enjoy the budget
largesse.
Having identified the problem,
however, the government should realise that zero-based budgeting poses the
challenge of high level professionalism by budget planners and places a tougher
demand on implementation. Replacing the Planning-Programming-Budgeting System
adopted in the United States in the 1960s to the 1970s, zero-based budgeting
demands that planners do a thorough
evaluation of the costs and benefits of each project and requires that every
expenditure be justified in detail, helping to identify redundancies or
duplications.
Modern budgeting is scientific
and Nigeria must join the train. Never again should the government return to
making budget plans without tying them to revenue sources. Every expenditure
project should have identifiable revenue sources. Cuts in in the United Kingdom
and the United States defence budgets are planned to move into other critical
sectors. To partly fund its new F-35 war planes, for instance, the Pentagon
aims to retire its A-10 Thunderbolt aircraft fleet.
Planning for projects must
include identifying where the funds will come from. More
crucially, Nigeria needs practical national plans to which all stakeholders
will buy in and national budgets geared towards meeting identified growth
targets. Malaysia was able to grow its economy from an agrarian to an
industrialised one within the ambit of national plans with the annual budgets
as stepping stones to achieving growth targets.
Its government said its robust
budgets had delivered 196 projects in 12 national “key economic areas”, created
437,000 jobs and achieved 6.3 per cent expansion in Gross Domestic Product
since 2009. Indonesia’s budgets are components of five-year plans that have
made it South-East Asia’s largest economy and the third fastest growing G-20
economy with a per capita GDP of $82,762, the world’s third highest, according
to the IMF, based on certain projected data.
President Buhari should begin by
appointing upright technocrats as ministers in charge of finance and national
planning and re-professionalising the Budget Office. The office should be
insulated from political influence, while approved capital budgets should be
scrupulously implemented. Emphasis should be on infrastructure, education,
health, institutional reforms and job creation.
Beginning from 2016, national
budgets should eliminate waste and loopholes for corruption, while budget
implementation and monitoring agencies should be upgraded and strengthened.
(punch)
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