Tuesday, October 21, 2014

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Nigeria: Breaking Apart the Presidency’s Jamboree Budget

Nasir El-Rufai analyses the presidency's proposed 2014 budget and finds in it all the hallmarks of the Jonathan administration's jamboree mentality.
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President Goodluck Jonathan at a ribbon-cutting ceremony in Lagos. Photograph by Ford Foundation.

The year 2014 is already off to a dramatic start with allegations of massive fraud to the tune of about $20 billion (N3.3 trillion) being leveled against the Nigerian National Petroleum Corporation (NNPC) for failure to remit oil revenue earnings for a period of 19 months.

As soon as the revelations gained traction, the Central Bank Governor Sanusi Lamido Sanusi was suspended and the wanton killings of Nigerians escalated in Adamawa, Borno and Yobe states.

Whenever massive cases of corruption are revealed, attention seems to be diverted. We saw this with the fuel subsidy protests of January 2012 and several other instances since then. Let us mourn our dead, grieve over the murder of our innocent children, but never lose track of the clear link between systematic corruption and the insecurity our nation suffers.

Back to the diversion of federation oil revenues: Under whose watch did the $20 billion disappear and into whose accounts have they gone? Should a government that claims to have the interest of its citizens at heart so brazenly preside over looting of public funds? Does the average person know the intricacies of how the budget is appropriated? These are questions that must command the interest of Nigerians as yet another cycle of wasteful spending unfolds.

In seeking answers to the above questions and in line with our tradition of annual budget analyses, we will begin 2014 with an assessment of the Presidency's allocations. The Presidency has allocations of about N108.2 billion ($650 million). It includes the State House (N33.4bn [$200 million]), the offices of the Secretary to the Government of the Federation (N63.2bn [$380 million]) and Head of Civil Service of the Federation (N11.6bn [$70 million]).

Indeed, the offices of the National Security Adviser, the Independent Corrupt Practices, Salaries and Wages, Sports and Planning Commissions − and all federal executive bodies − can be considered part of the Presidency, though under separate budget sub-heads.

This week, we will look at the 'Presidency -State House', while the offices of the Secretary to the Government of the Federation (SGF) and Head of Civil Service will be examined in ensuing weeks.

Where will the money go?

The State House is an important budget subhead that overlooks 14 agencies, some of which are central to Nigeria's anti-corruption, transparency and disaster preparedness.

In 2013, the Presidency-State House supervised 11 Ministries, Departments and Agencies (MDAs). This fiscal year, two new operation departments have been created, confirming that this administration is only interested in increasing the size of its already bloated bureaucracy. As the current budget proposal shows, government seems to have cemented a policy that allows wasteful proposals and a very heavy recurrent allocation.

In 2014, the Presidency would spend N33.4 billion ($200 million) or 0.7% of the federal budget. On the surface, the amount would represent a decrease of 10.3% or N3.9 billion ($20 million) when compared to the N37.3 billion ($220 million) that it got in 2013. But of this sum, N12.7 billion ($80 million) or 38.3% of the budget is apportioned to personnel costs or staff salaries in ten departments and agencies under the Presidency. And N12.2 billion ($70 million) would be for maintaining existing structures and people, effectively bringing the recurrent budget − e.g. that spent on ongoing costs such as salaries − to N25 billion ($150 million) or 74.8% of the budget. In other words, although the overall budget may be decreasing, the government is not meeting its promise to bring down recurrent expenditure, which it is rather quietly but consistently increasing.

Capital provisions for the Presidency this year would therefore be N8.4 billion ($50 million) or 25.2% of the total budget. This is a reduction in the capital budget of over 40% from the N14.4 billion ($90 million) 2013 figures. With provisions like these, what immediately becomes clear is that the 2014 budget is a budget of salaries, traveling, tea and coffee for the privileged few that would in no way guarantee any real progress or help Nigerians redress growing poverty and destitution.

Total allocations across agencies reveal the following: State House HQ 26.1%, State House Operations (P) 8.9%, State House Operations (VP) 1.3%, National Boundary Commission 1.9%, Border Communities Development Agency 1.2%, Office of the Special Assistant on MDGs 0.5%, National Institute for Policy and Strategic Studies (NIPPS) 4.3%, Bureau of Public Enterprises 6.7%, National Emergency Management Agency 3.8%, Economic and Financial Crimes Commission 30.6% and the Bureau of Public Procurement 3.8%.

Similarly, the Nigerian Extractive Industries Transparency Initiative (NEITI) has 3.3%, National Atomic Energy Commission 6.6% and the Office of the Chief Economic Adviser to the President 0.4% of the total MDA budget. As is evident from the above, 36.3% of the budget goes to the State House alone whose only responsibility is catering to the president and his largely 'missing-in-action' deputy.

Getting priorities straight

Analyzing the capital budget further, it becomes clear that this government is insincere in its fight against corruption. How can it justify the allocation of N3.7 billion ($20 million) or 44.5% of the Presidency's total capital allocation to the State House and a paltry N1.4bn ($10 million) or 16.8% to the Economic and Financial Crimes Commission (EFCC)? It is even more pathetic when one considers that the National Emergency Management Agency (NEMA) gets a miserly 4% or N339 million ($2 million) allocation for capital expenditure in the 2014 fiscal year.

The budgetary provisions can be seen in clearer perspective if you consider that the State House intends to, amongst others, spend its capital allocations on building and furnishing guest houses, purchasing vehicles and buses, procuring sauna baths, massage beds and renovating horse stables while the Bureau of Public Procurement (BPP), NEITI, EFCC and NEMA − all agencies which render essential anti-corruption and disaster management services − get fractions of its allocation.

A closer look at EFCC will suffice to illustrate the sorry state of affairs. Beyond a shortage of funds, the EFCC faces the challenges of a legal system that grinds slowly and unsurely, resulting in prolonged litigation and outright loss of cases due to poor investigation and evidence gathering. This reality should ordinarily lead to increased funding for legal services under the commission, which this budget fails to do.

In 2014, the EFCC would get N283.6 million ($1.7 million) for the services of lawyers and for prosecuting financial crimes. While this is an increase over the 2013 allocation of N100 million ($0.6 million), it is a classic example of perverse prioritisation when you consider that the State House intends to spend N320.2 million ($1.9 million) on honorarium and sitting allowances alone and N267.7 million ($1.6 million) on welfare packages, while EFCC has difficulties paying for legal services. NEITI, the transparency watchdog of the oil industry, with less than N70 million ($0.4 million) for capital projects is similarly constrained, while NNPC allegedly diverts $20 billion (N3.3 trillion) without appropriation.

As concerned Nigerians, we should ask important questions such as: if the fight against corruption is sincere, why does the State House get an allocation for sitting allowances that is higher than the legal services allocation of the EFCC or NEITI’s capital budget? Why does the Presidency also think that the welfare package for a few State House employees is more important than the oil revenue transparency and anti-corruption drive, assuming it can be called that?

NEMA provides another example. With Nigeria's insecurity issues, threats of global warming, flooding and other unforeseen disasters, why is the disaster management agency not getting higher allocation for research and development? Nowhere in its paltry N339 million ($2 million) capital provision is there a line item for these kinds of contingencies. The consequences could be unpreparedness for disasters which would only lead to an increase in the number of internally-displaced Nigerians.

Even if a contingency budget is resorted to, the time-lag in accessing it and then complying with the provisions of the Public Procurement Act 2007 would hamper the operations of NEMA and impact the timeliness of its response to disasters. Even more bothersome is the fact that for both local and international training in 2014, the agency would get some N60.6 million ($0.37 million), while at N173.3 million ($1 million) the State House would get almost thrice that amount for refreshment and feeding alone.

Furthermore, zoologist or not, President Jonathan must be living on another planet to assume that he is responsible for wildlife conservation and animals, when more than 70% of Nigerians live in abject poverty, insecurity and inequality. How else can one explain spending N100 million ($0.6 million) in tax payers' funds on wildlife conservation and animals in the fiscal year 2013 and in the 2014 budget proposal? Does Nigeria still have a ministry of environment?

To put this in proper context, in 2013, the Villa spent N7.5 million ($0.05 million) on wildlife conservation and intends to spend N37.5 million ($0.23 million) in 2014 for the same purpose. Upgrading and maintaining the State House zoo would cost Nigerian tax payers some N8 million ($0.05 million). The renovation of stables cost N7.5 million ($0.05 million) in 2013 and would set the nation back some N15 million ($0.9 million) in the current fiscal year. In addition to all these, we would spend a generous N14.5 million ($0.9 million) for the purchase of two very lucky animals.

Jamboree mentality

Almost every item in the Presidency's budget proposal redefines the term 'wasteful'. For instance, there is a provision of N1.5 billion ($10 million) for the upgrade of facilities, but the proposal cleverly leaves out details of the facilities to be upgraded. If the budget is finalised as it is, the government would spend N23.7 million ($0.14 million) on the purchase of laundry equipment, N50 million ($0.3 million) on the reconstruction of perimeter fence and gate house for the state house, and N310.5 million ($1.9 million) on vehicles purchase. Most ridiculous is the spending of N218.3 million ($1.3 million) on generator fuel. The Presidency should simply get connected to the national grid and experience the much touted 'improvement' in power supply if it believes its own press releases.

Misappropriation of public funds should not be treated with such levity if there is going to be a more even distribution of national income and if there is any hope of closing the wide gap between the rich and poor in Nigeria. The populace must not fall for the deliberate distraction tactics of this government whenever their failures manifest. Public accountability must be paramount on the minds of those vying for political office as well as the electorate. The $20 billion must be accounted for in full to the 36 states and the Federal Capital Territory as well as the 774 local governments that make up our federation. We must demand accountability and insist on it.

The government − beginning with the Presidency − needs to urgently reduce wasteful spending by trimming unnecessary costs and eliminating wasteful provisions to free up funds for investments in human and physical infrastructure. The Presidency should set the standard for probity and sensible spending. But unfortunately, the Presidency's current budget proposal shows no indication of any real progress or positive change, only the jamboree mentality that has become a hallmark of Jonathan's government.

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